<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MAY 2, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-26732
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GADZOOKS, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 74-2261048
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION) NUMBER)
4121 INTERNATIONAL PARKWAY
CARROLLTON, TX 75007
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 972-307-5555
--------------------
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(FORMER NAME, FORMER ADDRESS AND FISCAL YEAR, IF CHANGED SINCE LAST REPORT.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
As of June 8, 1998, the number of shares outstanding of the registrant's
common stock is 8,843,761.
<PAGE> 2
GADZOOKS, INC.
FORM 10-Q
For the Quarter Ended May 2, 1998
INDEX
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets as of May 2, 1998 3
and January 31, 1998
Condensed Statements of Income for the First 4
Quarter Ended May 2, 1998 and May 3, 1997
Condensed Statements of Cash Flows for the First 5
Quarter Ended May 2, 1998 and May 3, 1997
Note to Financial Statements 6
Item 2. Management's Discussion and Analysis of 7-9
Financial Condition and Results of Operations
PART II. OTHER INFORMATION 10
SIGNATURE PAGE 11
INDEX TO EXHIBITS 12-14
</TABLE>
2
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PART I - FINANCIAL INFORMATION
GADZOOKS, INC.
CONDENSED BALANCE SHEETS
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(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
MAY 2, JANUARY 31,
1998 1998
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,817 $ 9,755
Short-term investments 8,122 9,157
Accounts receivable 3,523 2,815
Inventory 39,357 35,764
Other current assets 1,414 1,427
---------- ----------
55,233 58,918
---------- ----------
Leaseholds, fixtures and equipment, net 26,456 25,403
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$ 81,689 $ 84,321
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 14,318 $ 16,722
Accrued expenses & other current liabilities 3,867 4,823
Income taxes payable 1,468 2,495
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19,653 24,040
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Accrued rent 1,881 1,800
Shareholders' equity:
Common stock 88 88
Additional paid-in capital 41,126 40,869
Retained earnings 18,941 17,524
---------- ----------
60,155 58,481
---------- ----------
$ 81,689 $ 84,321
========== ==========
</TABLE>
The accompanying note is an integral part of these financial statements.
3
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GADZOOKS, INC.
CONDENSED STATEMENTS OF INCOME
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(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
FIRST QUARTER ENDED
--------------------------
MAY 2, MAY 3,
1998 1997
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<S> <C> <C>
Net sales $ 45,026 $ 34,070
Cost of goods sold including buying,
distribution and occupancy costs 32,324 23,943
---------- ----------
Gross profit 12,702 10,127
Selling, general and administrative expenses 10,620 8,234
---------- ----------
Operating income 2,082 1,893
Interest income, net 185 243
---------- ----------
Income before income taxes 2,267 2,136
Provision for income taxes 850 812
---------- ----------
Net income $ 1,417 $ 1,324
========== ==========
Net income per share
Basic $ 0.16 $ 0.15
========== ==========
Diluted $ 0.16 $ 0.15
========== ==========
Average shares outstanding
Basic 8,795 8,592
========== ==========
Diluted 9,095 9,124
========== ==========
</TABLE>
The accompanying note is an integral part of these financial statements.
4
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GADZOOKS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
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(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
FIRST QUARTER ENDED
--------------------------
MAY 2, MAY 3,
1998 1997
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES :
Net income $ 1,417 $ 1,324
Adjustments to reconcile net income to cash
used in operating activities :
Depreciation 1,024 672
Changes in operating assets and liabilities (8,595) (2,846)
---------- ----------
NET CASH USED IN OPERATING ACTIVITIES (6,154) (850)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES :
Capital expenditures, net (2,078) (3,156)
Sales (purchases) of short-term investments, net 1,036 (1,512)
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (1,042) (4,668)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES :
Issuance of common stock 258 61
---------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 258 61
---------- ----------
Net decrease in cash and cash equivalents (6,938) (5,457)
Cash and cash equivalents at beginning of period 9,755 10,348
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,817 $ 4,891
========== ==========
</TABLE>
The accompanying note is an integral part of these financial statements.
5
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GADZOOKS, INC.
NOTE TO FINANCIAL STATEMENTS
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(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying condensed financial statements contain all adjustments
(consisting of only normal recurring accruals) necessary to present fairly
the financial position as of May 2, 1998 and January 31, 1998, and the
results of operations and cash flows for the three months ended May 2,
1998 and May 3, 1997. The results of operations for the three months then
ended are not necessarily indicative of the results to be expected for the
full fiscal year. The condensed balance sheet as of January 31, 1998 is
derived from audited financial statements. The condensed financial
statements should be read in conjunction with the financial statement
disclosures contained in the Company's Annual Report on Form 10-K for the
fiscal year ended January 31, 1998.
6
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Management's Discussion and Analysis of Financial
Condition and Results of Operations
GENERAL
Gadzooks is a rapidly growing, mall-based specialty retailer of casual apparel
and related accessories for young men and women principally between the ages of
13 and 19. As of May 2, 1998, the Company had opened 26 new stores since the
beginning of the fiscal year, closed one store, and operated 275 stores in 32
states east of the Rocky Mountains.
The Company's business is subject to seasonal influences with slightly higher
sales during the Christmas holiday, back-to-school, and spring break seasons.
Management's discussion and analysis should be read in conjunction with the
Company's financial statements and the notes related thereto.
RESULTS OF OPERATIONS
First Quarter Ended May 2, 1998 Compared to First Quarter Ended May 3, 1997
Net sales increased approximately $11.0 million, or 32.2 percent, to $45.0
million during the first quarter of fiscal 1998 from $34.1 million during the
comparable quarter of fiscal 1997. Comparable store sales decreased 0.5 percent
for the first quarter of fiscal 1998. The total company sales increase was
attributable to new stores not yet included in the comparable store sales base.
A store becomes comparable after it has been open for 14 full fiscal months.
Gross profit increased approximately $2.6 million to $12.7 million during the
first quarter of fiscal 1998 from $10.1 million during the comparable quarter of
fiscal 1997. As a percentage of net sales, gross profit decreased to 28.2
percent from 29.7 percent in the comparable quarter of last year. The majority
of the decrease in gross profit resulted from slow sales of junior swimwear and
the markdowns taken to position the stores to begin closing out swimwear in May.
Distribution costs included in cost of goods sold increased slightly as a
percentage of sales as a result of the Company's move to a larger distribution
center in May 1997. Store occupancy and buying costs as a percentage of sales
were flat when compared to the first quarter of 1997.
7
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Selling, general and administrative expenses ("SG&A") increased approximately
$2.4 million to $10.6 million during the first quarter of 1998 from $8.2 million
during the comparable quarter of fiscal 1997. The aggregate increase in SG&A is
primarily attributable to additional store expenses as a result of the Company's
expanded store base during the past year and an increase in administrative costs
to support the larger store chain. As a percentage of net sales, SG&A decreased
to 23.6 percent during the first quarter of fiscal 1998 from 24.2 percent during
the comparable quarter of last year. The decrease in the SG&A percentage is
primarily due to improved controls over store level expenses.
The Company's net interest income decreased $58,000 to $185,000 during the first
quarter of fiscal 1998 from $243,000 in the comparable period of last year due
to the use of short-term investments to fund the Company's continuing expansion.
LIQUIDITY AND CAPITAL RESOURCES
General. The Company's primary uses of cash are financing new store openings and
purchasing merchandise inventories. The Company is currently meeting its cash
requirements through cash flow from operations and short-term investments
on-hand.
Cash Flows. At May 2, 1998, cash and cash equivalents were $2.8 million, a
decrease of $6.9 million since January 31, 1998. The primary uses of cash were
increased inventory levels of $3.6 million, capital expenditures of $2.0 million
for new stores, a decrease in accounts payable of $2.4 million and a decrease in
income taxes payable of $1.0 million. The primary sources of cash for the first
three months of fiscal 1998 were net income before depreciation of $2.4 million
and sales of short-term investments of $1.0 million. The Company opened 26 new
stores during the first three months of 1998 as compared with 14 new stores in
the same period of the prior year.
8
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Credit Facility. The Company currently has a loan agreement with Wells Fargo
Bank, Dallas, Texas, which provides for an unsecured revolving line of credit of
$10 million. Amounts borrowed under the revolving line bear interest at the
lesser of either Prime Rate or 1.95 percent above LIBOR. The Company must also
pay a commitment fee of 0.50 percent per annum on the unused portion of the
revolving line. As of May 2, 1998, no amounts were outstanding under the
revolving line. The revolving line also provides for the issuance of letters of
credit that are generally used in connection with international merchandise
purchases. As of June 8, 1998, letters of credit in the amount of $0.7 million
were issued and outstanding.
The current Credit Facility matures on June 5, 1998, therefore the Company is in
the process of finalizing an increased line of credit with Wells Fargo Bank. The
terms of the Credit Facility are expected to remain virtually the same, however,
the line is expected to be increased to $20 million and the commitment fee is
expected to be reduced to 0.35 percent per annum on the unused portion of the
revolving line. No assurance can be given that negotiations on this increased
line of credit will be consummated on terms acceptable to the Company, if at all
Capital Expenditures. The Company began its fiscal 1998 store expansion program
with the opening of 26 new stores during the months of March and April. The
Company estimates that its average capital expenditures to open a new store,
including leasehold improvements and furniture and fixtures, will be
approximately $185,000 (approximately $115,000 net of all landlord construction
allowances). The typical cost of initial inventory for a new store is
approximately $100,000; however, the immediate cash requirement for inventory is
partially financed through the Company's payment terms with its vendors.
Pre-opening costs range from $9,000 to $13,000 for travel, hiring and training,
and other miscellaneous costs associated with the setup of a new store prior to
its opening for business. Pre-opening costs are expensed as incurred.
STATEMENT REGARDING FORWARD-LOOKING DISCLOSURE
Certain sections of this Quarterly Report on Form 10-Q, including the preceding
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," contain various forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Exchange Act, which represent the Company's expectations or beliefs concerning
future events. These forward-looking statements involve risks and uncertainties,
and the Company cautions that these statements are further qualified by
important factors that could cause actual results to differ materially from
those in the forward-looking statements, including, without limitation, those
set forth in the "Risk Factors" section of the Company's Annual Report on Form
10-K for the fiscal year ended January 31, 1998.
9
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PART II - OTHER INFORMATION
Items 1-5 - None
Item 6 - Exhibits and Reports on Form 8-K
(a) See Index to Exhibits.
(b) None.
10
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GADZOOKS, INC.
(Registrant)
DATE: June 9, 1998 By: /s/ MONTY R. STANDIFER
-----------------------------
Monty R. Standifer
Senior Vice President and
Chief Financial Officer
11
<PAGE> 12
INDEX TO EXHIBITS
EXHIBIT
NO. DESCRIPTION OF DOCUMENTS
- ------- ------------------------
3.1 Third Restated Articles of Incorporation of the Company (filed as
Exhibit 4.1 to the Company's Form S-8 (No. 33-98038) filed with the
Commission on October 12, 1995 and incorporated herein by
reference).
3.2 Amended and Restated Bylaws of the Company (filed as Exhibit 4.2 to
the Company's Form S-8 (No. 33-98038) filed with the Commission on
October 12, 1995 and incorporated herein by reference).
3.3 First Amendment to the Amended and Restated Bylaws of the Company
(filed as Exhibit 3.3 of the Company's Quarterly Report on Form
10-Q for the quarter ended August 2, 1997 filed with the Commission
on September 16, 1997 and is incorporated herein by reference).
4.1 Specimen Certificate for shares of Common Stock, $.01 par value, of
the Company (filed as Exhibit 4.1 to the Company's Amendment No. 2
to Form S-1 (No. 33-95090) filed with the Commission on September
8, 1995 and incorporated herein by reference).
10.1 Purchase Agreement dated as of January 31, 1992 among the Company,
Gerald R. Szczepanski, Lawrence H. Titus, Jr. and the Investors
listed therein (filed as Exhibit 10.1 to the Company's Form S-1
(No. 33-95090) filed with the Commission on July 28, 1995 and
incorporated herein by reference).
10.2 Purchase Agreement dated as of May 26, 1994 among the Company,
Gerald R. Szczepanski, Lawrence H. Titus, Jr. and the Investors
listed therein (filed as Exhibit 10.2 to the Company's Form S-1
(No. 33-95090) filed with the Commission on July 28, 1995 and
incorporated herein by reference).
10.3 Credit Agreement dated as of January 30, 1997 between the Company
and Wells Fargo Bank (Texas), National Association (filed as
Exhibit 10.3 to the Company's 1996 Annual Report on Form 10-K filed
with the Commission on April 23, 1997 and incorporated herein by
reference).
12
<PAGE> 13
10.4 Form of Indemnification Agreement with a schedule of director
signatories (filed as Exhibit 10.5 to the Company's Form S-1 (No.
33-95090) filed with the Commission on July 28, 1995 and
incorporated herein by reference).
10.5 Employment Agreement dated January 31, 1992 between the Company and
Gerald R. Szczepanski, as continued by letter agreement (filed as
Exhibit 10.6 to the Company's Form S-1 (No. 33-95090) filed with
the Commission on July 28, 1995 and incorporated herein by
reference).
10.6 1992 Incentive and Nonstatutory Stock Option Plan dated February
26, 1992, and Amendments No. 1 through 3 thereto (filed as Exhibit
10.8 to the Company's Form S-1 (No. 33-95090) filed with the
Commission on July 28, 1995 and incorporated herein by reference).
10.7 1994 Incentive and Nonstatutory Stock Option Plan for Key Employees
dated September 30, 1994 (filed as Exhibit 10.9 to the Company's
Form S-1 (No. 33-95090) filed with the Commission on July 28, 1995
and incorporated herein by reference).
10.8 1995 Non-Employee Director Stock Option Plan (filed as Exhibit
10.10 to the Company's Form S-1 (No. 333-00196) filed with the
Commission on January 9, 1996 and incorporated herein by
reference).
10.9 Gadzooks, Inc. Employees' Savings Plan (filed as Exhibit 10.11 to
the Company's Form S-1 (No. 33-95090) filed with the Commission on
July 28, 1995 and incorporated herein by reference).
10.10 Severance Agreement dated September 5, 1996 between the Company and
Gerald R. Szczepanski (filed as Exhibit 10.10 to the Company's 1996
Annual Report on Form 10-K filed with the Commission on April 23,
1997 and incorporated herein by reference).
10.11 Form of Severance Agreement with a schedule of executive officer
signatories (filed as Exhibit 10.11 to the Company's 1996 Annual
Report on Form 10-K filed with the Commission on April 23, 1997 and
incorporated herein by reference).
13
<PAGE> 14
10.12 Amendment No. 4 to the Gadzooks, Inc. 1992 Incentive and
Nonstatutory Stock Option Plan (filed as Exhibit 10.14 to the
Company's Amendment No. 3 to Form S-1 (No. 33-95090) filed with the
Commission on September 27, 1995 and incorporated herein by
reference).
10.13 Amendment No. 5 to the Gadzooks, Inc. 1992 Incentive and
Nonstatutory Stock Option Plan dated September 12, 1996 (filed as
Exhibit 10.13 to the Company's 1996 Annual Report on Form 10-K
filed with the Commission on April 23, 1997 and incorporated herein
by reference).
10.14 Amendment No. 1 to the 1994 Incentive and Nonstatutory Stock Option
Plan for Key Employees dated September 12, 1996 (filed as Exhibit
10.14 to the Company's 1996 Annual Report on Form 10-K filed with
the Commission on April 23, 1997 and incorporated herein by
reference).
10.15 Gadzooks, Inc. Employee Stock Purchase Plan (filed as Exhibit 4.5
to the Company's Form S-8 (No. 333-50639) filed with the Commission
on April 21, 1998 and incorporated herein by reference).
10.16 Gadzooks, Inc., Deferred Compensation Plan (filed as Exhibit 10.16
to the Company's 1997 Annual Report on Form 10-K filed with the
Commission on April 27, 1998 and incorporated herein by reference).
10.17 Lease Agreement between Gadzooks, Inc. (Lessee) and CB Midway
International, LTD. (Lessor) dated August 23, 1996 (filed as
Exhibit 10.17 to the Company's 1997 Annual Report on Form 10-K
filed with the Commission on April 27, 1998 and incorporated herein
by reference).
10.18* Gadzooks, Inc. 401(k) Plan and Profit Sharing Plan Adoption
Agreement.
27* Financial Data Schedule.
27.1* Restated Financial Data Schedule for Fiscal 1997.
27.2* Restated Financial Data Schedule for Fiscal 1996.
27.3* Restated Financial Data Schedule for Fiscal 1995.
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* Filed herewith (unless otherwise indicated, exhibits are previously filed).
14
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EXHIBIT 10.18
----------------------------
MERRILL LYNCH
-------------
SPECIAL
-------------
PROTOTYPE DEFINED
CONTRIBUTION PLAN
ADOPTION AGREEMENT
----------------------------
401(k) PLAN
EMPLOYEE THRIFT PLAN
PROFIT-SHARING PLAN
LETTER SERIAL NUMBER: D359287b
NATIONAL OFFICE LETTER DATE: 6/29/93
THIS PROTOTYPE PLAN AND ADOPTION AGREEMENT ARE IMPORTANT LEGAL INSTRUCTIONS WITH
LEGAL AND TAX IMPLICATIONS FOR WHICH THE SPONSOR, MERRILL, LYNCH, PIERCE, FENNER
& SMITH, INCORPORATED, DOES NOT RESPONSIBILITY. THE EMPLOYER IS URGED TO CONSULT
WITH ITS OWN ATTORNEY WITH REGARD TO THE ADOPTION OF THIS PLAN AND ITS
SUITABILITY TO ITS CIRCUMSTANCES.
<PAGE> 2
ADOPTION OF PLAN
The Employer named below hereby establishes or restates a profit-sharing plan
that includes a 401(k) [X], profit-sharing [X] and/or [ ] thrift plan feature
(the "Plan") by adopting the Merrill Lynch Special Prototype Defined
Contribution Plan and Trust as modified by the terms and provisions of this
Adoption Agreement.
EMPLOYER AND PLAN INFORMATION
Employer Name:* Gadzooks, Inc.
Business Address: 4121 International Parkway
Carrollton, TX 75007
Telephone Number: (972) 307-5555
Employer Taxpayer ID Number: 74-2261048
Employer Taxable Year ends on: a 52 or 53 week year which ends on
the Saturday nearest January 31.
Plan Name: Gadzooks, Inc. Savings Plan
Plan Number: 001
<TABLE>
<CAPTION>
PROFIT
401(k) SHARING THRIFT
<S> <C> <C> <C>
Effective Date of Adoption
or Restatement: 4/1/98 4/1/98 ---/---/---
--- --- ---
Original Effective Date: 1/1/95 1/1/95 ---/---/---
--- --- ---
</TABLE>
IF THIS PLAN IS A CONTINUATION OR AN AMENDMENT OF A PRIOR PLAN, ALL OPTIONAL
FORMS OF BENEFITS PROVIDED IN THE PRIOR PLAN MUST BE PROVIDED UNDER THIS PLAN TO
ANY PARTICIPANT WHO HAD AN ACCOUNT BALANCE, WHETHER OR NOT VESTED, IN THE PRIOR
PLAN.
- -----------------------------
* If there are any Participating Affiliates in this Plan, list below the
proper name of each Participating Affiliate. N/A
- -------.
- -------.
- -------.
- -------.
2
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ARTICLE I.
DEFINITIONS
A. "COMPENSATION"
(1) With respect to each Participant, except as provided below,
Compensation shall mean the (select all those applicable for
each column):
401(k) AND/ PROFIT
OR THRIFT SHARING
[ ] [ ] (a) amount reported in the "Wages
Tips and Other Compensation" Box
on Form W-2 for the applicable
period selected in Item 5 below.
[X] [X] (b) compensation for Code Section
415 safe-harbor purposes (as
defined in Section 3.9.1(H)(i)
of basic plan document #03) for
the applicable period selected
in Item 5 below.
[ ] [ ] (c) amount reported pursuant to Code
Section 3401(a) for the
applicable period selected in
Item 5 below.
[ ] [ ] (d) all amounts received (under
either option (a) or (b) above)
for personal services rendered
to the Employer but excluding
(select all those applicable):
[ ] overtime
[ ] bonuses
[ ] commissions
[ ] amounts in excess of $____.
[ ] other (specify): _____.
(2) Treatment of Elective Contributions (select one):
[X] (a) For purposes of contributions, Compensation
shall include Elective Deferrals and amounts
excludable from the gross income of the
Employee under Code Section 125, Code
Section 402(e)(3), Code Section 402(h) or
Code Section 403(b) ("elective
contributions").
[ ] (b) For purposes of contributions, Compensation
shall not include "elective contributions."
3
<PAGE> 4
(3) CODA Compensation (select one):
[X] (a) For purposes of the ADP and ACP Tests,
Compensation shall include "elective
contributions."
[ ] (b) For purposes of the ADP and ACP Tests,
Compensation shall not include "elective
contributions."
(4) With respect to Contributions to an Employer Contributions
Account, Compensation shall include all Compensation (select
one):
[ ] (a) during the Plan Year in which the
Participant enters the Plan.
[X] (b) after the Participant's Entry Date.
(5) The applicable period for determining Compensation shall be
(select one):
[X] (a) the Plan year.
[ ] (b) the Limitation Year.
[ ] (c) the consecutive 12-month period ending on ____.
B. "DISABILITY"
(1) Definition
Disability shall mean a condition which results in the
Participant's (select one):
[ ] (a) 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.
[ ] (b) total and permanent inability to meet the
requirements of the Participant's customary
employment which can be expected to last for
a continuous period of not less than 12
months.
[ ] (c) qualification for Social Security disability
benefits.
[X] (d) qualification for benefits under the
Employer's long-term disability plan.
(2) Contributions Due to Disability (select one):
[X] (a) No contributions to an Employer
Contributions Account will be made on behalf
of a Participant due to his or her
Disability.
4
<PAGE> 5
[ ] (b) Contributions to an Employer Contributions
Account will be made on behalf of a
Participant due to his or her Disability
provided that: the Employer elected option
(a) or (c) above as the definition of
Disability, contributions are not made on
behalf of a Highly Compensated Employee, the
contribution is based on the Compensation
each such Participant would have received
for the Limitation Year if the Participant
had been paid at the rate of Compensation
paid immediately before his or her
Disability, and contributions made on behalf
of such Participant will be nonforfeitable
when made.
C. "EARLY RETIREMENT" is (select one):
[X] (1) not permitted.
[ ] (2) permitted if a Participant terminates Employment
before Normal Retirement Age and has (select one):
[ ] (a) attained age ____.
[ ] (b) attained age ____ and completed
____ Years of Service.
[ ] (c) attained age ____ and completed
____ Years of Service as a
Participant.
D. "ELIGIBLE EMPLOYEES" (select one):
[X] (1) All Employees are eligible to participate in the
Plan.
[ ] (2) The following Employees are not eligible to
participate in the Plan (select all those
applicable):
[ ] (a) Employees included in a unit of
Employees covered by a collective
bargaining agreement between the
Employer or a Participating
Affiliate and the Employee
representatives (not including any
organization more than half of whose
members are Employees who are
owners, officers, or executives of
the Employer or Participating
Affiliate) in the negotiation of
which retirement benefits were the
subject of good faith bargaining,
unless the bargaining agreement
provides for participation in the
Plan.
[ ] (b) non-resident aliens who received no
earned income from the Employer or a
Participating Affiliate which
constitutes income from sources
within the United States.
5
<PAGE> 6
[ ] (c) Employees of an Affiliate.
[ ] (d) Employees employed in or by the
following specified division,
plant, location, job category
or other identifiable individual
or group of Employees: ____.
E. "ENTRY DATE"
Entry Date shall mean (select as applicable):
401(k) AND/ PROFIT
OR THRIFT SHARING
[ ] [ ] (1) If the initial Plan Year is less
than twelve months, the _____
day of _________ and thereafter:
[ ] [ ] (2) the first day of the Plan Year
following the date the Employee
meets the eligibility
requirements. If the Employer
elects this option (2)
establishing only one Entry
Date, the eligibility "age and
service" requirements elected in
Article II must be no more than
age 20 1/2 and 6 months of
service.
[ ] [ ] (3) the first day of the month
following the date the Employee
meets the eligibility
requirements.
[X] [X] (4) the first day of the Plan Year
and the first day of the seventh
month of the Plan Year following
the date the Employee meets the
eligibility requirements.
[ ] [ ] (5) the first day of the Plan Year,
the first day of the fourth
month of the Plan Year, the
first day of the seventh month
of the Plan Year, and the first
day of the tenth month of the
Plan Year following the date the
Employee meets the eligibility
requirements.
[ ] [ ] (6) other: _____
provided that the Entry Date or
Dates selected are no later than
any of the options above.
F. "HOURS OF SERVICE"
Hours of Service for the purpose of determining a Participant's Period
of Severance and Year of Service shall be determined on the basis of the method
specified below:
(1) Eligibility Service: For purposes of determining whether a
Participant has satisfied the eligibility requirements, the
following method shall be used (select one):
6
<PAGE> 7
401(k) AND/ PROFIT
OR THRIFT SHARING
[ ] [ ] (a) elapsed time method
[X] [X] (b) hourly records method
(2) Vesting Service: A Participant's nonforfeitable interest shall
be determined on the basis of the method specified below
(select one):
[ ] (a) elapsed time method
[X] (b) hourly records method
[ ] (c) If this item (c) is checked, the Plan only
provides for contributions that are always
100% vested and this item (2) will not
apply.
(3) Hourly Records: For the purpose of determining Hours of
Service under the hourly record method
(select one):
[X] (a) only actual hours for which an Employee is
paid or entitled to payment shall be
counted.
[ ] (b) an Employee shall be credited with 45 Hours
of Service if such Employee would be
credited with at least 1 Hour of Service
during the week.
G. "INTEGRATION LEVEL"
[ ] (1) This Plan is not integrated with Social Security.
[X] (2) This Plan is integrated with Social Security. The
Integration Level shall be (select one):
[X] (a) the Taxable Wage Base.
[ ] (b) $______ (a dollar amount less than the
Taxable Wage Base).
[ ] (c) ____% of the Taxable Wage Base (not to
exceed 100%).
[ ] (d) the greater of $10,000 or 20% of the Taxable
Wage Base.
H. "LIMITATION COMPENSATION"
For purposes of Code Section 415, Limitation Compensation shall be
compensation as determined for purposes of (select one):
[X] (1) Code Section 415 Safe-Harbor as defined in Section
3.9.1(H)(i) of basic plan document #03.
7
<PAGE> 8
[ ] (2) the "Wages, Tips and Other Compensation" Box on Form
W-2.
[ ] (3) Code Section 3401(a) Federal Income tax Withholding.
I. "LIMITATION YEAR"
For purposes of Code Section 415, the Limitation Year shall be (select
one):
[X] (1) the Plan Year.
(2) the twelve consecutive month period ending on the
[ ] _____ day of the month of _______.
J. "NET PROFITS" are (select one):
[X] (1) not necessary for any contribution.
[ ] (2) necessary for (select all those applicable):
[ ] (a) Profit-Sharing Contributions.
[ ] (b) Matching 401(k) Contributions.
[ ] (c) Matching Thrift Contributions.
K. "NORMAL RETIREMENT AGE"
Normal Retirement Age shall be (select one):
[ ] (1) attainment of age ____ (not more than 65) by the
Participant.
[X] (2) attainment of age 65 (not more than 65) by the
Participant or the 5th anniversary (not more than the
5th) of the first day of the Plan Year in which the
Eligible Employee became a Participant, whichever is
later.
[ ] (3) attainment of age ____ (not more than 65) by the
Participant or the ____ anniversary (not more than
the 5th) of the first day on which the Eligible
Employee performed an Hour of Service, whichever is
later.
L. "PARTICIPANT DIRECTED ASSETS" are:
401(k) AND/ PROFIT
OR THRIFT SHARING
[X] [X] (1) permitted
[ ] [ ] (2) not permitted.
8
<PAGE> 9
M. "PLAN YEAR"
The Plan Year shall end on the last day of December.
N. "PREDECESSOR SERVICE"
Predecessor service will be credited (select one):
[X] (1) only as required by the Plan.
[ ] (2) to include, in addition to the Plan requirements and
subject to the limitations set forth below, service
with the following predecessor employer(s) determined
as if such predecessors were the Employer: _______.
Service with such predecessor employer applies
[select either or both (a) and/or (b); (c) is only
available in addition to (a) and/or (b)]:
[ ] (a) for purposes of eligibility to participate;
[ ] (b) for purposes of vesting;
[ ] (c) except for the following service: _____
O. "VALUATION DATE"
Valuation Date shall mean (select one for each column, as applicable):
401(k) AND/ PROFIT
OR THRIFT SHARING
[ ] [ ] (1) the last business day of each
month.
[ ] [ ] (2) the last business day of each
quarter within the Plan Year.
[ ] [ ] (3) the last business day of each
semi-annual period within the
Plan Year.
[X] [X] (4) the last business day of the
Plan Year.
[ ] [ ] (5) other: _____.
9
<PAGE> 10
ARTICLE II.
PARTICIPATION
PARTICIPATION REQUIREMENTS
An Eligible Employee must meet the following requirements to become a
Participant (select one or more for each column, as applicable):
401(k) AND/ PROFIT
OR THRIFT SHARING
[ ] [ ] (1) Performance of one Hour of
Service.
[ ] [ ] (2) Attainment of age ____ (maximum
20 1/2) and completion of _____
(not more than 1/2) Years of
Service. If this item is
selected, no Hours oF Service
shall be counted.
[X] [X] (3) Attainment of age 21 (maximum
21) and completion of one
Year(s) of Service. If more than
one Year of Service is selected,
the immediate 100% vesting
schedule must be selected in
Article VII of this Adoption
Agreement.
[ ] [ ] (4) Attainment of age _____ (maximum
21) and completion of ____ Years
of Service. If more than one
Year of Service is selected, the
immediate 100% vesting schedule
must be selected in Article VII
of this Adoption Agreement.
[ ] [ ] (5) Each Employee who is an Eligible
Employee on ____ will be deemed
to have satisfied the
participation requirements on
the effective date without
regard to such Eligible
Employee's actual age and/or
service.
ARTICLE III.
401(K) CONTRIBUTIONS AND ACCOUNT ALLOCATION
A. ELECTIVE
If selected below, a Participant's Elective Deferrals will be (select
all applicable):
[X] (1) a dollar amount or a percentage of Compensation, as
specified by the Participant on his or her 401(k)
Election form, which may not exceed 15% of his or her
Compensation.
[X] (2) with respect to bonuses, such dollar amount or
percentage as specified by the Participant on his or
her 401(k) Election form with respect to such bonus.
10
<PAGE> 11
B. MATCHING 401(k) CONTRIBUTIONS
If selected below, the Employer may make Matching 401(k) Contributions
for each Plan Year (select one):
[ ] (1) Discretionary Formula:
Discretionary Matching 401(k) Contribution equal to such a
dollar amount or percentage of Elective Deferrals, as
determined by the Employer, which shall be allocated (select
one):
[ ] (a) based on the ratio of each Participant's
Elective Deferral for the Plan Year to the
total Elective Deferrals of all Participants
for the Plan Year. If inserted, Matching
401(k) Contributions shall be subject to a
maximum amount of $_____ for each
Participant or ____% of each Participant's
Compensation.
[ ] (b) in an amount not to exceed ____% of each
Participant's first ____% of Compensation
contributed as Elective Deferrals for the
Plan Year. If any Matching 401(k)
Contribution remains, it is allocated to
each such Participant in an amount not to
exceed ____% of the next ____% of each
Participant's Compensation contributed as
Elective Deferrals for the Plan Year.
Any remaining Matching 401(k) Contribution shall be allocated
to each such Participant in the ratio that such Participant's
Elective Deferral for the Plan Year bears to the total
Elective Deferrals of all such Participants for the Plan Year.
If inserted, Matching 401(k) Contributions shall be subject to
a maximum amount of $______ for each Participant or ___% of
each Participant's Compensation.
[X] (2) Nondiscretionary Formula:
A nondiscretionary Matching 401(k) Contribution for each Plan
Year equal to (select one):
[ ] (a) ___% of each Participant's Compensation
contributed as Elective Deferrals. If
inserted, Matching 401(k) Contributions
shall be subject to a maximum amount of
$______ for each Participant or _____% of
each Participant's Compensation.
[X] (b) 50% of the first 5% of the Participant's
Compensation contributed as Elective
Deferrals and 0% of the next 11% of the
Participant's Compensation contributed as
Elective Deferrals. If inserted, Matching
401(k) Contributions shall be subject to a
maximum amount of $_____ for each
Participant or _____% of each Participant's
Compensation.
11
<PAGE> 12
C. PARTICIPANTS ELIGIBLE FOR MATCHING 401(k) CONTRIBUTION ALLOCATION
The following Participants shall be eligible for an allocation to their
Matching 401(k) Contributions Account (select all those applicable):
[X] (1) Any Participant who makes Elective Deferrals.
[ ] (2) Any Participant who satisfies those requirements
elected by the Employer for an allocation to his or
her Employer Contributions Account as provided in
Article IV Section C.
[ ] (3) Solely with respect to a Plan in which Matching
401(k) Contributions are made quarterly (or on any
other regular interval that is more frequent than
annually) any Participant whose 401(k) Election is in
effect throughout such entire quarter (or other
interval).
D. QUALIFIED MATCHING CONTRIBUTIONS
If selected below, the Employer may make Qualified Matching
Contributions for each Plan Year (select all those applicable):
(1) In its discretion, the Employer may make Qualified Matching
Contributions on behalf of (select one):
[X] (a) all Participants who make Elective Deferrals
in that Plan Year.
[ ] (b) only those Participants who are Nonhighly
Compensated Employees and who makes Elective
Deferrals for that Plan Year.
(2) Qualified Matching Contributions will be contributed and
allocated to each Participant in an amount equal to (select
one):
[ ] (a) _____% of the Participant's Compensation
contributed as Elective Deferrals. If
inserted, Qualified Matching Contributions
shall not exceed ___% of the Participant's
Compensation.
[ ] (b) Such an amount, determined by the Employer,
which is needed to meet the ACP Test.
(3) In its discretion, the Employer may elect to designate all or
any part of Matching 401(k) Contributions as Qualified
Matching Contributions that are taken into account as Elective
Deferrals - included in the ADP Test and excluded from the ACP
Test - on behalf of (select one):
[ ] (a) all Participants who make Elective Deferrals
for that Plan Year.
[X] (b) Only Participants who are Nonhighly
Compensated Employees who make Elective
Deferrals for that Plan Year.
12
<PAGE> 13
E. QUALIFIED NONELECTIVE CONTRIBUTIONS
If selected below, the Employer may make Qualified Nonelective
Contributions for each Plan Year (select all those applicable):
(1) In its discretion, the Employer may make Qualified Nonelective
Contributions on behalf of (select one):
[ ] (a) all Eligible Participants.
[X] (b) only Eligible Participants who are Nonhighly
Compensated Employees.
(2) Qualified Nonelective Contributions will be contributed and
allocated to each Eligible Participant in an amount equal to
(select one):
[ ] (a) _____% (no more than 15%) of the
Compensation of each Eligible Participant
eligible to share in the allocation.
[ ] (b) Such an amount determined by the Employer,
which is needed to meet either the ADP Test
or ACP Test.
(3) At the discretion of the Employer, as needed and taken into
account as Elective Deferrals included in the ADP Test on
behalf of (select one):
[ ] (a) all Eligible Participants.
[X} (b) only those Eligible Participants who are
Nonhighly Compensated Employees.
F. ELECTIVE DEFERRALS USED IN ACP TEST (select one):
[X] (1) At the discretion of the Employer, Elective Deferrals
may be used to satisfy the ACP Test.
[ ] (2) Elective Deferrals may not be used to satisfy the ACP
Test.
G. MAKING AND MODIFYING A 401(k) ELECTION
An Eligible Employee shall be entitled to increase, decrease or resume
his or her Elective Deferral percentage with the following frequency during the
Plan Year (select one):
[ ] (1) annually.
[ ] (2) semi-annually.
[X] (3) quarterly.
[ ] (4) monthly.
[ ] (5) other (specify): ______.
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<PAGE> 14
Any such increase, decrease or resumption shall be effective as of the first
payroll period coincident with or next following the first day of each period
set forth above. A Participant may completely discontinue making Elective
Deferrals at any time effective for the payroll period after written notice is
provided to the Administrator.
ARTICLE IV.
PROFIT-SHARING CONTRIBUTIONS AND ACCOUNT ALLOCATION
A. PROFIT-SHARING CONTRIBUTIONS
If selected below, the following contributions for each Plan Year will
be made: Contributions to Employer Contributions Accounts (select one):
[X] (a) Such an amount, if any, as determined by the
Employer.
[ ] (b) _____% of each Participant's Compensation.
B. ALLOCATION OF CONTRIBUTIONS TO EMPLOYER CONTRIBUTIONS ACCOUNTS (select
one):
[ ] (1) Non-Integrated Allocation
The Employer Contributions Account of each Participant
eligible to share in the allocation for a Plan Year shall be
credited with a portion of the contribution, plus any
forfeitures if forfeitures are reallocated to Participants,
equal to the ratio that the Participant's Compensation for the
Plan Year bears to the Compensation for that Plan Year of all
Participants entitled to share in the contribution.
[X] (2) Integrated Allocation
Contributions to Employer Contributions Accounts with respect
to a Plan Year, plus any forfeitures if forfeitures are
reallocated to Participants, shall be allocated to the
Employer Contributions Account of each eligible Participant as
follows:
(a) First, in the ratio that each such eligible
Participant's Compensation for the Plan Year
bears to the Compensation for that Plan Year
of all eligible Participants but not in
excess of 3% of each Participant's
Compensation.
(b) Second, any remaining contributions and
forfeitures will be allocated in the ratio
that each eligible Participant's
Compensation for the Plan Year in excess of
the Integration Level bears to all such
Participants' excess Compensation for the
Plan Year but not in excess of 3%.
(c) Third, any remaining contributions and
forfeitures will be allocated in the ratio
that the sum of each Participant's
Compensation and
14
<PAGE> 15
Compensation in excess of the Integration
Level bears to the sum of all Participants'
Compensation and Compensation in excess of
the Integration Level, but not in excess of
the Maximum Profit-Sharing Disparity Rate
(defined below).
(d) Fourth, any remaining contributions or
forfeitures will be allocated in the ratio
that each Participant's Compensation for
that year bears to all Participants'
Compensation for that year.
The Maximum Profit-Sharing Disparity Rate is equal to
the lesser of:
(a) 2.7% or
(b) The applicable percentage determined in
accordance with the following table:
<TABLE>
<CAPTION>
IF THE INTEGRATION LEVEL IS
(AS A % OF THE TAXABLE WAGE
BASE ("TWB")). THE APPLICABLE PERCENTAGE IS:
<S> <C>
20% (or $10,000 if greater(
or less of the TWB 2.7%
More than 20% (but not less than
$10,001) but not
more than 80% of the TWB 1.3%
More than 80% but not less
than 100% of the TWB 2.4%
100% of the TWB 2.7%
</TABLE>
C. PARTICIPANTS ELIGIBLE FOR EMPLOYER CONTRIBUTION ALLOCATION
The following Participants shall be eligible for an allocation to their
Employer Contributions Account (select all those applicable):
[ ] (1) Any Participant who was employed during the Plan
Year.
[ ] (2) In the case of a Plan using the hourly record method
for determining Vesting Service, any Participant who
was credited with a Year of Service during the Plan
Year.
[ ] (3) Any Participant who was employed on the last day of
the Plan Year.
[ ] (4) Any Participant who was on a leave of absence on the
last day of the Plan Year.
15
<PAGE> 16
[ ] (5) Any Participant who during the Plan Year died or
became Disabled while an Employee or terminated
employment after attaining Normal Retirement Age.
[ ] (6) Any Participant who was credited with at least 501
Hours of Service whether or not employed on the last
day of the Plan Year.
[X] (7) Any Participant who was credited with at least 1,000
Hours of Service and was employed on the last day of
the Plan Year.
ARTICLE V.
THRIFT CONTRIBUTIONS
A. EMPLOYEE THRIFT CONTRIBUTIONS N/A
If selected below, Employee Thrift Contributions, which are required
for Matching Thrift Contributions, may be made by a Participant in an amount
equal to (select one):
[ ] (1) A dollar amount or a percentage of the Participant's
Compensation which may not be less than ____% nor may
not exceed ____% of his or her Compensation.
[ ] (2) An amount not less than ____% of and not more than
____% of each Participant's Compensation.
B. MAKING AND MODIFYING AN EMPLOYEE THRIFT CONTRIBUTION ELECTION N/A
A Participant shall be entitled to increase, decrease or resume his or
her Employee Thrift Contribution percentage with the following frequency during
the Plan Year (select one):
[ ] (1) annually
[ ] (2) semi-annually
[ ] (3) quarterly.
[ ] (4) monthly.
[ ] (5) other (specify): _____
Any such increase, decrease or resumption shall be effective as of the first
payroll period coincident with or next following the first day of each period
set forth above. A Participant may completely discontinue making Employee Thrift
Contributions at any time effective for the payroll period after written notice
is provided to the Administrator.
16
<PAGE> 17
C. THRIFT MATCHING CONTRIBUTIONS N/A
If selected below, the Employer will make Matching Thrift Contributions
for each Plan year (select one):
[ ] (1) Discretionary Formula:
A discretionary Matching Thrift Contribution equal to such a
dollar amount or percentage as determined by the Employer,
which shall be allocated (select one):
[ ] (a) based on the ratio of each Participant's
Employee Thrift Contribution for the Plan
Year to the total Employee Thrift
Contributions of all Participants for the
Plan Year. If inserted, Matching Thrift
Contributions shall be subject to a maximum
amount of $_____ for each Participant or
____% of each Participant's Compensation.
[ ] (b) in an amount not to exceed ____% of each
Participant's first ___% of Compensation
contributed as Employee Thrift Contributions
for the Plan Year. If any Matching Thrift
Contribution remains, it is allocated to
each such Participant in an amount not to
exceed ____% of the next ____% of each
Participant's Compensation contributed as
Employee Thrift Contributions for the Plan
Year.
Any remaining Matching Thrift Contribution shall be allocated
to each such Participant in the ratio that such Participant's
Employee Thrift Contributions for the Plan Year bears to the
total Employee Thrift Contributions of all such Participants
for the Plan Year. If inserted, Matching Thrift Contributions
shall be subject to a maximum amount of $______ for each
Participant or ____% of each Participant's Compensation.
[ ] (2) Nondiscretionary Formula:
A nondiscretionary Matching Thrift Contribution for each Plan
Year equal to (select one):
[ ] (a) ____% of each Participant's Compensation
contributed as Employee Thrift
Contributions. If inserted, Matching Thrift
Contributions shall be subject to a maximum
amount of $______ for each Participant or
____% of each Participant's Compensation.
[ ] (b) ____% of the first _____% of the
Participant's Compensation contributed as
Employee Thrift Contributions and ____% of
the next ____% of the Participant's
Compensation contributed as Employee Thrift
Contributions. If inserted, Matching Thrift
Contributions shall be subject to a maximum
amount of $_____ for each Participant or
____% of each Participant's Compensation.
17
<PAGE> 18
D. QUALIFIED MATCHING CONTRIBUTIONS N/A
If selected below, the Employer may make Qualified Matching
Contributions for each Plan Year (select all those applicable):
[ ] (1) In its discretion, the Employer may make Qualified
Matching Contributions on behalf of (select one):
[ ] (a) all Participants who make Employee Thrift
Contributions.
[ ] (b) only those Participants who are Nonhighly
Compensated Employees and who make Employee
Thrift Contributions.
[ ] (2) Qualified Matching Contributions will be contributed
and allocated to each Participant in an amount equal
to:
[ ] (a) ____% of the Participant's Employee Thrift
Contributions. If inserted, Qualified
Matching Contributions shall not exceed
____% of the Participant's Compensation.
[ ] (b) such an amount, determined by the Employer,
which is needed to meet the ACP Test.
ARTICLE VI.
PARTICIPANT CONTRIBUTIONS
PARTICIPANT VOLUNTARY NONDEDUCTIBLE CONTRIBUTIONS
Participant Voluntary Nondeductible Contributions are (select one):
[ ] (a) permitted.
[X] (b) not permitted.
ARTICLE VII.
VESTING
A. EMPLOYER CONTRIBUTION ACCOUNTS
(1) A Participant shall have a vested percentage in his or her
Profit-Sharing Contributions, Matching 401(k) Contributions
and/or Matching Thrift Contributions, if applicable, in
accordance with the following schedule (Select one):
18
<PAGE> 19
<TABLE>
<CAPTION>
MATCHING 401(k)
AND/OR MATCHING
THRIFT PROFIT-SHARING
CONTRIBUTIONS CONTRIBUTIONS
------------- -------------
<S> <C> <C>
[ ] [ ] (a) 100% vesting immediately upon participation.
[ ] [ ] (b) 100% after ____ (not more than 5) years of Vesting Service.
[X] [X] (c) Graded vesting schedule:
0% 0% after 1 year of Vesting Service;
25% 25% after 2 years of Vesting Service;
</TABLE>
<TABLE>
<CAPTION>
MATCHING 401(k)
AND/OR MATCHING
THRIFT PROFIT-SHARING
CONTRIBUTIONS CONTRIBUTIONS
------------- -------------
<S> <C> <C>
50% 50% (not less than 20%) after 3 years of Vesting Service;
75% 75% (not less than 40%) after 4 years of Vesting Service;
100% 100% (not less than 60%) after 5 years of Vesting Service;
___% ___% (not less than 80%) after 6 years of Vesting Service;
100% after 7 years of Vesting Service.
</TABLE>
(2) Top Heavy Plan
<TABLE>
<CAPTION>
MATCHING 401(k)
AND/OR MATCHING
THRIFT PROFIT-SHARING
CONTRIBUTIONS CONTRIBUTIONS
------------- -------------
<S> <C> <C>
Vesting Schedule (Select one):
[ ] [ ] (a) 100% vesting immediately upon participation.
[ ] [ ] (b) 100% after ____ (not more than 3) years of Vesting Service.
[X] [X] (c) Graded vesting schedule:
0% 0% after 1 year of Vesting Service;
25% 25% (not less than 20%) after 2 years of Vesting Service;
50% 50% (not less than 40%) after 3 years of Vesting Service;
75% 75% (not less than 60%) after 4 years of Vesting Service;
100% 100% (not less than 80%) after 5 years of Vesting Service;
</TABLE>
19
<PAGE> 20
Top Heavy Ratio:
(a) If the adopting Employer maintains or has ever maintained a
qualified defined benefit plan, for purposes of establishing
present value to compute the top-heavy ratio, any benefit
shall be discounted only for mortality and interest based on
the following:
Interest Rate: 8%
Mortality Table: UP `84
(b) For purposes of computing the top-heavy ratio, the valuation
date shall be the last business day of each Plan Year.
B. ALLOCATION OF FORFEITURES
Forfeitures shall be (select one from each applicable column):
MATCHING 401(k)
AND/OR MATCHING
THRIFT PROFIT-SHARING
CONTRIBUTIONS CONTRIBUTIONS
[X] [ ] (1) used to reduce Employer
contributions for succeeding
Plan Year.
[ ] [X] (2) allocated in the succeeding
Plan Year in the ratio which
the Compensation of each
Participant for the Plan Year
bears to the total
Compensation of all
Participants entitled to
share in the Contributions.
If the Plan is integrated
with Social Security,
forfeitures shall be
allocated in accordance with
the formula elected by the
Employer.
C. VESTING SERVICE
For purposes of determining Years of Service for Vesting Service
[select (1) or (2) and/or (3)]:
[X] (1) All Years of Service shall be included.
[ ] (2) Years of Service before the Participant attained age
18 shall be excluded.
[ ] (3) Service with the Employer prior to the effective date
of the Plan shall be excluded.
20
<PAGE> 21
ARTICLE VIII.
DEFERRAL OF BENEFIT DISTRIBUTIONS,
IN-SERVICE WITHDRAWALS AND LOANS
A. DEFERRAL OF BENEFIT DISTRIBUTIONS
401(k) AND/ PROFIT
OR THRIFT SHARING
[ ] [ ] If this item is checked, a Participant's
vested benefit in his or her Employer
Accounts shall be payable as soon as
practicable after the earlier of: (1)
the date the Participant terminates
Employment due to Disability or (2) the
end of the Plan Year in which a
terminated Participant attains Early
Retirement Age, if applicable, or Normal
Retirement Age.
B. IN-SERVICE DISTRIBUTIONS
[X] (1) In-service distributions may be made from any of the
Participant's vested Accounts, at any time upon or
after the occurrence of the following events (select
all applicable):
[X] (a) a Participant's attainment of age 59 1/2.
[X] (b) due to hardships as defined in Section 5.9
of the Plan.
[ ] (2) In-service distributions are not permitted.
C. LOANS ARE:
401(k) AND/ PROFIT
OR THRIFT SHARING
[X] [X] (1) permitted.
[ ] [ ] (2) not permitted.
ARTICLE IX.
GROUP TRUST
[ ] If this item is checked, the Employer elects to establish a Group Trust
consisting of such Plan assets as shall from time to time be
transferred to the Trustee pursuant to Article X of the Plan. The Trust
Fund shall be a Group Trust consisting of assets of this Plan plus
assets of the following plans of the Employer or of an Affiliate:
_______.
21
<PAGE> 22
ARTICLE X.
MISCELLANEOUS
[INTENTIONALLY REMOVED]
22
<PAGE> 23
The attached Supplement, dated January 29, 1998, is a part of the Plan.
EMPLOYER'S SIGNATURE
Name of Employer: Gadzooks, Inc. [X]
--------------------------------------------
By: /s/ Monty R. Standifer [X]
------------------------------------------------------
Authorized Signature
Monty R. Standifer [X]
------------------------------------------------------
Print Name
Sr. Vice President and Chief Financial Officer [X]
------------------------------------------------------
Title
DATED: January 29 , 19 98 [X]
------------------------------------------- ---------
TO BE COMPLETED BY MERRILL LYNCH:
SPONSOR ACCEPTANCE:
Subject to the terms and conditions of the Prototype Plan and this Adoption
Agreement, this Adoption Agreement is accepted by Merrill Lynch, Pierce, Fenner
& Smith Incorporated as the Prototype Sponsor.
Authorized Signature:
-----------------------------------------------------------
23
<PAGE> 24
TRUSTEE(S) SIGNATURE
This Trustee Acceptance is to be completed only if the Employer appoints one or
more Trustees and does not appoint a Merrill Lynch Trust Company as Trustee.
The undersigned hereby accept all of the terms, conditions, and obligations of
appointment as Trustee under the Plan. If the Employer has elected a Group Trust
in this Adoption Agreement, the undersigned Trustee(s) shall be the Trustee(s)
of the Group Trust.
AS TRUSTEE:
[X]
- ----------------------------------- -----------------------------------
(Signature) (print or type name)
[X]
- ----------------------------------- -----------------------------------
(Signature) (print or type name)
[X]
- ----------------------------------- -----------------------------------
(Signature) (print or type name)
[X]
- ----------------------------------- -----------------------------------
(Signature) (print or type name)
DATED: , 19______ [X]
-----------------------------------
24
<PAGE> 25
THE MERRILL LYNCH TRUST COMPANIES AS TRUSTEE
This Trustee Acceptance and designation of Investment Committee are to be
completed only when a Merrill Lynch Trust Company is appointed as Trustee.
TO BE COMPLETED BY THE EMPLOYER:
DESIGNATION OF INVESTMENT COMMITTEE*
The Investment Committee for the Plan is (print or type names):
Name: Jerry Szczepanski
---------------------------------------------------------------------------
Name: Monty Standifer
---------------------------------------------------------------------------
Name: Steve Puterbaugh
---------------------------------------------------------------------------
Name:
---------------------------------------------------------------------------
TO BE COMPLETED BY MERRILL LYNCH TRUST COMPANY:
ACCEPTANCE BY TRUSTEE:
The undersigned hereby accept all of the terms, conditions, and obligations of
appointment as Trustee under the Plan. If the Employer has elected a Group Trust
in this Adoption Agreement, the undersigned Trustee(s) shall be the Trustee(s)
of the Group Trust.
SEAL MERRILL LYNCH TRUST COMPANY [_______________]
By:
---------------------------------
DATED , 19
--------- --
- -------------------------
* The Investment Committee is the Administrative Committee. See the Supplement.
25
<PAGE> 26
THE MERRILL LYNCH TRUST COMPANIES AS TRUSTEE
This Trustee Acceptance is to be completed only if, in addition to a Merrill
Lynch Trust Companies as Trustee, the Employer appoints an additional Trustee of
a second trust fund.
The undersigned hereby accepts all of the terms, conditions, and obligations of
appointment as Trustee under the Plan. If the Employer has elected a Group Trust
in this Adoption Agreement, the undersigned Trustee(s) shall be the Trustee(s)
of the Group Trust.
AS TRUSTEE
- -------------------------------------- ---------------------------------------
(Signature) print or type name)
DATED: , 19
------------ -----
SEAL MERRILL LYNCH TRUST COMPANY [______________]
By:
DATED: , 19
------------ -----
DESIGNATION OF ADMINISTRATIVE COMMITTEE
The Administrative Committee for the Plan is (print or type names):
Name: Jerry Szczepanski
---------------------------------------------------------------------------
Name: Monty Standifer
---------------------------------------------------------------------------
Name: Steve Puterbaugh
---------------------------------------------------------------------------
Name:
---------------------------------------------------------------------------
26
<PAGE> 27
SUPPLEMENT TO THE
GADZOOKS, INC. SAVINGS PLAN
(AS AMENDED AND RESTATED EFFECTIVE APRIL 1, 1998) (THE "PLAN")
The Employer is hereby amending and restating the Plan, effective April
1, 1998, as an individually-designed plan, rather than a prototype plan under
the sponsorship of Merrill Lynch, Pierce, Fenner & Smith, Inc. The documents
comprising the Plan, as so amended and restated, consist of the Merrill Lynch
Special Prototype Defined Contribution Plan Adoption Agreement as filled out and
executed by the Employer ("Adoption Agreement"), the Merrill Lynch Special
Prototype Defined Contribution Plan Basic Plan Document #03 ("Basic Plan
Document") and the provisions of this Supplement. This Supplement modifies and
overrides the Adoption Agreement and the Basic Plan Document.
1. Article IX of the Basic Plan Document is hereby modified by
the addition of the following new section:
9.4 Appointment of Administrative Committee.
Notwithstanding the foregoing provisions of this
Article IX, the Employer may, while retaining its status as
plan administrator of the Plan under ERISA, appoint a
committee to administer the Plan and carry out all of the
functions and duties of the Administrator under the Plan (the
"Administrative Committee" or the "Committee"). The Committee
shall also act as the Investment Committee under the Plan. The
rules set forth in Section 9.1.2 of the Basic Plan Document
shall govern actions by the Committee. The members of the
Committee shall be deemed fiduciaries for purposes of ERISA
and shall be indemnified as described in Section 8.4 of the
Basic Plan Document.
2. Section 10.5.1 of the Basic Plan Document is hereby modified
by the addition of the following new paragraph at the end thereof:
A Participant shall not be permitted to direct that more than
50% of any contributions to any Account in the Plan be
initially invested in Qualifying Employer Securities.
3. The Basic Plan Document and the Adoption Agreement are hereby
modified to eliminate the functions and duties of the Sponsor and the mass
submitter, to the extent such functions and duties are to be performed by the
Sponsor or mass submitter in those capacities. The Employer shall assume all
such functions and duties that properly belong to the employer-sponsor of an
individually-designed qualified profit sharing plan under the Code and ERISA.
The Plan shall be construed and interpreted in a manner consistent with its
status as an individually-designed single employer plan of the Employer.
<PAGE> 28
GADZOOKS, INC.
By: /s/ Monty R. Standifer
------------------------------
Title: Sr. Vice President and CFO
------------------------------
January 29, 1998
--------------------
Date
2
<PAGE> 29
----------------------------
MERRILL LYNCH
SPECIAL
PROTOTYPE
DEFINED CONTRIBUTION PLAN
----------------------------
Base Plan Document #03 used in conjunction with:
Non-standardized Profit Sharing Plan with CODA
Letter Serial Number: D359287b
National Office Letter Date: 6/29/93
Non-standardized Money Purchase Pension Plan
Letter Serial Number: D359288b
National Office Letter Date: 6/29/93
Non-standardized Profit Sharing Plan
Letter Serial Number: D359289b
National Office Letter Date: 6/29/93
THIS PROTOTYPE PLAN AND ADOPTION AGREEMENT ARE IMPORTANT LEGAL INSTRUMENTS WITH
LEGAL AND TAX IMPLICATIONS FOR WHICH THE SPONSOR, MERRILL LYNCH, PIERCE, FENNER
& SMITH, INCORPORATED, DOES NOT ASSUME RESPONSIBILITY. THE EMPLOYER IS URGED TO
CONSULT WITH ITS OWN ATTORNEY WITH REGARD TO THE ADOPTION OF THIS PLAN AND ITS
SUITABILITY TO ITS CIRCUMSTANCES.
<PAGE> 30
<TABLE>
<CAPTION>
INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY
------------------------ --------------------------
<S> <C>
PLAN DESCRIPTION: PROTOTYPE NON-STANDARDIZED PROFIT SHARING PLAN WITH CODA WASHINGTON, DC 20224
FFN: 50339816103-004 CASE: 9201920 EIN: 13-5674085
BPD: 03 PLAN: 004 LETTER SERIAL NO.: D359287B PERSON TO CONTACT: MR. WOLF
TELEPHONE NUMBER: (202) 622-8380
REFER REPLY TO: E:EP:Q:1
MERRILL LYNCH PIERCE FENNER & SMITH INC. DATE: 06/29/93
P.O. BOX 9038
PRINCETON, NJ 08543
</TABLE>
Dear Applicant:
In our opinion, the amendment to the form of the plan identified above does not
in and of itself adversely effect the plan's acceptability under section 401 of
the Internal Revenue Code. This opinion relates only to the amendment to the
form of the plan. It is not an opinion as to the acceptability of any other
amendment or of the form of the plan as a whole, or as to the effect of other
Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
An employer who adopts the amended form of the plan after the date of the
amendment should apply for a determination letter by filing an application with
the Key District Director of Internal Revenue on Form 5307, Short Form
Application for Determination for Employee Benefit Plan.
This letter with respect to the amendment to the form of the plan does not
affect the applicability to the plan of the continued, interim and extended
reliance provisions of sections 13 and 17.03 of Rev. Proc. 89-9, 1989-1 C.B.
780. The applicability of such provisions may be determined by reference to the
initial opinion letter issued with respect to the plan.
If you, the sponsoring organization, have any questions concerning the IRS
processing of this case, please call the above telephone number. This number is
only for use of the sponsoring organization. Individual participants and/or
adopting employers with questions concerning the plan should contact the
sponsoring organization. The plan's adoption agreement must include the
sponsoring organization's address and telephone number for inquiries by adopting
employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial Number
and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of the plan.
Sincerely yours,
/s/ John Sevrien
Chief, Employee Plans Qualifications
Branch
<PAGE> 31
<TABLE>
<CAPTION
INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY
------------------------ --------------------------
<S> <C>
PLAN DESCRIPTION: PROTOTYPE NON-STANDARDIZED MONEY PURCHASE PENSION PLAN WASHINGTON, DC 20224
FFN: 50339816103-003 CASE: 9201919 EIN: 13-5674085
BPD: 03 PLAN: 003 LETTER SERIAL NO.: D359288B PERSON TO CONTACT: MR. WOLF
TELEPHONE NUMBER: (202) 622-8380
REFER REPLY TO: E:EP:Q:1
MERRILL LYNCH PIERCE FENNER & SMITH INC. DATE: 06/29/93
P.O. BOX 9038
PRINCETON, NJ 08543
</TABLE>
Dear Applicant:
In our opinion, the amendment to the form of the plan identified above does not
in and of itself adversely effect the plan's acceptability under section 401 of
the Internal Revenue Code. This opinion relates only to the amendment to the
form of the plan. It is not an opinion as to the acceptability of any other
amendment or of the form of the plan as a whole, or as to the effect of other
Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
An employer who adopts the amended form of the plan after the date of the
amendment should apply for a determination letter by filing an application with
the Key District Director of Internal Revenue on Form 5307, Short Form
Application for Determination for Employee Benefit Plan.
This letter with respect to the amendment to the form of the plan does not
affect the applicability to the plan of the continued, interim and extended
reliance provisions of sections 13 and 17.03 of Rev. Proc. 89-9, 1989-1 C.B.
780. The applicability of such provisions may be determined by reference to the
initial opinion letter issued with respect to the plan.
If you, the sponsoring organization, have any questions concerning the IRS
processing of this case, please call the above telephone number. This number is
only for use of the sponsoring organization. Individual participants and/or
adopting employers with questions concerning the plan should contact the
sponsoring organization. The plan's adoption agreement must include the
sponsoring organization's address and telephone number for inquiries by adopting
employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial Number
and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of the plan.
Sincerely yours,
/s/ John Sevrien
Chief, Employee Plans Qualifications
Branch
<PAGE> 32
<TABLE>
<CAPTION>
INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY
------------------------ --------------------------
<S> <C>
PLAN DESCRIPTION: PROTOTYPE NON-STANDARDIZED PROFIT SHARING PLAN WASHINGTON, DC 20224
FFN: 50339816103-002 CASE: 9201918 EIN: 13-5674085
BPD: 03 PLAN: 002 LETTER SERIAL NO.: D359289B PERSON TO CONTACT: MR. WOLF
TELEPHONE NUMBER: (202) 622-8380
REFER REPLY TO: E:EP:Q:1
MERRILL LYNCH PIERCE FENNER & SMITH INC. DATE: 06/29/93
P.O. BOX 9038
PRINCETON, NJ 08543
</TABLE>
Dear Applicant:
In our opinion, the amendment to the form of the plan identified above does not
in and of itself adversely effect the plan's acceptability under section 401 of
the Internal Revenue Code. This opinion relates only to the amendment to the
form of the plan. It is not an opinion as to the acceptability of any other
amendment or of the form of the plan as a whole, or as to the effect of other
Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
An employer who adopts the amended form of the plan after the date of the
amendment should apply for a determination letter by filing an application with
the Key District Director of Internal Revenue on Form 5307, Short Form
Application for Determination for Employee Benefit Plan.
This letter with respect to the amendment to the form of the plan does not
affect the applicability to the plan of the continued, interim and extended
reliance provisions of sections 13 and 17.03 of Rev. Proc. 89-9, 1989-1 C.B.
780. The applicability of such provisions may be determined by reference to the
initial opinion letter issued with respect to the plan.
If you, the sponsoring organization, have any questions concerning the IRS
processing of this case, please call the above telephone number. This number is
only for use of the sponsoring organization. Individual participants and/or
adopting employers with questions concerning the plan should contact the
sponsoring organization. The plan's adoption agreement must include the
sponsoring organization's address and telephone number for inquiries by adopting
employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial Number
and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of the plan.
Sincerely yours,
/s/ John Sevrien
Chief, Employee Plans Qualifications
Branch
<PAGE> 33
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE PAGE
---- ----
<S> <C> <C> <C>
ARTICLE I. DEFINITIONS..............................1 1.50 Hour of Service.............................7
1.1 Account......................................1 1.51 Immediately Distributable...................7
1.2 Account Balance..............................1 1.52 Investment Manager..........................7
1.3 ACP Test.....................................1 1.53 Key Employee................................7
1.4 Actual Deferral Percentage...................1 1.54 Leased Employee.............................8
1.5 Adjustment Factor............................1 1.55 Limitation Year.............................8
1.6 Administrator................................1 1.56 Master or Prototype Plan....................8
1.7 Adoption Agreement...........................1 1.57 Matching 401(k) Contribution................8
1.8 ADP Test.....................................1 1.58 Matching 401(k) Contributions Account.......8
1.9 Affiliate....................................1 1.59 Matching Thrift Contributions...............8
1.10 Annuity Contract............................1 1.60 Matching Thrift Contributions Account.......8
1.11 Average Actual Deferral Percentage..........1 1.61 Net Profits.................................8
1.12 Average Contribution Percentage.............1 1.62 Nonhighly Compensated Employee..............8
1.13 Beneficiary.................................2 1.63 Nonvested Separation........................8
1.14 Benefit Commencement Date...................2 1.64 Normal Retirement Age.......................8
1.15 CODA........................................2 1.65 Owner-Employee..............................8
1.16 CODA Compensation...........................2 1.66 Partially Vested Separation.................8
1.17 Code........................................2 1.67 Participant.................................9
1.18 Compensation................................2 1.68 Participant Contributions Account...........9
1.19 Contribution Percentage.....................3 1.69 Participant-Directed Assets.................9
1.20 Contribution Percentage Amounts.............3 1.70 Participant Voluntary Nondeductible
1.21 Defined Benefit Plan........................3 Contributions..........................9
1.22 Defined Contribution Plan...................3 1.71 Participant Voluntary Nondeductible
1.23 Disability..................................3 Contributions Account..................9
1.24 Early Retirement............................3 1.72 Participating Affiliate.....................9
1.25 Early Retirement Date.......................3 1.73 Period of Severance.........................9
1.26 Earned Income...............................3 1.74 Plan.......................................10
1.27 Elective Deferrals..........................4 1.75 Plan Year..................................10
1.28 Elective Deferrals Account..................4 1.76 Prototype Plan.............................10
1.29 Eligible Employee...........................4 1.77 Qualified Joint and Survivor Annuity.......10
1.30 Eligible Participant........................4 1.78 Qualified Matching Contributions...........10
1.31 Employee....................................4 1.79 Qualified Matching Contributions Account...10
1.32 Employee Thrift Contributions...............5 1.80 Qualified Nonelective Contributions........10
1.33 Employee Thrift Contributions Account.......5 1.81 Qualified Nonelective Contributions
1.34 Employer....................................5 Account...............................10
1.35 Employer Account............................5 1.82 Qualified Plan.............................10
1.36 Employer Contributions......................5 1.83 Qualifying Employer Securities.............10
1.37 Employer Contribution Account...............5 1.84 Rollover Contribution......................10
1.38 Employment..................................5 1.85 Rollover Contributions Account.............10
1.39 Entry Date..................................5 1.86 Self-Employed Individual...................10
1.40 ERISA.......................................5 1.87 Social Security Retirement Age.............11
1.41 Excess Aggregate Contributions..............5 1.88 Sponsor....................................11
1.42 Excess Contributions........................5 1.89 Spouse.....................................11
1.43 Excess Elective Deferrals...................5 1.90 Surviving Spouse...........................11
1.44 Family Member...............................6 1.91 Taxable Wage Base..........................11
1.45 401(k) Contributions Accounts...............6 1.92 Transferred Account........................11
1.46 401(k) Election.............................6 1.93 Trust......................................11
1.47 Fully Vested Separation.....................6 1.94 Trust Fund.................................11
1.48 Group Test..................................6 1.95 Trustee....................................11
1.49 Highly Compensated Employee.................6 1.96 Valuation Date.............................11
</TABLE>
i
<PAGE> 34
<TABLE>
<CAPTION>
PAGE PAGE
---- ----
<S> <C> <C> <C>
1.97 Vesting Service............................11 6.3 Change in Form of Benefit Payments..........45
1.98 Years of Service...........................11 6.4 Direct Rollovers............................45
ARTICLE II. PARTICIPATION..........................12 ARTICLE VII. DEATH BENEFITS........................46
2.1 Admission as a Participant..................12 7.1 Payment of Account Balances.................46
2.2 Rollover Membership and Trust to Trust 7.2 Beneficiaries...............................46
Transfer.............................12 7.3 Life Insurance..............................49
2.3 Crediting of Service for Eligibility ARTICLE VIII. FIDUCIARIES..........................50
Purposes.............................12 8.1 Named Fiduciaries...........................50
2.4 Termination of Participation................13 8.2 Employment of Advisors......................50
2.5 Limitation for Owner-Employee...............13 8.3 Multiple Fiduciary Capacities...............51
2.6 Corrections with Regard to Participation....13 8.4 Indemnification.............................51
2.7 Provision of Information....................14 8.5 Payment of Expense..........................51
ARTICLE III. CONTRIBUTIONS AND ACCOUNT ARTICLE IX. PLAN ADMINISTRATION....................51
ALLOCATIONS..............................14 9.1 The Administrator...........................51
3.1 Employer Contributions and Allocations......14 9.2 Powers and Duties of the Administrator......51
3.2 Participant Voluntary Nondeductible 9.3 Delegation of Responsibility................52
Contributions........................14 ARTICLE X. TRUSTEE AND INVESTMENT COMMITTEE........52
3.3 Rollover Contributions and Trust to Trust 10.1 Appointment of Trustee and Investment
Transfers............................15 Committee............................52
3.4 Section 401(k) Contributions and Account 10.2 The Trust Fund.............................52
Allocations..........................15 10.3 Relationship with Administrator............53
3.5 Matching 401(k) Contributions...............19 10.4 Investment of Assets.......................53
3.6 Thrift Contributions........................22 10.5 Investment Direction, Participant-Directed
Treatment of Forfeitures........................23 Assets and Qualifying Employer
3.8 Establishing of Accounts....................23 Investments..........................54
3.9 Limitations on Amount of Allocations........23 10.6 Valuation of Accounts......................56
3.10 Return of Employer Contributions Under 10.7 Insurance Contracts........................56
Special Circumstances................29 10.8 The Investment Manager.....................56
ARTICLE IV. VESTING................................30 10.9 Powers of Trustee..........................57
4.1 Determination of Vesting....................30 10.10 Accounting and Records....................59
4.2 Rules for Crediting Vesting Service.........30 10.11 Judicial Settlement of Accounts...........59
4.3 Employer Accounts Forfeitures...............30 10.12 Resignation and Removal of Trustee........59
4.4 Top-Heavy Provisions........................31 10.13 Group Trust...............................60
ARTICLE V. AMOUNT AND DISTRIBUTION OF BENEFITS ARTICLE XI. PLAN AMENDMENT OR TERMINATION..........60
WITHDRAWALS AND LOANS....................34 11.1 Prototype Plan Amendment...................60
5.1 Distribution Upon Termination of 11.2 Plan Amendment.............................60
Employment...........................34 11.3 Right of the Employer to Terminate Plan....61
5.2 Amount of Benefits Upon a Fully Vested 11.4 Effect of Partial or Complete Termination
Separation...........................34 or Complete Discontinuance of
5.3 Amount of Benefits Upon a Partially Vested Contributions........................61
Separation...........................34 11.5 Bankruptcy.................................62
5.4 Amount of Benefits upon Nonvested ARTICLE XII. MISCELLANEOUS PROVISIONS..............62
Separation...........................34 12.1 Exclusive Benefit of Participants..........62
5.5 Amount of Benefits Upon a Separation Due Plan Not a Contract of Employment...............62
to Disability........................34 12.3 Action by Employer.........................63
5.6 Distribution and Restoration................34 12.4 Source of Benefits.........................63
5.7 Withdrawals During Employment...............35 12.5 Benefits Not Assignable....................63
5.8 Loans.......................................35 12.6 Domestic Relations Orders..................63
5.9 Hardship Distributions......................37 12.7 Claims Procedure...........................63
5.10 Limitation on Commencement of Benefits.....37 12.8 Records and Documents; Errors..............63
5.11 Distribution Requirements..................38 12.9 Benefits to Minors, Incompetents and
ARTICLE VI. FORMS OF PAYMENT OF RETIREMENT Others...............................63
BENEFITS.................................42 12.10 Plan Merger or Transfer of Assets.........64
6.1 Methods of Distribution.....................42 12.11 Participating Affiliates..................64
6.2 Election of Optional Forms..................44 12.12 Controlling Law...........................64
12.13 Singular and Plural and Article and
Section References...................64
</TABLE>
ii
<PAGE> 35
ARTICLE I.
DEFINITIONS
As used in this Prototype Plan and in each Adoption Agreement, each of the
following terms shall have the meaning for that term set forth in this Article
I:
1.1 Account: A separate Elective Deferrals Account, Employee Thrift
Contribution Account, Employer Contributions Account, Matching 401(k)
Contributions Account, Matching Thrift Contributions Account, Participant
Voluntary Nondeductible Contributions Account, Qualified Matching Contributions
Account, Qualified Nonelective Contributions account, Rollover Contribution
Account, and Transferred Account, as the case may be.
1.2 Account Balance: The value of an Account determined as of the
applicable Valuation Date.
1.3 ACP Test: The Contribution Percentage test that is set forth in
Section 3.5.2 of the Plan.
1.4 Actual Deferral Percentage: The ratio (expressed as a percentage), of
(A) Elective Deferrals made on behalf of an Eligible Participant for the Plan
Year (including Excess Elective Deferrals of Highly Compensated Employees and,
at the election of the Employer, Qualified Nonelective Contributions and/or
Qualified Matching Contributions), but excluding (1) Excess Elective Deferrals
of Nonhighly Compensated Employees that arise solely from Elective Deferrals
made under the Plan or plans of the Employer or an Affiliate and (2) Elective
Deferrals that are taken into account in the ACP Test (provided the ADP Test is
satisfied with or without the exclusion of such Elective Deferrals) to (B) the
Participant's CODA Compensation for the Plan Year (whether or not the Eligible
Employee was a Participant for the entire Plan Year). The Actual Deferral
Percentage of an Eligible Participant who would be a Participant but for the
failure to make an Elective Deferral is zero.
1.5 Adjustment Factor: The cost of living adjustment factor prescribed by
the Secretary of the Treasury under Code Section 415(d) for years beginning
after December 31, 1987, as applied to such items and in such manner as the
Secretary shall provide.
1.6 Administrator: The Employer, unless otherwise specified by duly
authorized action by the Employer.
1.7 Adoption Agreement: The document so designated with respect to this
Prototype Plan that is executed by the Employer, as amended from time to time.
1.8 ADP Test: The Average Actual Deferral Percentage test set forth in
Section 3.4.2(B) of the Plan.
1.9 Affiliate: Any corporation or unincorporated trade or business (other
than the Employer) while it is:
(A) a member of a "controlled group of corporations" (within the
meaning of Code Section 414(b)) of which the Employer is a member;
(B) a member of any trade or business under "common control" (within
the meaning of Code Section 414(c)) with the Employer;
(C) a member of an "affiliated service group" (as that term is defined
in Code Section 414(m)) which includes the Employer; or
(D) any other entity required to be aggregated with the Employer
pursuant to Code Section 414(o). With respect to Section 3.9,
"Affiliate" status shall be determined in accordance with Code
Section 415(h).
1.10 Annuity Contract: An individual or group annuity contract issued by
an insurance company providing periodic benefits, whether fixed, variable or
both, the benefits or value of which a Participant or Beneficiary cannot
transfer, sell, assign, discount, or pledge as collateral for a loan or a
security for the performance of an obligation, or for any other purpose, to any
person other than the issuer thereof. The terms of any annuity contract
purchased and distributed by the Plan to a Participant or Spouse shall comply
with the requirements of this Plan.
1.11 Average Actual Deferral Percentage: For any group of Eligible
Participants, the average (expressed as a percentage) of the Actual Deferral
Percentage for each of the Eligible Participants in that group, including those
not making Elective Deferrals.
<PAGE> 36
1.12 Average Contribution Percentage: For any group of Eligible
Participants, the average (expressed as a percentage) of the Contribution
Percentages for each of the Participants in that group, including those on
whose behalf Matching 401(k) Contributions and/or Matching Thrift
Contributions, if applicable, are not being made.
1.13 Beneficiary: A person or persons entitled to receive any payment of
benefits pursuant to Article VII.
1.14 Benefit Commencement Date: The first day, determined pursuant to
Article V, for which a Participant or Beneficiary receives or begins to receive
payment in any form of distribution as a result of death, Disability,
termination of Employment, Early Retirement, Plan termination or upon or after
Normal Retirement Age or age 70 1/2.
1.15 CODA: A cash or deferred arrangement pursuant to Code Section 401(k)
which is part of a profit sharing plan and under which an Eligible Participant
may elect to make Elective Deferrals in accordance with Section 3.4.1.
1.16 CODA Compensation: Solely for purposes of determining the Actual
Deferral Percentage and the Contribution Percentage, CODA Compensation shall be
Compensation excluding or including "elective contributions" as specified in
the Adoption Agreement. The preceding sentence shall be effective for Plan
Years beginning on or after January 1, 1989.
1.17 Code: The Internal Revenue Code of 1986, as now in effect or as
amended from time to time. A reference to a specific provision of the Code
shall include such provision and any applicable regulation pertaining thereto.
1.18 Compensation: For purposes of contributions, Compensation shall be
defined in the Adoption Agreement and Section 3.9.1(H), subject to any
exclusions elected under Section I.A(d) of the Adoption Agreement, Section
3.1.4 and the following modifications:
(A) For a Self-Employed Individual, Compensation means his or her
Earned Income, provided that if the Self- Employed Individual is
not a Participant for an entire Plan Year, his or her Compensation
for that Plan Year multiplied by a fraction the numerator of which
is the number of days he or she is a Participant during the Plan
Year and the denominator of which is the number of days in the
Plan Year.
(B) Compensation of each Participant taken into account under this
Plan for any Plan Year beginning after December 21, 1988 shall be
limited to the first $200,000 as adjusted by the Adjustment
Factor. In determining the Compensation of a Participant for
purposes of this limitation, the rule of Code Section 414(q)(6)
shall apply, except in applying such rules, the term "family"
shall include only the Spouse of the Participant and any lineal
descendants of the Participant who have not attained the age of 19
before the close of the year.
If as a result of the application of such rules, the adjusted
$200,000 limitation is exceeded, (except for purposes of
determining the portion of Compensation up to the Integration
Level if this Plan is integrated with Social Security), the
limitation shall be prorated among the affected Participants in
proportion to each such Participant's Compensation as determined
under this Section 1.18 prior to the application of this
limitation. In a manner applied uniformly to all Eligible
Employees, only Compensation during the period in which the
Employee is an Eligible Employee may be taken into account for
purposes of the nondiscrimination tests described in Code Section
401(k) and 401(m).
(C) If Compensation for any prior Plan Year is taken into account in
determining an Employee's contributions or benefits for the
current year, the Compensation for such prior year is subject to
the applicable annual compensation limit in effect for that prior
year. For this purpose, for years beginning before January 1,
1990, the applicable annual compensation limit is $200,000.
(D) In addition to other applicable limitations set forth in the Plan,
and notwithstanding any other provision of the Plan to the
contrary, for Plan Years beginning on or after January 1, 1994,
the annual Compensation of each Employee taken into account under
the Plan shall not
2
<PAGE> 37
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 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 limitations under Section 401(a)(17) of the Code shall mean the
OBRA '93 annual compensation limit set forth in this provision.
If Compensation for any prior determination period is taken into account in
determining an Employee's benefits accruing in the current Plan Year, the
Compensation for that prior determination period is subject to the OBRA '93
annual compensation limit in effect for that prior determination period. For
this purpose, for prior determination periods beginning before the first day of
the first Plan Year beginning on or after January 1, 1994, the OBRA '93
Compensation limit is $150,000.
1.19 Contribution Percentage: The ratio (expressed as a percentage) of the
Participant's Contribution Percentage Amounts to the Participant's CODA
Compensation for the Plan Year, whether or not the Eligible Employee was a
Participant for the entire Plan Year.
1.20 Contribution Percentage Amounts: shall mean the sum of the: (A)
Matching 401(k) Contributions; (B) Matching Thrift Contributions; (C) Qualified
Matching Contributions (to the extent not taken into account for purposes of
the ADP Test); (D) Employee Thrift Contributions; and (E) Participant Voluntary
Nondeductible Contributions, as applicable, made on behalf of the Participant
for the Plan Year. Such Contribution Percentage Amounts shall not include
Matching 401(k) Contributions that are forfeited either to correct Excess
Aggregate Contributions or because the contributions to which they relate are
Excess Elective Deferrals, Excess Contributions or Excess Aggregate
Contributions. The Employer may include Qualified Nonelective Contributions in
the Contribution Percentage. Amounts, as specified in the Adoption Agreement.
Elective Deferrals may also be used in the Contribution Percentage Amounts so
long as the ADP Test is met before the Elective Deferrals are used in the ACP
Test and continues to be met following the exclusion of those Elective
Deferrals that are used to meet the ACP Test, as specified in the Adoption
Agreement. An Eligible Participant who does not direct an Elective Deferral or
an Employee Thrift Contribution shall be treated as an Eligible Participant on
behalf of whom no such contributions are made.
1.21 Defined Benefit Plan: A plan of the type defined in Code Section
414(j) maintained by the Employer or Affiliate, as applicable.
1.22 Defined Contribution Plan: A plan of the type defined in Code Section
414(i) maintained by the Employer or Affiliate, as applicable.
1.23 Disability: Disability as defined in the Adoption Agreement. The
permanence and degree of such impairment shall be supported by medical
evidence.
1.24 Early Retirement: An actively employed Participant is eligible for
Early Retirement upon satisfying the requirements set forth in the Adoption
Agreement.
1.25 Early Retirement Date: The Participant's Benefit Commencement Date
following his or her termination of Employment on or after satisfying the
requirements for Early Retirement and prior to Normal Retirement Age.
1.26 Earned Income: The "net earnings from self-employment" within the
meaning of Code Section 401(c)(2) of a Self- Employed Individual from the trade
or business with respect to which the Plan is established, but only if the
personal services of the Self-Employed Individual are a material
income-producing factor in that trade or business. Net earnings will be
determined without regard to items not included in gross income and the
deductions properly allocable to or chargeable against such items and are to be
reduced by contributions by the Employer or Affiliate to a
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Qualified Plan to the extent deductible under Code Section 404. Where this
Plan refers to Earned Income in the context of a trade or business other than
that with respect to which the Plan is adopted, the term Earned Income means
such net earnings as would be Earned Income as defined above if that trade or
business was the trade or business with respect to which the Plan is adopted.
Net earnings shall be determined with regard to the deduction allowed to the
Employer by Code Section 164(f) for taxable years beginning after December 31,
1989.
1.27 Elective Deferrals: Contributions made to the Plan during the Plan
Year by the Employer, at the election of the Participant, in lieu of cash
compensation and shall include contributions that are made pursuant to a 401(k)
Election.
A Participant's Elective Deferral in any taxable year is the sum of all Employer
and Affiliate contributions pursuant to an election to defer under any qualified
cash or deferred arrangement, any simplified employee pension plan or deferred
arrangement as described in Code Section 402(h)(1)(B), any eligible deferred
compensation plan under Code Section 457, any plan as described under Code
Section 501(c)(18), and any Employer contributions made on behalf of a
Participant for the purchase of an annuity under Code Section 403(b) pursuant to
a salary reduction agreement. Such contributions are nonforfeitable when made
and are not distributable under the terms of the Plan to Participants or their
Beneficiaries earlier than the earlier of:
(A) termination from Employment, death or Disability of the
Participant;
(B) termination of the Plan without establishment of another Defined
Contribution Plan by the Employer or an Affiliate;
(C) disposition by the Employer or Affiliate to an unrelated
corporation of substantially all of its assets used in a trade or
business if such unrelated corporation continues to maintain this
Plan after the disposition but only with respect to Employees who
continue employment with the acquiring unrelated entity. The sale
of 85% of the assets used in a trade or business will be deemed a
sale of "substantially all" the assets used in a trade or
business;
(D) sale by the Employer or Affiliate to an unrelated entity of its
interest in an Affiliate if such unrelated entity continues to
maintain the Plan but only with respect to Employees who continue
employment with such unrelated entity; or
(E) the events specified in Part B, Article VIII of the Adoption
Agreement.
Elective Deferrals shall not include any deferrals properly distributed as an
"Excess Amount" pursuant to Section 3.9.2.
1.28 Elective Deferrals Account: The Account established for a Participant
pursuant to Section 3.8.1.
1.29 Eligible Employee: Those Employees specified in the Adoption
Agreement.
1.30 Eligible Participant: An Eligible Employee who has met the
eligibility requirements set forth in the Adoption Agreement whether or not he
or she makes Elective Deferrals and/or Employee Thrift Contributions.
1.31 Employee: A Self-Employed Individual, or any individual who is
employed by the Employer in the trade or business with respect to which the
Plan is adopted and any individual who is employed by an Affiliate. Each
Leased Employee shall also be treated as an Employee of the recipient Employer.
The preceding sentence shall not apply, however, to any Leased Employee who is
(A) covered by a money purchase pension plan maintained by the "leasing
organization" referred to in Section 1.54 which provides, with respect to such
Leased Employee, a nonintegrated Employer contribution rate of at least 10% of
Limitation Compensation, but including amounts contributed pursuant to a salary
reduction agreement which are excluded from the Employee's gross income under
Code Section 402(a)(8), Code Section 402(h) or Code Section 403(b), immediate
participation, and full and immediate vesting and (B) such Leased Employees do
not constitute more than 20% of the Employer's and Affiliate's nonhighly
compensated workforce. For purposes of the Plan, all Employees will be treated
as employed by a single employer.
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1.32 Employee Thrift Contributions: Employee nondeductible contributions
which are required to be eligible for a Matching Thrift Contribution. Employee
Thrift Contributions do not include Participant Voluntary Nondeductible
Contributions.
1.33 Employee Thrift Contributions Account: The Account established for a
Participant pursuant to Section 3.8.3.
1.34 Employer: The sole proprietorship, partnership or corporation that
adopts the Plan by executing the Adoption Agreement. For all purposes relating
to eligibility, participation, contributions, vesting and allocations, Employer
includes all Participating Affiliates.
1.35 Employer Account: The Participant's Matching 401(k) Contributions
Account, Matching Thrift Contributions Account, Employer Contributions Account,
Qualified Matching Contributions Account and Qualified Nonelective
Contributions Account, as the case may be.
1.36 Employer Contributions: Any contributions made by the Employer for
the Plan Year on behalf of a Participant in accordance with Section 3.1 of the
Plan.
1.37 Employer Contribution Account: The Account established for a
Participant pursuant to Section 3.8.2.
1.38 Employment: An Employee's employment or self-employment with the
Employer, Affiliate or a "leasing organization" referred to in Section 1.54 or,
to the extent required under Code Section 414(a)(2) or as otherwise specified
by the Administrator on a uniform and nondiscriminatory basis, any predecessor
of any of them. If any of them maintains a plan of a "predecessor employer"
(within the meaning of Code Section 414(a)(1)) employment or self- employment
with the "predecessor employer" will be treated as Employment. Additionally,
if the trade or business conducted by a Self-Employed Individual becomes
incorporated, all employment with that trade or business or with any Affiliate
shall be treated as Employment with the Employer.
1.39 Entry Date: The date on which an Eligible Employee becomes a
Participant, as specified in the Adoption Agreement.
1.40 ERISA: The Employee Retirement Income Security Act of 1974, as
amended from time to time. Reference to a specific provision of ERISA shall
include such provision and any applicable regulation pertaining thereto.
1.41 Excess Aggregate Contributions: With respect to any Plan Year, the
excess of: (A) The aggregate Contribution Percentage Amounts, taken into
account in computing the numerator of the Contribution Percentage actually made
on behalf of Highly Compensated Employees for such Plan year, over (B) The
maximum Contribution Percentage Amounts permitted by the ACP Test (determined
by reducing contributions made on behalf of Highly Compensated Employees in the
order of their Contribution Percentages beginning with the highest of such
percentages). Such determination shall be made after first determining Excess
Elective Deferrals and then determining Excess Contributions.
1.42 Excess Contributions: With respect to any Plan Year, the aggregate
amount of Elective Deferrals, Qualified Nonelective Contributions and Qualified
Matching Contributions, if applicable, actually paid over to the Trust Fund on
behalf of Highly Compensated Employees for such Plan Year, over the maximum
amount of such contributions permitted by the ADP Test (determined by reducing
contributions made on behalf of Highly Compensated Employees in order of the
Actual Deferral Percentages, beginning with the highest of such percentages).
1.43 Excess Elective Deferrals: The amount of Elective Deferrals for a
Participant's taxable year that are includible in the gross income of the
Participant to the extent that such Elective Deferrals exceed the Code Section
402(g) dollar limitation and which the Participant allocates to this Plan
pursuant to the procedure set forth in Section 3.4.2. Excess Elective
Deferrals shall be treated as an Annual Addition pursuant to Section 3.9,
unless such amounts are distributed no later than the first April 15th
following the close of the Participant's taxable year.
1.44 Family Member: An individual described in Code Section 414(q)(6)(B).
1.45 401(k) Contributions Accounts: The Participant's Elective Deferral
Account, Qualified Nonelective Contributions Account, and/or Qualified Matching
Contributions Account, as the case may be.
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<PAGE> 40
1.46 401(k) Election: The election by a Participant to make Elective
Deferrals in accordance with Section 3.4.1.
1.47 Fully Vested Separation: Termination of Employment, by reason other
than death, of a Participant whose vested percentage in each Employer Account
is 100%.
1.48 Group Test: A Trust Fund consisting of assets of any Plan maintained
and established by the Employer or an Affiliate pursuant to Section 10.14.
1.49 Highly Compensated Employee: The term Highly Compensated Employee
includes highly compensated active Employees and highly compensated former
employees.
(A) A highly compensated active Employee includes any Employee who
performs service for the Employer or Affiliate during the Plan
Year and who, during the look-back year (the twelve-month period
immediately preceding the Plan Year):
(i) received Compensation from the Employer or Affiliate in
excess of $75,000 (as adjusted by the Adjustment Factor);
(ii) received Compensation from the Employer or Affiliate in
excess of $50,000 (as adjusted by the Adjustment Factor)
and was a member of the top-paid group for such year; or
(iii) was an officer of the Employer or Affiliate and received
Compensation during such year that is greater than 50% of
the Defined Benefit Dollar Limitation.
(B) The term Highly Compensated Employees also includes:
(i) Employees who are both described in the preceding sentence
if the term "Plan Year" is substituted for the term
"look-back year" and the Employee is one of the 100
Employees who received the most Compensation from the
Employer or Affiliate during the Plan Year; and
(ii) Employees who are 5% owners at anytime during the
look-back year or Plan Year.
(C) If no officer has received Compensation that is greater than 50%
of the Defined Benefit Dollar Limitation in effect during either
the Plan Year or look-back year, the highest paid officer of such
year shall be treated as a Highly Compensated Employee.
(D) A highly compensated former employee includes any Employee who
terminated Employment (or was deemed to have terminated) prior to
the Plan Year, performs no service for the Employer or Affiliate
during the Plan Year, and was a highly compensated active employee
for either the separation year or any Plan Year ending on or after
the Employee's 55th birthday.
(E) If an Employee is, during a Plan Year or look-back year, a Family
Member of either (i) a 5% owner who is an active or former
Employee or (ii) a Highly Compensated Employee who is one of the
ten most highly compensated employees ranked on the basis of
Compensation paid by the Employer or Affiliate during such year,
then the Family Member and the 5% owner or top-ten Highly
Compensated Employee shall be aggregated. In such case, the
Family Member and 5% 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% owner or top-ten Highly Compensated Employee For purposes
of this section, Family Member includes the Spouse, lineal
ascendants and descendants of the Employee or former employee and
the spouses of such lineal ascendants and descendants.
(F) The determination of who is a Highly Compensated Employee,
including the determinations of the number and identity of
Employees in the top-paid group; the top 100 Employees; the number
of Employees treated as officers; and the Compensation that is
considered will be made in accordance with Code Section 414(q).
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<PAGE> 41
1.50 Hour of Service: If the Employer elects in the Adoption Agreement the
hourly record method, an Hour of Service shall include:
(A) Each hour for which an Employee is paid, or entitled to payment,
by the Employer or an Affiliate for the performance of duties for
the Employer or an Affiliate. These hours will be credited to the
Employee for each Plan Year in which the duties are performed, or
with respect to eligibility under Article II, the applicable
computation period under the definition of Year of Service in
which the duties are performed;
(B) Each hour for which an Employee is paid, or entitled to payment,
by the Employer or an Affiliate due to a period of time during
which no duties are performed (irrespective of whether Employment
has terminated) due to vacation, holiday, illness, incapacity
(including Disability), layoff, jury duty, military duty, or leave
of absence. No more than 501 Hours of Service will be credited
under this paragraph for any single continuous period (whether or
not such period occurs in a single computation period). Hours
under this paragraph will be calculated and credited pursuant to
section 2530.200b-2 of the Department of Labor Regulations which
are incorporated herein by this reference; and
(C) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer or an
Affiliate. The same Hours of Service will not be credited both
under subparagraph (A) or subparagraph (B), as the case may be,
and under this subparagraph (C). These hours will be credited to
the Employee for the Year of Service or other computation period
to which the award or agreement pertains rather than the Year of
Service or other computation period in which the award, agreement
or payment is made.
If the Employer elects in the Adoption Agreement the elapsed time method, an
Hour of Service is an hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer or an Affiliate. With
respect to both the hourly record method and the elapsed time method, in
addition to service with an Affiliate, Hours of Service will also be credited
for any individual considered an Employee for purposes of this Plan under Code
Section 414(n).
1.51 Immediately Distributable: A Participant's Account is Immediately
Distributable if any part of such Account could be distributed to the
Participant or Participant's Surviving Spouse before the Participant attains
(or would have attained if not deceased) the later of Normal Retirement Age or
age 62.
1.52 Investment Manager: Any person appointed by the Trustee or, with
respect to Participant-Directed Assets, by the Participant or Beneficiary
having the power to direct the investment of such assets, to serve as such in
accordance with Section 10.8.
1.53 Key Employee: Any Employee or former Employee (and the beneficiaries
of such Employee) who at any time during the "determination period" was (A) an
officer of the Employer or Affiliate, having an annual Compensation greater
than 50% of the Defined Benefit Dollar Limitation for any Plan Year within the
"determination period"; (B) an owner (or considered an owner under Code Section
318) of one of the ten largest interests in the Employer or Affiliate if such
individual's Compensation exceeds 100% of the dollar limitation under Code
Section 415(c)(1)(A); (C) a "5% owner" (as define din Code Section 416(i)) of
the Employer or Affiliate; or (D) a "1% owner" (as defined in Code Section
416(i)) of the Employer or Affiliate who has an annual Compensation of more
than $150,000. Annual Compensation means compensation as defined in Code
Section 415(c)(3), but including amounts contributed by the Employer pursuant
to a salary reduction agreement which are excludable from the Employee's gross
income under Code Section 125, Code Section 402(a)(8), Code Section 402(h) or
Code Section 403(b). The "determination period" is the Plan Year containing
the "determination date" and the four preceding Plan Years. The "determination
date" for the first Plan Year is the last day of that Plan Year, and for any
subsequent Plan Year is the last day of the preceding Plan Year. The
determination of who is a Key Employee will be made in accordance with Code
Section 416(i).
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1.54 Leased Employee: Any individual (other than an Employee of the
recipient Employer or Affiliate) who, pursuant to an agreement between the
Employer or Affiliate and any other person (the "leasing organization") has
performed services for the Employer (or for the Employer or Affiliate 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, which services
are of a type historically performed, in the business field of the recipient
Employer or Affiliate, by employees. Contributions or benefits provided a
Leased Employee by the leasing organization which are attributable to services
performed for the recipient Employer or Affiliate shall be treated as provided
by the recipient Employer.
1.55 Limitation Year: The Limitation Year as specified 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.
1.56 Master or Prototype Plan: A plan the form of which is the subject of
a favorable opinion letter from the Internal Revenue Service.
1.57 Matching 401(k) Contribution: Any contribution made by the Employer
to this and/or any other Defined Contribution Plan for the Plan Year, by reason
of the Participant's 401(k) Election, and allocated to a Participant's Matching
401(k) Contributions Account or to a comparable account in another Defined
Contribution Plan. Matching 401(k) Contributions are subject to the
distribution provisions applicable to Employer Accounts in the Plan.
1.58 Matching 401(k) Contributions Account: The Account established for a
Participant pursuant to Section 3.8.4.
1.59 Matching Thrift Contributions: Any contribution made by the Employer
for the Plan Year by reason of Employee Thrift Contributions. Matching Thrift
Contributions shall be subject to the distribution provisions applicable to
Employer Accounts in the Plan.
1.60 Matching Thrift Contributions Account: The Account established for a
Participant pursuant to Section 3.8.5.
1.61 Net Profits: The current and accumulated profits of the Employer from
the trade or business of the Employer with respect to which the Plan is
established, as determined by the Employer before deductions for federal, state
and local taxes on income and before contributions under the Plan or any other
Qualified Plan.
1.62 Nonhighly Compensated Employee: An Employee of the Employer who is
neither a Highly Compensated Employee nor a Family Member.
1.63 Nonvested Separation: Termination of Employment of a Participant
whose vested percentage in each Employer Account is 0%.
1.64 Normal Retirement Age: The age specified in the Adoption Agreement.
Notwithstanding the Employer's election in the Adoption Agreement, if, for Plan
Years beginning before January 1, 1988, Normal Retirement Age was determined
with reference to the anniversary of the participation commencement date (more
than 5 but not to exceed 10 years), the anniversary date for Participants who
first commenced participation under the Plan before the first Plan Year
beginning on or after January 1, 1988, shall be the earlier of (A) the tenth
anniversary of the date the Participant commenced participation in the Plan (or
such anniversary as had been elected by the Employer, if less than 10) or (B)
the fifth anniversary of the first day of the first Plan Year beginning on or
after January 1, 1988.
1.65 Owner-Employee: An individual who is a sole proprietor, if the
Employer is a sole proprietorship, or if the Employer is a partnership, a
partner owning more than 10% of either the capital interest or the profits
interest in the Employer; provided that where this Plan refers to an
Owner-Employee in the context of a trade or business other than the trade or
business with respect to which the Plan is adopted, the term Owner-Employee
means a person who would be an Owner-Employee as defined above if that other
trade or business was the Employer.
1.66 Partially Vested Separation: Termination of Employment of a
Participant whose vested percentage in any Employer Account is less than 100%
but greater than 0%.
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1.67 Participant: An Employee who has commenced, but not terminated,
participation in the Plan as provided in Article II.
1.68 Participant Contributions Account: The Participant's Participant
Voluntary Nondeductible Contributions Account and/or Employee Thrift
Contributions Account; as the case may be.
1.69 Participant-Directed Assets: The assets of an Account which are
invested, as described in Section 10.5.1, according to the direction of the
Participant or the Participant's Beneficiary, as the case may be, in either
individually selected investments or in commingled funds or in shares of
regulated investment companies.
1.70 Participant Voluntary Nondeductible Contributions: Any voluntary
nondeductible contributions made in cash by a Participant to this Plan other
than Employee Thrift Contributions.
1.71 Participant Voluntary Nondeductible Contributions Account: The
Account established for a Participant pursuant to Section 3.8.6.
1.72 Participating Affiliate: Any Affiliate or any other employer
designated as such by the Employer, and, by duly authorized action, that has
adopted the Plan with the consent of the Employer and has not withdrawn
therefrom.
1.73 Period of Severance: For purposes of the hourly records method, a
Period of Severance is a period equal to the number of consecutive Plan Years
or, with respect to eligibility, the applicable computation period under the
definition of Year of Service, in which an Employee has 500 Hours of Service or
less. The Period of Severance shall be determined on the basis of Hours of
Service and shall commence with the first Plan Year in which the Employee has
500 Hours of Service or less. With respect to any period of absence during
which a Period of Severance does not commence, the Participant shall be
credited with the Hours of Service (up to a maximum of 501 Hours of Service in
a Plan Year) which would otherwise have been credited to him or her but for
such absence, or if such Hours of Service cannot be determined, 8 Hours of
Service for each day of absence.
For purposes of the elapsed time method, a Period of Severance is a continuous
period of at least 12-consecutive months during which an individual's
Employment is not continuing, beginning on the date an Employee retires, quits
or is discharged or, if earlier, the first 12-month anniversary of the date
that the individual is otherwise first absent from service (with or without
pay) for any other reason, and ending on the date the individual again performs
an Hour of Service.
Anything in the definition thereof to the contrary notwithstanding, a Period of
Severance shall not commence if the Participant is:
(A) On an authorized leave of absence in accordance with standard
personnel policies applied in a nondiscriminatory manner to all
Employees similarly situated and returns to active Employment by
the Employer or Affiliate immediately upon the expiration of such
leave of absence;
(B) On a military leave while such Employee's reemployment rights are
protected by law and returns to active Employment within ninety
days after his or her discharge or release (or such longer period
as may be prescribed by law); or
(C) Absent from work by reason of (i) the pregnancy of the Employee,
(ii) the birth of a child of the Employee, or (iii) the placement
of a child with the Employment in connection with the adoption of
such child by such Employee, or (iv) the care of such child for a
period beginning immediately following such birth or placement.
In determining when such a Participant's Period of Severance
begins, the Participant will be credited with (i) for purposes of
the elapsed time method, the 12-consecutive month period beginning
on the first anniversary of the first date of such absence; or
(ii) for purposes of the hourly records method, the Hours of
Service he or she would normally have had but for such absence, or
if such Hours cannot be determined, eight Hours of Service for
each day of such absence; provided, however, that such Hours of
Service shall not exceed 501 and shall be credited only in the
year in which such absence began if such crediting would prevent
the Participant from incurring a Period of Severance in that year,
or in any other case, shall be credited in the immediately
following year.
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1.74 Plan: The plan established by the Employer in the form of this
Prototype Plan and the applicable Adoption Agreement executed by the Employer.
The Plan shall have the name specified in the Adoption Agreement.
1.75 Plan Year: Each 12-consecutive month period ending on the date
specified in the Adoption Agreement, during any part of which the Plan is in
effect.
1.76 Prototype Plan: The Merrill Lynch Special Prototype Defined
Contribution Plan set forth in this document, as amended or restated from time
to time.
1.77 Qualified Joint and Survivor Annuity: An immediate annuity for the
life of Participant with a survivor annuity continuing after the Participant's
death to the Participant's Surviving Spouse for the Surviving Spouse's life in
an amount equal to 50% of the amount of the annuity payable during the joint
lives of the Participant and such Surviving Spouse and which is the actuarial
equivalent of a single life annuity which could be provided for the Participant
under an Annuity Contract purchased with the aggregate vested Account Balances
of the Participant's Accounts at the Benefit Commencement Date.
1.78 Qualified Matching Contributions: Matching Contributions which,
pursuant to the election made by the Employer, and in accordance with Code
Section 401(m), are nonforfeitable when made and subject to the limitation on
distribution set forth in the definition of Qualified Nonelective
Contributions.
1.79 Qualified Matching Contributions Account: The Account established for
a Participant pursuant to Section 3.8.7.
1.80 Qualified Nonelective Contributions: Contributions (other than
Matching 401(k) Contributions, Qualified Matching 401(k) Contributions or
Elective Deferrals), if any, made by the Employer which the Participant may not
elect to receive in cash until distributed from the Plan, which are
nonforfeitable when made, and which are not distributable under the terms of
the Plan to Participants or their Beneficiaries earlier than the earlier of:
(A) termination of Employment, death, or Disability of the
Participant;
(B) attainment of the age 59 1/2 by the Participant;
(C) termination of the Plan without establishment of another Defined
Contribution Plan by the Employer or an Affiliate;
(D) disposition by the Employer or Participating Affiliate to an
unrelated corporation of substantially all of its assets used in a
trade or business if such unrelated corporation continues to
maintain this Plan after the disposition but only with respect to
Employees who continue employment with the acquiring unrelated
entity. The sale of 85% of the assets used in a trade or business
will be deemed a sale of "substantially all" the assets used in a
trade or business;
(E) sale by the Employer to an unrelated entity of its interest in an
Affiliate if such unrelated entity continues to maintain the Plan
but only with respect to Employees who continue employment with
such unrelated entity; and
(F) effective for Plan Years beginning before January 1, 1989, upon
the hardship of the Participant.
1.81 Qualified Nonelective Contributions Account: The Account established
for a Participant pursuant to Section 3.8.7.
1.82 Qualified Plan: A Defined Benefit Plan or Defined Contribution Plan.
1.83 Qualifying Employer Securities: Employer securities, as that term is
defined in ERISA Section 407(d)(5).
1.84 Rollover Contribution: A contribution described in Section 3.3.
1.85 Rollover Contributions Account: The Account established for a
Participant pursuant to Section 3.8.9.
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1.86 Self-Employed Individual: An individual who has Earned Income for the
Plan Year involved from the trade or business for which the Plan is
established, or who would have had such Earned Income but for the fact that the
trade or business with respect to which the Plan is established had no Net
Profits for that Plan Year.
1.87 Social Security Retirement Age: Age 65 in the case of a Participant
attaining age 62 before January 1, 2000 (i.e., born before January 1, 1938),
age 66 for a Participant attaining age 62 after December 31, 1999, and before
January 1, 2017 (i.e., born after December 31, 1937, but before January 1,
1955), and age 67 for a Participant attaining age 62 after December 31, 2016
(i.e., born after December 31, 1954).
1.88 Sponsor: The mass submitter, Merrill Lynch, Pierce, Fenner & Smith
Incorporated and any successor thereto, and any other qualifying sponsoring
organization who sponsors with the consent of the mass submitter, the Prototype
Plan and makes the Prototype Plan available for adoption by Employers.
1.89 Spouse: The person married to a Participant, provided that a former
spouse will be treated as the Spouse to the extent provided under a "qualified
domestic relations order" (or a "domestic relations order" treated as such) as
referred to in Section 12.6.
1.90 Surviving Spouse: The person married to a Participant on the earliest
of:
(A) the date of the Participant's death;
(B) the Participant's Benefit Commencement Date; or
(C) the date on which an Annuity Contract is purchased for the
Participant providing benefits under the Plan;
Anything contained herein to the contrary notwithstanding, a former spouse will
be treated as the Surviving Spouse to the extent provided under a "qualified
domestic relations order" (or a "domestic relations order" treated as such) as
referred to in Section 12.6.
1.91 Taxable Wage Base: The maximum amount of earnings which may be
considered "wages" for the Plan Year involved under Code Section 3121(a)(1).
1.92 Transferred Account: The Account established for a Participant
pursuant to Section 3.8.10.
1.93 Trust: The trust established under the Plan to which Plan
contributions are made and in which Plan assets are held.
1.94 Trust Fund: The assets of the Trust held by or in the name of the
Trustee.
1.95 Trustee: The person appointed as Trustee pursuant to Article X and
any successor Trustee.
1.96 Valuation Date: The last business day of each Plan Year, the date
specified in the Adoption Agreement or determined pursuant to Section 10.6, if
applicable, and each other date as may be determined by the Administrator.
1.97 Vesting Service: The Years of Service credited to a Participant under
Article IV for purposes of determining the Participant's vested percentage in
any Employer Account established for the Participant.
1.98 Years of Service: If the Employer elects the hourly records method in
the Adoption Agreement, an Employee shall be credited with one Year of Service
for each Plan Year in which he or she has 1,000 Hours of Service. Solely for
purposes of eligibility to participate, an Employee shall be credited with a
Year of Service on the last day of the 12- consecutive month period which
begins on the first day on which he or she has an Hour of Service, if he or she
has at least 1,000 Hours of Service in that period.
If an Employee fails to be credited with a Year of Service on such date, he or
she shall be credited with a Year of Service on the last day of each succeeding
12-consecutive month period.
If the Employer elects the elapsed time method in the Adoption Agreement, the
Employee's Years of Service shall be a span of service equal to the sum of:
(A) the period commencing on the date the Employee first performs an
Hour of Service and ending on the date he or she quits, retires,
is discharged, dies, or if earlier, the 12-month anniversary of
the date on which the Employee was otherwise first absent from
service (without or without pay) for any other reason; and
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(B) (i) if the Employee quits, retires, or is discharged, the
period commencing on the date the Employee terminated his
or her Employment and ending on the first date on which he
or she again performs an Hour of Service, if such date is
within 12 months of the date on which he or she last
performed an Hour of Service; or
(ii) if the Employee is absent from work for any other reason
and, within 12 months of the first day of such absence,
the Employee quits, retires or is discharged, the period
commencing on the first day of such absence and ending on
the first day he or she again performs an Hours of Service
if such day is within 12 months of the date his or her
absence began.
With respect to both the elapsed time method and the hourly record method,
service with a predecessor employer, determined in the manner in which the
rules of this Plan would have credited such service had the Participant earned
such service under the terms of this Plan, may be included in Years of Service,
as specified in the Adoption Agreement.
ARTICLE II.
PARTICIPATION
2.1 Admission as a Participant:
2.1.1 An Eligible Employee shall become a Participant on the Entry Date
coincident with or next following the date on which he or she meets the
eligibility requirements specified in the Adoption Agreement; provided, however
that:
(A) an Eligible Employee who has met the eligibility requirements as
of the first day of the Plan Year in which the Plan is adopted as
a new Plan shall become a Participant as of such date;
(B) an Eligible Employee who had met the eligibility requirements of a
plan that is restated and/or amended to become this Plan shall
become a Participant as of the date this Plan is adopted; and
(C) if selected in the Adoption Agreement, an Eligible Employee shall
become a Participant on the effective date of the Plan providing
he or she is an Eligible Employee on such date.
2.1.2 An Employee who did not become a Participant on the Entry Date
coincident with or next following the day on which he or she met the
eligibility requirements because he or she was not then an Eligible Employee
shall become a Participant on the first day on which he or she again becomes an
Eligible Employee unless determined otherwise in accordance with Section 2.3.1
of the Plan.
2.1.3 If the Plan includes a CODA or thrift feature, in addition tot he
participation requirements set forth in Section 2.1.1, an Eligible Employee
shall become a Participant upon filing his or her 401(k) Election or election
to make Employee Thrift Contributions with the Administrator. An election
shall not be required if the Employer has elected to make contributions to an
Employer Account and/or Qualified Nonelective Contributions with respect to all
Eligible Participants.
2.1.4 An individual who has ceased to be a Participant and who again becomes
an Eligible Employee shall become a Participant immediately upon reemployment
as an Eligible Employee unless determined otherwise in accordance with Section
2.3.1 of the Plan.
2.2 Rollover Membership and Trust to Trust Transfer: An Eligible Employee
who makes a Rollover Contribution or a trust to trust transfer shall become a
Participant as of the date of such contribution or transfer even if he or she
had not previously become a Participant. Such an Eligible Employee shall be a
Participant only for the purposes of such Rollover Contribution or transfer and
shall not be eligible to share in contributions made by the Employer until he
or she has become a Participant in accordance with Section 2.1.
2.3 Crediting of Service for Eligibility Purposes:
2.3.1 For purposes of eligibility to participate, an Eligible Employee or
Participant without any vested interest in any Employer Account and without an
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<PAGE> 47
Elective Deferrals Account who terminates Employment shall lose credit for his
or her Years of Service prior to such termination of Employment if his or her
Period of Severance equals or exceeds five years or, if greater, the aggregate
number of Years of Service.
2.3.2 For purposes of eligibility to participate, a Participant who has a
vested interest in any Employer Account and who terminates Employment shall
retain credit for his or her Years of Service prior to such termination of
Employment without regard to the length of his or her Period of Severance. In
the event such Participant returns to Employment, he or she shall participate
immediately.
2.3.3 A former Eligible Employee who was not a Participant who again becomes
an Eligible Employee with no Years of Service to his or her credit shall be
treated as a new Employee.
2.4 Termination of Participation: A Participant shall cease to be a
Participant:
(A) upon his or her death;
(B) upon the payment to him or her of all nonforfeitable benefits
due to him or her under the Plan, whether directly or by the
purchase of an Annuity Contract; or
(C) upon his or her Nonvested Separation.
2.5 Limitation for Owner-Employee:
2.5.1 If the Plan provides contributions or benefits for one or more
Owner-Employees who control the trade or business for which this Plan is
established and who also control as an Owner-Employee or as Owner-Employees one
or more other trades or businesses, this Plan and the plan established for each
such other trade or business must, when looked at as a single plan, satisfy the
requirements of Code Sections 401(a) and (d) with respect to the employees of
this and all of such other trades or businesses.
2.5.2 If the Plan provides contributions or benefits for one or more
Owner-Employees who control as an Owner-Employee or as Owner-Employees one or
more other trades or businesses, the employees of the other trades or
businesses must be included in a plan who satisfies the requirements of Code
Sections 401(a) and (d) and which provides contributions and benefits for the
employees of such other trades or businesses not less favorable than the
contributions and benefits provided for Owner-Employees under this Plan.
2.5.3 If an individual is covered as an Owner-Employee under the plans of two
or more trades or businesses which are not controlled and the individual
controls a trade or business, then the contributions or benefits of the
employees under the plan of the trades or businesses which are controlled must
be as favorable as those provided for such individual under the most favorable
plan of the trade or business which is not controlled.
2.5.4 For purposes of the preceding three subsections, an Owner-Employee, or
two or more Owner-Employees, will be considered to control a trade or business
if the Owner-Employee, or two or more Owner-Employees together:
(A) own the entire interest in an unincorporated trade or business, or
(B) in the case of a partnership, own more than 50% of either the
capital interest or the profits interest in the partnership.
For purposes of the preceding sentence, an Ownership-Employee, or two or more
Owner-Employees, shall be treated as owning any interest in a partnership which
is owned, directly or indirectly, by a partnership which such Owner-Employee,
or such two or more Owner-Employees, are considered to control within the
meaning of the preceding sentence.
2.6 Corrections with Regard to Participation:
2.6.1 If in any Plan Year an Eligible 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 the Employer for the year has been
made, the Employer shall make a subsequent contribution with respect to the
omitted Eligible Employee in the amount which would have contributed with
respect to such Eligible Employee had he or she not been omitted. Such
contribution shall be made whether or not it is deductible in whole or in part
in any taxable year under applicable provisions of the Code. It shall be the
responsibility of the Employer and Administrator to take any and all actions as
required by this Section 2.6.1.
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<PAGE> 48
2.6.2 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 amount contributed on behalf of such ineligible person shall constitute a
forfeiture for the Plan Year in which the discovery is made. It shall be the
responsibility of the Employer and Administrator to take any and all actions as
required by this Section 2.6.2.
2.7 Provision of Information: Each Employee shall execute such forms as
may reasonably be required by the Administrator, and shall make available to
the Administrator any information the Administrator may reasonably request in
this regard. By virtue of his or her participation in this Plan, an Employee
agrees, on his or her own behalf and on behalf of all persons who may have or
claim any right by reason of the Employee'' participation in the Plan, to be
bound by all provisions of the Plan.
ARTICLE III.
CONTRIBUTIONS AND ACCOUNT
ALLOCATIONS
3.1 Employer Contributions and Allocations:
3.1.1 If the Plan is a profit-sharing plan, the Employer will contribute cash
and/or Qualifying Employer Securities to the Trust Fund, in such amount, if
any, as specified in the Adoption Agreement and with respect to Qualifying
Employer Securities as is consistent with Section 10.4.2 and 10.4.3. If the
Plan is a profit-sharing plan, Net Profits may be necessary for an Employer to
make contributions, as specified in the Adoption Agreement. Employer
Contributions for a Plan Year will be allocated no later than the last day of
the Plan Year to the Employer Contributions Account of Participants eligible
for an allocation in the manner specified in the Adoption Agreement. A
not-for-profit corporation may adopt a profit-sharing plan as an incentive
plan; provided, however, that such a plan may not contain a CODA feature unless
otherwise permitted by law.
3.1.2 If the Plan is a money purchase pension plan, the Employer will
contribute cash to the Trust Fund in an amount equal to that percentage of the
Compensation of each Participant eligible for an allocation of Employer
contributions for that Plan Year as specified in the Adoption Agreement.
Employer Contributions for the Plan Year will be allocated as of the last day
of the Plan Year to the Employer Contributions Accounts of Participants
eligible for an allocation and entitled to share in such contributions in the
manner specified in the Adoption Agreement.
3.1.3 If the Plan is a target benefit plan, the Employer will contribute cash
to the Trust Fund in an amount specified in the Adoption Agreement. The amount
contributed with respect to the targeted benefit of each Participant eligible
for an allocation for that Plan Year will be allocated as of the last day of
the Plan Year to the Participant's Employer Contributions Account in the manner
specified in the Adoption Agreement.
3.1.4 If the Employer elects in the Adoption Agreement to make contributions
on behalf of a Participant whose Employment terminated due to Disability,
"Compensation" shall mean, with respect to such Participant, the Compensation
he or she would have received for the entire calendar year in which the
Disability occurred if he or she had been paid for such year at the rate at
which he or she was being paid immediately prior to such Disability. Employer
Contributions may be taken into account only if the Participant is a Nonhighly
Compensation Employee and contributions made on his or her behalf are
nonforfeitable.
3.1.5 If an Employer has adopted more than one Adoption Agreement, or has
adopted a plan pursuant to the Merrill Lynch Special Prototype Defined Benefit
Plan and Trust, only one Adoption Agreement may be integrated with Social
Security.
3.1.6 For purposes of the Plan, contributions provided by the "leasing
organization" referred to in Section 1.37 of a Leased Employee who are
attributable to services performed for the Employer shall be treated as
provided by the Employer.
3.2 Participant Voluntary Nondeductible Contributions:
3.2.1 If elected by the Employer in the Adoption Agreement, each Participant
while actively employed may make Participant Voluntary Nondeductible
Contributions in cash in a dollar amount or a percentage of Compensation which
does not, when included in the Contribution Percentage Amount, exceed the
limitations set forth in Code Section 401(m).
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3.2.2 Participant Voluntary Nondeductible Contributions shall be made in
accordance with rules and procedures adopted by the Administrator.
3.3 Rollover Contributions and Trust to Trust Transfers:
3.3.1 Any Eligible Employee or Participant may make a Rollover Contribution
under the Plan. A Rollover Contribution shall be in cash or in other property
acceptable to the Trustee and shall be a contribution attributable to (a) a
"qualified total distribution"( as defined in Code Section 402(a)(5)),
distributed to the contributing Employee under Code Section 402(a)(5) from a
Qualified Plan or distributed to the Employee under Code Section 403(a)(4)
from an "employee annuity" or referred to in that section, or (b) a payout or
distribution tot he Employee referred to in Code Section 408(d)(3) from an
"individual retirement account" or an "Individual retirement annuity"
described, respectively, in Code Section 408(a) or Section 408(b) consisting
exclusively of amounts attributable to "qualified total distributions" (as
defined in Code Section 402(a)(5)) from a Qualified Plan.
The Plan shall not accept a Rollover contribution attributable to any
accumulated deductible employee contributions as defined by Code Section
72(o)(5)(B). The Trustee may condition acceptance of a Rollover Contribution
upon receipt of such documents as it may require. In the event that an
Employee makes a contribution pursuant to this Section 3.3 intended to be a
Rollover Contribution but which did not qualify as a Rollover Contribution, the
Trustee shall distribute to the Employee as soon as practicable after that
conclusion is reached the entire Account balance in his or her Rollover
Contributions Account deriving from such contributions determined as of the
valuation date coincident with or immediately preceding such discovery.
3.3.2 Any Eligible Employee or Participant may direct the Administrator to
direct the Trustee to accept a transfer to the Trust Fund from another trust
established pursuant to another Qualified Plan of all or any part of the assets
held in such other trust. The Plan shall not accept a direct transfer
attributable to accumulated deductible employee contributions as defined by
Code Section 72(o)(5)(B). The Trustee may condition acceptance of such a trust
to trust transfer upon receipt of such documents as it may require.
3.4 Section 401(k) Contributions and Account Allocations:
3.4.1 Elective Deferrals:
(A) Amount of Elective Deferrals: Subject to the limitations
contained in Section 3.4.2., the Employer will contribute cash to
the Trust Fund in an amount equal to:
(i) as specified on the Participant's 401(k) Election
form, the specific dollar amount, or the deferral percentage
multiplied by each such Participant's Compensation; or
(ii) a bonus contribution made pursuant to Section 3.4.1(C).
(B) The amount elected by a Participant pursuant to a 401(k) Election
shall be determined within the limits specified in the Adoption
Agreement. The 401(k) Election shall be made on a form provided by
the Administrator but no election shall be effective prior to
approval by the Administrator. The Administrator may reduce the
amount of any 401(k) Election, or make such other modifications as
necessary, so that the Plan complies with the provisions of the
Code. A Participant's 401(k) Election shall remain in effect
until modified or terminated. Modification or termination of a
401(k) Election shall be made at such time as specified in the
Adoption Agreement.
(C) If elected by the Employer in the Adoption Agreement, an Eligible
Employee may make a 401(k) Election to have an amount withheld up
to the amount of any bonus payable for such Plan Year and direct
the Employer to contribute the amount so withheld to his or her
Elective Deferrals Account.
3.4.2 Limitation on Elective Deferrals:
(A) Maximum Amount of Elective Deferrals and Distribution of Excess
Elective Deferrals:
(i) No Participant shall be permitted to have Elective
Deferrals made
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under this Plan, or any other Qualified Plan maintained by
the Employer, during any Plan Year in excess of the dollar
limitation contained in Code Section 402(g) in effect at
the beginning of the Participant's taxable year.
(ii) Notwithstanding any other provision of the Plan, Excess
Elective Deferrals made to this Plan or assigned to this
Plan, plus any income and minus any loss allocable thereto,
shall be distributed no later than April 15, 1988, and each
April 15 thereafter, to Participants to whose accounts
Excess Elective Deferrals were designated for the preceding
Plan Year and who claim Excess Elective Deferrals for such
taxable year. Excess Elective Deferrals shall be treated
as Annual Additions.
(iii) Claims. A Participant may designate to this Plan any
amount of his or her Elective Deferrals as Excess
Elective Deferrals during his or her taxable year. A
Participant's claim shall be in writing, shall be submitted
to the Administrator no later than March 1, shall specify
the Participant's Excess Elective Deferral for the
preceding Plan Year, and shall be accompanied by the
Participant's written statement that if such amounts are
not distributed, such Excess Elective Deferral, when added
to amounts deferred under other plans or arrangements
described in Code Section 401(k), Code Section 408(k),
Code Section 403(b) or Code Section 457, exceeds the limit
imposed on the Participant by Code Section 402(g) for the
year in which the deferral occurred. A Participant is
deemed to notify the Administrator of any Excess Elective
Deferrals that arise by taking into account only those
Elective Deferrals made to this Plan and any other plans of
the Employer or an Affiliate.
(iv) Determination of Income or Loss: Excess Elective Deferrals
shall be adjusted for income or loss up to the date of
distribution. The income or loss allocable to
Participant's Excess Elective Deferrals is the sum of: (1)
the income or loss allocable to the Participant's Elective
Deferrals Account for the Participant's taxable year
multiplied by a fraction, the numerator of which is the
Participant's Excess Elective Deferrals for the
Participant's taxable year and the denominator of which is
the Account Balance of the Participant's Elective Deferrals
Account without regard to any income or loss occurring
during such taxable year; and (2) ten percent of the amount
determined under (1) multiplied by the number of whole
calendar months between the end of the Participant's
taxable year and the date of distribution, counting the
month of distribution if distribution occurs after the 15th
of such month.
Anything in the preceding paragraph of this Section 3.4.2(A)(iv) to
the contrary notwithstanding, any reasonable method for computing the
income or loss allocable to Excess Elective Deferrals may be used,
provided that such method is used consistently for all Participants
and for all corrective distributions under the Plan, and is used by
the Plan for allocating income or loss to Participants' Accounts.
Income or loss allocable to the period between the end of the taxable
year and the date of distribution may be disregarded in determining
income or loss.
(B) ADP Test: The Average Actual Deferral Percentage for Highly
Compensated Employees for each Plan Year and the Average Actual
Deferral Percentage for Nonhighly Compensated Employees for the same
Plan Year must satisfy one of the following tests:
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<PAGE> 51
(i) The Average Actual Deferral Percentage for Eligible
Participants who are Highly Compensated Employees for the Plan
Year shall not exceed the Average Actual Deferral Percentage
for Eligible Participants who are Nonhighly Compensated
Employees for the Plan Year multiplied by 1.25; or
(C) The Average Actual Deferrals Percentage for Eligible Participants who
are Highly Compensated Employees for the Plan Year shall not exceed
the Average Actual Deferral Percentage for Eligible Participants who
are Nonhighly Compensated Employees for the Plan Year multiplied by
2.0; provided that the Average Actual Deferral Percentage for Eligible
Participants who are Highly Compensated Employees does not exceed the
Average Actual Deferral Percentage for Participants who are Nonhighly
Compensated Employees by more than two percentage points.
(D) Special Actual Deferral Percentage Rules
(i) The Actual Deferral Percentage for any Eligible Participant
who is a Highly Compensated Employee for the Plan Year and
who is eligible to have Elective Deferrals and Qualified
Matching Contributions or Qualified Nonelective
Contributions, or both, if treated as Elective Deferrals
for purposes of the ADP Test, allocated to his or her
accounts under two or more plans or arrangements described
in Code Section 401(k) that are maintained by the Employer
shall be determined as if all such Elective Deferrals,
Qualified Matching Contributions and Qualified Nonelective
Contributions were made under a single arrangement. If a
Highly Compensated Employee participates in two or more
cash or deferred arrangements that have different plan
years, all cash or deferred arrangements ending with or
within the same calendar year shall be treated as a single
arrangement.
(ii) In the event that this Plan satisfies the requirements of
Code Section 401(k), Code Section 401(a)(4) or Code
Section 410(b) only if aggregated within one or more other
qualified plans, or if one or more other qualified plans
satisfy the requirements of such Code Sections only if
aggregated with this Plan, then this Section shall be
applied by determining the Actual Deferral Percentage of
Employees as if all such qualified plans were a single
qualified plan. For Plan Years beginning after December
31, 1989, plans may be aggregated in order to satisfy Code
Section 401(k) only if they have the same plan year.
(iii) For purposes of determining the Actual Deferral Percentage
of an Eligible Participant who is a 5% owner or one of the
ten most highly paid Highly Compensated Employees, the
Elective Deferrals (and Qualified Matching Contributions or
Qualified Nonelective Contributions, or both, if treated as
Elective Deferrals for purposes of one of the tests
referred to in Section 3.4.2(B)) and CODA Compensation of
such Participant shall include the Elective Deferrals (and,
if applicable, Qualified Matching Contributions, Qualified
Nonelective Contributions) and CODA Compensation for the
Plan Year of Family Members. Family Members with respect
to such Highly Compensated Employees shall be disregarded
as separate employees in determining the Actual Deferral
Percentage both for Eligible Participants who are Nonhighly
Compensated Employees and for Eligible Participants who are
Highly Compensated Employees.
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<PAGE> 52
(iv) For purposes of determining the ADP Test, Elective Deferrals,
Qualified Matching Contributions, and Qualified Nonelective
must be made before the last day of the 12- month period
immediately following the Plan Year to which such
contributions relate.
(v) The Employer shall maintain records sufficient to demonstrate
satisfaction of the ADP Test and the amount of Qualified
Nonelective Contributions and/or Qualified Matching
Contribution used in such test.
(vi) The determination and treatment of the Elective Deferrals,
Qualified Matching Contributions, and Qualified Nonelective
Contributions, used in the ADP Test shall satisfy such other
requirements as may be prescribed by the Secretary of the
Treasury.
(E) Distribution of Excess Contributions
(i) In General. Notwithstanding any other provision of the Plan
except Section 3.4.2(E), Excess Contributions, plus any income
and minus any loss allocable thereto, shall be distributed no
later than the last day of each Plan Year beginning after
December 31, 1987, to Participants to whose Accounts Elective
Deferrals, Qualified Matching Contributions, and Qualified
Nonelective Contributions were allocated for the preceding
Plan Year.(1) 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 Deferrals (and amounts treated as Elective Deferrals)
of each Family Member that is combined to determine the
combined Actual Deferral Percentage. Excess Contributions
shall be treated as Annual Additions.
(ii) Determination of Income or Loss. Excess Contributions shall
be adjusted for any income or loss up to the date of
distribution. The income or loss allocable to Excess
Contributions is the sum of: (1) the income or loss allocable
to the Participant's Elective Deferrals Account (and, if
applicable, the Qualified Nonelective Contributions Account or
the Qualified Matching Contributions Account or both) for the
Plan Year multiplied by a fraction, the numerator of which is
such Participant's Excess Contributions for the year and the
denominator of which is the Account Balances of Participant's
Elective Deferrals Account, Qualified Nonelective
Contributions Account and Qualified Matching Contributions
Account if any of such contributions are included in the ADP
Test, without regard to any income or loss occurring during
such Plan Year; and (2) 10% of the amount determined under (1)
multiplied by the number of whole calendar months between the
end of the Plan Year and the date of distribution, counting
the month of distribution if distribution occurs after the
15th of such month.
Anything in the preceding paragraph of this Section
3.4.2(D)(ii) to the contrary notwithstanding, any reasonable
method for computing the income or loss allocable to Excess
Contributions may be used, provided that such method is used
consistently for all Participants and for all corrective
distributions under the Plan for the Plan Year,
- ------------------
(1) Distribution of Excess Contributions on or before the last day of the Plan
Year in which such excess amounts arose is required under Code Section
401(k)(8) if the Plan is to maintain its tax-qualified status. However, if such
excess amounts, plus any income and minus any loss allocable thereto, are
distributed more than 2 1/2 months after the last day of the Plan Year in which
such excess amounts arose, then Code Section 4979 imposes a 10% excise tax on
the employer maintaining the plan with respect to such amounts.
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<PAGE> 53
and is used by the Plan for allocating income or
loss to Participant's Accounts. Income or loss
allocable to the period between the end of the
Plan Year and the date of distribution may be
disregarded in determining income or loss.
(iii) Accounting for Excess Contributions. Amounts
distributed under this Section 3.4.2(D) shall
first be distributed from the Participant's
Elective Deferrals Account and Qualified Matching
Contributions Account in proportion to the
Participant's Elective Deferrals and Qualified
Matching Contributions (to the extent used in the
ADP Test) for the Plan Year. Excess
Contributions shall be distributed from the
Participant's Qualified Nonelective Contributions
Account only to the extent that such Excess
Contributions exceed the balance in the
Participant's Elective Deferrals Account and
Qualified Matching Contributions Account.
(F) In lieu of distributing Excess Contributions pursuant to the
preceding Section 3.4.2(D), and as specified in the Adoption
Agreement, the Employer may make special Qualified Nonelective
Contributions on behalf of Nonhighly Compensated Employees
that are sufficient to satisfy the ADP Test.
(G) In lieu of distributing Excess Contributions, the Participant
may treat his or her Excess Contributions as an amount
distributed and then re-contributed by such Participant.
Recharacterized amounts are 100% nonforfeitable and subject to
the same distribution requirements as Elective Deferrals.
Amounts may not be re-characterized by a Highly Compensated
Employee to the extent that such amount in combination with
other amounts made to the Participant's Participant
Contributions Account would exceed any stated limit on such
contributions, as specified in the Adoption Agreement. If
Excess Contributions are re-characterized, they must be so no
later than two and one half months after the last day of the
Plan Year in which such Excess Contributions arose and they
are deemed to occur no earlier than the date the last Highly
Compensated Employee is informed in writing of the amount
re-characterized and the consequences thereof.
Recharacterized amounts are taxable to the Participant for the
tax year in which he or she would have received such
contributions in cash.
(H) Under no circumstances may Elective Deferrals, Qualified
Matching Contributions and Qualified Nonelective Contributions
be contributed and allocated to the Trust later than the last
day of the 12-month period immediately following the Plan Year
to which such contributions relate.
3.5 Matching 401(k) Contributions:
3.5.1 Amount of Matching Contributions. Subject to the limitations
contained in Sections 3.9 and 3.5.2, for each Plan Year the Employer will
contribute in cash and/or Qualifying Employer Securities, Matching 401(k)
Contributions to the Trust Fund in an amount, if any, calculated by reference
to the Participants' Elective Deferrals as specified in the Adoption Agreement.
3.5.2 Limitation on Contribution Percentage:
(A) ACP Test: The Average Contribution Percentage for Eligible
Participants who are Highly Compensated Employees for the Plan
Year and the Average Contributions Percentage for Eligible
Participants who are Nonhighly Compensated Employees for the
same Plan Year must satisfy one of the following tests:
(i) the Average Contribution Percentage for Eligible
Participants who are Highly Compensated Employees
for the Plan Year shall not exceed the Average
Contribution Percentage for Eligible Participants
who are Nonhighly Compensated
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<PAGE> 54
Employees for the same Plan Year multiplied by 1.25; or
(ii) the Average Contribution Percentage for Eligible Participants
who are Highly Compensated Employees shall not exceed the
Average Contribution Percentage for Eligible Participants who
are Nonhighly Compensated Employees by more than two
percentage points or such lesser amount as the Secretary of
the Treasury shall prescribe to prevent the multiple use of
this alternative limitation with respect to any Highly
Compensated Employee.
(B) Special Average Contribution Percentage Rules:
(i) For purposes of this Section 3.5.2, the Contribution
Percentage for any Eligible Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible
to have Matching 401(k) Contributions or Matching Thrift
Contributions, as the case may be (other than Qualified
Matching Contributions), allocated to his or her account
under two or more qualified plans described in Code Section
401(a), or arrangements described in Code Section 401(k)
shall be determined as if the total of such Contribution
Percentage Amounts was made under each plan.
If a Highly Compensated Employee participates in 2 or more
cash or deferred arrangements that have different plan
years, all cash or deferred arrangements ending with or
within the same calendar year shall be treated as a single
arrangement.
(ii) In the event that this Plan satisfies the requirements of
Code Section 410(b) only if aggregated with one or more
other plans, or if one or more other plans satisfy the
requirements of Code Section 410(b) only if aggregated with
this Plan, then this Section 3.5.2 shall be applied by
determining the Contribution Percentages of Employees as if
all such plans were a single plan. For Plan Years
beginning after December 31, 1989, plans may be aggregated
in order to satisfy Code Section 401(m) only if they have
the same plan year.
(iii) For purposes of determining the Contribution Percentage of
an Eligible Participant who is 5% owner or one of the 10
most highly-paid Highly Compensated Employees, the
Contribution Percentage Amounts and the CODA Compensation
of such Participant shall include the Contribution
Percentage Amounts and CODA Compensation for the Plan Year
of Family Members. Family Members with respect to Highly
Compensated Employees shall be disregarded as separate
employees in determining the Contribution Percentage both
for Participants who are Nonhighly Compensated Employees
and for Participants who are Highly Compensated Employees.
(iv) For purposes of determining the ACP Test, Matching 401(k)
Contributions, Matching Thrift Contributions and Qualified
Nonelective Contributions will be considered made for a
Plan Year if made no later than the end of the 12-month
period beginning on the day after the close of the Plan
Year.
(v) The Employer shall maintain records sufficient to
demonstrate satisfaction of the ACP Test and the Amount of
Qualified Nonelective Contributions or Qualified Matching
Contributions, or both, used in such test.
(C) Multiple Use: If one or more Highly Compensated Employees participate
in
20
<PAGE> 55
both a cash or deferred arrangement and a plan subject to the ACP
Test and the sum of the Actual Deferral Percentage and the Actual
Contribution Percentage of those Highly Compensated Employees exceeds
the "aggregate limit", then the Actual Contribution Percentage of
those Highly Compensated Employees will be reduced, beginning with
such Highly Compensated Employee whose Actual Contribution Percentage
is the highest, so that the limit is not exceeded.
The amount by which each Highly Compensated Employee's Contribution
Percentage is reduced shall be treated as an Excess Aggregate
Contribution. The Actual Deferral Percentage and Actual Contribution
Percentage of the Highly Compensated Employees are determined after
any corrections required to meet the ADP Test and the ACP Test.
Multiple use does not occur if either the Average Deferral Percentage
or Actual Contribution Percentage of the Highly Compensated Employees
do not exceed 1.25 multiplied by the Actual Deferral Percentage and
the Actual Contribution Percentage of the Nonhighly Compensated
Percentage for Participants who are Nonhighly Compensated Employees.
(i) The "aggregate limit" is the sum of (1) 125% of the greater oft
he Actual Deferral Percentage for Participants who are Nonhighly
Compensated Employees for the Plan Year or the Actual Deferral
Percentage for Participants who are Nonhighly Compensated Employees
for the Plan Year beginning with or within the Plan Year and (2) the
lesser of 200% or two plus the lesser of such Actual Deferral
Percentage or Actual Contribution Percentage. "Lesser" is substituted
for "greater" in "(1)," above, and "greater" is substituted for
"lesser" after "two plus the" in "(2)" if it would result in a larger
aggregate limit.
(D) Forfeiture of Excess Aggregate Contributions:
(i) In General. Notwithstanding any other provision of this
Plan, Excess Aggregate Contributions, plus any income and
minus any loss allocable thereto, shall be forfeited and
applied to reduce subsequent Matching 401(k) Contributions
or Matching Thrift Contributions, as the case may be. No
forfeitures arising under this Section 3.6.2(D) shall be
allocated to the account of any Highly Compensated
Employee. If not forfeitable, Excess Aggregate
Contributions shall be distributed no later than the last
day of each Plan Year beginning after December 31, 1987, to
participants to whose Accounts such Excess Aggregate
Contributions were allocated for the preceding Plan Year.
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
amounts constituting Contribution Percentage Amounts of
each Family Member that is combined to determine the
combined actual Contribution Percentage. Excess Aggregate
Contributions shall be treated as Annual Additions.
Anything above to the contrary notwithstanding, any
forfeiture or distribution under this Section 3.5.2(D)(i)
shall occur only if sufficient Employee Thrift
Contributions and/or Participant Voluntary Nondeductible
Contributions, as the case may be, are not distributed from
the qualified plan holding such Employee Thrift
Contributions and/or Participant Voluntary Nondeductible
Contributions, as the case may be.(2)
- ------------------
(2) Distribution or forfeiture of Excess Aggregate Contributions on or before
the last day of the Plan Year in which such excess amounts arose is required
under Code Section 401(m)(6) if the Plan is to maintain its tax-qualified
status. However, if such excess amounts, plus any income and minus any loss
allocable thereto, are distributed more than 2 1/2 months after the last day of
the Plan Year in which such excess amounts arose, then Code Section 4979
imposes a 10% excise tax on the employer maintaining the plan with respect to
such amounts.
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<PAGE> 56
(ii) Determination or Income or Loss. Excess Aggregate
Contributions shall be adjusted for an income or
loss up to the date of distribution. The income
or loss allocable to Excess Aggregate
Contributions is the sum of: (1) the income or
loss allocable to the Participant's Matching
401(k) Contribution Account or Matching Thrift
Contribution Account (if any, and if all amounts
therein are not used in the ADP Test) and, if
applicable, Qualified Nonelective Contribution
Account and Elective Deferrals Account for the
Plan Year multiplied by a fraction, the numerator
of which is such Participant's excess Aggregate
Contributions for the year and the denominator of
which is the Participant's Account Balance(s)
attributable to Contribution Percentage Amounts
without regard to any income or loss occurring
during such Plan Year; and (2) 10% of the amount
determined under (1) multiplied by the number or
whole calendar months between the end of the Plan
Year and the date of distribution, counting the
month of distribution if distribution occurs after
the 15th of such month.
Anything in the preceding paragraph of this
Section 3.5.2(D)(ii) to the contrary
notwithstanding, any reasonable method for
computing the income or loss allocable to excess
Aggregate Contributions may be used, provided that
such method is used consistently for all
Participants and for all corrective distributions
under the Plan for the Plan Year, and is used by
the Plan for allocating income or loss to
Participants' Accounts. Income or loss allocable
to the period between the end of the Plan Year and
the date of distribution may be disregarded in
determining income or loss.
(iii) The determination of the Excess Aggregate
Contributions shall be made after first
determining the Excess Elective Deferrals, and
then determining the Excess Contributions.
3.5.3 For purposes of determining the ACP Test, Qualified Nonelective
Contributions, Matching 401(k) Contributions and Marketing Thrift Contributions
will be considered made for a Plan Year if paid to the Trustee no later than
the end of the 12-month period beginning on the day after the close of the Plan
Year.
3.6 Thrift Contributions:
3.6.1 Employee Thrift Contributions. If elected by the Employer in the
Adoption Agreements to provide for Employee Thrift Contributions, the Employer
will contribute cash to the Trust Fund in an amount equal to (A) the Employee
Thrift Contribution percentage of each Participant on his or her Employee
Thrift Contribution election form multiplied by each such Participant's
Compensation or (B) the specific dollar amount set forth on the Participant's
election form. The amount elected by a Participant pursuant to a Participant's
Employee Thrift Contribution election shall be determined within the limits
specified in the Adoption Agreement. Such election shall be made on a form
provided by the Administrator but no election shall be effective prior to
approval by the Administrator.
The Administrator may reduce the amount of any Employee Thrift Contribution, or
make such other modifications as necessary, so that the Plan complies with the
provisions of the Code. A Participant's election shall remain in effect until
modified or terminated at such times as specified in the Adoption Agreement.
3.6.2 Marketing Thrift Contributions. Subject to the limitations contained
in Sections 3.9 and 3.5.2, for each Plan Year the Employer will contribute in
cash and/or Qualifying Employer Securities, Matching Thrift Contributions to
the Trust Fund in an amount, if any, calculated by reference to the
Participants' Employee Thrift Contributions, as specified in the Adoption
Agreement.
Matching Thrift Contributions made by the Employer will be allocated to the
Matching Thrift Contributions Account for those Participants who
22
<PAGE> 57
have contributed Employee Thrift Contributions to the Plan, as specified in the
Adoption Agreement.
3.7 Treatment of Forfeitures:
3.7.1 If the Employer has elected in the Adoption Agreement to reallocate
forfeitures for a Plan Year among Participants, then such forfeitures, if any,
shall be allocated as of the last day of the Plan Year to the Employer Accounts
of those Participants who are eligible to share in the allocation of
contributions to that particular Employer Account (whether or not a
contribution was made for that Plan Year) for that Plan Year in that particular
Employer Account category with respect to which such forfeitures are
attributable. If the Plan is a Target Benefit Plan, forfeitures may only be
used to reduce Employer Contributions, in accordance with Section 3.7.2.
3.7.2 If the Employer has elected in the Adoption Agreement to use forfeiture
to reduce contributions, then forfeitures shall be applied in the succeeding
Plan Year to reduce Employer Contributions in that particular Employer Account
category to which such forfeitures were attributable.
3.8 Establishing of Accounts:
3.8.1 An Elective Deferrals Account shall be established for each Eligible
Participant who makes a 401(k) Election to which the Administrator shall
credit, or cause to be credited, Elective Deferrals allocable to each such
Participant, plus earnings or losses thereon.
3.8.2 An Employer Contributions Account shall be established for each
Participant to which the Administrator shall credit or cause to be credited
Employer contributions pursuant to Section 3.1, and forfeitures attributable to
such contributions, if any, plus earnings or losses thereon.
3.8.3 An Employee Thrift Contributions Account shall be established for each
Participant who makes Employee Thrift Contributions to the Plan, to which the
Administrator shall credit, or cause to be credited, all amounts allocable to
each such Participant, plus earnings or losses thereon.
3.8.4 A Matching 401(k) Contributions Account shall be established for each
Participant for whom Matching 401(k) Contributions are made, to which the
Administrator shall credit, or cause to be credited, all such amounts allocable
to each such Participant, plus earnings or losses thereon.
3.8.5 A Matching Thrift Contributions Account shall be established for each
Participant for whom Matching Thrift Contributions are made, to which the
Administrator shall credit, or cause to be credited, all amounts allocable to
each such Participant, plus earnings or losses thereon.
3.8.6 A Participant Voluntary Nondeductible Contributions Account shall be
established for each Participant who makes Participant Voluntary Nondeductible
Contributions to the Plan, plus earnings or losses thereon.
3.8.7 A Qualified Matching Contributions Account shall be established for
each Eligible Participant for whom Qualified Matching Contributions are made,
to which the Administrator shall credit, or cause to be credited, all amounts
allocable to each such Participant, plus earnings or losses thereon.
3.8.8 A Qualified Nonelective Contributions Account shall be established for
each Participant for whom Qualified Nonelective Contributions are made, to
which the Administrator shall credit, or cause to be credited, all amounts
allocable to each such Participant, plus earnings or losses thereon.
3.8.9 A Rollover Contributions Account shall be established for each
Participant who contributes to the Plan pursuant to Section 3.3 to which the
Administrator shall credit, or cause to be credited, Rollover Contributions
made by the Participant, plus earnings or losses thereon.
3.8.10 A Transferred Contributions Account shall be established for each
Participant for whom assets are transferred from another Qualified Plan, to
which the Administrator shall credit, or cause to be credited, transferred
assets, plus earnings or losses thereon.
3.9 Limitations on Amount of Allocations:
3.9.1 As used in this Section 3.9, each of the following terms shall have the
meaning for that term set forth in this Section 3.9.1:
(A) Annual Additions means, for each Participant, the sum of the following
amounts credited to the Participant's Accounts for the Limitation
Year:
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<PAGE> 58
(i) Employer Contributions within the meaning of IRS
regulation 1.415-6(b);
(ii) Employee Contributions;
(iii) forfeitures;
(iv) allocation under a simplified employee pension;
and
(v) any Excess Amount applied under a Defined
Contribution Plan in the Limitation Year to reduce
Employer Contributions will also be considered as
part of the Annual Additions for such Limitation
Year.
Amounts allocated after March 31, 1984, to an "individual
medical benefit account" as defined in Code Section
415(1)(2) ("Individual Medical Benefit Account") which is
part of a pension or annuity plan maintained by the Employer
or Affiliate are treated as Annual Additions to a Defined
Contribution Plan. Also, amounts derived from contributions
paid or accrued after December 31, 1985, in taxable years
ending after that 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
419(e) ("Welfare Benefit Fund") maintained by the Employer
or Affiliate, are treated as Annual Additions to a Defined
Contribution Plan.
(B) Defined Benefit Dollar Limitation means $90,000 multiplied
by the Adjustment Factor or such other limitation set forth
in Code Section 415(b)(1) as in effect for the Limitation
Year.
(C) Defined Benefit Fraction means a fraction, the numerator of
which is the sum of the Projected Annual Benefits of the
Participant involved under all Defined Benefit Plans
(whether or not terminated) maintained by the Employer or
Affiliate, and the denominator of which is the lesser of
125% of the Defined Benefit Dollar Limitation determined for
the Limitation Year or 140% of the Participant's Highest
Average Limitation 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 or Affiliate which
were in existence on May 5, 1986, the denominator of this
fraction will not be less than 125% of the sum of the annual
benefits under such Plans which the Participant had accrued
as of the close of the last Limitation Year beginning before
January 1, 1987, disregarding any changes in the terms and
conditions of the plans after May 5, 1986. The preceding
sentence applies only if the Defined Benefit plans
individually and in the aggregate satisfied the requirements
of Code Section 415 for all Limitation Years beginning
before January 1, 1987.
(D) Defined Contribution Dollar Limitation means $30,000 or if
greater, one-fourth of the Defined Benefit Dollar Limitation
as in effect for the Limitation Year.
(E) Defined Contribution Fraction means a fraction, the
numerator of which is the sum of the Annual Additions to the
Participant's Account or Accounts under all the Defined
Contribution Plans (whether or not terminated) maintained by
the Employer or Affiliate for the current and all prior
Limitation Years (including the Annual Additions
attributable to the Participant's nondeductible
contributions to all Defined Benefit Plans, whether or not
terminated, maintained by the Employer or Affiliate and the
Annual Additions attributable to all Welfare Benefit Funds,
Individual Medical Benefit Accounts, and simplified employee
pensions maintained by the Employer or Affiliate), and the
denominator of which is the sum of the "maximum aggregate
amounts" (as defined in the following sentence) for the
current and all prior Limitation Years of service with the
Employer or Affiliate (regardless of whether a Defined
24
<PAGE> 59
Contribution Plan was maintained by the Employer or Affiliate). The
"maximum aggregate amount" in any Limitation Year is the lesser of (i)
125% of the Defined Benefit Dollar Limitation in effect under Code
Section 415(c)(1)(A) or (ii) 35% of the Participant's Compensation for
such year.
If the Employee was a Participant as 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 or Affiliate 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 (A) the excess of the
sum of the fractions over 1.0 times (B) the denominator of this
fraction will be permanently subtracted from the numerator of this
fraction. The adjustment is calculated using the fractions as they
would be computed as of the later of the end of the last Limitation
Year beginning before January 1, 1987, and disregarding any changes in
the terms and conditions of the Plans made after May 6, 1986, but
using the Code Section 415 limitation applicable to the first
Limitation Year beginning on or after January 1, 1987. The Annual
Addition for any Limitation Year beginning before January 1, 1987,
shall not be recomputed to treat all Participant contributions as
Annual Additions.
(F) Excess Amounts means the excess of the Participant's Annual Additions
for the Limitation Year involved over the Maximum Permissible Amount
for that Limitation Year.
(G) Highest Average Limitation Compensation means the average Compensation
as defined in Code Section 415(c)(3) of the Participant involved for
that period of three consecutive Years of Service with the Employer or
Affiliate (or if the Participant has less than three such Years of
Service, the actual number thereof) that produces the highest average.
(H) Limitation Compensation means Compensation, as defined in either (i),
(ii) or (iii) below, as specified in the Adoption Agreement.
(i) Safe-Harbor Compensation: For an Employee other than a
Self-Employed Individual, the Employee's earned income,
wages, salaries, and fees for professional services and
other amounts received without regard to whether or not an
amount is paid in cash) for personal services actually
rendered in the course of Employment (including, but not
limited to, commissions paid salesmen, compensation for
services on the basis of a percentage of profits,
commissions on insurance premiums, tips, bonuses, fringe
benefits, and reimbursements or other expense allowances
under a non-accountable plan (as described in Reg.
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 contributions
under a "simplified employee pension" plan (within the
meaning of Code Section 408(k)) and 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 other property) held
by the Employee either becomes freely "transferable" or is
no longer subject to a "substantial risk of forfeiture"
(both quoted
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<PAGE> 60
terms within the meaning of Code Section 83(a));
(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,
contributions made (whether or not under a salary reduction
agreement) towards the purchase of an annuity described in
Code Section 403(b) (whether or not the amounts are
actually excludable from the gross income of the Employee);
or
For Limitation Years beginning after December 31, 1991, Limitation
Compensation shall include only that compensation which is
actually paid or made available during the Limitation year.
(ii) Information required to be reported under Section 6041 and 6051.
("Wages, Tips and other Compensation Box" Form W-2).
Limitation Compensation is defined as wages as defined in Code
Section 3401(a) and all other payments of compensation to an
Employee by the Employer (in the course of the Employer's trade
or business) for which the Employer is required to furnish the
Employee a written statement under Section 6041(d) and
6051(a)(3) of the Code. Compensation must be determined
without regard to any rules under Section 3401(a) that limit
the remuneration included in wages based on the nature or
location of the employment or the services performed (such as
the exception for agricultural labor in Section 3401(a)(2)).
(iii) Code Section 3401(a) wages: Limitation Compensation is defined
as 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)).
Without regard to the definition of Limitation Compensation
elected by the Employer, for a Self-Employed Individual,
Limitation Compensation means his or her Earned Income,
provided that if the Self-Employed Individual is not a
Participant for an entire Plan Year, his or her Limitation
Compensation for that Plan Year shall be his or her Earned
Income for that Plan Year multiplied by a fraction the
numerator of which is the number of days he or she is a
Participant during the Plan Year and the denominator of which
is the number of days in the Plan Year. Additionally,
Limitation Compensation for a Participant in a Defined
Contribution Plan who is permanently and totally disabled (as
defined in Code Section 22(e)) 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 disabled; such imputed compensation
may be taken into account only if the Participant is not a
Highly Compensated Employee and contributions made on behalf of
such Participant are nonforfeitable when made.
(I) Maximum Permissible Amount means the maximum Annual Addition which may
be contributed or allocated to a Participant's Account under the Plan
for any Limitation year. The maximum Annual Addition shall not exceed
the
26
<PAGE> 61
lesser of: (a) the Defined Contribution Dollar Limitation, or (b)
25% of the Participant's Compensation for the Limitation Year.
The Compensation limitation referred to in (b) shall not apply to
any contribution for medical benefits (within the meaning of Code
Sections 401(h) or 419(f)(2)) which is otherwise treated as an
Annual Addition under Code Section 415(1)(1) or 419A(d)(2). If a
short Limitation Year is created because of an amendment changing
the Limitation Year to a different 12-consecutive month period,
the Maximum Permissible Amount will not exceed the Defined
Contribution Dollar Limitation multiplied by the following
fraction:
Number of months in
the short Limitation Year
-------------------------
12
(J) 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 a Defined
Benefit Plan assuming:
(i) the Participant continues in employment with the Employer
or Affiliate until the Participant's "normal retirement
age" under the Plan within the meaning of Code Section
411(a)(8) (or the Participant's current age, if later); and
(ii) the Participant's Limitation 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.
3.9.2 The provisions of this subsection 3.9.2 apply with respect to a
Participant who does not participate in, and has never participated in, another
Qualified Plan, a Welfare Benefit Fund or an Individual Medical Benefit Account
or a simplified employee pension, as defined in Code Section 401(k), maintained
by the Employer or an Affiliate, which provides an Annual Addition as defined
in Section 3.9.1(A) of the Plan, other than this Plan;
(A) The amount of Annual Additions which may be credited to the
Participant's Account for any Limitation Year will not exceed the
lesser of the Maximum Permissible Amount or any other limitation
contained in this Plan. If the Employer Contribution that would
otherwise be contributed or allocated to the Participant's
Account would cause the Annual Additions on behalf of the
Participant for the Limitation Year to exceed the Maximum
Permissible Amount with respect to that Participant for the
Limitation Year, the amount contributed or allocated will be
reduced so that the Annual Additions on behalf of the Participant
for the Limitation Year will equal such Maximum Permissible
Amount.
(B) Prior to determining the Participant's actual Limitation
Compensation for a Limitation Year, the Employer may determine
the Maximum Permissible Amount for the Participant for the
Limitation Year on the basis of a reasonable estimation of the
Participant's Compensation for that Limitation Year. Such
estimated Compensations hall be uniformly determined for all
Participants similarly situated.
(C) As soon as is administratively feasible after the end of a
Limitation Year, the Maximum Permissible Amount for the
Limitation Year will be determined on the basis of the
Participant's actual compensation for the Limitation Year.
(D) If pursuant to Section 3.9.2(C) or as a result of the allocation
of forfeitures, there is an Excess Amount with respect to the
Participant for a Limitation Year, the Excess Amount shall be
disposed of as follows:
(i) First, any contribution to the Participant's Elective
Deferrals Account, Participant Voluntary
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<PAGE> 62
Nondeductible Contributions Account or Employee Thrift
Contributions Account, if applicable, and any earnings
allocable thereto will be distributed to the Participant to
the extent that the return thereof would reduce the Excess
Amount in such Participant's Accounts;
(ii) If after the application of Section 3.9.2(D)(i) an Excess
Amount still exists, and the Participant is covered by the
Plan at the end of the Limitation Year, the remaining
Excess Amount in the Participant's Account will be used to
reduce Employer contributions (including allocation of any
forfeitures) under this Plan for such Participant in the
next Limitation Year, and in each succeeding Limitation
Year, if necessary.
(iii) If after the application of Section 3.9.2(D)(i) an Excess
Amount still exists, and the Participant is covered by the
Plan at the end of the Limitation Year, the Excess Amount
will be held unallocated in a suspense account. The
suspense account will be applied to reduce future Employer
contributions under this Plan for all remaining
Participants in the next Limitation Year, and in each
succeeding Limitation Year, if necessary; provided,
however, that if all or any part of the Excess Amount held
in a suspense account is attributable to a Participant's
Elective Deferrals, such Excess Amount shall be held
unallocated in a suspense account to be used for such
Participant in the next Limitation Year and each succeeding
Limitation Year as an Elective Deferral if such Participant
is covered by the Plan in the next and each succeeding
Limitation Year, if necessary.
(iv) If a suspense account is in existence at any time during a
Limitation year pursuant to Section 3.9.2(D)(iii), the
suspense account will not participate in the allocation of
the Trust Fund's investment gains or losses to or from any
other Account. 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 or
Participant contributions may be made to the Plan for the
Limitation Year. Excess Amounts, other than those Excess
Amounts referred to in Section 3.9.2(D)(i), may not be
distributed to Participants or Former Participants.
3.9.3 The provisions of this subsection 3.9.3 apply with respect to a
Participant who, in addition to this Plan, is covered or has been covered under
one or more Defined Contribution Plans which are Master or Prototype Plans,
Welfare Benefit Funds an Individual Medical Benefit Account or a simplified
employee pension maintained by the Employer or an Affiliate, which provides an
Annual Addition as described in Section 3.9.1(A) of the Plan during any
Limitation Year.
(A) The Annual Additions which may be credited to a Participant's
Accounts under this Plan for any such Limitation Year will not
exceed the Maximum Permissible Amount reduced by the Annual
Additions credited to the Participant's account or accounts under
any other plans and Welfare Benefit Fund, Individual Medical
Benefit Account or simplified employee pension for the same
Limitation Year.
If the Annual Additions with respect to the Participant under any
one or more other such Defined Contribution Plans or Welfare
Benefit Funds, Individual Medical Account or simplified employee
pension maintained by the Employer are less than the Maximum
Permissible Amount and the Employer Contribution that would
otherwise be contributed or allocated to a Participant's Account
under this Plan would cause the Annual Additions for the
Limitation Year to exceed this limitation, the amount contributed
or allocated shall be reduced
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so that the Annual Additions under all such plans and funds for
the Limitation Year will equal the Maximum Permissible Amount.
If the Annual Additions with respect to the Participant under
such other Defined Contribution Plans and Welfare Benefit Funds,
Individual Medical Benefit Account or simplified employee pension
in the aggregate are equal to or greater than the Maximum
Permissible Amount, no amount will be contributed or allocated to
any of the Participant's Account under this Plan for the
Limitation Year.
(B) Prior to determining the Participant's actual compensation for a
Limitation Year, the Maximum Permissible Amount for a Participant
may be determined in the manner described in Section 3.9.2(B).
(C) As soon as is administratively feasible after the end of a
Limitation Year, the Maximum Permissible Amount for the
Limitation Year will be determined on the basis of the
Participant's actual Limitation Compensation for the Limitation
Year.
(D) If, pursuant to subsection 3.9.3(C) above, or as a result of the
allocation of forfeitures, a Participant's Annual Additions under
this Plan and the Participant's Annual Additions under such other
plans would result in an Excess Amount for a Limitation Year, the
Excess Amount will be deemed to consist of the Annual Additions
attributable to simplified employee pension will be deemed to
have been allocated first, followed by Annual Additions to a
Welfare Benefit Fund or Individual Medical Benefit Account
regardless of the actual allocation date.
(E) If an Excess Amount was allocated to a Participant on an
allocation date of this plan which coincides with an allocation
date of another such 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 (A) the Annual Additions allocated to the
Participant for the Limitation Year as of such date under
this Plan to (B) the total Annual Additions allocated to the
Participant for the Limitation Year as of such date under
this Plan and all of the other plans referred to in the
first sentence of this Section 3.9.3.
(F) Any Excess Amount attributed to this Plan will be disposed in the
manner described in Section 3.9.2(D).
3.9.4 If a Participant is covered under one or more Defined Contribution
Plans, other than this Plan, maintained by the Employer or an Affiliate which
are not Master or Prototype Plans, or Welfare Benefit Funds or an Individual
Medical Benefit Account maintained by the Employer, Annual Additions which may
be credited to the Participant's Account under this Plan for any Limitation
Year shall be limited in accordance with the provisions of subsections
3.9.3(A)--(F) above as though each such other plan was a Master or Prototype
Plan.
3.9.5 If the Employer maintains, or at any time maintained, a Defined
Benefit Plan covering any Participant in this Plan, the sum of the
Participant's Defined Benefit Fraction and Defined Contribution Fraction will
not exceed 1.0 in any Limitation Year. If such sum would otherwise exceed 1.0
and if such Defined Benefit Plan does not provide for a reduction in benefits
thereunder, Annual Additions which may be credited to a Participant's Account
under this Plan for any Limitation Year shall be limited in accordance with the
provisions of Section 3.9.2.
3.9.6 If required pursuant to Section 4.4.4, "100%" shall be substituted for
"125% wherever the later percentage appears in this Section 3.9.
3.10 Return of Employer Contributions Under Special Circumstances:
Notwithstanding any provision of this Plan to the contrary, upon timely written
demand by the Employer or the Administrator to the Trustee:
(A) Any contribution by the Employer to the Plan under a mistake of
fact shall be returned to the Employer by the Trustee within one
year after the payment of the contribution.
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<PAGE> 64
(B) Any contribution made by the Employer incident to the
determination by the Commissioner of Internal Revenue
that the Plan is initially a Qualified Plan shall be
returned to the Employer by the Trustee within one year
after notification from the Internal Revenue Service that
the Plan is not initially a Qualified Plan but only if
the application for the qualification is made by the time
prescribed by law for filing the Employer's return for
the taxable year in which the Plan is adopted, or such
later date as the Secretary of the Treasury may prescribe.
(C) In the event the deduction of a contribution made by the
Employer is disallowed under Code Section 404, such
contribution (to the extent disallowed) must be returned to
the Employer within one year oft he disallowance of the
deduction.
ARTICLE IV.
VESTING
4.1 Determination of Vesting:
4.1.1 A Participant shall at all times have a vested percentage of
100% in the Account Balance of each of his or her Participant
Contributions Accounts, 401(k) Contributions Accounts, Rollover
Contributions Account and Transferred Account.
4.1.2 A Participant shall have a vested percentage of 100% in his or
her Account Balance of each of his or her Employer Accounts if he or
she terminates Employment due to attainment of Normal Retirement Age,
Early Retirement specified in the Adoption Agreement, if elected by
the Employer in the Adoption Agreement, or upon Disability or death.
4.1.3 The vested percentage of a Participant in the Account Balance of
each of his or her Employer Accounts not vested pursuant to Section
4.1.1 or 4.1.2 shall be determined in accordance with the vesting rule
or schedule specified in the Adoption Agreement.
4.2 Rules for Crediting Vesting Service:
4.2.1 Subject to Section 4.2.2, Years of Service shall be credited for
purposes of determining a Participant's Vesting Service as specified
in the Adoption Agreement. If the Employer maintains the plan of a
predecessor employer, service with such predecessor employer shall be
treated as service with the Employer for purposes of Vesting Service.
4.2.2 An Employee who terminates Employment with no vested percentage
in an Employer Account shall, if he or she returns to Employment, have
no credit for Vesting Service prior to such termination of Employment
if his or her Period of Severance equals or exceeds five years.
4.2.3 Vesting Service of an Employee following a Period of Severance
of five years or more shall not be counted for the purpose of
computing his or her vested percentage in his or her Employer Accounts
derived from contributions accrued prior to Period of Severance. If
applicable, separate records shall be maintained reflecting the
Participant's vested rights in his or her Account Balance attributable
to service prior to the Period of Severance and reflecting the
Participant's vested percentage in his or her Account Balance
attributable to service after the Period of Severance. Vesting Service
prior to and following an Employee's Period of Severance shall be
counted for purposes of computing his or her vested percentage in an
Employer Account derived from contributions made after the Period of
Severance.
4.3 Employer Accounts Forfeitures:
4.3.1 Subject to Section 5.6, upon the Nonvested Separation of a
Participant, the nonvested portion of each Employer Account of such
Participant will be forfeited as of the date of termination of
Employment. Upon the Partially Vested Separation of a Participant, the
nonvested portion of each Employer Account of such Participant will be
forfeited as of the date of termination of Employment; provided,
however, that such Participant receives a distribution in accordance
with Section 5.6. If a Participant does not receive a distribution
following his or her termination of Employment, the nonvested portion
of each Employer Account of the Participant shall be forfeited
following a Period of Severance of five years.
4.3.2 If the Employer elects in the Adoption Agreement to reallocate
forfeitures, forfeitures for a Plan Year shall be allocated in
accordance with Section 4.3.3. If the Employer elects in the Adoption
Agreement to use Forfeitures to reduce
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Employer contributions, forfeitures shall be applied in accordance
with Section 3.7.2.
4.4 Top-Heavy Provisions:
4.4.1 As used in this Section 4.4, each of the following terms shall
have the meanings for that term set forth in this Section 4.4.1:
(A) Determination Date means, for any Plan Year subsequent to the
first Plan Year, the last day of the preceding Plan Year. For
the first Plan Year of the Plan, the last day of that year.
(B) Permission Aggregation Group means the Required Aggregation
Group of plans plus any other plan or plans of the Employer or
Affiliate which, when considered as a group with the Required
Aggregation Group, would continue to satisfy the requirements
of Code Sections 401(a)(4) and 410.
(C) Required Aggregation Group means (i) each Qualified Plan
of the Employer or Affiliate in which at least one Key
Employee participates or participated at any time during
the determination period (regardless of whether the plan
has terminated), and (ii) any other qualified plan of the
Employer or Affiliate which enables a plan described in
(i) to meet the requirements of Code Sections 401(aA)(4)
or 410.
(D) Super Top-Heavy means, for any Plan Year beginning after
December 31, 1983, the Plan if any Top-Heavy Ratio as
determined under the definition of Top-Heavy Plan exceeds 90%.
(E) Top-Heavy Plan means, for any Plan Year beginning after
December 31, 1983, the Plan if any of the following conditions
exists:
(i) If the Top-Heavy Ratio for the Plan exceeds 60% and the
Plan is not part of any Required Aggregation Group or
Permissible Aggregation Group of Plans.
(ii) If the Plan is a part of a Required Aggregation Group of
plans but not part of a Permissive Aggregation Group and
the Top-Heavy Ratio for the group of plans exceeds 60%.
(iii)If the Plan is a part of a Required Aggregation Group and
part of a Permissive Aggregation Group of plans and the
Top-Heavy Ratio for the Permissive Aggregation Group
exceeds 60%.
(F) Top-Heavy Ratio means:
(i) If the Employer or Affiliate maintains one or more
Defined Contribution Plans (including any Simplified
Employee Pension Plan) and the Employer or Affiliate has
never maintained any Defined Benefit Plan which during
the five year period ending on the Determination Date has
or has had accrued benefit, 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 (including any
part of any Account Balance distributed in the five-year
period ending on the Determination Date), and the
denominator of which is the sum of all Account Balances
(including any part of any Account Balance distributed in
the five-year period ending on the Determination Date),
both computed in accordance with Code Section 416. 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.
(ii) If the Employer or an Affiliate maintains one or more
Defined Contribution Plans (including any Simplified
Employee Pension Plan)
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<PAGE> 66
and the Employer or an Affiliate maintains or has
maintained one or more Defined Benefit plans which during
the five-year ending on the Determination Date has or has
had any 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
Account Balances under the aggregated Defined
Contribution Plans for all Key Employees, determined in
accordance with (i) above, and the present value of
accrued benefits under the aggregated Defined
Contribution Plans for all Key Employees, determined in
accordance with (i) above, and the present value of
accrued benefits under the aggregated Defined Benefit
Plans for all Key Employees as of the Determination Date,
and the denominator of which is the sum of the Account
Balances under the aggregated Defined Contribution Plans
for all Participants, determined in accordance with (i)
above, and the present value of accrued benefits under
the Defined Benefit Plans for all Participants as of the
Determination Date, all determined in accordance with
Code Section 416. The accrued benefit 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 five-year period ending on
the Determination Date.
(iii) For purposes of (i) and (ii) above, the value of Account
Balances and the present value of accrued benefits will
be determined as of the most recent Valuation Date that
falls within or ends with the 12-month period ending on
the Determination Date, except as provided in Code
Section 416 for the first and second Plan Years of a
Defined Benefit Plan. The Account Balances and accrued
benefits of a Participant (1) who is not a Key Employee
but who was a Key Employee in a prior year, or (2) who
has not been credited with at least one Hour of Service
with the Employer or an Affiliate at any time during the
five-year period ending on the Determination Date, will
be disregarded. The calculation of the Top-Heavy Ratio,
and the extent to which distributions, rollovers, and
transfers are taken into account will be made in
accordance with Code Section 416.
Elective Deferrals 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 who is not a Key Employee shall
be determined under (A) the method, if any, that uniformly applies for
accrual purposes under all Defined Benefit Plans or (B) if there is no
such method, as if such benefit accrued not more rapidly than the
slowest accrual rate permitted under the fractional rule of Code
Section 411(b)(1)(C).
4.4.2 If the Plan is determined to be a Top-Heavy Plan or a Super
Top-Heavy Plan as of any Determination Date after December 31, 1983,
then the Top-Heavy vesting schedule specified in the Adoption
Agreement, beginning with the first Plan Year commencing after such
Determination Date, shall apply only for those Plan Years in which the
Plan continues to be a Top-Heavy or Super Top-Heavy Plan, as the case
may be.
4.4.3 (A) Except as provided in Sections 4.4.3(C) and (D), for any
Plan Year in which the Plan is a Top-Heavy Plan,
contributions Account of any Participant who is not a Key
Employee in respect of that Plan Year shall not be less than
the lessor of:
(i) 3% of such Participant's Limitation Compensation,
or
(ii) if the Employer has no Defined Benefit Plan which
designates this Plan to satisfy Code Section 401, the
largest percentage of
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contributions and forfeitures, as a percentage of the
Key Employee's Limitation Compensation, allocated to
the Employer Contributions Account of any Key Employee
for that year. The minimum allocation is determined
without regard to any Social Security contribution.
This minimum allocation shall be made even though,
under other Plan provisions, the Participant would not
otherwise be entitled to receive an allocation, or
would have received a lesser allocation for the Plan
Year because of (a) the Participant's failure to
complete a Year of Service, (b) the Participant's
failure to make mandatory Participant contributions to
the Plan or (c) compensation less than a stated amount.
(B) For purposes of computing the minimum allocation, a
Participant's Limitation Compensation will be applied.
(C) The provision in (A) above shall not apply to any
Participant who was not employed by the Employer or an
Affiliate on the last day of the Plan Year.
(D) If the Employer or an Affiliate has executed Adoption
Agreements covering Participants by a plan which is a
profit-sharing plan and by another plan which is a money
purchase pension plan or a target benefit plan, the
minimum allocation specified in the preceding Section
4.4.3(A) shall be provided by the money purchase pension
plan or by the target benefit plan, as the case may be.
If a Participant is covered under this Plan and a Defined
Benefit Plan maintained pursuant to Adoption Agreements
offered by the Sponsor, the minimum allocation specified
in the preceding Section 4.4.3(A) shall not be applicable
and the Participant shall receive the minimum benefit
specified in the Defined Benefit Plan.
(E) With respect to any profit sharing or money purchase
pension plan which becomes Top-Heavy and is integrated
with Social Security, prior to making the allocations
specified in the Adoption Agreement, anything contained
therein to the contrary notwithstanding, there shall be
an allocation of the Employer Contribution Account in the
ratio that each such Participant's Limitation
Compensation for the Plan Year bears to the Limitation
Compensation of all such Participants for the Plan Year,
but not in excess of 3% of such Limitation Compensation.
4.4.4 If the Plan becomes a Top-Heavy Plan, then the maximum benefit
which can be provided under Section 3.9 shall continue to be
determined by applying "125%" whenever it appears in that Section and
by substituting "4%" for "3%" whenever that appears in Section 4.4.3.
However, if the Plan becomes a Super Top-Heavy Plan, the maximum
benefit which can be provided under Section 3.9 shall be determined by
substituting "100%" for "125%" wherever the latter percentage appears
and the 3% minimum contribution provided for in Section 4.4.4 shall
remain unchanged.
4.4.5 Beginning with the Plan Year in which this Plan is Top-Heavy,
one of the minimum Top-Heavy vesting schedules as specified in the
Adoption Agreement will apply. The minimum 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. However, this Section 4.4 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 such
Employee's vesting in his or her Employer and such Employee's vesting
in his or her Employer Contributions Account will be determined
without regard to this Section 4.4. The minimum allocation pursuant to
Section 4.4.3 (to the extent required to be nonforfeitable under Code
Section 416(b)) may not be forfeited under Code Section 411(a)(3)(B)
or Code Section 411(a)(3)(D).
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ARTICLE V.
AMOUNT AND DISTRIBUTION OF
BENEFITS WITHDRAWALS AND LOANS
5.1 Distribution Upon Termination of Employment:
5.1.1 Subject to Section 5.1.2, a Participant's Benefit Commencement
Date shall be as soon as practicable following his or her Fully Vested
Separation, Partially Vested Separation or Nonvested Separation, if
applicable, and in accordance with Section 5.6. If the Plan includes a
CODA feature, each 401(k) Contributions Account of a Participant shall
be payable in accordance with the events specified in Section 1.27 of
the Plan.
5.1.2 If specified in the Adoption Agreement, a Participant's Benefit
Commencement Date shall be deferred until the earliest of his or her
Normal Retirement Age, Disability,, or if elected by the Employer in
the Adoption Agreement, Early Retirement. If a Participant terminates
Employment after satisfying any service requirement for Early
Retirement specified in the Adoption Agreement, he or she shall be
entitled to elect to receive a distribution of his or her vested
Employer Accounts upon satisfaction of any age requirement for Early
Retirement.
5.2 Amount of Benefits Upon a Fully Vested Separation: A Participant's
benefits upon his or her Fully Vested Separation for any reason other
than Disability shall be the Account Balance of all of his or her
Accounts determined in accordance with Section 10.6.2.
5.3 Amount of Benefits Upon a Partially Vested Separation: A
Participant's benefits upon his or her Partially Vested Separation for
any reason other than Disability shall be: (A) the Account Balance of
his or her Employer Accounts determined in accordance with Section
10.6.2 multiplied by his or her vested percentage determined pursuant
to Section 4.1.3, or, if applicable, Section 4.4.2, plus (B) the
Account Balance of his or her other Accounts determined in accordance
with Section 10.6.2.
5.4 Amount of Benefits upon Nonvested Separation: A Participant's
benefits upon his or her Nonvested Separation shall be the Account
Balance of his or her Accounts other than Employer Accounts, if any,
determined in accordance with Section 10.6.2.
5.5 Amount of Benefits Upon a Separation Due to Disability: If a
Participant terminates Employment due to a Disability, his or her
benefit shall be the Account Balance of all of his or her Accounts
determined as a Fully Vested Separation in accordance with Section 5.2
and Section 10.6.2. The Benefit Commencement Date of any such
Participant on whose behalf contributions are being made pursuant to
Section 3.1.4 shall be as soon as practicable after the date such
contributions cease.
5.6 Distribution and Restoration:
5.6.1 If, upon a Participant's termination of Employment, the vested
Account Balance of his or her Accounts as of the applicable Valuation
Date is equal to or less than $3,500, such Participant will receive a
distribution of his or her entire vested benefit and the nonvested
portion will be treated as forfeiture. If the value of a Participant's
vested Account is zero, the Participant shall be deemed to have
received a distribution of such vested Account.
5.6.2 If, upon a Participant's termination of Employment, the vested
Account Balance of his or her Accounts as of the applicable Valuation
Date exceeds $3,500, the Participant may elect, in accordance with
Article VI, to receive a distribution of the entire vested portion of
such Accounts and the nonvested portion, if any, will be treated as a
forfeiture.
5.6.3 If the vested Account Balance of a Participant's Accounts as of
the applicable Valuation Date has an aggregate value exceeding (or at
the time of any prior distribution exceeded) $3,500, and the
Participant's benefit is Immediately Distributable, the Participant
and the Participant's Spouse (or where either the Participant or the
Spouse has died, the survivor) must consent to any distribution of
such benefit. The consent of the Participant and the Participant's
Spouse shall be obtained in writing within the 90-day period ending on
the Participant's Benefit Commencement Date; provided, however, that
if the Plan is a profit-sharing plan and Section 6.1.2 applies, the
consent of the Participant's Spouse will not be required. The
Administrator shall notify the Participant and the Participant's
Spouse of the right to defer any distribution until the Participant's
benefit is no longer Immediately Distributable. Such notification
shall include a general description of the material features, and an
explanation oft he relative values of, the optional forms of benefit
available under the Plan in a manner that would satisfy the notice
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<PAGE> 69
requirements of Code Section 417(a)(3), and shall be provided no less
than 30 days and no more than 90 days prior to the Benefit
Commencement Date.
5.6.4 Notwithstanding the foregoing, only the Participant need consent
to the commencement of a distribution in the form of a Qualified Joint
and Survivor Annuity while the Participant's benefit is Immediately
Distributable. Neither the consent of the Participant nor the
Participant's Spouse shall be required to the extent that a
distribution is required to satisfy Code Section 401(a)(9) or Code
Section 415.
5.6.5 For purposes of determining the applicability of the foregoing
consent requirements to distributions made before the first day of the
first Plan Year beginning after December 31, 1988, the Participant's
vested benefit shall not include amounts attributable to accumulated
deductible Participant contributions within the meaning of Code
Section 72(o)(5)(B).
5.6.6 If a Participant, who after termination of Employment received a
distribution and forfeited any portion of an Employer Account or is
deemed to have received a distribution in accordance with Section
5.6.1, resumes Employment, he or she shall have the right, while an
Employee, to repay the full amount previously distributed from such
Employer Account. Such repayment must occur before the earlier of (i)
the date on which he or she would have incurred a Period of Severance
of five years commencing after the distribution or (ii) five years
after the first date on which the Participant makes a repayment, the
Account Balance of his or her relevant Employer Account shall be
restored to its value as of the date of distribution. The restored
amount shall be derived from forfeitures during the Plan Year and, if
such forfeitures are not sufficient, from a contribution by the
Employer made as of that date (determined without references to Net
Profits). If an Employee who had a Nonvested Separation and was deemed
to receive a distribution resumes Employment before a Period of
Severance of five years, his or her Employer Account will be restored
upon reemployment, to the amount on the date of such deemed
distribution.
5.7 Withdrawals During Employment:
5.7.1 If the Plan is a profit-sharing plan, and if the Employer has
elected in the Adoption Agreement to permit withdrawals during
Employment, prior to termination of Employment, each Participant upon
attainment of age 59 1/2 may elect to withdraw, as of the Valuation
Date next following the receipt of an election by the Administrator,
and upon such notice as the Administrator may require, all or any part
of the vested Account Balance of all of his or her Accounts, as of
such Valuation Date.
5.7.2 Notwithstanding Section
5.7.1, prior to termination of Employment, each Participant with a
Rollover Contributions Account and/or a Participant Voluntary
Nondeductible Contributions Account may elect to withdraw, as of the
Valuation Date next following the receipt of an election by the
Administrator, and upon such notice as the Administrator may require,
all or any of such Account, as of such Valuation Date.
5.7.3 The Administrator may establish from time to time rules and
procedures with respect to any withdrawals including the order of
Accounts from which such withdrawals shall be made.
5.7.4 No forfeitures shall occur as a result of a withdrawal pursuant
to this Section 5.7.
5.7.5 If a Participant is married at the time of such election, the
Participant's Spouse must consent to such a withdrawal in the same
manner as provided in Section 6.2.4; provided, however, that if the
Plan is a profit-sharing plan and Section 6.1.2 applies, the consent
of the Participant's Spouse will not be required.
5.8 Loans:
5.8.1 If the Employer has elected in the Adoption Agreement to make
loans available, a Participant may submit an application to the
Administrator to borrow from any Account maintained for the
Participant (on such terms and conditions as the Administrator shall
prescribe) an amount which when added to the outstanding balance of
all other loans to the Participant would not exceed the lesser of (a)
$50,000 reduced by the excess (if any) of the highest outstanding
balance of loans during the one year period ending on the day before
the loan is made, over the outstanding balance of loans from the Plan
on the date the loan is made, or (b) 50% of the vested portion of his
or her Account from which the borrowing is to be made as of the
Valuation Date next following the receipt of his or her loan
application by the Administrator and the expiration of such notice
period as the Administrator may require. For this purpose, all loans
from Qualified Plans of the Employer or an Affiliate shall be
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aggregated, and an assignment or pledge of any portion of the
Participant's interest in the Plan, and a loan, pledge or assignment
with respect to any insurance contract purchased under the Plan, will
be treated as a loan under this Section 5.8.1.
5.8.2 If approved, each such loan shall comply with the following
conditions:
(A) it shall be evidenced by a negotiable promissory note:
(B) the rate of interest payable on the unpaid balance of such
loan shall be a reasonable rate determined by the
Administrator;
(C) the Participant must obtain the consent of his or her
Spouse, if any, within the 90-day period before the time
an Account is used as security for the loan; provided,
however, that if the Plan is a profit-sharing plan that
meets the requirements in Section 6.1.2 of the Plan, the
consent of the Participant's Spouse will not be required.
A new consent is required if an Account is used for any
increase in the amount of security. The consent shall
comply with the requirements of Section 6.2.4, but shall
be deemed to meet any requirements contained in section
6.2.4 relating to the consent of any subsequent Spouse. A
new consent shall be required if an Account is used for
renegotiation, extension, renewal, or other revision of
the loan;
(D) the loan, by its terms, must require repayment (principal
and interest) be amortized in level payments, not less
frequently than quarterly, over a period not extending
beyond five years from the date of the loan; provided,
however, that if the proceeds of the loan are used to
acquire a dwelling unit which within a reasonable time
(determined at the time the loan is made) will be used as
the principal residence of the Participant, the repayment
schedule may be fore a term in excess of five years; and
(E) the loan shall be adequately secured and may be secured by no
more than 50% of the Participant's vested interest in the
Account Balance of his or her Accounts.
5.8.3 If a Participant or Beneficiary requests and is granted a loan,
and the loan is made from Participant Directed Assets, principal and
interest payments with respect to the loan shall be credited solely to
the Account of the borrowing Participant from which the loan was made.
Any loss caused by nonpayment or other default on a Participant's loan
obligations shall be charged solely to that Account. Any other loan
shall be treated as an investment of the Trust Fund and interest and
principal payments on account thereof shall be credited to the Trust
Fund. The Administrator shall determine the order of Accounts from
which a loan may be made.
5.8.4 Anything herein to the contrary notwithstanding:
(A) in the event of a default, foreclosure on the promissory note
will not occur until a distributable event occurs under this
Article V;
(B) No loan will be made to any Owner-Employee or to any
"shareholder-employee" of the Employer or a Participating
Affiliate or with respect to any amounts attributable to
a Rollover Contribution or a trust to trust transfer and
relating to prior participation by such an individual in
a Qualified Plan. For this purpose, a "shareholder-
employee" means an employee or officer of an electing
shall business, i.e., an "S corporation" as defined in
Code Section 13.61, who owns (or is considered as owning
within the meaning of Code Section 318(a)(1)) on any day
during the taxable year of such corporation, more than 5%
of the outstanding stock of the corporation; and
(C) loans shall not be made available to Highly Compensated
Employees in an amount greater than the amount made available
to other Employees.
5.8.5 If a valid spousal consent has been obtained in accordance with
Section 5.8.2(C), then, notwithstanding any other provision of this
Plan, the portion of the Participant's vested Account used as a
security interest held by the Plan by reason of a loan outstanding to
the Participant shall be taken into account for purposes of
determining the amount of the Participant's benefit payable at the
time of death or distribution; but only if the reduction is used as
36
<PAGE> 71
repayment of the loan. If less than 100% of the Participant's vested
benefit (determined without regard tot he preceding sentence) is
payable to the Surviving Spouse, then the Participant's benefit shall
be adjusted by first reducing the Participant's vested benefit by the
amount of the security used as repayment of the loan, and then
determining the benefit payable to the Surviving Spouse.
5.9 Hardship Distributions:
5.9.1 Effective January 1, 1989, if applicable and elected by the
Employer in the Adoption Agreement, a Participant may request a
distribution due to hardship from the vested portion of his or her
Accounts, (other than from his or her Qualified Nonelective
Contributions Account or earnings accrued after December 31, 1988, on
the Participant's Elective Deferrals) only if the distribution is made
both due to an immediate and heavy financial need of the Participant
and is necessary to satisfy such financial need.
5.9.2 A hardship distribution shall be permitted only if the
distribution is due to:
(A) Expenses incurred or necessary for medical care described in
Code Section 213(d) incurred by the Participant, the
Participant's Spouse, or any dependents of the Participant (as
defined in Code Section 152);
(B) purchase (excluding mortgage payments) of a principal
residence for the Participant;
(C) payment of tuition and related educational fees for the next
12 months of post-secondary education for the Participant, his
or her Spouse, children or dependents;
(D) the need to prevent the eviction of the Participant from his
or her principal residence or foreclosure on the mortgage of
the Participant's principal residence; or
(E) any other condition or event which the Commissioner of the
Internal Revenue Service determines is a deemed immediate and
financial need.
5.9.3 A distribution will be considered necessary to satisfy an
immediate and heavy financial need of a Participant if all of the
following requirements are satisfied:
(A) the distribution will not be in excess of the amount of the
immediate and heavy financial need of the Participant
(including amounts necessary to pay any Federal, state or
local income taxes of penalties reasonably anticipated to
result from the distribution);
(B) the Participant obtains all distributions, other than hardship
distributions, and all nontaxable loans currently available
under all plans maintained by the Employer or an Affiliate;
(C) the Participant's Elective Deferrals, Employee Thrift
Contributions and Participant Voluntary Nondeductible
Contributions will be suspended for a least 12 months after
receipt of the hardship distribution in this Plan and in all
other plans maintained by the Employer or an Affiliate; and
(D) 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
distribution in this Plan and in all other plans
maintained by the Employer or an Affiliate.
5.9.4 If the distribution is made from any Account other than a 401(k)
Contributions Account, a distribution due to hardship may be made
without application of Section 5.9.3(B), 5.9.3(C), or 5.9.3(D).
5.10 Limitation on Commencement of Benefits:
5.10.1 Anything in this Article V to the contrary notwithstanding, a
Participant's Benefit Commencement Date shall in no event be later
than the 60th day after the close of the Plan Year in which the latest
of the following events occur:
(A) the attainment by the Participant of his or her Normal
Retirement Age;
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<PAGE> 72
(B) the tenth anniversary of the year in which the Participant
commenced participation in the Plan; or
(C) the Participant's termination of Employment. Notwithstanding
the foregoing, the failure of a Participant and Spouse to
consent to a distribution while a benefit is Immediately
Distributable, shall be deemed to be an election to defer
commencement of payment of any benefit sufficient to satisfy
this Section.
5.10.2 If it is not possible to distribute a Participant's Accounts
because the Administrator has been unable to locate the Participant
after making reasonable efforts to do so, then a distribution of the
Participant's Accounts shall be made when the Participant can be
located.
5.11 Distribution Requirements:
5.11.1 Subject to the Joint and Survivor Annuity rules set forth in
Article VI, the requirements of this Article shall apply to any
distribution of a Participant's interest and will take precedence over
any inconsistent provisions of this Plan. Unless otherwise specified,
the provisions of this article apply to calendar years beginning after
December 31, 1987__ used in this Section 5.11, each of the following
terms shall have the meaning for that term set forth in this Section
5.11.1:
(A) Applicable Life Expectancy. The life expectancy (or joint
and last survivor expectancy) calculated using the
attained age of the Participant (or designated
Beneficiary) as of the Participant's (or designated
Beneficiary's) birthday in the applicable calendar year
reduced by one for each calendar year which has elapsed
since the date Life Expectancy was first calculated. If
Life Expectancy shall be the Life Expectancy as so
recalculated. The applicable calendar year shall bet he
first distribution calendar year, and if Life Expectancy
is being recalculated such succeeding calendar year.
(B) Designated Beneficiary. The individual who is designated
as the Beneficiary under the Plan in accordance with Code
Section 401(a)(9). In the event that a Participant names
a trust to be a designated Beneficiary, such designation
shall provide that, as of the later of the date on which
the trust is named as a Beneficiary or the Participant's
Required Beginning Date, and as of all subsequent periods
during which the trust is named as a Beneficiary, the
following requirements are met: (i) the trust is a valid
trust under state law, or would be but for the fact that
there is no corpus; (ii) the trust is irrevocable; (iii)
the Beneficiaries of the trust who are Beneficiaries with
respect to the trust's interests in the Participant's
benefits are identifiable from the trust instrument
within the meaning of Code Section 401(a)(9); and (iv) a
copy of the trust is provided to the Plan.
(C) Distribution Calendar Year. A calendar year for which a
minimum distribution is required. For distributions beginning
before the Participant's death, the first Distribution
Calendar Year is the calendar year immediately preceding the
calendar year which contains the Participant's Required
Beginning Date. For distributions beginning after the
Participant's death, the first Distribution Calendar Year is
the calendar year in which distributions are required to begin
pursuant to Section 7.2.
(D) Life Expectancy. Life Expectancy and joint and last survivor
expectancy are computed by use of the expected return
multiples in Table V and VI of section 1.72-9 of the
regulations issued under the Code. Unless otherwise elected by
the Participant (or Spouse, in the case of distributions
described in Section 7.2) by the time distributions are
required to begin, Life Expectancies shall not be recalculated
annually. Such election shall be irrevocable as to the
Participant or Spouse and shall apply to all subsequent years.
The Life Expectancy of a nonspouse Beneficiary may not be
recalculated.
(E) Required Beginning Date.
(i) General Rule. The Required Beginning Date of a
Participant is
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<PAGE> 73
the first day of April of the calendar year following the
calendar year in which the Participant attains age 70
1/2.
(ii) Transitional rule. The Required Beginning Date of a
Participant who attains age 70 1/2 before January 1,
1988, shall be determined in accordance with (1) or (2)
below:
(1) Non-5% owners. The Required Beginning Date of a
Participant who is not a "5% owner as defined in (iii)
below is the first day of April of the calendar year
following the calendar year in which the later of
retirement or attainment of age 70 1/2 occurs.
(2) 5% owners. The Required Beginning Date of a Participant
who is a 5% owner during any year beginning after
December 31, 1979, is the first day of April following
the later of:
(a) the calendar year in which the Participant
attains age 70 1/2; or
(b) the earlier of the calendar year with or within
which ends the Plan Year in which the Participant
becomes a 5% owner, or the calendar year in which
the Participant retires. The Required Beginning
Date of a Participant who is not a 5% owner who
attains age 70 1/2 during 1988 and who has not
retired as of January 1, 1989, is April 1, 1990.
(iii) 5% owner. A Participant is treated as a 5% owner for
purposes of this Section 5.11 if such Participant is a
5% owner as defined in Code Section 416(i) determined in
accordance with section 416 but without regard to
whether the plan is top heavy) at any time during the
Plan Year ending with or within the calendar year in
which such owner attains age 66 1/2 or any subsequent
Plan Year.
(iv) Once distributions have begun to a 5% owner under this
Section 5.11, they must continue to be distributed even
if the Participant ceases to be a 5% owner in a
subsequent year.
5.11.2 All distributions required under this Section 5.11 shall be
determined and made in accordance with the Income Tax Regulations
under Code Section 401(a)(9), including the minimum distribution
incidental benefit requirement of section 1.401(a)(9)-2 of the
regulations issued under the Code. The entire interest of a
Participant must be distributed or begin to be distributed no later
than the Participant's Required Beginning Date.
5.11.3 Limits on Distribution Periods. As of the first Distribution
Calendar Year, distributions, if not made in a lump sum, may only be
made over one of the following periods (or a combination thereof):
(A) the life of the Participant;
(B) the life of the Participant and a Designated Beneficiary;
(C) a period certain not extending beyond the Life Expectancy of
the Participant; or
(D) a period certain not extending beyond the joint and last
survivor expectancy of the Participant and a Designated
Beneficiary.
For calendar years beginning before January 1, 1989, if the
Participant's Spouse is not the Designated Beneficiary, the method of
distribution selected must assure that at least 50/% of the present
value of the amount available for distribution is paid within the Life
Expectancy of the Participant.
5.11.4. Determination of Amount to be Distributed Each Year.
(A) If the Participant's interest is to be paid in the form of
annuity distributions under the Plan (whether directly or in
the form of an annuity purchased from an
39
<PAGE> 74
insurance company), payments under the annuity shall
satisfy the following requirements:
(i) the annuity distributions must be paid in periodic
payments made at intervals not longer than one year;
(ii) the distribution period must be over a life (or lives) or
over a period certain not longer than a Life Expectancy
(or joint life and last survivor expectancy) described in
Code Section 401(a)(9) (A) (ii) or Code Section 401(a)(9)
(B)(iii), whichever
is applicable.
(iii)the Life Expectancy (or joint life and last survivor
expectancy) for purposes of determining the period
certain shall be determined without recalculation of Life
Expectancy;
(iv) once payments have begun over a period certain, the
period certain may not be lengthened even if the period
certain is shorter than the maximum permitted;
(v) payments must either be nonincreasing or increase only as
follows:
(1) with any percentage increase in a specified and
generally recognized cost-of-living index;
(2) to the extent of the reduction to the amount of the
Participant's payments to provide for a survivor
benefit upon death, but only if the Beneficiary whose
life was being used to determine the distribution
period described in Section 5.11.4 (A)(iii) dies and
the payments continue otherwise in accordance with that
section over the life of the Participant;
(3) to provide cash refunds of Employee contributions upon
the Participant's death; or
(4) because of an increase in benefits under the Plan.
(vi) If the annuity is a life annuity (or a life annuity with
a period certain not exceeding 20 years), the amount
which must be distributed on or before the Participant's
Required Beginning Date (or, in the case of distributions
after the death of the Participant, the date
distributions are required to begin pursuant to Section
7.2) shall be the payment which is required for one
payment interval. The second payment need not be made
until the end of the next payment interval even if that
payment interval ends in the next calendar year. Payment
intervals are the periods for which payments are receive,
e.g., bimonthly, monthly, semi-annually, or annually. If
the annuity is a period certain annuity without a life
contingency (or a life annuity with a period certain
exceeding 20 years) periodic payments for each
distribution calendar year shall be combined and treated
as an annual amount.
The amount which must be distributed by the Participant's
Required Beginning Date (or, in the case of distributions
after the death of the Participant, the date distributions are
required to begin pursuant to Section 7.2) is the annual
amount for the first Distribution Calendar Year. The annual
amount for other Distribution Calendar Years, including the
annual amount for the calendar year in which the Participant's
Required Beginning Date (or the date distributions are
required to begin pursuant to Section 7.2) occurs, must be
distributed on or before December 31 of the calendar year for
which the distribution is required.
(B) Annuities purchased after December 31, 1988, are subject to
the following conditions:
(i) Unless the Participant's Spouse is the Designated
Beneficiary, if the Participant's interest is being
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<PAGE> 75
distributed in the form of a period certain annuity
without a life contingency, the period certain as of the
beginning of the first Distribution Calendar Year may not
exceed the applicable period determined using the table
set forth in Q&A A-5 of section 1.401(a)(9)-2 of the
regulations issued under the Code.
(ii) If the Participant's interest is being distributed in the
form of a joint and survivor annuity for the joint lives
of the Participant and a nonspouse Beneficiary, annuity
payments to be made on or after the Participant's
Required Beginning Date to the Designated Beneficiary
after the Participant's death must not at any time exceed
the applicable percentage oft he annuity payment for such
period that would have been payable to the Participant
using the table set forth in Q&A A-6 of section
1.401(a)(9)-2 of the regulations under the Code.
(C) Transitional Rule. If payments under an annuity which complies
with Section 5.11.4 (A) begin prior to January 1, 1989, the
minimum distribution requirements in effect as of July 27,
1987, shall apply to distributions from this Plan, regardless
of whether the annuity form of payment is irrevocable. This
transitional rule also applies to deferred annuity contracts
distributed to or owned by the Participant prior to January 1,
1989, unless additional contributions are made under the Plan
by the Employer or Affiliate with respect to such contract.
(D) If the form of distribution is an annuity made in accordance
with Section 5.11.4, any additional benefits accruing to the
Participant after his or her Required Beginning Date shall be
distributed as a separate and identifiable component of the
annuity beginning with the first payment interval ending in
the calendar year immediately following the calendar year in
which such amount accrues.
(E) Any part of the Participant's interest which is in the form of
an individual account shall be distributed in a manner
satisfying the requirements of the Code Section 401(a)(9).
5.11.5 Transitional Rule Section 242 Election Notwithstanding the
other requirements of this Article and subject to the Joint and
Survivor Annuity rules set forth in Article VI, distribution on behalf
of any Employee, including a 5% owner, may be made in accordance with
all of the following requirements (regardless of when such
distribution commences):
(A) the distribution by the trust is one which would not have
qualified such trust under Code Section 401(a)(9) as in effect
prior to amendment by the Deficit Reduction Act of 1984;
(B) the distribution is in accordance with a method of
distribution designated by the Employee whose interest in the
trust is being distributed or, if the Employee is deceased, by
a Beneficiary of such Employee;
(C) such designation was in writing, was signed by the Employee or
the Beneficiary, and was made before January 1, 1984;
(D) the Employee had accrued a benefit under the Plan as of
December 31, 1983; and
(E) the method of distribution designated by the Employee or the
Beneficiary specifies the time at which distribution will
commence, the period of which distributions will be made, and
the case of any distribution upon the Employee's death, the
Beneficiaries of the Employee listed in order of priority.
A distribution upon death will not be covered by this transitional
rule unless the information in the designation contains the required
information described above the respect to the distributions to be
made upon the death of the Employee.
For any distribution which commenced before January 1, 1984, but
continues after December 31, 1983, the Employee, or the Beneficiary,
to whom such distribution is being made, will be presumed to have
designated the method of distribution under
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<PAGE> 76
which the distribution is being made if the method of distribution was specified
in writing and the distribution satisfies the requirements in subsections
5.11.5(A) and (E).
If a designation is revoked any subsequent distribution must satisfy the
requirements of Code Section 401(a)(9). If a designation is revoked subsequent
to the date distributions are required to begin, the trust must distribute by
the end of the calendar year following the calendar year in which the revocation
occurs the total amount not yet distributed to satisfy Code Section 401(a)(9)
but for the Section 242(b)(2) election.
For calendar years beginning after December 31, 1988, such distributions must
meet the minimum distribution incidental benefit requirements in section
1.401(a)(9)-2 of the regulations issued under the Code. Any changes in the
designation will be considered to be a revocation of the designation.
However, the mere substitution or addition of another Beneficiary (one not named
in the designation) under the designation will not be considered to be a
revocation of the designation, so long as such substitution or addition does not
alter the period over which distributions are to be made under the designation,
directly or indirectly (for example, by altering the relevant measuring life).
In the case in which an amount is transferred or rolled over from one plan to
another plan, the rules in Q &A J-2 and Q&A J-3 of section 1.401(a)(9)-1 of the
regulations issued under the Code.
ARTICLE VI.
FORMS OF PAYMENT OF
RETIREMENT BENEFITS
6.1 Methods of Distribution:
6.1.1 If the Plan is a money purchase pension plan or a target benefit plan, a
Participant's benefit shall be payable in the normal form of a Qualified Joint
and Survivor Annuity if the Participant is married on his or her Benefit
Commencement Date and in the normal form of an immediate annuity for the life of
the Participant if the Participant if the is not married on that date. A
Participant who terminated Employment on or after satisfying the requirements
for Early Retirement may elect to have his or her Qualified Joint and Survivor
Annuity distributed upon attainment of such Early Retirement. If the Plan is a
profit-sharing plan that satisfies the requirements set forth in Section 6.1.2,
a Participant's Accounts shall only be payable in the normal form of a lump-sum
distribution in accordance with Section 6.1.1(B) below. A Participant in a money
purchase pension plan, a target benefit plan, or a profit-sharing plan that does
not satisfy the requirements set forth in Section 6.1.2, may at any time after
attaining age 35 and prior to his or her Benefit Commencement Date elect, in
accordance with Section 6.2 of any of the following optional forms of payment
instead of normal form:
(A) An Annuity Contract payable as:
(i) a single life annuity
(ii) a joint and 50% survivor annuity with a contingent annuitant;
(iii) a joint and 100% survivor annuity with a contingent annuitant;
(iv) an annuity for the life of the Participant with 120 monthly
payments certain;
(B) A lump sum distribution in cash or in kind, or part in cash and part
in kind; or
(C) In installments payable in cash or in kind, or part in cash and part
in kind over a period not in excess of that required to comply with
Section 5.11.4.
Anything in this Section 6.1.1 to the contrary notwithstanding, if the value of
a Participant's vested Account as of the applicable Valuable Date is $3,500 or
less, his or her benefit shall be paid in the form of a lump sump distribution
and no optional form of benefit payment shall be available.
6.1.2 If the Plan is a profit-sharing plan then: (A) the Participant cannot
elect payments in the form of a Life annuity (this Section 6.1.2 shall not apply
if a life annuity form is an optional form preserved under Code Section
411(d)(6)); (B) on the death of the Participant, the Participant's benefits will
be paid to his or her Surviving Spouse, if any, or, if his or her Surviving
Spouse has already consented in a manner conforming to an election under Section
6.2.4, then to the Participant's Beneficiary; and (C) the normal form of benefit
shall be lump sum and sections 6.2.1, 6.2.2 and 6.2.4 shall not be applied by
the Administrator. A Participant in such a profit-sharing plan may also elect to
receive his or her
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<PAGE> 77
benefit in the form of installments in accordance with Section 6.1.1(C) of the
Plan. This Section 6.1.2 shall not apply, however, with respect to the
Participant if it is determined that the Plan is a direct or indirect transferee
of a defined benefit plan, a money purchase pension plan (including a target
benefit plan) or a stock bonus or profit-sharing plan which is subject to the
survivor annuity requirements of Code Sections 401(a)(11) and 417. In addition,
this Section 6.1.2 shall not apply unless the Participant's Surviving Spouse, if
any, is the Beneficiary of (i) the proceeds of any insurance of the
Participant's life purchased by Employer contributions or (ii) forfeitures
allocated to the Participant's Surviving Spouse has consented to the
Participant's designation of another Beneficiary as referred to in subsection
(C) of this Section 6.1.2.
6.1.3 The following transitional rules shall apply for those Participants
entitled to but not receiving benefits as of August 23, 1984:
(A) Any living Participant not receiving benefits on August 23, 1984, who
would otherwise not receive the benefits prescribed by Section 6.1
must be given the opportunity to elect to have Section 6.1 apply if
such Participant is credited with at least One Hour of Service under
this Plan or a predecessor plan in a Plan Year beginning on or after
January 1, 1976, and such Participant had at least 10 Years of Service
when he or she terminated from Employment.
(B) Any living Participant not receiving benefits on August 23, 1984, who
was credited with at least one Hour of Service under this Plan or a
predecessor plan on or after September 2, 1974, and who is not
otherwise credited with an Hour of Service in a Plan Year beginning on
or after January 1, 1976, must be given the opportunity to have his or
her benefits paid in accordance with this Section 6.1.3(D).
(C) The respective opportunities to elect (as described in these Sections
6.1.3(A) and (B)) must be afforded to the appropriate Participants
during the period commencing on August 23, 1984, and ending on such
Participant's Benefit Commencement Date.
(D) Any Participants who has elected pursuant to this Section 6.1.3(B) and
any Participant who does not elect under this Section 6.1.3(A) or who
meets the requirements of this Section 6.1.3(A) or who meets the
requirements of this Section 6.1.3(A) or who meets the requirements of
this Section 6.1.3(A) except that such Participant does not have at
least ten Years of Service when he or she terminates from Employment,
shall have his or her benefits distributed in accordance with all of
the following requirements if benefits would have been payable in the
form of a single life annuity:
(1) Joint and Survivor Annuity: If benefits in the form of a single
life annuity became payable to a married Participant who:
(a) begins to receive payments on or after Normal Retirement
Age; or
(b) dies on or after Normal Retirement Age while in active
Employment; or
(c) begins to receive payments on or after the "Qualified Early
Retirement Age", as that term is defined in Section
6.1.3(D)(3)(a); or
(d) terminates from Employment on or after attaining Normal
Retirement Age (or Qualified Early Retirement Age) and after
satisfying the eligibility requirement for the payment of
benefits under the Plan and thereafter dies before his or
her Benefit Commencement Date; then such benefits will be
received in the form of a Qualified Joint and Survivor
Annuity, unless the Participant has elected otherwise during
the election period which begins at least six months before
the Participant attains Qualified Early Retirement Age and
ends no earlier than 90 days before his or her Benefit
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Commencement Date. Any election hereunder will be in writing
and may be changed by the Participant at any time.
(2) Election of early survivor annuity: A Participant who is
employed after attaining the Qualified Early Retirement Age will
be given the opportunity to elect, beginning on the later of (1)
the 90th day before he or she attains his or her Qualified Early
Retirement Age, or (2) the date on which participation begins,
and ending on the date he or she terminates Employment, to have
a survivor annuity payable on death. If the Participant elects
the survivor annuity, payments under such annuity must not be
less tan the payment which would have been made to the Spouse
under the Qualified Joint and Survivor Annuity if the
Participant had retired on the day before his or her death. Any
election under this provision will be in writing and may be
changed by the Participant at any time.
(3) Qualified Early Retirement Age
(a) For purposes of this section 6.1.3, Qualified Early
Retirement Age is the latest of:
(i) the earliest date, under the Plan, on which the
Participant may elect to receive retirement benefits,
(ii) the first day of the 120th month beginning before the
Participant reaches Normal Retirement Age, or
(iii) the date the Participant begins participation.
(b) Qualified Joint and Survivor Annuity is an annuity for the
life of the Participant with a survivor annuity for the life
of the Spouse as described in Section 1.77.
6.2 Election of Optional Forms:
6.2.1 By notice to the Administrator at any time prior to a Participant's date
of death and beginning on the first day of the Plan Year in which the
Participant attains age 35, the Participant may elect, in writing, not to
receive the normal form of benefit payment otherwise applicable and to receive
instead an optional form of benefit payment provided for in Section 6.1.1. If
the Participant separates from Employment prior to the first day of the Plan
Year in which the Participant attains age 35, the Participant may make such
election beginning on the date he or she separates from Employment. This Section
6.2.1 shall not be applicable if Section 6.1.2 applies to a Participant.
6.2.2 Within a reasonable period, but in any event no less than 30 and no more
than 90 days prior to each Participant's Benefit Commencement Date, the
Administrator shall provide to each Participant a written explanation of the
terms and conditions of a Qualified Joint and Survivor Annuity. Such written
explanation shall consist of:
(A) the terms and conditions of the Qualified Joint and Survivor Annuity;
(B) the Participant's right to make, and the effect of, an election to
waive the Qualified Joint and Survivor Annuity;
(C) the rights of the Participant's Spouse under Section 6.2.4;
(D) the right to make, and the effect of, a revocation of a previous
election to waive the Qualified Joint and Survivor Annuity; and
(E) the relative values of the various optional forms of benefit under the
Plan.
(F) If the distribution is one to which Sections 401(a)(11) and 417 of the
Internal Revenue Code do not apply, such distribution may commence
less than 30 days after the notice required under
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Section 1.411(a)-11(c) of the Income Tax Regulations is given,
provided that:
(1) the Plan Administrator clearly informs the Participant that the
Participant has a right to a period of at least 30 days after
receiving the notice to consider the decision of whether or not
to elect a distribution (and, if applicable, a particular
distribution option), and
(2) the Participant, after receiving the notice, affirmatively
elects a distribution.
The Administrator may, on a uniform and nondiscretionary basis, provide for such
other notices, information or election periods or take such other action as the
Administrator considers necessary or appropriate to implement the provisions of
this Section 6.2.2.
6.2.3 A Participant may revoke his or her election to take an optional form of
benefit, and elect a different form of benefit, at any time prior to the
Participant's Benefit Commencement Date.
6.2.4 The election of an optional benefit by a Participant after December 31,
1984, must also be a waiver of a Qualified Joint and Survivor Annuity by the
Participant. Any waiver of a Qualified Joint and Survivor Annuity shall not be
effective unless (A) the Participant's Spouse consents in writing; (B) the
election designates a specific alternate Beneficiary, including any class of
Beneficiaries or any contingent Beneficiaries which may not be changed without
spousal consent (or the Spouse expressly permits designations by the Participant
without any further spousal consent); (C) the Spouse's consent to the waiver is
witnessed by a Plan representative or notary public; and (D) the Spouse's
consent acknowledges the effect of the election. Additionally, a Participant's
waiver of the Qualified Joint and Survivor Annuity will not be effective unless
the election designates a form of benefit payment which may not be changed
without spousal consent or the Spouse expressly permits designations without any
further spousal consent. Notwithstanding this consent requirement, if the
Participant establishes to the satisfaction of a Plan representative that such
written consent may not be obtained because there is no Spouse or the Spouse
cannot be located, the election will be deemed effective. Any consent necessary
under this provision will not be valid with respect to any other Spouse. A
consent that permits designations by the Participant without any requirement of
further consent by such Spouse must acknowledge that the Spouse has the right to
limit consent to a specific Beneficiary, and a specific form of benefit, where
applicable, and that the Spouse voluntarily elects to relinquish either or both
of such rights. Additionally, a revocation of a prior waiver may be made by a
Participant without the consent of the Spouse at any time before his or her
Benefit Commencement Date. The number of revocations shall not be limited. Any
new waiver will require a new consent by the electing Participant's Spouse. No
consent obtained under this provision shall be valid unless the Participant has
received notice as provided in this Section.
6.2.5 The election of an optional form of benefit which contemplates the payment
of an annuity shall not be given effect if any person who would receive benefits
under the annuity dies before the Benefit Commencement Date.
6.3 Change in Form of Benefit Payments: Any former Employee whose payments are
being deferred or who is receiving installment payments may request acceleration
or other modification of the form of benefit distribution, subject to Code
Section 401(a)(9), provided that any necessary consent to such change required
pursuant to Section 6.2.4 is obtained from the Employee's Spouse. This Section
6.3 shall not apply to any Employee who becomes a Participant on or after
January 1, 1989 or to Plans adopted after that date.
6.4 Direct Rollovers:
6.4.1 The provisions of this Section 6.4 apply only to distributions made on or
after January 1, 1993.
6.4.2 Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a Distributee's election under this Section 6.4, a Distributee
may elect, at the time and in the manner prescribed by the 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.
6.4.3 Definitions - All terms used in this Section 6.4 shall have the meaning
set forth below:
(A) Eligible Rollover Distribution: An Eligible Rollover Distribution is
any
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distribution of all or any portion of the balance of 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 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 Code Section 401(a)(9); 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: An Eligible Retirement Plan is an individual
retirement account described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(b), an annuity plan
described in Code Section 403(a), or a qualified trust described in
Code Section 401(a) 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: A 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 payee under a qualified domestic relations order, as defined
in Code Section 414(p), are Distributees with regard to the interest
of the Spouse or former Spouse.
(D) Direct Rollover: A Direct Rollover is a payment by the Plan to the
Eligible Retirement Plan specified by the Distributee.
ARTICLE VII.
DEATH BENEFITS
7.1 Payment of Account Balances:
7.1.1 The benefits payable to the Beneficiary of a Participant who dies while an
Employee shall be the Account Balance of all of his or her Accounts including,
if applicable, the proceeds of any life insurance contract in effect on the
Participant's life in accordance with Section 7.3. The benefits payable to the
Beneficiary of a Participant who dies after terminating Employment shall be the
vested Account Balance of all of his or her Accounts. Except as otherwise
provided in this Article VII, a Beneficiary may request that he or she be paid
his or her benefits as soon as practicable after the Participant's death.
7.1.2 If a Participant dies before distribution of his or her entire interest in
the Plan has been completed, the remaining interest shall, subject to Section
7.2.5, be distributed to the Participant's Beneficiary in the form, at the time
and from among the methods specified in Section 6.1.1 as elected by the
Beneficiary in writing filed with the Administrator. If an election is not
received by the Administrator within 90 day following the date the Administrator
is notified of the Participant's death, the distribution shall be made, if to a
Surviving Spouse, in accordance with Section 7.2.5(B), and, if to some other
Beneficiary, to the Beneficiary in a lump-sum.
7.1.3 The value of the benefits payable to a Beneficiary shall be determined in
accordance with Section 10.6.2. If the value of such death benefit is $3,500 or
less, distribution of such benefit shall be made in a lump-sum as soon as
practicable following the death of the Participant.
7.2 Beneficiaries:
7.2.1 The Administrator shall provide each Participant, within the period
described in Section 7.2.1(A) for such Participant, a written explanation of the
death benefit in such terms and in such a manner as would be comparable to the
explanation provided for meeting the requirements applicable to a Qualified
Joint and Survivor Annuity. This Section 7.2.1 shall not be applicable if
Section 6.1.2 applies to a Participant.
(A) The period for providing a written explanation of the death benefit
for a
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Participant ends on the latest of the following to occur:
(i) 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;
(ii) a reasonable period ending after the Employee becomes a
Participant; or
(iii) a reasonable period ending after Code Section 417 first applies
to the Participant.
Notwithstanding the foregoing, notice must be provided within a
reasonable period ending after termination of Employment in case of a
Participant who terminates Employment before attaining age 35 and who
has a vested interest in his or her Account.
(B) For purposes of the preceding paragraph, a reasonable period ending
after the enumerated events described in (ii) and (iii) is the end of
the two-year period beginning one year prior to the date the
applicable event occurs and ending one year after that date. A
Participant who has a vested interest in his or her Account and who
terminates Employment before the Plan in which age 35 is attained,
shall be provided such notice within the two-year period beginning one
year prior to and ending one year after termination. If such a
Participant returns to Employment, the applicable period for such
Participant shall be redetermined.
7.2.2 A Participant shall designate one or more Beneficiaries to whom amounts
due after his or her death, other than under the Qualified Joint and Survivor
Annuity, shall be paid. In the event a Participant fails to make a proper
designation or in the event that no designated Beneficiary survives the
Participant, the Participant's Beneficiary shall be the Participant's Surviving
Spouse, or if the Participant has no Surviving Spouse, the legal representative
of the Participant's estate, as an asset of that estate. A Participant's
Beneficiary shall not have any right to benefits under the Plan unless he or she
shall survive the Participant.
7.2.3 Any designation of a Beneficiary incorporated into an Annuity Contract or
insurance contract shall be governed by the terms of such Annuity Contract or
insurance contract. Any other designation of a Beneficiary must be filed with
the Administrator, in a time and manner designated by such Administrator, in
order to be effective. Any such designation of a Beneficiary may be revoked by
filing a later designation or an instrument of revocation with the
Administrator, in a time and manner designated by the Administrator.
7.2.4 Effective after December 31, 1984, a married Participant whose designation
of a Beneficiary is someone other than his or her Spouse, including a
Beneficiary referred to in the first sentence of Section 7.2.3, or the change of
any such Beneficiary to a new Beneficiary other than the Participant's Spouse,
shall not be valid unless made in writing and consented to by the Participant's
Spouse in such terms and in such a manner as would be comparable to the consent
provided for a waiver of the Qualified Joint and Survivor Annuity. The Spouse's
consent to such designation must be made in the manner described in Section
6.2.4.
7.2.5 Notwithstanding any other provision of the Plan to the contrary:
(A) If the Participant dies after his or her Benefit Commencement Date,
but before distribution of his or her benefit has been completed, the
remaining portion of such benefit may continue in the form and over
the period in which the distributions were being made, but in any
event must continue to be made at least as rapidly as under the method
of distribution being used prior to the Participant's death.
(B) If the Participant dies leaving a Surviving Spouse before his or her
Benefit Commencement Date, the Participant's benefit shall be payable
to the Participant's Surviving Spouse in the form of an annuity for
the life of the Surviving Spouse. The preceding sentence shall not
apply if, within 90 days following the date the Administrator is
notified of the Participant's death, his or her Surviving Spouse
elects, by written notice to the Administrator, any other
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form of benefit payment specified in Section 6.1.1, or the such
Surviving Spouse has already consented in a manner described in
Section 6.2.4 to a distribution to an alternate Beneficiary designated
by the Participant. If the Plan is a profit-sharing plan which meets
the requirements of Section 6.1.2, the Surviving Spouse shall receive
his or her distribution in the form of a lump-sum unless she or he
elects within 90 days following the date the Administrator is notified
of the Participant's death, any other form of benefit payment
specified in Section 6.1.1, or the Participant's Surviving Spouse has
already consented in a manner described in Section 6.2.4 to a
distribution to an alternate Beneficiary designated by the
Participant. If the Participant's benefit is $3,500 or less,
distribution shall be made in the form of a lump-sum comprised of the
assets in the Account immediately prior to the distribution if the
Account consists of Participant-Directed Assets. If the Account does
not consist of Participant-Directed Assets, the distribution shall be
in cash. If the Participant's benefit is distributable in the form of
an annuity for the life of the Surviving Spouse, the Surviving Spouse
may elect to have such annuity distributed immediately.
(C) If the Participant dies before his or her Benefit Commencement Date,
the distribution of the Participant's entire interest shall be
completed by December 31 of the calendar year containing the fifth
anniversary of the Participant's death except to the extent that an
election is made by the designated Beneficiary involved to receive
distributions in accordance with (i) or (ii) of this subsection (C)
below:
(i) if any portion of the Participant's interest is payable to a
designated Beneficiary who is an individual, distributions may
be made in substantially equal installments over the life or
Life Expectancy, as defined in Section 5.11.1(D), of the
designated Beneficiary commencing on or before December 31 of
the calendar year immediately following the calendar year of the
Participant's death;
(ii) if the designated Beneficiary is the Participant's Surviving
Spouse, the date distributions are required to begin in
accordance with (i) of this subsection (C) shall not be earlier
than the later of December 31 of the calendar year in which the
Participant died and December 31 of the calendar year in which
the Participant would have attained age 65; and
(iii) if the Surviving Spouse dies before payments begin subsequent
distributions shall be made as if the Surviving Spouse had been
the Participant.
(D) For purposes of this Section 7.2.5, distribution of a Participant's
interest is considered to begin on the Participant's Required
Beginning Date, as defined in Section 5.11.1(E). If distribution in
the form of an annuity irrevocably commences to the Participant before
such Required Beginning Date, the date distribution is considered to
begin is the date distribution actually commences.
(E) For purposes of this Section 7.2.5, any amount paid to a child of the
Participant will be treated as if it had been paid to the
Participant's Surviving Spouse if the amount becomes payable to such
Surviving Spouse when the child reaches the age of majority.
(F) If a Participant has not made an election pursuant to this Section
7.2.5 by the time of his or her death, the Participant's designated
Beneficiary must elect the method of distribution no later than the
earlier of (i) December 31 of the calendar year in which distributions
would be required to begin under this Section or (ii) December 31 of
the calendar year which contains the fifth anniversary of the date of
death of the Participant. If the Participant has no designated
Beneficiary, or if the designated Beneficiary does not elect a method
of distribution, distribution of the Participant's entire Interest
must be
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completed by December 31 of the calendar year containing the fifth
anniversary of the Participant's death.
7.3 Life Insurance:
7.3.1 With the consent of the Administrator and upon such notice as the
Administrator may require, a Participant may direct that a portion of his or her
Account be used to pay premiums on life insurance on the Participant's life;
provided, however, that (a) the aggregate premiums paid on ordinary life
insurance must be less than 50% of the aggregate contributions allocated to the
Participant's Employer Accounts, (b) the aggregate premiums paid on term life
insurance contracts, universal life insurance contracts and all other life
insurance contracts which are not ordinary life insurance may not exceed 25% of
the aggregate contributions allocated to the Participant's Employer Account, and
(c) the sum of one-half of the premiums paid on ordinary life insurance and the
total of all other life insurance premiums may not exceed 25% of the aggregate
contributions allocated to the Employer Account of the Participant. For purposes
of these limitations, ordinary life insurance contracts are contracts with both
non-decreasing death benefits and non-increasing premiums.
7.3.2 The Trustee shall be the owner of each life insurance contract purchased
under this Section 7.3 and the proceeds of each such contract shall be payable
to the Trustee, provided that all benefits, rights and privileges under each
contract on the life of a Participant which are available while the Participant
is living shall be exercised by the Trustee only upon and in accordance with the
written instructions of the Participant. The proceeds of all such insurance on
the life of a Participant shall be paid over by the Trustee to the Participant's
Beneficiary in accordance with this Article VII. Under no circumstances shall
the Trustee retain any part of the proceeds.
7.3.3 Any dividends or credits earned on a life insurance contract shall be
applied when received in reduction of any premiums thereon, of, if no premiums
are due, applied to increase the proceeds of the insurance contract.
7.3.4 If a Participant is found by the Administrator to be insurable only at a
substandard premium rate, the policy shall provide a reduced death benefit using
the same premium as would be required if the Participant were a standard risk,
the amount of the death benefit being determined in accordance with the amount
of the rating.
7.3.5 The cash surrender value of an insurance contract to the extent deriving
from Employer or Participant contributions, if any, shall be included,
respectively, in the Account Balance of the Account from which the premiums were
paid. Any death benefits under an insurance contract payable before the
Participant's termination of Employment will be paid to the Trustee for addition
to the relevant Account of the Participant for distribution in accordance with
Section 7.1.
7.3.6 Any other provisions herein to the contrary notwithstanding, the purchase
of life insurance for any Participant shall be subject to such minimum premium
requirements as the Trustee may determine from time to time.
7.3.7 Premiums on life insurance contracts on a Participant's life shall be paid
by the Trustee, unless directed otherwise by the Participant, first from cash in
the Participant's Employer Accounts to the extent thereof, and then from cash in
the Participant's Participant Contributions Accounts, if any, to the extent
thereof. If there is insufficient cash in either Account to pay premiums due,
the Trustee shall notify the Participant of this fact. If the Participant does
not thereafter instruct the Trustee to sell sufficient assets in an Account of
the Participant to pay premiums due on a timely basis, the Trustee shall not be
obligated to take any further action with respect to any life insurance contract
on the Participant's life, whether as regards continuing insurance on a paid-up
basis, effecting a reduction of the insurance in force, or otherwise, except at
the direction of the Participant.
7.3.8 Prior to such time as a Participant becomes entitled to receive a
distribution of any benefits under this Plan for any reason other than the
Participant's death, the Trustee shall, pursuant to the written direction of the
Participant delivered to the Administrator within such period of time as is
acceptable to the Administrator, either convert all life insurance contracts on
the Participant's life into cash or an annuity to provide current or future
retirement income to the Participant or distribute the contracts to the
Participant as a part of a benefit distribution; provided, however, that:
(A) the contracts shall not be distributed unless, if the Participant is
married at the time the distribution of the contracts is to
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be made, and the Plan is a money purchase pension plan, a target
benefit plan or a profit-sharing plan to which Section 6.1.2 does not
apply, the Participant's Spouse at that time consents to a
distribution in the manner prescribed by Section 6.2.4; and
(B) If the cash value of any contracts at the time they become
distributable to a Participant exceeds a Participant's vested interest
in his or her Employer Accounts at that time, the Participant shall be
entitled to receive a distribution of each contracts only if the
Participant promptly pays such excess in cash to the Trust Fund.
Life insurance contracts on a Participant's life shall not continue to be
maintained under the Plan following the Participant's termination of Employment
or after Employer contributions have ceased.
If a Participant on whose life an insurance contract is held does not make a
timely and proper direction regarding the contract under this Section 7.3.8, the
Participant shall be deemed to have directed that the contract be converted into
cash to be distributed in the manner in which the Participant's benefit is to be
distributed.
7.3.9 Anything contained herein to the contrary notwithstanding, in the event of
any conflict between the terms of the Plan and the terms of any insurance
contract purchased under this Section 7.3, the provisions of the Plan shall
control.
ARTICLE VIII.
FIDUCIARIES
8.1 Named Fiduciaries:
8.1.1 The Administrator shall be a "named fiduciary" of the Plan, as that term
is defined in ERISA Section 402(a)(2), with authority to control and manage the
operation and administration of the Plan, other than authority to manage and
control Plan assets.
The Administrator shall also be the "administrator" and "plan administrator"
with respect to the Plan, as those terms are defined in ERISA Section 3(16)(A)
and in Code Section 414(g), respectively.
8.1.2 The Trustee, or Investment Committee if appointed by the Employer, shall
be a "named fiduciary" of the Plan, as that term is defined in ERISA Section
402(a)(2), with authority to manage and control all Trust Fund assets and to
select an Investment Manager or Investment Managers. If Merrill Lynch Trust
Company is the Trustee, it shall be a nondiscretionary trustee; an Investment
Committee shall be appointed and shall be the Employer, who may also remove such
Investment Committee; and the Investment Committee shall be the "named
fiduciary" with respect to Trust Fund assets. Anything in this Section 8.1.2 to
the contrary notwithstanding, with respect to Participant-Directed Assets, the
Participant or Beneficiary having the power to direct the investment of such
assets shall be the "named fiduciary" with respect thereto.
8.1.3 The Trustee, or Investment Committee if appointed by the Employer, shall
have the power to make and deal with any investment of the Trust Fund permitted
in Section 10.4, except Participant-Directed Assets or assets for which an
Investment Manager has such power, in any manner which it deems advisable and
shall also:
(A) establish and carry out a funding policy and method consistent with
the objectives of the Plan and the requirements of ERISA:
(B) have the power to select Annuity Contracts, if applicable;
(C) have the power to determine, if applicable, what investments specified
in Section 10.4, including, without limitation, Qualified Employer
Securities and regulated investment company shares, are available as
Participant-Directed Assets; and
(D) have all the rights, powers, duties and obligations granted or imposed
upon it elsewhere in the Plan.
8.2 Employment of Advisors: A "named fiduciary", with respect to the Plan (as
defined in ERISA Section 402(a)(2)) and any "fiduciary" (as defined in ERISA
Section 3(4)) appointed by such a "named fiduciary", may employ one or more
persons to render advice with regard to any responsibility of such "named
fiduciary" or "fiduciary" under the Plan.
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8.3 Multiple Fiduciary Capacities: Any "named fiduciary" with respect to the
Plan (as defined in ERISA Section 402(a)(2)) and any other "fiduciary" (as
defined in ERISA Section 3(4)) with respect to the Plan may serve in more than
one fiduciary capacity.
8.4 Indemnification: To the extent not prohibited by state or federal law, the
Employer agrees to, and shall indemnify and save harmless, as the case may be,
each Administrator (if a person other than the Employer), Trustee, Investment
Committee and/or any Employee, officer or director of the Employer, or an
Affiliate, from all claims for liability, loss, damage or expense (including
payment of reasonable expenses in connection with the defense against any such
claim) which result from any exercise or failure to exercise any of the
indemnified person's responsibilities with respect to the Plan, other than by
reason of gross negligence.
8.5 Payment of Expense:
8.5.1 All Plan expenses, including without limitation, expenses and fees
(including fees for legal services rendered and fees to the Trustee) of the
Sponsor, Administrator, Investment Manager, Trustee, and any insurance company,
shall be charged against and withdrawn from the Trust Fund; provided, however,
the Employer may pay any of such expenses or reimburse the Trust Fund for any
payment.
8.5.2 All transactional costs or charges imposed or incurred (if any) for
Participant-Directed Assets shall be charged to the Account of the directing
Participant or Beneficiary. Transactional costs and charges shall include, but
shall not be limited to, charges for the acquisition or sale or exchange of
Participant-Directed Assets, brokerage commissions, service charges and
professional fees.
8.5.3 Any taxes which may be imposed upon the Trust Fund or the income therefrom
shall be deducted from and charged against the Time Fund.
ARTICLE IX.
PLAN ADMINISTRATION
9.1 The Administrator:
9.1.1 The Employer may appoint one or more persons as Administrator, who may
also be removed by the Employer. If any individual is appointed as
Administrator, and the individual is an Employee, the individual will be
considered to have resigned as Administrator if he or she terminates Employment
and at least one other person continues to serve as Administrator. Employees
shall receive no compensation for their services rendered to or as
Administrator.
9.1.2 If more than one person is designated as Administrator, the Administrator
shall act by a majority 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. However,
if less than three members are appointed, the Administrators shall act only upon
the unanimous consent of its members. An Administrator who is also a Participant
shall not vote or act upon any matter relating to himself or herself, unless
such person is the sole Administrator.
9.1.3 The Administrator may authorize in writing any person to execute any
document or documents on the Administrator's behalf, and any interested person,
upon receipt of notice of such authorization directed to it, may thereafter
accept and rely upon any document executed by such authorized person until the
Administrator shall deliver to such interested person a written revocation of
such authorization.
9.2 Powers and Duties of the Administrator:
9.2.1 The Administrator shall have the power to construe the Plan and to
determine all questions of fact or interpretation that may arise thereunder, and
any such construction or determination shall be conclusively binding upon all
persons interested in the Plan.
9.2.2 The Administrator shall have the power to promulgate such rules and
procedures, to maintain or cause to be maintained such records and to issue such
forms as it shall deem necessary and proper for the administration of the Plan.
9.2.3 Subject to the terms of the Plan, the Administrator shall determine the
time and manner in which all elections authorized by the Plan shall be made or
revoked.
9.2.4 The Administrator shall have all the rights, powers, duties and
obligations granted to or imposed upon it elsewhere in the Plan.
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9.2.5 The Administrator shall exercise all of its responsibilities in a uniform
and nondiscriminatory manner.
9.3 Delegation of Responsibility: The Administrator may designate persons,
including persons other than "named fiduciaries" (as defined in ERISA Section
402(a)(2)) to carry out the specified responsibilities of the Administrator and
shall not be liable for any act or omission of a person so designated.
ARTICLE X.
TRUSTEE AND
INVESTMENT COMMITTEE
10.1 Appointment of Trustee and Investment Committee:
10.1.1 The Employer shall appoint one or more persons as a Trustee who shall
serve as such for all or a portion of the Trust Fund. By executing the Adoption
Agreement: (i) the Employer represents that all necessary action ha s been taken
for the appointment of the Trustee; (ii) the Trustee acknowledges that it
accepts such appointment; and (iii) both the Employer and the Trustee agree to
act in accordance with the Trust provisions contained in this Article X.
10.1.2 An Employee appointed as Trustee or to the Investment Committee shall
receive no compensation for services rendered in such capacity and will be
considered to have resigned if he or she terminates Employment and at least one
other person continues to act as Trustee or as the Investment Committee, as the
case may be. If Merrill Lynch Trust Company is the Trustee, the Employer shall
appoint an Investment Committee and Merrill Lynch Trust Company shall be a
nondiscretionary trustee.
10.1.3 If more than one person is acting as the Trustee, or as an Investment
Committee, such Trustee, or Investment Committee, shall act by a majority of the
persons at the time so acting and such action may be taken either by a vote at a
meeting or in writing without a meeting. If less than three members are serving,
the Trustee, or Investment Committee, shall act only upon the unanimous consent
of those serving. The Trustee, or Investment Committee, may authorize in writing
any person to execute any document or documents on its behalf, and any
interested person, upon receipt of notice of such authorization directed to it,
may thereafter accept and rely upon any document executed by such authorized
person until the Trustee, or Investment Committee, shall deliver to such
interested person a written revocation of such authorization.
10.2 The Trust Fund: The Trustee shall receive such sums of money or other
property acceptable to the Trustee which shall from time to time be paid or
delivered to the Trustee under the Plan. The Trustee shall hold in the Trust
Fund all such assets, without distinction between principal and income, together
with all property purchased therewith and the proceeds thereof and the earnings
and income thereon. The Trustee shall not be responsible for, or have any duty
to enforce, the collection of any contributions or assets to be paid or
transferred to it, or for verifying whether contributions or transfers to it are
allowable under the Plan, nor shall the Trustee be responsible for the adequacy
of the Trust Fund to meet or discharge liabilities under the Plan.
10.2.1 The Trustee shall receive in cash or other assets acceptable to the
Trustee, as long as such assets received do not constitute a prohibited
transaction, all contributions paid or delivered to it which are allocable under
the Plan and to the Trust Fund and all transfers paid or delivered under the
Plan and to the Trust Fund and all transfers paid or delivered under the Plan to
the Trust Fund from a predecessor trustee or another trust (including a trust
forming part of another plan qualified under Code Section 401(a); provided,
however, that the Trustee shall not be obligated to receive any such
contribution or transfer unless prior thereto or coincident therewith, as the
Trustee may specify, the Trustee has received such reconciliation, allocation,
investment or other information concerning, or such direction, contribution or
representation with respect to, the contribution or transfer or the source
thereof as the Trustee may require. The Trustee shall have no duty or authority
to (a) require any contribution or transfers to be made under the Plan or to the
Trustee, (b) compute any amount to be contributed or transferred under the Plan
to the Trustee, or (c) determine whether amounts received by the Trustee comply
with the Plan.
10.2.2 The Trust Fund shall consist of all money and other property received by
the Trustee pursuant to Section 10.2, increased by any income or gains on or
increment in such assets and decreased by any investment loss or expense,
benefit or disbursement paid pursuant to the Plan.
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10.3 Relationship with Administrator:
10.3.1 Neither the Trustee, nor the Investment Committee, if any, shall be
responsible in any respect for the administration of the Plan. Payments of money
or property from the Trust Fund shall be made by the Trustee upon direction from
the Administrator or its designee. Payments by the Trustee shall be transmitted
to the Administrator or its designee for delivery to the proper payees or to
payee addresses supplied by the Administrator or its designee, and the Trustee's
obligation to make such payments shall be satisfied upon such transmittal. The
Trustee shall have no obligation to determine the identity of persons entitled
to payments under the Plan or their addresses.
10.3.2 Directors from or on behalf of the Administrator or its designee shall be
communicated to the Trustee or the Trustee's designee for that purpose only in a
manner and in accordance with procedures acceptable to the Trustee. The
Trustee's designee shall not, however, be empowered to implement any such
directions except in accordance with procedures acceptable to the Trustee. The
Trustee shall have no liability for following any such directions or failing to
act in the absence of any such directions. The Trustee shall have no liability
for the acts or omissions of any person making or failing to make any direction
under the Plan or the provisions of this Article X nor any duty or obligation to
review any such direction, act or omission.
10.3.3 If a dispute arises over the propriety of the Trustee making any payment
from the Trust Fund, the Trustee may withhold the payment until the dispute has
been resolved by a court of competent jurisdiction or settled by the parties to
the dispute. The Trustee may consult legal counsel and shall be fully protected
in acting upon the advice of counsel.
10.4 Investment of Assets:
10.4.1 Except as provided in Section 10.4.2, investments of the Trust Fund shall
be made in the following, but only if compatible with the Sponsor's
administrative and operational requirement and framework:
(A) shares of any regulated investment company managed in whole or in
part by the Sponsor or any affiliate of the Sponsor;
(B) any property purchased through the Sponsor or any affiliate of the
Sponsor, whether or not productive of income or consisting of
wasting assets, including, without limitation by specification,
governmental, corporate or personal obligations, trust and
participation certificates, leaseholds, fee titles, mortgages and
other interests in realty, preferred and common stocks,
convertible stocks and securities, shares of regulated investment
companies, certificates of deposit, put and call options and other
option contracts of any type, foreign or domestic, whether or not
traded on any exchange, futures contracts and options on future
contracts traded on or subject to the rules of an exchange which
has been designated as a contract market by the Commodity Futures
Trading Commission, an independent U.S. government agency,
contracts relating to the lending of property, evidences of
indebtedness or ownership in foreign corporations or other
enterprises, or indebtedness of foreign governments, group trust
participations, limited or general partnership interests,
insurance contracts, annuity contracts, any other evidences of
indebtedness or ownership including oil, mineral or gas
properties, royalty interests or rights (including equipment
pertaining thereto); and
(C) Qualifying Employer Securities or "qualifying employer real
properties" (as that term is defined in ERISA Section 407(d) to
the extent permitted by Section 10.4.3.).
10.4.2
(A) Up to 25% or with the written consent of the Sponsor or its
representative, an additional percentage of each Plan Year's
contributions may be invested in property as specified in Section
10.4.1(B) acquired through a person other than the Sponsor or an
affiliate of the Sponsor.
(B) Except as permitted by Section 10.4.2 and except as may result
from a Rollover Contribution or a trust to trust transfer, without
the written consent of the Sponsor or its representative, property
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may not be acquired through a person other than the Sponsor or an
affiliate of the Sponsor if following such acquisitions the value
of the property so acquired would exceed 25% of the value of the
Trust Fund.
10.4.3 In is sole discretion, the Investment Committee, or Trustee if there is
no Investment Committee:
(A) may permit the investment of up to 10% of the Trust Fund in
Qualifying Employer Securities or "qualifying employer and
property" (as that term is defined in ERISA Section 407(d)), to
the extent such investment is compatible with the Sponsor's
administrative and operational requirements and framework; and
(B) may determine, subject to Section 10.4.2, that a percentage of
assets in excess of 10% of the Trust Fund may be invested in
Qualifying Employer Securities or "qualifying employer real
property" by a profit-sharing plan.
10.4.4 This Plan will be recognized as a Prototype Plan by the Sponsor only by
complying with the provisions of this Section 10.4.
10.5 Investment Direction, Participant-Directed Assets and Qualifying Employer
Investments:
10.5.1 The Trustee, or Investment Committee if appointed, shall manage the
investment of the Trust Fund except insofar as (a) an Investment Manager has
authority to manage Trust assets, or (b) Participant-Directed Assets are
permitted as specified in the Adoption Agreement. Except as required by ERISA,
if an Investment Committee is acting, the Trustee shall invest the Trust Fund as
directed by the Investment Committee, an Investment Manager or a Participant or
Beneficiary, as the case may be, and the Trustee shall have no discretionary
control over, nor any other discretion regarding, the investment or reinvestment
of any asset of the Trust.
Participant-Directed Assets shall be invested in accordance with the direction
of the Participant or, in the event of the Participant's death before an Account
is fully paid out, the Participant's Beneficiary with respect to the assets
involved; provided, however, that Participant-Directed Assets may not be
invested in "collectibles" (as defined in Code Section 408(m)(2)). If there are
Participant-Directed Assets, the investment of these assets shall be made in
accordance with such rules and procedures established by the Administrator which
must be consistent with the rules and procedures of the Sponsor or its
affiliate, as the case may be.
10.5.2 With respect to Participant-Directed Assets, neither the Administrator,
the Investment Committee nor the Trustee shall:
(A) make any investments or dispose of any investments without the
direction of the Participant or Beneficiary for whom the
Participant-Directed Assets are maintained, except as provided in
Section 8.5 so as to pay fees or expenses of the Plan;
(B) be responsible for reviewing any investment direction with respect
to Participant-Directed Assets or for making recommendations on
acquiring, retaining or disposing of any assets or otherwise
regarding any assets;
(C) have any duty to determine whether any investment is an authorized
or proper one; or
(D) be liable for following any investment direction or for any
losses, taxes or other consequences incurred as a consequence of
investments selected by any Participant or Beneficiary or for
holding assets uninvested until it receives proper instructions.
10.5.3 If Participant-Directed Assets are permitted, a list of the Participants
and Beneficiaries and such information concerning them as the Trustee may
specify shall be provided by the Employer or the Administrator to the Trustee
and/or such person as are necessary for the implementation of the directions in
accordance with the procedure acceptable to the Trustee.
10.5.4 It is understood that the Trustee may, from time to time, have on hand
funds which are received as contributions or transfers to the Trust Fund which
are awaiting investment or funds from the sale of Trust Fund assets which are
awaiting reinvestment. Absent receipt by the Trustee of a direction from the
proper person for the investment or reinvestment of
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such funds or otherwise prior to the application of funds in implementation of
such a direction, the Trustee shall cause such funds to be invested in shares of
such money market fund or other short-term investment vehicle as the Trustee, or
Investment Committee if appointed, may specify for this purpose from time to
time. Any such investment fund may be sponsored, managed or distributed by the
Sponsor or an affiliate of the Sponsor.
10.5.5 Directions for the investment or reinvestment of Trust assets of a type
referred to in Section 10.4 from the Investment Committee, an Investment Manager
or a Participant or Beneficiary, as the case may be, shall, in a manner and in
accordance with procedures acceptable to the Trustee, be communicated to and
implemented by, as the case may be, the Trustee, the Trustee's designee or, with
the Trustee's consent and if an Investment Committee is operating, a
broker/dealer designated for the purpose by the Investment Committee.
Communication of any such direction to such a designee or broker/dealer shall
conclusively be deemed an authorization to the designee or broker/dealer to
implement the direction even though coming from a person other than the Trustee.
The Trustee shall have no liability for its or any other person's following such
directions or failing to act in the absence of any such directions. The Trustee
shall have no liability for the acts or omissions of any person directing the
investment or reinvestment of Trust Fund assets or making or failing to make any
direction referred to in Section 10.5.6.
10.5.6 The voting and other rights in securities or other assets held in the
Trust shall be exercised by the Trustee provided, however, that if an Investment
Committee is appointed, the Trustee shall act as directed by such person who at
the time has the right to direct the investment or reinvestment of the security
or other asset involved.
10.5.7 With respect to any Qualifying Employer Securities allocated to an
Account, each Participant shall be entitled to direct the Trustee in writing as
to the manner in which Qualifying Employer Securities are to be voted.
10.5.8 With respect to any Qualifying Employer Securities allocated to an
Account, each Participant shall be entitled to direct the Trustee in writing as
to the manner in which to respond to a tender or exchange offer or other
decisions with respect to the Qualifying Employer Securities.
The Administrator shall utilize its best efforts to timely distribute or cause
to be distributed to each Participant such information received from the Trustee
as will be distributed to shareholders of the Employer in connection with any
such tender or exchange offer or other similar matter or any vote referred to in
Section 10.5.7.
10.5.9 If an Investment Committee is appointed, notwithstanding any provision
hereof to the contrary, in the event the person with the right to direct a
voting or other decision with respect to any security, Qualifying Employer
Securities, or other asset held in the Trust does not communicate any decision
on the matter to the Trustee or the Trustee's designee by the time prescribed by
the Trustee or the Trustee's designee for that purpose or if the Trustee
notifies the Investment Committee, if applicable, either that it does not have
precise information as to the securities, Qualifying Employer Securities, or
other assets involved allocated on the applicable record date to the accounts of
all Participants and Beneficiaries or that time constraints make it unlikely
that Participant, Beneficiary or Investment Manager direction as the case may
be, can be received on a timely basis, the decision shall be the responsibility
of the Investment Committee and shall be communicated to the Trustee on a timely
basis. In the event an Investment Committee with any right under the Plan to
direct a voting or other decision with respect to any security, Qualifying
Employer Securities, or other asset held in the Trust, does not communicate any
decision on the matter to the Trustee or the Trustee's designee by the time
prescribed by the Trustee for that purpose, the Trustee may, at the cost of the
Employer, retain an Investment Manager with full discretion to make the
decision. Except as required by ERISA, the Trustee shall (a) follow all
directions above referred to in this Section and (b) shall have no duty to
exercise voting or other rights relating to any such security, Qualifying
Employer Security or other asset.
10.5.10 The Administrator shall establish, or cause to be established, a
procedure acceptable to the Trustee for the timely dissemination to each person
entitled to direct the Trustee or its designee as to a voting or other decision
called for thereby or referred to therein of all proxy and other materials
bearing on the decision.
10.5.11 Any person authorized to direct the investment of Trust assets may, if
the Trustee and the Investment Committee, if applicable, so permit, direct the
Trustee to invest such assets in a common
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or collective trust maintained by the Trustee for the investment of assets of
qualified trusts under section 401(a) of the Code, individual retirement
accounts under section 408(a) of the Code and plans or governmental units
described in section 818(a)(6) of the Code. The documents governing any such
common or collective trust fund maintained by the Trustee, and in which Trust
assets have been invested, are hereby incorporated into this Article X by
reference.
10.6 Valuation of Accounts:
10.6.1 A Participant's Account shall be valued at fair market value on each
Valuation Date. Subject to Section 10.6.2(A), as of each Valuation Date, the
earnings and losses and expenses of the Trust Fund shall be allocated to each
Participant Account in the ratio that such Account Balance in that category of
Accounts bears to all Account Balances in that category. With respect to
Participant-Directed Assets, the earnings and losses and expenses (including
transactional expenses pursuant to Section 8.5.2) of such Participant-Directed
Assets shall be allocated to the Account of the Participant or Beneficiary
having authority to direct the investment of the assets in his or her Account.
10.6.2 The Valuation Date with respect to any distributions (including, without
limitation, loan distributions and purchase of annuities) from any Account upon
the occurrence of a Benefit Commencement Date or otherwise, shall be:
(A) with respect to Participant-Direct Asset, the date as of which the
Account distribution is made; and
(B) with respect to other assets, the Valuation Date immediately
preceding the Benefit Commencement Date, if applicable, or
immediately preceding the proposed date of any other distribution
from an Account.
With respect to any contribution allocable to an Account which has not been made
as of a Valuation Date determined pursuant to this Section 10.6.2, the principal
amount of such contribution distributable because of the occurrence of a Benefit
Commencement Date shall be distributed as soon as practicable after the date
paid to the Trust Fund.
10.6.3 The assets of the Trust shall be valued at fair market value as
determined by the Trustee based upon such sources of information as it may deem
reliable, including, but not limited to, stock market quotations, statistical
evaluation services, newspapers of general circulation, financial publications,
advice from investment counselors or brokerage firms, or any combination of
sources. The reasonable costs incurred in establishing values of the Trust Fund
shall be a charge against the Trust Fund, unless paid by the Employer.
When the Trustee is unable to arrive at a value based upon information from
independent sources, it may rely upon information from the Employer,
Administrator, Investment Committee, appraisers or other sources, and shall not
incur any liability for inaccurate valuation based in good faith upon such
information.
10.7 Insurance Contracts: The Trustee, if an Investment Committee is not
appointed, Investment Committee, or Participant or Beneficiary with respect to
Participant-Directed Assets, may appoint one or more insurance companies to hold
assets of the Plan, and may direct, subject to Section 7.3, the purchase of
insurance contracts or policies from one or more insurance companies with assets
of the Plan. Neither the Investment Committee, Trustee nor the Administrator
shall be liable for the validity of any such contract or policy, the failure of
any insurance company to make any payments or for any act or omission of an
insurance company with respect to any duties delegated to any insurance company.
10.8 The Investment Manager:
10.8.1 The Trustee, if an Investment Committee is not appointed, Investment
Committee, or the Participant or Beneficiary with respect to
Participant-Directed Assets, may, by an instrument in writing, appoint one or
more Investment Managers, who may be an affiliate of the Merrill Lynch Trust
Company, to direct the Trustee in the investment of all or a specified portion
of the assets of the Trust in property specified in Section 10.4. Any such
Investment Manager shall be directed by the Trustee, if an Investment Committee
is not appointed, Investment Committee Participant or Beneficiary, as the case
may be, to act in accordance with the procedures referred to in Section 10.5.5.
If appointed, the Investment Committee shall notify the Trustee in writing
before the effectiveness of the appointment or removal of any Investment
Manager. If there is more than one Investment Manager whose appointment is
effective under the Plan at any one time, the Trustee shall, upon written
instructions
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from the Investment Committee, Participant or Beneficiary, establish separate
funds for control by each such Investment Manager. The funds shall consist of
those Trust Fund assets designated by the Investment Committee, participant or
Beneficiary.
10.8.2 Each person appointed as an Investment Manager shall be:
(A) an investment adviser registered under the Investment Advisors Act
of 1940.
(B) a bank as defined in that Act, or
(C) an insurance company qualified to manage, acquire or dispose of
any asset of the Plan under the laws of more than one state.
10.8.3 Each Investment Manager shall acknowledge in writing that it is a
"fiduciary" (as defined in ERISA Section 3(21) with respect to the Plan. The
Trustee, or the Investment Committee if appointed, shall enter into an agreement
with each Investment Manager specifying the duties and compensation of such
Investment Manager and the other terms and conditions under which such
Investment Manager shall be retained. Neither the Trustee nor the Investment
Committee, if appointed, shall be liable for any act or omission of any
Investment Manager and shall not be liable for following the advice of any
Investment Manager with respect to any duties delegated to any Investment
Manager.
10.8.4 The Trustee, or Investment Committee if appointed, or the Participant or
Beneficiary, if applicable with respect to Participant-Directed Assets, shall
have the power to determine the amount of Trust Fund assets to be invested
pursuant to the direction of a designated Investment Manager and to set
investment objectives and guidelines for the Investment Manager.
10.8.5 Second Trust Fund: The Employer may appoint a second trustee under the
Plan with respect to assets which the Employer desires to contribute or have
transferred to the Trust Fund, but which the other Trustee does not choose to
accept; provided, however, that if a Merrill Lynch Trust Company is a Trustee,
its consent (which consent may be evidenced by its acceptance of its appointment
as Trustee) shall be required. In the event and upon the effectiveness of the
acceptance of the second Trustee's appointment, the Employer shall be deemed to
have created two trust funds under the Plan, each with its own Trustee, each
governed separately by this Article X. Each Trustee under such an arrangement
shall, however, discharge its duties and responsibilities solely with respect to
those assets of the Trust delivered into its possession and except pursuant to
ERISA, shall have no duties, responsibilities or obligations with respect to
property of the other Trust nor any liability for the acts or omissions of the
other Trustee. As a condition to its consent to the appointment of a second
trustee, the Merrill Lynch Trust Company shall assure that recordkeeping,
distribution and reporting procedures are established on a coordinated basis
between it and the second trustee as considered necessary or appropriate with
respect to the Trusts.
10.9 Powers of Trustee:
10.9.1 At the direction of the person authorized to direct such action as
referred to in Section 10.5.1, but limited to those assets or categories of
assets acceptable to the Trustee as referred to in Section 10.4, or at its own
discretion if no such person is so authorized, the Trustee, or the Trustee's
designee or a broker/dealer as referred to in Section 10.5.5, is authorized and
empowered:
(A) To invest and reinvest the Trust Fund, together with the income
therefrom, in assets specified in Section 10.4;
(B) To deposit or invest all or any part of the assets of the Trust in
savings accounts or certificates of deposit or other deposits in a
bank or savings and loan association or other depository
institution, including the Trustee or any of its affiliates,
provided with respect to such deposits with the Trustee or an
affiliate the deposits bear a reasonable interest rate;
(C) To hold, manage, improve, repair and control al property, real or
personal, forming part of the Trust Fund; to sell, convey,
transfer, exchange, partition, lease for any term, even extending
beyond the duration of this Trust, and otherwise dispose of the
same from time to time;
(D) to have, respecting securities, all the rights, powers and
privileges of an owner, including the power to give proxies, pay
assessment and other sums deemed by the
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Trustee necessary for the protection of the Trust Fund; to vote
any corporate stock either in person or by proxy, with or without
power of substitution, for any purpose; to participate in voting
trusts, pooling agreements, foreclosures, reorganizations,
consolidations, mergers and liquidations, and in connection
therewith to deposit securities with or transfer title to any
protective or other committee; to exercise or sell stock
subscriptions or conversion rights; and, regardless of any
limitation elsewhere in this instrument relative to investments by
the Trustee, to accept and retain as an investment any securities
or other property received through the exercise of any of the
foregoing powers;
(E) Subject to Section 10.5.4 hereof, to hold in cash, without
liability for interest, such portion of the Trust Fund which it is
directed to so hold pending investments, or payment of expenses,
or the distribution of benefits;
(F) To take such actions as may be necessary or desirable to protect
the Trust from loss due to the default on mortgages held in the
Trust including the appointment of agents or trustees, to grant to
such agents such powers as are necessary or desirable to protect
the Trust Fund, to direct such agent or trustee, or to delegate
such power to direct, and to remove such agent or trustee;
(G) To settle, compromise or abandon all claims and demands in favor
of or against the Trust Fund;
(H) To invest in any common or collective trust fund of the type
referred to in Section 10.5.8 hereof maintained by the Trustee;
(I) To exercise all of the further rights, powers, options, and
privileges granted, provided for, or vested in trustees generally
under the laws of the State of New Jersey, so that the powers
conferred upon the Trustee herein shall not be in limitation of
any authority conferred by law, but shall be in addition thereto;
(J) To borrow money from any source and to execute promissory notes,
mortgages or other obligations and to pledge or mortgage any trust
assets as security, subject to applicable requirements of the Code
and ERISA; and
(K) To maintain accounts at, execute transactions through, and lend on
an adequately secured basis stocks, bonds or other securities to,
any brokerage or other firm, including any firm which is an
affiliate of the Trustee.
10.9.2 To the extent necessary or which it deems appropriate to implement its
powers under Section 10.9.1 or otherwise to fulfill any of its duties and
responsibilities as trustee of the Trust Fund, the Trustee shall have the
following additional powers and authority:
(A) to register securities, or any other property, in its name or in
the name of any nominee, including the name of any affiliate or
the nominee name designated by any affiliate, with or without
indication of the capacity in which property shall be held, or to
hold securities in bearer form and to deposit any securities or
other property in a depository or clearing corporation;
(B) to designate and engage the services of, and to delegate powers
and responsibilities to, such agents, representatives, advisers,
counsel and accountants as the Trustee considers necessary or
appropriate, any of whom may be an affiliate of the Trustee or a
person who renders services to such an affiliate, and, as a part
of its expenses under this Trust Agreement to pay their reasonable
expenses and compensation;
(C) to make, execute and deliver, as Trustee, any and all deeds,
leases, mortgages, conveyances, waivers, releases or other
instruments in writing necessary or appropriate for the
accomplishment of any of the powers listed in this Trust
Agreement; and
(D) generally to do all other acts which the Trustee deems necessary
or appropriate for the protection of the Trust Fund.
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10.9.3 The Trustee shall have no duties or responsibilities other than those
specified in the Plan.
10.10 Accounting and Records:
10.10.1 The Trustee shall maintain or cause to be maintained accurate records
and accounts of all Trust transactions and assets. The records and accounts
shall be available at reasonable times during normal business hours for
inspection or audit by the Administrator, Investment Committee, if appointed, or
any person designated for the purpose by either of them.
10.10.2 Within 90 days following the close of each fiscal year of the Plan or
the effective date of the removal or resignation of the Trustee, the Trustee
shall file with the Administrator a written accounting setting forth all
transactions since the end of the period covered by the last previous
accounting. The accounting shall include a listing of the assets of the Trust
showing the value of such assets at the close of the period covered by the
accounting. On direction of the Administrator, and if previously agreed to by
the Trustee, the Trustee shall submit to the Administrator interim valuations,
reports or other information pertaining to the Trust.
The Administrator may approve the accounting by written approval delivered to
the Trustee or by failure to deliver written objections to the Trustee within 60
days after receipt of the accounting. Any such approval shall be binding on the
Employer, the Administrator, the Investment Committee and, to the extent
permitted by ERISA, all other persons.
10.11 Judicial Settlement of Accounts: The Trustee can apply to a court of
competent jurisdiction at any time for judicial settlement of any matter
involving the Plan including judicial settlement of the Group Trustee's account.
If it does so, the Trustee must give the Administrator the opportunity to
participate in the court proceedings, but the Trustee can also involve other
persons. Any expenses the Trustee incurs in legal proceedings involving the
Plan, including attorney's fees, are chargeable to the Trust Fund as an
administrative expense. Any judgment or decree which may be entered in such a
proceeding, shall,, subject to the provision of ERISA to be conclusive upon all
persons having or claiming to have any interest in the Trust Fund or under any
Plan.
10.12 Resignation and Removal of Trustee:
10.12.1 The Trustee may resign at any time upon at least 30 days' written notice
to the Employer.
10.12.2 The Employer may remove the Trustee upon at least 30 days' written
notice to the Trustee.
10.12.3 Upon resignation or removal of the Trustee, the Employer shall appoint a
successor trustee. Upon failure of the Employer to appoint, or the failure of
the effectiveness of the appointment by the Employer of, a successor trustee by
the effective date of the resignation or removal, the Trustee may apply to any
court of competent jurisdiction for the appointment of a successor.
Promptly after receipt by the Trustee of notice of the effectiveness of the
appointment of the successor trustee: (a) the Trustee shall deliver to the
successor trustee such records as may be reasonably requested to enable the
successor trustee to properly administer the Trust Fund and all property of the
Trust after deducting therefrom such amounts as the Trustee deems necessary to
provide for expense, taxes, compensation or other amounts due to or by the
Trustee not paid by the Employer prior to the delivery; and (b) except, if the
second Trustee is removed or resigns, the Plan will no longer be considered a
prototype plan.
10.12.4 Upon resignation or removal of the Trustee, the Trustee shall have the
right to a settlement of its account, which settlement shall be made, at the
Trustee's option, either by an agreement of settlement between the Trustee and
the Employer or by a judicial settlement in an action instituted by the Trustee.
The Employer shall bear the cost of any such judicial settlement, including
reasonable attorneys fees.
10.12.5 The Trustee shall not be obligated to transfer Trust assets until the
Trustee is provided assurance by the Employer satisfactory to the Trustee that
all fees and expenses reasonably anticipated will be paid.
10.12.6 Upon settlement of the account and transfer of the Trust Fund to the
successor trustee, all rights and privileges under the Trust Agreement shall
vest in the successor trustee and all responsibility and liability of the
Trustee with respect to the Trust and assets shall, except as otherwise required
by ERISA terminate subject only to the requirement that the
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Trustee execute all necessary documents to transfer the Trust assets to the
successor trustee.
10.13 Group Trust:
10.13.1 If elected by the Employer in the Adoption Agreement, the Trustee shall
be the Trustee for this Plan and each other qualified plan specified in the
Adoption Agreement; provided, however, that such other qualified plan is in
effect pursuant to an Adoption Agreement under this Prototype Plan. Any
reference to Trustee and to the Trust Fund in this Plan shall mean the Trustee
as the trustee of a Group Trust consisting of the assets of each such plan. The
Plan and each other qualified plan specified in the Adoption Agreement shall be
deemed to join in and adopt the Trust as the trust for each such plan. By
executing the Adoption Agreement, the Trustee accepts designation as Trustee of
this Group Trust.
10.13.2 The Trustee shall establish and maintain such accounting records for
each of the Plans as shall be necessary to reflect the interest in the Group
Trust applicable at any time or from time to time to each Plan. No part of the
corpus or income of the Group Trust allocable to an individual Plan may be used
for or diverted to any purposes other than for the exclusive benefit of
Participants and their Beneficiaries entitled to benefits under that Plan. The
allocable interest of a Plan in the Group Trust may not be assigned.
ARTICLE XI.
PLAN AMENDMENT
OR TERMINATION
11.1 Prototype Plan Amendment:
11.1.1 The mass submitter, Merrill Lynch, Pierce, Fenner & Smith Incorporated
and any successor thereto, may amend any part of the Prototype Plan. For
purposes of sponsoring organization amendments, 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 will
no longer be identical to or a minor modifier of the mass submitter plan.
11.1.2 An Employer shall have the right at any time, by an instrument in
writing, effective retroactively or otherwise, to (A) change the choice of
options in the Adoption Agreement, in whole or in part; (B) add overriding
language in the Adoption Agreement when such language is needed to satisfy Code
Section 415 or Code Section 416 because of the required aggregation of multiple
plans; and (C) add certain model amendments published by the Internal Revenue
Service which specifically provide that their adoption will not cause the Plan
to be treated as individually designed. No such amendment, however, shall have
any of the effects specified in Section 11.2.1. If the adopting Employer amends
the Plan or nonelective portions of the Adoption Agreement except as previously
provided, it will no longer participate in the Prototype Plan, but will be
considered to have an individually designed plan for the purposes of
qualification under Code Section 401(a). In the event the Employer is switching
from an individually designed plan or from one prototype plan to another, a list
of the Section "411(d)(6) protected benefits" that must be preserved may be
attached, and such a list would not be considered an amendment to the plan.
11.1.3 This Plan will be recognized as a Prototype Play by the Sponsor only by
complying with the registration requirements as specified in the Adoption
Agreement.
11.2 Plan Amendment:
11.2.1 Except as provided in Section 11.22, no amendment pursuant to Section
11.1 shall:
(A) authorize any part of the Trust Fund to be used for, or diverted
to, purposes other than for the exclusive benefit of
Participants or their Beneficiaries;
(B) decrease the accrued benefits of any Participant or his or her
Beneficiary under the Plan; An amendment which has the effect of
(1) eliminating or reducing an Early Retirement benefit or a
retirement-type subsidy, or (2) eliminating an optional form of
benefit payment, with respect to benefits attributable to
service before the amendment shall be treated as reducing
accrued benefits. In the case of a retirement-type subsidy, the
proceeding sentence shall apply only with respect to a
Participant who satisfied (either before or after the amendment)
the preamendment conditions for the subsidy. In general, a
retirement-type subsidy is a subsidy that continues after
retirement, but does not include a qualified disability benefit,
a medical benefit, a social security
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supplement, a death benefit (including life insurance), or a
plant shutdown benefit (that does not continue after retirement
age).
(C) reduce the vested percentage of any Participant determined
without regard to such amendment as of the later of the date
such amendment is adopted or the date it becomes effective;
(D) eliminate an optional form of benefit distribution with respect
to benefits attributable to service before the amendment; or
(E) change the vesting schedule, or in any way amend the Plan to
either directly or indirectly affect the computation of a
Participant's vested percentage, unless each Participant having
not less than 3 years of Vesting Service is permitted to elect,
within a reasonable period specified by the Administrator after
the adoption of such amendment, to have his or her vested
percentage computed without regard to such amendment.
For Participants who do not have at least one Hour of Service in
any Plan Year beginning after December 31, 1988, the preceding
sentence shall be applied by substituting "5 Years of Vesting
Service" for "3 Years of Vesting service" where such language
appears. The period during which the election may be made shall
commence with the date the amendment is adopted and shall end on
the later of:
(i) 60 days after the amendment is adopted;
(ii) 60 days after the amendment becomes effective; and
(iii) 60 days after the Participant is issued written notice
by the Administrator.
11.2.2 Anything contained in this Section 11.2 to the contrary notwithstanding,
a Participant's benefit may be reduced to the extent permitted under Code
Section 412(c)(8).
11.3 Right of the Employer to Terminate Plan:
11.3.1 The Employer intends and expects that from year to year it will be able
to and will deem it advisable to continue this Plan in effect and to make
contributions as herein provided. The Employer reserves the right, however, to
terminate the Plan with respect to its Employees at any time by an instrument in
writing delivered to the Administrator and the Trustee, or to completely
discontinue its contributions thereto at any time.
11.3.2 The Plan will also terminate: (A) if the Employer is a sole
proprietorship, upon the death of the sole proprietor; (B) if the Employer is a
partnership, upon termination of the partnership; (C) if the Employer is
judicially declared bankruptcy or insolvent: (D) upon the sale or other
disposition of all or substantially all of the assets of the business; or (E)
upon any other termination of the business. Any successor to or purchaser of the
Employer's trade or business, after any event specified in the prior sentence,
may continue the Plan, in which case the successor or purchaser will thereafter
be considered the Employer for purposes of the Plan. Such a successor or
purchaser shall execute an appropriate Adoption Agreement if and when requested
by the Administrator.
11.3.3 Anything contained herein to the contrary notwithstanding, if the
Employer fails to attain or retain qualification of the Plan under Code Section
401(a), the Plan will not participate in this Prototype Plan and will, instead,
be considered an individually designed plan for purposes of such qualification.
11.4 Effect of Partial or Complete Termination or Complete Discontinuance of
Contributions:
11.4.1 Determination of Date of Complete or Partial Termination. The date of
complete or partial termination shall be established by the Administrator in
accordance with the directions of the Employer (if then in existence) in
accordance with applicable law.
11.4.2 Effect of Termination
(A) As of the date of a partial termination of the Plan:
(i) the accrued benefit of each affected Participant, to the
extent funded, shall become nonforfeitable;
61
<PAGE> 96
(ii) no affected Participant shall be granted credit based on
Hours of Service after such date;
(iii) Compensation paid to affected Participants after such
date shall not be taken into account; and
(iv) no contributions by affected Participants shall be
required or permitted.
(B) As of the date of the complete termination of the Plan or of a
complete discontinuance of contributions:
(i) the accrued benefit of each affected Participant to the
extent funded, shall become nonforfeitable;
(ii) no affected Participant shall be granted credit based on
Hours of Service after such date;
(iii) Compensation paid after such date shall not be taken
into account;
(iv) no contributions by affected Participants shall be
required or permitted;
(v) no Eligible Employee shall become a Participant after
such date; and
(vi) except as may otherwise be required by applicable law,
all obligations of the Employer and Participating
Affiliates to fund the Plan shall terminate.
(C) All other provisions of the Plan shall remain in effect unless
otherwise amended.
11.4.3 Upon the complete discontinuance of profit-sharing contributions under
the Plan, at the Employer's election, either the Trust Fund shall continue to be
held and distributed as if the Plan had not been terminated (in which cash such
Plan shall continue to be subject to all requirements under Title I of ERISA,
and qualification requirements under the Code) or any and all assets remaining
in the Trust Fund as of the date of such termination or discontinuance, together
with any earnings subsequently accruing thereon, shall be distributed by the
Trustee to the Participants at the Administrator's direction. Upon the complete
termination of the Plan, the Trust Fund shall be distributed to Participants
within one year after the date of termination.
If the Plan does not offer an annuity option (purchased from a commercial
provider) and if the Employer or any Affiliate does not maintain another Defined
Contribution Plan (other than an employee stock ownership plan as defined in
Code Section 4975(e)(7)), the Participant's benefit may, without the
Participant's consent, be distributed to the Participant. However, if any
Affiliate maintains another Defined Contribution Plan (other than an employee
stock ownership plan as defined in Code Section 4975(e)(7)), then the
Participant's Account(s) will be transferred, without the Participant's consent,
to the other plan if the Participant does not consent to an immediate
distribution. Distributions shall be made in compliance with the applicable
provisions, including restrictions, of Articles VI and VII. The Trust Fund shall
continue in effect until all distributions therefrom are complete. Upon the
completion of such distributions, the Trustee shall be relieved from all further
liability with respect to all amounts so paid or distributed.
11.5 Bankruptcy: In the event that the Employer shall at any time be
judicially declared bankrupt or insolvent without any provisions being made for
the continuation of this Plan, the Plan shall be completely terminated in
accordance with this Article XI.
ARTICLE XII.
MISCELLANEOUS PROVISIONS
12.1 Exclusive Benefit of Participants: Notwithstanding anything in the Plan
to the contrary, the Trust Fund shall be held for the benefit of all persons who
shall be entitled to receive payments under the Plan. Subject to Section 3.10,
it shall be prohibited at any time for any part of the Trust Fund (other than
such part as is required to pay expenses) to be used for, or diverted to,
purposes other than for the exclusive benefit of Participants or their
Beneficiaries.
12.2 Plan Not a Contract of Employment: The Plan is not a contract of
Employment, and the terms of Employment of any Employee shall not be affected in
any way by the Plan or related instruments except as specifically provided
therein.
62
<PAGE> 97
12.3 Action by Employer: Any action by an Employer which is a corporation
shall be taken by the board of directors of the corporation or any person or
persons duly empowered to exercise the powers of the corporation with respect to
the Plan. In the case of an Employer which is a partnership, action shall be
taken by any general partner of the partnership, and in the case of an Employer
which is a sole proprietorship, action shall be taken by the sole proprietor.
12.4 Source of Benefits: Benefits under the Plan shall be paid or provided
for solely from the Trust Fund, and neither the Employer, any Participating
Affiliate, the Trustee, the Administrator, nor any Investment Manager or
insurance company shall assume any liability under the Plan therefor.
12.5 Benefits Not Assignable: Benefits provided under the Plan may not be
assigned or alienated, either voluntarily or involuntarily. In the event that a
Participant or Beneficiary becomes individually liable with respect to any
expenses listed in Section 8.5, the provision of Section 401(a)(13) of the Code
shall be applicable with respect to any claim the Plan may have against the
Participant or Beneficiary individually with respect to such expenses. The
preceding sentence shall also apply to the creation, assignment or recognition
of a right to any benefit payable with respect to a Participant pursuant to a
"domestic relations order" (as defined in Code Section 414(p)) unless such order
is determined by the Administrator to be a "qualified domestic relations order"
(as defined in Code Section 414(p)) or, in the case of a "domestic relations
order" entered before January 1, 1985, if either payment of benefits pursuant to
the order has commenced as of that date or the Administrator decides to treat
such order as a "qualified domestic relations order" within the meaning of Code
Section 414(p) even if it does not otherwise qualify as such.
12.6 Domestic Relations Orders: Any other provisions of the Plan to the
contrary notwithstanding, the Administrator shall have all powers necessary with
respect to the Plan for the proper operation of Code Section 414(p) with respect
to "qualified domestic relations orders" (or "domestic relations orders" treated
as such) referred to in Section 12.5, including, but not limited to, the power
to establish all necessary or appropriate procedures, to authorize the
establishment of new accounts with such assets and subject to such investment
control by the Administrator as the Administrator may deem appropriate, and the
Administrator may decide upon and direct appropriate distributions therefrom.
12.7 Claims Procedure: In the event that a claim by a Participant,
Beneficiary, or other person for benefits under the Plan is denied, the
Administrator will so notify the claimant, giving the reasons for the denial.
This notice will also refer to the specific provisions of the Plan on which the
denial was based, will specify whether any additional information is needed from
the Participant or Beneficiary and will explain the review procedure.
Within 60 days after receiving the denial, the claimant may submit, directly or
through a duly authorized representative, a written request for reconsideration
of the applicable to the Administrator. Documents or records relied on by the
claimant should be filed with the request. The person making the request may
review relevant documents and submit issues and additional comments in writing.
The Administrator will review the claim within 60 days (or 120 days if a hearing
is held because special circumstances exist) and provide a written response to
the appeal. The response will explain the reasons for the decision and will
refer to the Plan provisions on which the decision is based. The decision of the
Administrator is the final one under the claims procedure.
12.8 Records and Documents; Errors: Participants and Beneficiaries must
supply the Administrator with such personal history data as may be required by
the Administrator in the operation of the Plan. Proof of age, when required,
must be established by evidence satisfactory to the Administrator, and the
records of the Employer and Participating Affiliates concerning length of
service and compensation may be accepted by the Administrator as conclusive for
the purposes of the Plan. Should any error in the records maintained under the
Plan result in any Participant or Beneficiary receiving from the Plan more or
less than he or she would have been entitled to receive had the records been
correct, the Administrator, in its discretion, may correct such error and, as
far as practicable, may adjust benefits in such manner that the aggregate value
of the benefit under the Plan shall be the amount to which such Participant or
Beneficiary was properly entitled.
12.9 Benefits to Minors, Incompetents and Others: In the event any benefit is
payable to a
63
<PAGE> 98
minor or to a Participant or Beneficiary declared incompetent by a court having
jurisdiction over such matters and a guardian, committee, conservator or other
legal representative of the estate of such a person is appointed, benefits to
which he or she is entitled shall be paid to the legally appointed person. The
receipt by any such person to whom any such payment on behalf of any Participant
or Beneficiary is made shall be a sufficient discharge therefor.
12.10 Plan Merger or Transfer of Assets:
12.10.1 The merger or consolidation of the Employer with any other person, or
the transfer of the assets of the Employer to any other person, or the merger of
the Plan with any other plan shall not constitute a termination of the Plan if
provision is made for the continuation of the Plan.
12.10.2 The Plan may not merge or consolidate with, or transfer any assets or
liabilities to, any other plan, unless each Participant would (if the Plan had
then terminated) receive a benefit immediately after the merger, consolidation
or transfer which is equal to or greater than the benefit he or she would have
been entitled to receive immediately before the merger, consolidation or
transfer (if the Plan had then terminated). Any merger or consolidation shall
not constitute a termination of a Plan or require the acceleration of vesting of
Participant's Account Balances.
12.11 Participating Affiliates:
12.11.1 With the consent of the Employer and by duly authorized action, any
affiliate may adopt the Plan. Such Affiliate shall determine the classes of its
Employees who shall be Eligible Employees and the amount of its contribution to
the Plan on behalf of such Employees.
12.11.2 With the consent of the Employer and by duly authorized action, a
Participating Affiliate may terminate its participation in the Plan or withdraw
from the Plan. Any such withdrawal shall be deemed an adoption by such
Participating Affiliate of a plan and trust identical to the Plan and the Trust,
except that all references to the Employer shall be deemed to refer to such
Participating Affiliate. At such time and in such manner as the Employer
directs, the assets of the Trust allocable to Employees of such Participating
Affiliate shall be transferred to the trust deemed adopted by such Participating
Affiliate.
12.11.3 A Participating Affiliate shall have no power with respect to the Plan
except as specifically provided herein.
12.12 Controlling Law: The Plan is intended to qualify under Code Section
401(a) and to comply with ERISA, and its terms shall be interpreted accordingly.
Otherwise, to the extent not preempted by ERISA, the laws of the State of New
York shall control the interpretation and performance of the terms of the Plan.
12.13 Singular and Plural and Article and Section References: As used in the
Plan, the singular includes the plural, and the plural includes the singular,
unless qualified by the context. Titles of Articles and Sections of the Plan are
for convenience of reference only and are to be disregarded in applying the
provisions of the Participant Plan. Any reference in this Prototype Plan to an
Article or Section is to the Article or Section so specified of the Prototype
Plan, unless otherwise indicated.
64
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