<PAGE>
As filed with the Securities and Exchange Commission on January 11, 2000
Registration No. 333-_________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
POLARIS INDUSTRIES INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MINNESOTA 41-1790959
(state or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
--------------------
1225 Highway 169 North
Minneapolis, Minnesota 55441
(Address, including zip code, of registrant's principal executive offices)
--------------------
POLARIS 401(k) RETIREMENT SAVINGS PLAN
(Full title of the plan)
--------------------
Michael W. Malone, Vice President--Finance,
Chief Financial Officer, and Secretary
Polaris Industries Inc.
1225 Highway 169 North
Minneapolis, Minnesota 55441
(612) 542-0500
(Name, address, including zip code and telephone number, including area code,
of agent for service)
--------------------
COPY TO:
James C. Melville
Kaplan, Strangis and Kaplan, P.A.
5500 Norwest Center, 90 South Seventh Street
Minneapolis, Minnesota 55402
(612) 375-1138
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Title of Securities to Amount to be Proposed Maximum Proposed Maximum Amount of
be Registered Registered(1) Offering Price per Aggregate Offering Registration Fee
Share(2) Price
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
Common Stock Par
Value $.01 700,000 shares(1) $33.53 $23,471,000 $6,196.34
Interests in Plan(3) N/A(3) N/A N/A N/A
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
</TABLE>
- --------------------
(1) Estimated maximum aggregate number of shares of Polaris
Industries Inc. (the "Company") common stock, $.01 par value (the "Common
Stock") purchasable with employee and employer contributions under the Plan
during the next 36 months. The number of shares of Common Stock stated above
may be adjusted in accordance with the provisions of the Plan in the event
that, during the period the Plan is in effect, there is effected any increase
or decrease in the number of issued shares of Common Stock resulting from a
subdivision or consolidation of shares or the payment of a stock dividend or
any other increase or decrease in the number of shares effected without
receipt of consideration by the Company. Accordingly, this Registration
Statement covers, in addition to the number of shares of Common Stock stated
above, an indeterminate number of shares which by reason of any such events
may be issued in accordance with the provisions of the Plan.
(2) Estimated by the registrant solely for the purpose of
calculating the registration fee pursuant to Rule 457(h) under the Securities
Act of 1933, as amended (the "Securities Act") and is based upon the average
of the high and low prices of the Common Stock as reported on the New York
Stock Exchange on January 7, 2000.
(3) Pursuant to Rule 416(c) under the Securities Act, this
Registration Statement also covers an indeterminate amount of interests to be
offered or sold pursuant to the employee benefit plan described herein. In
accordance with Rule 457(h)(2) under the Securities Act no separate fee
calculation is made for plan interests.
2
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1. PLAN INFORMATION.*
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.*
* Information required by Part I of Form S-8 to be contained in the Section
10(a) prospectus to be sent or given to participants in the Polaris 401(k)
Retirement Savings Plan (the "Plan") is omitted from the Registration Statement
in accordance with Rule 428(b)(1) under the Securities Act, and the Note to Part
I of Form S-8.
3
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents, which have been filed with the Securities
and Exchange Commission (the "Commission") by the Company, are hereby
incorporated by reference in this Registration Statement:
(a) The Company's latest Annual Report on Form 10-K for the
fiscal year ended December 31, 1998, filed with the Commission,
pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
(b) All other reports filed by the Company pursuant to Section
13(a) or 15(d) of the Exchange Act since the end of the fiscal year
covered by the Company's Annual Report referred to in (a) above.
(c) A description of the Company's Common Stock contained in
the Company's Registration Statement on Form S-4, Registration No.
33-55769 filed with the Commission on September 30, 1994, including
Amendment No. 1 filed on November 10, 1994 and Amendment No. 2 filed on
November 21, 1994.
All documents filed by the Company pursuant to Section 13(a), 13(c),
14 and 15(d) of the Exchange Act, subsequent to the date of this Registration
Statement and prior to the filing of a post-effective amendment which
indicates that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold, are deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof and thereof from the date of filing of such documents. Any statement
contained in the documents incorporated, or deemed to be incorporated, by
reference herein shall be deemed to be modified or superseded for purposes of
this Registration Statement to the extent that a statement contained herein
or in any other subsequently filed document which also is, or is deemed to
be, incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as
so modified or superseded, to constitute a part of this Registration
Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The validity of the shares offered will be passed upon for the
Company by Kaplan, Strangis and Kaplan, P.A., Minneapolis, Minnesota. Andris
A. Baltins, a member of the Board of Directors of the Company, is also a
member of the law firm Kaplan, Strangis and Kaplan, P.A. Members of such firm
beneficially own an aggregate of 54,956 shares of the Company's Common
Stock. This represents less than 1% of the currently outstanding voting
shares.
1
<PAGE>
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by Minnesota law, the Company's Articles of
Incorporation provide that directors of the Company shall not be personally
liable to the Company or its shareholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Company or its shareholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) relating to prohibited dividends or
distributions or the repurchase or redemption of stock, or (iv) for any
transaction from which the director derives an improper personal benefit.
The Company is required by Minnesota law to indemnify all officers
and directors of the Company for expenses and liabilities (including
attorneys' fees) incurred as the result of proceedings against them in
connection with their capacities as officers or directors. In order to be
entitled to indemnification with respect to a purported act or omission, an
officer or director must (i) have acted in good faith, (ii) have received no
improper personal benefit, (iii) in the case of a criminal proceeding, have
had no reasonable cause to believe the conduct to be unlawful, and (iv) have
reasonably believed that the conduct was in the best interests of the Company.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
<TABLE>
<S> <C>
4.1 Articles of Incorporation of Polaris Industries Inc., as
amended, incorporated by reference to Exhibit 3(a) to the
Company's Registration Statement on Form S-4 (No. 33-55769)
(the "Form S-4").
4.2 Bylaws of the Company, incorporated by reference to Exhibit
3(b) to the Form S-4.
5.1 Opinion of Kaplan, Strangis and Kaplan, P.A.
5.2 Internal Revenue Service Determination Letter dated October
27, 1997
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Kaplan, Strangis and Kaplan, P.A. (included in
Exhibit 5.1)
24.1 Powers of Attorney
99.1 Polaris 401(k) Retirement Savings Plan as amended through
April 1, 1999
2
<PAGE>
99.2 Trust Agreement dated as of April 1, 1999, between Polaris
Industries Inc. and Fidelity Management Trust Company, as
supplemented by the First Amendment dated as of May 15, 1999
and the Second Amendment dated as of July 1, 1999.
</TABLE>
- ------------------
In connection with Exhibit 5.2, the Registrant hereby undertakes
that it will submit or has submitted the Plan and any amendment thereto to
the Internal Revenue Service in a timely manner and has made or will make all
changes required by the IRS in order to qualify the Plan under Section 401 of
the Internal Revenue Code of 1986, as amended.
ITEM 9. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act);
(ii) To reflect in the prospectus any facts or
events arising after the effective date of
this Registration Statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in this Registration
Statement. Notwithstanding the foregoing,
any increase or decrease in volume of
securities offered (if the total dollar
value of securities offered would not exceed
that which was registered) and any deviation
from the low or high end of the estimated
maximum offering range may be reflected in
the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and
price represent no more than a 20% change in
the maximum aggregate offering price set
forth in the "Calculation of Registration
Fee" table in the effective Registration
Statement; ;
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in this Registration
Statement or any material change to such
information in this Registration Statement;
provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply to information required to be
included in a post-effective amendment by those
paragraphs which are contained in periodic reports
filed by the registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are
incorporated by reference in this Registration
Statement.
3
<PAGE>
(2) That, for the purpose of determining any
liability under the Securities Act, each
such post-effective amendment shall be
deemed to be a new Registration Statement
relating to the securities offered therein,
and the offering of such securities at that
time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the
securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that,
for purposes of determining any liability under the
Securities Act, each filing of the registrant's
annual report pursuant to Section 13(a) or 15(d) of
the Exchange Act (and, where applicable, each filing
of an employee benefit plan's annual report pursuant
to Section 15(d) of the Exchange Act) that is
incorporated by reference in this Registration
Statement shall be deemed to be a new Registration
Statement relating to the securities offered therein,
and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to
directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in
the opinion of the Commission such indemnification is
against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such
liabilities (other than the payment by the registrant
of expenses incurred or paid by a director, officer
or controlling person of the registrant in the
successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling
person in connection with the securities being
registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as
expressed in the Securities Act and will be governed
by the final adjudication of such issue.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Minneapolis, State of Minnesota, on
January 11, 2000.
POLARIS INDUSTRIES INC.
By: /s/ W. Hall Wendel, Jr.
---------------------------------------
W. Hall Wendel, Jr.
Chairman of the Board
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ W. Hall Wendel, Jr. Chairman of the Board and January 11, 2000
- ------------------------------------ Director
W. Hall Wendel, Jr.
/s/ Thomas C. Tiller President, Chief Executive January 11, 2000
- ------------------------------------ Officer and Director
Thomas C. Tiller (Principal Executive Officer)
/s/ Michael W. Malone Vice President - Finance, January 11, 2000
- ------------------------------------ Chief Financial Officer and
Michael W. Malone Secretary
(Principal Financial and
Accounting Officer)
* Director January 11, 2000
- ------------------------------------
Andris A. Baltins
* Director January 11, 2000
- ------------------------------------
Raymond J. Biggs
5
<PAGE>
* Director January 11, 2000
- ------------------------------------
Beverly F. Dolan
* Director January 11, 2000
- ------------------------------------
Robert S. Moe
* Director January 11, 2000
- ------------------------------------
Gregory R. Palen
* Director January 11, 2000
- ------------------------------------
Bruce A. Thomson
* Director January 11, 2000
- ------------------------------------
Stephen G. Shank
By: /s/ W. Hall Wendel, Jr. January 11, 2000
--------------------------------
W. Hall Wendel, Jr.
Attorney-in-Fact
</TABLE>
- ----------------------------
W. Hall Wendel, Jr., on his own behalf and pursuant to Powers of Attorney,
dated prior to the date hereof, attested by the directors listed above and
filed with the Securities and Exchange Commission, by signing his name hereto
does hereby sign and execute this Registration Statement of Polaris
Industries Inc., or amendment thereto, on behalf of each of the directors
named above.
6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the trustees (or
other persons who administer the employee benefit plan) have duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Minneapolis, State of Minnesota, on
January 11, 2000.
Polaris 401(k) Retirements Savings Plan
By the Members of the 401(k) Retirement
Committee as Plan Administrator
/s/ Thomas C. Tiller
-----------------------------------
Thomas C. Tiller
/s/ Michael W. Malone
-----------------------------------
Michael W. Malone
/s/ John B. Corness
-----------------------------------
John B. Corness
/s/ Scott Swenson
-----------------------------------
Scott Swenson
7
<PAGE>
INDEX TO EXHIBITS
-----------------
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION METHOD OF FILING
- -------------- ----------- ----------------
<S> <C> <C>
4.1 Articles of Incorporation Incorporated by reference to Exhibit
3(a) to the Company's Registration
Statement on Form S-4 (No. 33-55769)
(the "Form S-4")
4.2 Bylaws Incorporated by reference to Exhibit 3(b)
to the Form S-4
5.1 Opinion of Kaplan, Strangis and Kaplan, P.A. Filed herewith electronically
5.2 Internal Revenue Service Determination Letter Filed herewith electronically
dated October 27, 1997
23.1 Consent of Arthur Andersen LLP Filed herewith electronically
23.2 Consent of Kaplan, Strangis and Kaplan, P.A. Included in Exhibit 5.1
24.1 Powers of Attorney Filed herewith electronically
99.1 Polaris 401(k) Retirement Savings Plan as amended Filed herewith electronically
through dated April 1, 1999
99.2 Trust Agreement dated as of April 1, 1999, Filed herewith electronically
between Polaris Industries Inc. and Fidelity
Management Trust Company, as supplemented by the
First Amendment dated as of May 15, 1999 and the
Second Amendment dated as of July 1, 1999.
</TABLE>
8
<PAGE>
EXHIBIT 5.1
January 11, 2000
Securities and Exchange Commission
Judiciary Plaza
450 - 5th Street N.W.
Washington, D.C. 20549
RE: POLARIS INDUSTRIES INC.
REGISTRATION STATEMENT ON FORM S-8
Ladies and Gentlemen:
This opinion is furnished in connection with the Registration
Statement on Form S-8 (the "Registration Statement") filed with the
Securities and Exchange Commission (the "Commission") by Polaris Industries
Inc., a Minnesota corporation (the "Company") covering (a) 700,000 shares of
common stock, par value $.01 of the Company (the "Common Stock"), and (b) an
indeterminate amount of plan interests (the "Interests") issuable in
connection with the Polaris 401(k) Retirement Savings Plan, as amended (the
"Plan"). We understand that it is the Company's intention that the Common
Stock will be purchased by the Plan Trustee in the open market.
We have acted as counsel to the Company and, as such, have examined
the Company's Articles of Incorporation, Bylaws and such other corporate
records and documents as we have considered relevant and necessary for the
purpose of this opinion. We have participated in the preparation and filing
of the Registration Statement. We are familiar with the proceedings taken by
the Company with respect to the authorization and proposed issuance of shares
of Common Stock pursuant to the Plan as contemplated by the Registration
Statement.
Based on the foregoing, we are of the opinion that:
1. The 700,000 shares of Common Stock that are being registered by
the Company under the Registration Statement pursuant to the Plan referred to
in the Registration Statement shall continue to be validly issued, fully paid
and non-assessable after being purchased in open market transactions.
2. The Interests, when issued, delivered and paid for in accordance
with the Plan as set forth in the Registration Statement, will be validly
issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm in the Registration
Statement. In giving such consent, we do not admit that we come within the
category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Commission promulgated thereunder.
Sincerely,
/s/ KAPLAN, STRANGIS AND KAPLAN, P.A.
<PAGE>
EXHIBIT 5.2
INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY
DISTRICT DIRECTOR
P.O. BOX 2508
CINCINNATI, OH 45201
Date: October 27, 1997 Employer Identification Number:
41-1797637
POLARIS INDUSTRIES PARTNERS, L.P. DLN:
C/O JAMES B. PLATT, ESQ. 365170049
FREDRIKSON & BYRON, P.A. Person to Contact:
1100 INT'L CENTRE; 900 2ND AVE. S. CINDY PERRY
MINNEAPOLIS, MN 55402 Contact Telephone Number:
(513) 241-5199
Plan Name:
401(K) RETIREMENT/SAVINGS PLAN
Plan Number: 001
Dear Applicant:
We have made a favorable determination on your plan, identified
above, based on the information supplied. Please keep this letter in your
permanent records.
Continued qualification of the plan under its present form will
depend on its effect in operation. (See section 1.401-1(b)(3) of the Income
Tax Regulations.) We will review the status of the plan in operation
periodically.
The enclosed document explains the significance of this favorable
determination letter, points out some events that may affect the qualified
status of your employee retirement plan, and provides information on the
reporting requirements for your plan. It also describes some events that
automatically nullify it. It is very important that you read the publication.
This letter relates only to the status of your plan under the
Internal Revenue Code. It is not a determination regarding the effect of
other federal or local statutes.
This determination letter is applicable for the amendment(s) adopted
on 04-26-94.
This determination letter is also applicable for the amendment(s)
adopted on 03-23-95.
This plan has been mandatorily disaggregated, permissively
aggregated, or restructured to satisfy the nondiscrimination requirements.
This plan satisfies the nondiscrimination in amount requirement of
section 1.401(a)(4)-1(b)(2) of the regulations on the basis of a design-based
safe harbor described in the regulations.
This letter is issued under Rev. Proc. 93-39 and considers the
amendments required by the Tax Reform Act of 1986 except as otherwise
specified in this letter.
<PAGE>
This plan satisfies the nondiscriminatory current availability
requirements of section 1.401(a)(4)-4(b) of the regulations with respect to
those benefits, rights, and features that are currently available to all
employees in the plan's coverage group. For this purpose, the plan's coverage
group consists of those employees treated as currently benefiting for
purposes of demonstrating that the plan satisfies the minimum coverage
requirements of section 410(b) of the Code.
This plan also satisfies the requirements of section
1.401(a)(4)-4(b) of the regulations with respect to the specific benefits,
rights, or features for which you have provided information.
Except as otherwise specified this letter may not be relied upon
with respect to whether the plan satisfies the qualification requirements as
amended by the Uruguay Round Agreements Act, Pub. L. 103-465 and by the Small
Business Job Protection Act of 1996 (SBJPA), Pub. L. 104-108, other than the
requirements of Code section 401(a)(26).
The information on the enclosed addendum is an integral part of this
determination. Please be sure to read and keep it with this letter.
We have sent a copy of this letter to your representative as
indicated in the power of attorney.
If you have questions concerning this matter, please contact the
person whose name and telephone number are shown above.
Sincerely yours,
/s/ C. Ashley Bullard
District Director
Enclosures:
Publication 794
Reporting & Disclosure Guide
for Employee Benefit Plans
Addendum
This letter supercedes our letter dated June 19, 1996.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated January 29,
1999, included in Polaris Industries Inc.'s Annual Report on Form 10-K for
the year ended December 31, 1998 and to all references to our Firm included
in this Registration Statement.
/s/ ARTHUR ANDERSEN LLP
Minneapolis, Minnesota,
January 10, 2000
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that POLARIS INDUSTRIES INC. a
Minnesota corporation (the "Company"), and each of the undersigned directors
of the Company, hereby constitutes and appoints W. Hall Wendel, Jr. and
Michael W. Malone and each of them (with full power to each of them to act
alone) its/his/her true and lawful attorney-in-fact and agent, for it/him/her
and on it/his/her behalf and in its/his/her name, place and stead, in any and
all capacities to sign, execute, affix its/his/her seal thereto and file a
Registration Statement on Form S-8 or any other applicable form under the
Securities Act and amendments thereto, including pre-effective and
post-effective amendments, with all exhibits and any and all documents
required to be filed with respect thereto with any regulatory authority,
relating to the proposed registration of up to 700,000 shares of the
Company's Common Stock, par value $.01, issuable under the Polaris 401(k)
Retirement Savings Plan.
There is hereby granted to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing requisite
and necessary to be done in respect of the foregoing as fully as it/he/she or
itself/himself/herself might or could do if personally present, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any
of them, may lawfully do or cause to be done by virtue hereof.
This Power of Attorney may be executed in any number of
counterparts, each of which shall be an original, but all of which taken
together shall constitute one and the same instrument and any of the
undersigned directors may execute this Power of Attorney by signing any such
counterpart.
POLARIS INDUSTRIES INC. has caused this Power of Attorney to be
executed in its name by its Chief Executive Officer on the 31st day of March,
1999.
POLARIS INDUSTRIES INC.
By: /s/ W. Hall Wendel, Jr.
---------------------------------
W. Hall Wendel, Jr.
Chief Executive Officer
<PAGE>
The undersigned, directors of POLARIS INDUSTRIES INC., have hereunto
set their hands as of the 31st day of March, 1999.
/s/ W. Hall Wendel, Jr. /s/ Thomas C. Tiller
- ----------------------------- -------------------------
W. Hall Wendel, Jr. Thomas C. Tiller
/s/ Bruce A. Thomson /s/ Stephen G. Shank
- ----------------------------- -------------------------
Bruce A. Thomson Stephen G. Shank
/s/ Andris A. Baltins /s/ Gregory R. Palen
- ----------------------------- -------------------------
Andris A. Baltins Gregory R. Palen
/s/ Beverly F. Dolan /s/ Robert S. Moe
- ----------------------------- -------------------------
Beverly F. Dolan Robert S. Moe
/s/ Raymond J. Biggs
- -----------------------------
Raymond J. Biggs
D I R E C T O R S
6
<PAGE>
EXHIBIT 99.1
ADOPTION CERTIFICATE
FOR THE
FREDRIKSON & BYRON
MODEL OPTIONAL 401(k) PROFIT SHARING PLAN
Polaris Industries L.P. the "Employer"),
---------------------------------------------------
(Name of Proprietor, Partnership, Corporation or Other Organization)
Of 1225 Highway 169 North, Minneapolis, MN 55441-5978 hereby:
-----------------------------------------------------
(Business Address)
A. ESTABLISHMENT OR AMENDMENT OF PLAN.
/ / 1. (NEW PLAN). Establishes, effective
_____________________, 19__, a profit sharing
plan to be known as:
---------------------------------------------------
---------------------------------------------------
(Official name of plan, including Employer's name
or other identification)
by adoption of the Fredrikson & Byron Model
Optional 401(k) Profit Sharing Plan;
OR
/X/ 2. (AMENDMENT OF EXISTING PLAN). Amends,
effective JANUARY 1, 1989*,
Polaris Industries L.P. 401(k)
Retirement/savings Plan
---------------------------------------------------
(Name of previous plan)
which was established on May 30, 1986,
and made effective as of June 1, 1985,
by adoption of the Fredrikson & Byron Model Optional
401(k) Profit Sharing Plan, such amended Plan to be
known as:
Polaris Industries L.P. 401(k)
Retirement/Savings Plan
---------------------------------------------------
(Name of existing plan or new name which includes
Employer's name or other identifying information)
B. EMPLOYER STATUS. As of the effective date of this
new or amended Plan, the Employer was a:
/ / 1. Sole Proprietor
*SEE MISCELLANEOUS SPECIAL PROVISIONS, ITEM 39.
<PAGE>
/ / 2. Partnership
Any partner owns more than 10% profits or
capital interest: / / Yes / / No
/ / 3. Corporation
S Corporation / / Yes / / No
/X/ 4. Other form of organization
Describe: Limited Partnership
* * * * * * * * * * * * * * * * * * * * *
C. EFFECT OF MODEL PLAN PROVISIONS. All terms, conditions and
provisions of the Model Plan which are not changed by the elections in this
Adoption Certificate are adopted as the governing provisions of this Plan.
However, any provision of the Model Plan which states that the provision is
effective only if designated in the Adoption Certificate shall be considered
adopted only if the appropriate designation is made in this Adoption
Certificate.
D. ELECTIVE PROVISIONS. By completing the following sections
of this Adoption Certificate, the Employer executing this Adoption Certificate
hereby elects to implement the corresponding elective provisions of the Model
Plan. In addition, any other Employer adopting this Plan as a participating
Employer, whether at the time this Adoption Certificate is executed or
thereafter, thereby elects to be bound by such provisions. Parenthetical remarks
shall be considered merely illustrative and not a binding part of this Adoption
Certificate.
1. DEFINITION OF EMPLOYER AND DESIGNATED
EMPLOYER. [Section 2.2.2; Section 2.2.3]. The term "Employer" includes the
Employer executing this Adoption Certificate and the following (i) predecessor
employers, or (ii) for-profit or nonprofit corporations, trusts, partnerships
or proprietorships which have adopted this Plan as participating Employers in
accordance with its terms:
a. Name: Polaris Industries, Inc.
Address: 1225 North County Road 18
Minneapolis, MN 55441-5078
EIN:
------------------------
b. Name: N/A
Address:
------------------------
------------------------
EIN:
------------------------
Attach separate exhibit identified as Exhibit A if
the term "Employer" includes more than two predecessors or participating
Employers.
ii
<PAGE>
The "designated Employer" authorized to amend or
terminate the Plan, appoint, remove or enter into an agreement with the
Funding Agent, and to exercise such other powers and duties as are specified
in the Model Plan, is ______________________________ (if blank is not filled
in, the designated Employer is the Employer executing this Adoption
Certificate).
2. DEFINITION OF FUNDING AGENT [Section 2.2.6].
The Funding Agent is:
/X/ a. Trustee
/ / b. Other:
----------------------------
----------------------------
3. DEFINITION OF ELIGIBLE EMPLOYEE
[Section 2.2.8]. The term "eligible employee" does not include the following
cate- gory(ies) of employees: (i) employees who are hired by the employer as
temporary project employees; and (ii) seasonal employees; provided, however,
that if a seasonal employee meets the requirements to participate in the
plan, such employee shall be treated as an eligible employee.
4. PLAN ADMINISTRATOR [Section 2.2.15].
The Plan Administrator is Polaris Industries L.P.
5. EFFECTIVE DATE [Section 2.3.1].
a. Effective date of the Plan:
June 1, 1985
b. Effective date of the Plan
restatement or other amendment: January 1, 1989*
6. PLAN YEAR [Section 2.3.2]. The fiscal
year (tax accounting year) of the Employer as of the date of execution of
this Adoption Certificate is January 1 - December 31. In the event of a
change in such fiscal year, the fiscal year for all purposes in and under the
Plan shall be the actual fiscal year of the Employer, regardless of the dates
set forth in this Section 6.
The plan year is:
/X/ a. The fiscal year; or
/ / b.
----------------------------------
*SEE MISCELLANEOUS SPECIAL PROVISIONS, ITEM 39.
iii
<PAGE>
7. ENTRY DATE [Section 2.3.3].
Elects optional entry date:
/ / a. As provided in the Plan;
/ / b. First day of each month;
/ / c. Each day of the plan year; or
/X/ d. January 1, April 1, July 1 and
October 1 Each Year
8. NORMAL RETIREMENT DATE [Section 2.3.5].
The normal retirement date is:
a. [Section 2.3.5.1] The 65th (not
greater than 65th) birthday of the
participant.
b. [Section 2.3.5.2] The N/A (not
greater than 5th) anniversary of the
participant's original Plan entry
date.
9. EARLY RETIREMENT DATE [Section 2.3.6].
/X/ Authorizes early retirement at age 55 upon
completion of N/A years of vesting service
10. SERVICE [Section 2.4.1]. Service for
eligibility and vesting includes service with the following predecessor(s) of
the Employer or unrelated employer(s): Polaris Industries, Inc.
11. HOURS OF SERVICE EQUIVALENCY
[Section 2.4.2.2].
/X/ a. 10 hours for each day;
/ / b. 45 hours for each week;
/ / c. 95 hours for each semimonthly
payroll period; or
/ / d. 190 hours for each month
N/A 12. YEAR OF SERVICE FOR ELIGIBILITY
[Section 2.4.3.1.2].
/ / Elects to exclude years of service prior to
breaks in service if employee has no vested
interest ("Rule of Parity")
iv
<PAGE>
N/A 13. YEAR OF SERVICE FOR VESTING
[Section 2.4.3.2].
/ / [Section 2.4.3.2.1] Elects to exclude years
of service prior to lower of age and 18
(not applicable if "4-40" vesting elected)
/ / [Section 2.4.3.2.2] Elects to exclude all
years of service before Plan or predecessor
plan adopted (not applicable if "4-40"
vesting elected)
/ / [Section 2.4.3.2.3] Elects to exclude all
years of service prior to participant's
termination of employment, but only if
employment terminated before Plan or
predecessor plan established (not applicable
if "4-40" vesting elected)
/ / [Section 2.4.3.2.4] Elects to exclude all
years of service following breaks in service
for certain purposes
/ / [Section 2.4.3.2.5] Elects to exclude years
of service before break in service until
completion of year of service
/ / [Section 2.4.3.2.6] Elects to exclude years
of service prior to breaks in service if
participant has no vested interest ("Rule
of Parity")
N/A 14. DEFINITION OF COMPENSATION [Section 2.6.10].
/ / With respect to plan years beginning before
January 1, 1992, elects to include bonuses
paid in the plan year but not accrued for a
prior plan year and bonuses accrued for the
plan year and paid not later than the due
date for filing the Employer's federal
income tax return for such plan year
(whether or not deductible for such plan
year). ELECTION AVAILABLE ONLY FOR
ACCRUAL-BASIS TAXPAYER. ELECTION NOT
AVAILABLE WITH RESPECT TO PLAN YEARS
BEGINNING ON AND AFTER JANUARY 1, 1992.
N/A 15. DEFINITION OF COVERED COMPENSATION
[Section 2.6.11].
/ / a. Elects to INCLUDE salary reduction
contributions by the Employer on
behalf of the participant to a
cafeteria plan [Section 2.6.11]
v
<PAGE>
N/A b. Elects to INCLUDE the following
amounts includible in federal gross
income but not considered by the
Employer to constitute regular
compensation [Sectio5n 2.6.11.5]:
/ / i. Club dues
/ / ii. Expense reimbursements
/ / iii. Automobile allowances
/ / iv. Other allowances, as
follows:
--------------------------
--------------------------
--------------------------
/ / v. Other taxable fringe
benefits, as follows:
--------------------------
--------------------------
--------------------------
N/A c. Elects to EXCLUDE the following
[Section 2.6.11.6]:
/ / i. Discretionary bonuses
/ / ii. Formula bonuses
/ / iii. Incentive compensation
payments
/ / iv. Overtime
/ / v. Commissions
(____% excluded if less
than 100%)
N/A / / d. Elects to INCLUDE compensation paid
prior to Plan entry or reentry date
[Section 2.6.11.7]
N/A 16. INTEGRATION LEVEL [Section 2.6.14].
a. For plan years beginning prior to
January 1, 1989, the integration
level is:
/ / i. The taxable wage base in
effect on the first day of
the plan year
/ / ii. $________, but not greater
than the taxable wage base
in effect on the first day
of the plan year
vi
<PAGE>
/ / iii. $________, increasing each
year by $________, but in
no case greater than the
taxable wage base in effect
on the first day of the
plan year
b. For plan years beginning on and
after January 1, 1989, the
integration level is:
/ / i. The taxable wage base in
effect on the first day of
the plan year
/ / ii. $_________, but not
greater than the
taxable wage base in effect
on the first day of the
plan year
/ / iii. $_________, increasing each
year by $________, but
in no case greater than the
taxable wage base in effect
on the first day of the
plan year
17. PARTICIPATION [Section 3.1.2;
Section 3.1.3; Section 3.1.4].
a. Service required:
/X/ i. Six months (not greater
than 30 for plan years
beginning prior to January
1, 1989, nor greater than
18 for plan years beginning
after December 31, 1988);
with respect to ________
participation in Salary
Deferral Contributions and
Matching Contributions
only, six months (not
greater than six months
for plan years beginning
after December 31, 1988)
/ / ii. _____ year(s) of service
(not greater than three for
plan years beginning prior
to January 1, 1989, nor
greater than two for plan
years beginning after
December 31, 1988); with
respect to participation in
Salary Referral
Contributions and Matching
Contributions only, ______
year(s) of service (not
greater than one year of
service for plan years
beginning after
December 31, 1988)
vii
<PAGE>
b. Minimum age required:
N/A* / / i. Age 21
/ / ii. Age __ (less than 21)
c. Other conditions unrelated to age
and service: N/A
N/A 18. CASH OPTION CONTRIBUTIONS [Section 4.1.2].
/ / Elects to authorize Cash Option
Contributions in an amount equal to
_____% of the aggregate amount of such
Cash Option Contribution and that portion
of the Employer's Non-401(k) Contribution
allocated without regard to integration
with Social Security
19. SALARY DEFERRAL CONTRIBUTIONS [Section 4.2].
/ / a. Elects to authorize Salary Deferral
Contributions
/X/ i. Elects maximum Reduction
Percentage of 15%
N/A / / ii. Elects to limit Reduction
Percentage to whole
percentages
/ / b. Elects not to authorize Salary
Deferral Contributions beginning
_______________________________.
However, provisions applicable to
Salary Deferral Contributions and
other elective contributions shall
continue to be applicable to such
contributions held in the Plan.
(NOTE: This Adoption Certificate may
not be used if Plan does not and
will not hold Salary Deferral
Contributions or elective
contributions.)
20. MATCHING CONTRIBUTION [Section 4.5].
/X/ a. Matching Contribution percentage is
100% of participant's Salary
Deferral Contributions. (If blank
is not filled in, or
________________
*EFFECTIVE FEBRUARY 1, 1994. PRIOR TO SUCH DATE THE AGE REQUIREMENT WAS AGE 21.
viii
<PAGE>
if 0% is elected, Matching
Contribution percentage for each
plan year, if any, will be as
established by the Employer and
communicated to participants
employed by it during such plan
year.)
/X/ b. Elects to make Matching Contribution
only on each participant's Salary
Deferral Contributions which do not
exceed 4* % of covered compensation
N/A / / c. Elects to limit maximum amount of
Matching Contribution for a plan
year to amount of Employer's current
and accumulated profits
21. NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS
[Section 4.8.1].
N/A** / / Elects to authorize Nondeductible Employee
Contributions
22. CONTRIBUTION OF INSURANCE POLICIES
[Section 4.8.3].
N/A / / Elects to authorize participants to
contribute insurance policies to the Plan
23. ALLOCATION FORMULA FOR FORFEITURES AND
NON-401(k) CONTRIBUTION [Section 6.2].
a. Elects the following formula: (Elect
i, ii, iii or iv)
/X/ i. Nonintegrated formula
[Section 6.2.2.1]
/ / ii. Integrated three-step
allocation
[Section 6.2.2.2]
/ / iii. Integrated four-step
allocation
[Section 6.2.2.3]
First-step percentage: ___%
/ / iv. Unit allocation
[Section 6.2.2.4]
First-step percentage: ___%
Covered compensation
increments
[Section 6.2.2.4.1.1]:
$__________
-ix-
______________________
*EFFECTIVE FEBRUARY 1, 1994. EFFECTIVE FEBRUARY 1, 1990 AND PRIOR TO
FEBRUARY 1, 1994, THE MATCHING CONTRIBUTION PERCENTAGE WAS 3%. PRIOR TO
FEBRUARY 1, 1990, THE MATCHING CONTRIBUTION PERCENTAGE WAS 2%.
**EFFECTIVE FOR PLAN YEARS BEGINNING ON AND AFTER JANUARY 1, 1987, NONDEDUCTIBLE
EMPLOYEE CONTRIBUTIONS ARE NO LONGER PERMITTED.
ix
<PAGE>
Number of full units for
each full increment of
covered compensation
Section 6.2.2.4.1.1]:
______ units
Number of full units for
each full year of
service
[Section 6.2.2.4.1.2]:
_____ units
/X/ b. Elects to require 1,000 hours of
service during the plan year to
share in nontop-heavy contribution
/X/ c. Elects to require employment on the
last day of the plan year to share
in nontop-heavy contribution
24. VESTING [Section 7.1.4.1].
a. Elects one of the following vesting
schedules for Non-401(k)
Contribution Account:
/X/ i. Immediate full vesting
[Section 7.1.4.1.1].
ii. Top-heavy schedules
[Section 7.1.4.1.2]:
/ / (A) Six-year or
modified six-year
vesting
YEARS OF SERVICE % NOT LESS THAN
Less than 1 year _____
1 year but less than 2 years _____
2 years but less than 3 years _____ (20%)
3 years but less than 4 years _____ (40%)
4 years but less than 5 years _____ (60%)
5 years but less than 6 years _____ (80%)
6 years or more _____ (100%)
/ / (B) Three-year vesting
YEARS OF SERVICE % NOT LESS THAN
Less than 1 year _____
1 year but less than 2 years _____
2 years but less than 3 years _____
3 years or more _____ (100%)
x
<PAGE>
/ / iii. Seven-year or modified
seven-year vesting
[Section 7.1.4.1.3]
YEARS OF SERVICE % NOT LESS THAN
Less than 1 year _____
1 year but less than 2 years _____
2 years but less than 3 years _____
3 years but less than 4 years _____ (20%)
4 years but less than 5 years _____ (40%)
5 years but less than 6 years _____ (60%)
6 years but less than 7 years _____ (80%)
7 years or more _____ (100%)
/ / iv. Four-forty vesting
(effective only for plan
years beginning prior to
January 1, 1989)
[Section 7.1.4.1.4]
/ / v. Ten-year vesting (effective
only for plan years
beginning prior to
January 1, 1989)
[Section 7.1.4.1.5]
YEARS OF SERVICE % NOT LESS THAN
Less than 1 year _____
1 year but less than 2 years _____
2 years but less than 3 years _____
3 years but less than 4 years _____
4 years but less than 5 years _____
5 years but less than 6 years _____
6 years but less than 7 years _____
7 years but less than 8 years _____
8 years but less than 9 years _____
9 years but less than 10 years _____
10 years or more _____ (100%)
/ / vi. Five-year vesting
(effective for plan
years beginning after
December 31, 1988)
[Section 7.1.4.1.5]
YEARS OF SERVICE % NOT LESS THAN
Less than 1 year ____
1 year but less than 2 years ____
2 years but less than 3 years ____
3 years but less than 4 years ____
4 years but less than 5 years ____
5 years or more ____ (100%)
xi
<PAGE>
b. If Matching Contributions are made
to the Plan, elects one of the
following vesting schedules for
Matching Contribution Account:
/X/ i. Immediate full vesting
[Section 7.1.4.1.1]
ii. Top-heavy schedules
[Section 7.1.4.1.2]:
/ / (A) Six-year or
modified six-year
vesting
YEARS OF SERVICE % NOT LESS THAN
Less than 1 year ____
1 year but less than 2 years ____
2 years but less than 3 years ____ (20%)
3 years but less than 4 years ____ (40%)
4 years but less than 5 years ____ (60%)
5 years but less than 6 years ____ (80%)
6 years or more ____ (100%)
/ / (B) Three-year vesting
YEARS OF SERVICE % NOT LESS THAN
Less than 1 year ____
1 year but less than 2 years ____
2 years but less than 3 years ____
3 years or more ____ (100%)
/ / iii. Seven-year or modified
seven-year vesting
[Section 7.1.4.1.3]
YEARS OF SERVICE % NOT LESS THAN
Less than 1 year ____
1 year but less than 2 years ____
2 years but less than 3 years ____
3 years but less than 4 years ____ (20%)
4 years but less than 5 years ____ (40%)
5 years but less than 6 years ____ (60%)
6 years but less than 7 years ____ (80%)
7 years or more ____ (100%)
xii
<PAGE>
/ / iv. Four-forty vesting
(effective only for plan
years beginning prior to
January 1, 1989)
[Section 7.1.4.1.4]
/ / v. Ten-year vesting (effective
only for plan years
beginning prior to
January 1, 1989)
[Section 7.1.4.1.5]
YEARS OF SERVICE % NOT LESS THAN
Less than 1 year ____
1 year but less than 2 years ____
2 years but less than 3 years ____
3 years but less than 4 years ____
4 years but less than 5 years ____
5 years but less than 6 years ____
6 years but less than 7 years ____
7 years but less than 8 years ____
8 years but less than 9 years ____
9 years but less than 10 years ____
10 years or more (100%)
/ / vi. Five-year vesting
(effective for plan
years beginning after
December 31, 1988)
[Section 7.1.4.1.5]
YEARS OF SERVICE % NOT LESS THAN
Less than 1 year ____
1 year but less than 2 years ____
2 years but less than 3 years ____
3 years but less than 4 years ____
4 years but less than 5 years ____
5 years or more (100%)
25. CASH-OUT RULE [Section 7.1.4.2.2].
N/A / / Elects to forfeit unvested portion of Non-
401(k) Contribution Account and Matching
Contribution Account upon termination of
employment with no beneficial interest or
distribution of entire beneficial interest
prior to five consecutive one-year breaks in
service
N/A 26. TREATMENT OF FORFEITURES
[Section 7.1.4.4.2].
/ / Elects to use forfeitures to reduce the Em-
ployer's Matching Contribution for the plan
year
xiii
<PAGE>
27. DISTRIBUTIONS ON OR AFTER TERMINATION OF
EMPLOYMENT [Section 7.1.4.5]. Elects to make distributions on or after
termination of employment for any reason other than death, disability, or
early or normal retirement in accordance with the following:
/ / a. After attainment of normal
retirement date [Sections 7.1.4.5.1]
/X/ b. On the date elected by the
participant, subject to satisfaction
of the following objective criteria
[Section 7.1.4.5.2]:________________
____________________________________
____________________________________
____________________________________
____________________________________
____________________________________
____________________________________
____________________________________
28. DISTRIBUTIONS ON RETIREMENT, DISABILITY OR
TERMINATION OF EMPLOYMENT [Section 7.5]. Elects to permit the following
optional forms of distribution on retirement, disability or termination of
employment:
N/A / / a. Installments [Section 7.5.2]
N/A / / b. Insurance policy [Section 7.5.3]
29. DISTRIBUTIONS ON DEATH [Section 7.6.1.2].
N/A / / Elects to permit installment distributions
on death
30. HARDSHIP WITHDRAWALS [Section 7.12].
/ / a. Elects to permit hardship
withdrawals
/X/ b. Elects to permit hardship
withdrawals only under
Section 7.12.6 for all purposes
N/A 31. IN-SERVICE WITHDRAWALS [Sections 7.13].
Elects to permit withdrawals if the participant has:
/ / a. Completed five years of service as a
participant
/ / b. Attained age _______________________
/ / c. Completed five years of service as a
participant and attained age _______
xiv
<PAGE>
32. MINIMUM CONTRIBUTION OR BENEFIT IN TOP-HEAVY
PLAN [Section 8.3]. If the Plan is or becomes top-heavy, the minimum
contribution or benefit accrual shall be made in the following plan:
POLARIS INDUSTRIES L.P. 401(K) RETIREMENT/SAVINGS PLAN
33. CREDITING EARNINGS ON ADVANCE, UNALLOCATED,
NONCOMMINGLED CONTRIBUTIONS [Section 12.2.2.1.2; Section 12.2.2.1.4].
N/A / / Elects to allocate earnings on advance,
unallocated, noncommingled contributions as
part of Employer contribution
34. INSURANCE AS INVESTMENT OF PARTICIPANT'S AC-
COUNTS [Sections 12.3.8].
/X/ Elects to permit the purchase of life insur-
ance as an investment of a participant's
accounts
The applicable limitations will be under:
/X/ a. Section 12.3.8.3.1 (1/4-1/2 rule)
/ / b. Section 12.3.8.3.2 (accumulation/
participation rule)
N/A 35. PARTICIPANT LOANS [Section 12.3.11].
/ / Elects to permit participant loans
N/A 36. SEGREGATED INVESTMENT ACCOUNTS
[Section 12.4.3].
/ / Elects to permit participants to segregate
their accounts for direction of investment
N/A 37. SEGREGATION OF ACCOUNT IN INCOME-PRODUCING
INVESTMENTS IN PROXIMITY TO RETIREMENT DATE [Section 12.4.4]. A partici-
pant may segregate his or her account under Section 12.4.4 of the Plan at age
__________ if he or she has completed ___________ years of vesting service.
38. APPLICABLE STATE LAW [Section 13.11].
The laws of the State of Minnesota shall apply in the construction and
enforcement of the Plan.
39. MISCELLANEOUS SPECIAL PROVISIONS:
See Exhibits A and B.
xv
<PAGE>
* * * * * * *
The Employer hereby adopts the Plan and, IN WITNESS WHEREOF,
the Employer has executed this document on this 26th day of April, 1994 .
In the Presence of: Polaris Industries L.P.
-------------------------------------
(Employer's Name)
/s/ Mary H. Zins By /s/ Kenneth D. Larson
- ----------------------------------- -----------------------------------
Its President and COO
-------------------------------
xvi
<PAGE>
FREDRIKSON & BYRON
MODEL OPTIONAL 401(k) PROFIT SHARING PLAN
(C) 1992 Fredrikson & Byron, P.A.
Specimen Form/89-107
Optional 401(k)
<PAGE>
FREDRIKSON & BYRON
MODEL OPTIONAL 401(k) PROFIT SHARING PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1. Establishment and Adoption of Model Plan...........................................................1
1.1 Purpose............................................................................................1
1.2 Establishment and Adoption.........................................................................1
ARTICLE 2. Definitions and Special Rules......................................................................1
2.1 Instruments or Documents...........................................................................1
2.1.1 Plan......................................................................................1
2.1.2 Trust.....................................................................................1
2.1.3 Adoption Certificate......................................................................1
2.2 Parties............................................................................................2
2.2.1 Fredrikson & Byron........................................................................2
2.2.2 Employer..................................................................................2
2.2.3 Designated Employer.......................................................................2
2.2.4 Affiliate.................................................................................2
2.2.5 Trustee...................................................................................2
2.2.6 Funding Agent.............................................................................2
2.2.7 Employee..................................................................................2
2.2.8 Eligible employee.........................................................................3
2.2.9 Highly compensated employee...............................................................3
2.2.10 Participant...............................................................................6
2.2.11 Limited participant.......................................................................6
2.2.12 Beneficiary...............................................................................6
2.2.13 Designated beneficiary....................................................................7
2.2.14 Named fiduciary...........................................................................8
2.2.15 Plan Administrator........................................................................8
2.3 Important Dates....................................................................................8
2.3.1 Effective date............................................................................8
2.3.2 Fiscal year and plan year.................................................................8
2.3.3 Entry date................................................................................8
2.3.4 Valuation date............................................................................8
2.3.5 Normal retirement date....................................................................8
2.3.6 Early retirement date.....................................................................8
2.4 Service............................................................................................8
2.4.1 Service...................................................................................8
2.4.2 Hour of service...........................................................................8
2.4.3 Year of service..........................................................................11
2.4.4 One-year break in service................................................................13
2.5 Top-Heavy Plan Definitions........................................................................13
2.5.1 Top-heavy plan...........................................................................13
2.5.2 Super top-heavy plan.....................................................................14
2.5.3 Aggregation group........................................................................14
2.5.4 Determination date.......................................................................15
i
<PAGE>
2.5.5 Valuation date............................................................................15
2.5.6 Key employee..............................................................................15
2.5.7 Nonkey employee...........................................................................16
2.6 Miscellaneous......................................................................................16
2.6.1 Internal Revenue Code or the Code.........................................................16
2.6.2 ERISA.....................................................................................16
2.6.3 Fund......................................................................................16
2.6.4 Value.....................................................................................16
2.6.5 Beneficial interest.......................................................................16
2.6.6 Disabled or disability....................................................................16
2.6.7 Termination of employment.................................................................16
2.6.8 Age.......................................................................................16
2.6.9 Net income or profits.....................................................................16
2.6.10 Compensation..............................................................................16
2.6.11 Covered compensation......................................................................17
2.6.12 Adjusted compensation.....................................................................18
2.6.13 Base compensation.........................................................................18
2.6.14 Integration level.........................................................................18
2.6.15 Integrated with Social Security...........................................................18
2.6.16 Applicable contribution...................................................................18
2.6.17 Minimum contribution......................................................................19
2.6.18 Base contribution.........................................................................19
2.6.19 Integrated contribution...................................................................19
2.6.20 Applicable formula........................................................................20
2.6.21 Insurance or insurance policy.............................................................20
2.6.22 Annuity...................................................................................20
2.6.23 Qualified joint and survivor annuity......................................................20
2.6.24 Qualified preretirement survivor annuity..................................................20
2.6.25 Annuity starting date.....................................................................20
2.7 Special Definitions Applicable to Plan Maintained by Partnership or Proprietorship.................20
2.7.1 Net income or profits.....................................................................20
2.7.2 Earned income.............................................................................20
2.7.3 Compensation..............................................................................21
2.7.4 Covered compensation......................................................................21
2.7.5 Self-employed individual..................................................................21
2.7.6 Owner-employee............................................................................21
2.8 Interpretation of Certain Words....................................................................21
ARTICLE 3. Participation......................................................................................21
3.1 Participation Requirements.........................................................................21
3.2 Early Entry Date in Certain Circumstances..........................................................22
3.3 Reentry after One-Year Break in Service............................................................22
3.4 Effect of Involvement of Owner-Employees in Other Trades or Businesses.............................22
3.5 Notification of Plan Provisions....................................................................22
ARTICLE 4. Funding and Expenses...............................................................................23
4.1 Employer's Regular Contribution....................................................................23
4.1.1 Non-401(k) Contributions..................................................................23
4.1.2 Cash Option Contribution..................................................................23
ii
<PAGE>
4.2 Salary Deferral Contributions......................................................................23
4.3 Excess Deferrals...................................................................................24
4.3.1 Definitions...............................................................................24
4.3.2 Limitation on Elective Contributions by Employer and Affiliates...........................24
4.3.3 Distribution of Excess Deferrals..........................................................24
4.4 Actual Deferral Percentage Limitation..............................................................25
4.4.1 Actual Deferral Percentage Test...........................................................25
4.4.2 Actual Deferral Percentage................................................................26
4.4.3 Family Aggregation........................................................................26
4.4.4 Remedial Action...........................................................................27
4.4.5 Record keeping............................................................................28
4.5 Employer's Matching Contribution...................................................................28
4.6 Contributions not Limited to Profits and Earned Surplus............................................29
4.7 Time and Deductibility of Contributions Made by Employer Directly or on Behalf of Participant......29
4.7.1 Employer's Regular Contribution...........................................................29
4.7.2 Salary Deferral Contributions.............................................................29
4.7.3 401(k) Remedial Contribution..............................................................29
4.7.4 Matching Contribution.....................................................................29
4.8 Nondeductible Employee Contributions...............................................................29
4.8.1 Authorization and Limitation..............................................................30
4.8.2 Time of Nondeductible Employee Contributions..............................................30
4.8.3 Contribution of Insurance Policies........................................................30
4.9 Contribution Percentage Limitation.................................................................30
4.9.1 Contribution Percentage Test..............................................................30
4.9.2 Aggregate Limit...........................................................................30
4.9.3 Contribution Percentage...................................................................32
4.9.4 Family Aggregation........................................................................32
4.9.5 Remedial Action...........................................................................33
4.9.6 Record-Keeping............................................................................34
4.10 Rollover and Transfer Contributions................................................................34
4.10.1 Rollover from Qualified Plan..............................................................34
4.10.2 Rollover from Individual Retirement Account, Annuity or Bond..............................35
4.10.3 Direct Transfer from Qualified Plan.......................................................35
4.10.4 Commingling on Valuation Dates............................................................35
4.11 Expenses...........................................................................................35
ARTICLE 5. Deductible Employee Contributions..................................................................35
5.1 Cessation of Deductible Employee Contributions.....................................................35
5.2 Separate Accounts..................................................................................35
5.3 Vesting and Distribution...........................................................................35
5.3.1 Vesting...................................................................................35
5.3.2 Distribution..............................................................................36
5.4 Investment Restrictions............................................................................36
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ARTICLE 6. Allocation of Contributions........................................................................36
6.1 Separate Accounts..................................................................................36
6.2 Allocation of Employer's Non-401(k) Contribution and Forfeitures...................................37
6.2.1 Top-Heavy Minimum.........................................................................37
6.2.2 Nontop-Heavy Allocation...................................................................37
6.2.3 Effect of Section 410(b) Coverage Requirements............................................37
6.3 Employer's Cash Option Contribution................................................................39
6.4 Salary Deferral Contributions......................................................................40
6.5 Employer's 401(k) Remedial Contribution............................................................40
6.6 Employer's Matching Contribution...................................................................40
6.7 Code Section 415 Limitations on Allocation of Contributions and Forfeitures........................40
6.7.1 General Rule..............................................................................40
6.7.2 Multiple Defined Contribution Plans.......................................................40
6.7.3 Defined Benefit and Defined Contribution Plans............................................40
6.7.4 Change of Limitation Year.................................................................42
6.8 Duties of Designated Employer Regarding Limitations................................................42
6.8.1 Return of Nondeductible Employee Contributions............................................42
6.8.2 Return of Salary Deferral Contributions...................................................42
6.8.3 Disposition of Employer Contributions and Forfeitures.....................................42
ARTICLE 7. Benefits...........................................................................................43
7.1 Vesting, Valuation and Distribution of a Participant's Non-401(k) Contribution
Account and Matching Contribution Account........................................................43
7.1.1 Retirement, Disability and Death..........................................................43
7.1.2 Termination of Plan.......................................................................44
7.1.3 Partial Termination of Plan...............................................................44
7.1.4 Vesting in Absence of Event of Maturity; Distribution upon Other Terminations of
Employment..............................................................................44
7.2 Nondeductible Employee Contribution Account........................................................47
7.2.1 Vesting and Distribution..................................................................47
7.2.2 Withdrawals...............................................................................47
7.3 Vesting and Distribution of 401(k) Contribution Account, Rollover/Transfer Account and
Insurance Proceeds Account.......................................................................48
7.4 Special Rules for Plans with 401(k) Contribution Accounts..........................................48
7.4.1 Termination of Plan.......................................................................48
7.4.2 Sale of Assets............................................................................48
7.4.3 Sale of Subsidiary........................................................................48
7.5 Methods of Distribution of Accounts to Participant.................................................48
7.5.1 Lump Sum..................................................................................48
7.5.2 Installments..............................................................................48
7.5.3 Insurance Policy..........................................................................49
7.5.4 Incidental Death Benefit Requirement......................................................49
7.5.5 Required Beginning Date...................................................................50
7.5.6 Section 242(b) Election Honored...........................................................50
7.5.7 In-Kind Distributions.....................................................................51
7.5.8 Distribution of Beneficial Interest to Certain Participants in Form of
Qualified Joint and Survivor Annuity....................................................51
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7.6 Distribution of Benefits upon Death of a Participant...............................................52
7.6.1 Death Prior to Commencement of Required Distributions.....................................52
7.6.2 Section 242(b) Election Honored...........................................................53
7.6.3 Payment of Beneficial Interest in Form of Qualified Preretirement Survivor Annuity
in the Event of Married Participant's Death Prior to Annuity Starting Date..............53
7.6.4 Death after Commencement of Required Distributions........................................55
7.7 Additional Rules Relating to Distributions.........................................................55
7.7.1 Distributions Subject to Regulations......................................................55
7.7.2 Inconsistent Provisions...................................................................55
7.7.3 Separate Accounts.........................................................................55
7.7.4 No Consent Necessary for Required Distributions...........................................55
7.7.5 Effective Date............................................................................55
7.8 Reemployment of a Participant Receiving Benefits Hereunder.........................................56
7.9 Payment in Case of Incompetency....................................................................56
7.10 Nonalienation of Benefits..........................................................................56
7.11 Payment of Taxes...................................................................................57
7.12 Distributions from a Participant's Accounts Prior to the Occurrence of Another Event of Maturity...57
7.12.1 Illness...................................................................................57
7.12.2 Family Illness............................................................................57
7.12.3 Educational Purposes......................................................................57
7.12.4 Financial Hardship as a Result of Inability to Meet Current Obligations...................57
7.12.5 Charging Accounts and Special Limitations Applicable to Certain Accounts..................57
7.12.6 Special Requirements Applicable to Certain Distributions..................................57
7.13 Distribution from a Participant's Accounts upon Completion of Five Years of Service
as a Participant or Attainment of Specified Age..................................................58
7.14 Distribution Pursuant to Qualified Domestic Relations Order........................................59
7.15 Distributions after January 1, 1993................................................................60
7.15.1 Eligible Rollover Distribution............................................................60
7.15.2 Eligible Retirement Plan..................................................................60
7.15.3 Distributee...............................................................................60
7.15.4 Direct Rollover...........................................................................60
ARTICLE 8. Provisions Relating to Top-Heavy Plan..............................................................60
8.1 Application of Top-Heavy Provisions................................................................60
8.2 Minimum Vesting Requirements.......................................................................60
8.3 Minimum Contribution Requirement...................................................................61
8.4 Maximum Compensation Limitation....................................................................61
8.5 Provisions not Applicable to Certain Employees.....................................................61
ARTICLE 9. Amendment and Termination..........................................................................62
9.1 Amendment by Designated Employer...................................................................62
9.1.1 No Diversion..............................................................................62
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9.1.2 Reduction of Accrued Benefit by Amendment.................................................62
9.1.3 Election of Amended Schedule in Certain Circumstances.....................................62
9.1.4 Notice to Funding Agent and Employers.....................................................62
9.1.5 Amendment of Agreement with Funding Agent.................................................62
9.1.6 Effect of Amendment.......................................................................62
9.2 Termination........................................................................................63
9.3 Withdrawal by Employer.............................................................................63
9.3.1 Notice of Withdrawal......................................................................63
9.3.2 Right of Withdrawing Employer to Adopt Successor Plan.....................................63
9.3.3 Withdrawal Treated as Termination of the Plan with Respect to Withdrawing Employer........63
ARTICLE 10. Military and Government Service....................................................................63
10.1 Term in the Service................................................................................63
10.2 Statutes Affecting Provisions......................................................................63
ARTICLE 11. Certain Provisions Relating to Fund and Funding Agent..............................................63
11.1 Appointment and Resignation of Funding Agent.......................................................63
11.2 Agreement with Funding Agent.......................................................................64
11.3 Commingling........................................................................................64
11.4 Rights of Employees to Fund........................................................................64
11.5 Diversion of Fund and Return of Employer Contributions.............................................64
11.6 Errors in Participants' Accounts...................................................................64
ARTICLE 12. Administration of the Plan.........................................................................64
12.1 Administration by Designated Employer..............................................................64
12.2 Certain Provisions Relating to Accounting for Participants' Interests in the Fund and Adjusting
Accounts.........................................................................................64
12.2.1 Subdivision of Accounts...................................................................65
12.2.2 Adjustment of Accounts on Valuation Dates.................................................65
12.3 Powers of Designated Employer......................................................................66
12.3.1 Determinations............................................................................66
12.3.2 Plan Interpretation and Dispute Resolution................................................66
12.3.3 Rule-Making...............................................................................66
12.3.4 Accounting Direction......................................................................66
12.3.5 Fund Disbursement and Investment..........................................................66
12.3.6 Allocation of Fiduciary Responsibilities..................................................66
12.3.7 Unallocated Key-Person Insurance..........................................................66
12.3.8 Allocated Life Insurance..................................................................66
12.3.9 Sale of Insurance Contracts...............................................................67
12.3.10 Purchase of Insurance Contracts...........................................................68
12.3.11 Participant Loans.........................................................................68
12.3.12 Employment of Agents......................................................................70
12.3.13 Correction of Errors......................................................................70
12.3.14 Appointment and Removal of Funding Agent..................................................70
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12.3.15 Certifications............................................................................70
12.3.16 Establishment of Separate Fund Following Merger or Consolidation..........................70
12.4 Participant Direction of Investment of Accounts....................................................70
12.4.1 Separate Investment Funds.................................................................70
12.4.2 Segregation of Accounts for Participant Loans.............................................70
12.4.3 Segregation of Accounts for Participant Direction and Exercise of Participant Direction...71
12.4.4 Segregation of Accounts Subsequent to Termination of Employment or Earlier Date...........71
12.4.5 Segregation of Insurance Proceeds.........................................................72
12.5 Claims Procedure...................................................................................72
12.5.1 Filing and Denial of Claim................................................................72
12.5.2 Review of Denial..........................................................................72
12.5.3 Notice Periods and Legal Action...........................................................72
12.6 Action Taken by Designated Employer or Employer....................................................73
12.7 Delegation by Designated Employer and Others.......................................................73
12.8 Membership and Operation of Committee..............................................................73
12.8.1 Membership of Committee...................................................................73
12.8.2 Officers..................................................................................73
12.8.3 Meetings and Voting.......................................................................73
12.8.4 Bonds, Compensation and Expenses..........................................................73
12.9 Notification and Certification by Designated Employer, Employer or Committee.......................74
ARTICLE 13. Miscellaneous......................................................................................74
13.1 Right to Terminate Employment......................................................................74
13.2 Limitation on Liability of Designated Employer, Employer, Committee or Funding Agent...............74
13.3 Unemployment Benefits..............................................................................74
13.4 Consolidation or Merger of the Plan................................................................74
13.5 Effect of Change of Method of Crediting Service....................................................74
13.6 Service of ProceSections...........................................................................75
13.7 Persons Dealing with Designated Employer, Employer, Committee and Funding Agent....................75
13.8 Plan Intended to Qualify under Section 40l(a) of Internal Revenue Code.............................75
13.9 Indemnification....................................................................................75
13.10 Titles.............................................................................................75
13.11 Governing Law......................................................................................75
13.12 Matters Surviving Amendment........................................................................75
</TABLE>
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FREDRIKSON & BYRON
MODEL OPTIONAL 401(k) PROFIT SHARING PLAN
ARTICLE 1.
ESTABLISHMENT AND ADOPTION OF MODEL PLAN
1.1 PURPOSE. The Employer has adopted this Profit Sharing Plan to
provide benefits upon retirement, disability or death exclusively for the
benefit of its employees who participate hereunder and their beneficiaries.
1.2 ESTABLISHMENT AND ADOPTION. Any employer otherwise eligible to
adopt a qualified plan under Section 401 of the Internal Revenue Code may
establish this Plan in the following manner: If a corporate employer (or
equivalent), through proper corporate action and by executing an Adoption
Certificate, and if an unincorporated employer, by executing an Adoption
Certificate. In addition, any such employer may, in accordance with the
provisions of Section 2.2.2, adopt this Plan as established by another employer.
ARTICLE 2.
DEFINITIONS AND SPECIAL RULES
2.1 INSTRUMENTS OR DOCUMENTS.
2.1.1 The "PLAN" means the profit sharing plan set forth in
this instrument as adopted by the Employer. As the Plan instrument and Adoption
Certificate are amended from time to time, the "PLAN" shall mean those
instruments as amended; provided, however, that the name of the Plan may be
changed from time to time by written resolution of the designated Employer
without amendment hereto.
2.1.2 The "TRUST" is the trust or trusts, if any, created by
execution of the Fredrikson & Byron Model Profit Sharing Trust by the designated
Employer and the Trustee or Trustees. Two or more trusts may be established to
hold the contributions under this Plan by appropriate designation in the trust
agreement.
2.1.3 The "ADOPTION CERTIFICATE" is the "Adoption Certificate
for the Fredrikson & Byron Model Optional 401(k) Profit Sharing Plan" whereby
this Plan is established.
2.2 PARTIES. The parties and others concerned:
2.2.1 "FREDRIKSON & BYRON" is Fredrikson & Byron, P.A., a
Minnesota professional corporation, and its successors.
2.2.2 The "EMPLOYER" is the for-profit or nonprofit
corporation, trust, partnership or proprietorship which has established the Plan
by executing the Adoption Certificate, and its successors and assigns, by
merger, purchase or otherwise. The "EMPLOYER" also includes any other for-profit
or nonprofit corporation, trust, partnership or proprietorship which, with the
consent of the designated Employer and in accordance with the rules and
procedures for adopting the Plan established by the designated Employer from
time to time, (i) has adopted the Plan by such action as is appropriate to its
form of organization, and (ii) is named as an Employer in the Adoption
Certificate or an amendment thereto. Each such Employer shall, as a condition of
its adoption of this Plan, be bound by all of the provisions of this Plan and
the Adoption Certificate in the same manner as if it were the Employer which
established the Plan and executed the Adoption Certificate. The "EMPLOYER" also
refers to any predecessor employer where the Employer maintains the plan of such
predecessor employer. Any such predecessor employer shall be designated in the
Adoption Certificate. In the event this Plan is adopted by more than one
Employer, unless the context indicates otherwise:
2.2.2.1 A reference to "the Employer" shall be to the
Employer by whom an employee is employed or, in the case of a participant who is
no longer employed, an Employer which employed such participant and made
contributions which were allocated to the participant's accounts hereunder; and
2.2.2.2 A reference to "an Employer" shall be to any
Employer which has adopted this Plan.
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2.2.3 The "DESIGNATED EMPLOYER" is the Employer which executed
the Adoption Certificate unless another Employer is so designated in the
Adoption Certificate. Except as otherwise set forth in this Plan with respect to
the delegation of powers and duties, the designated Employer shall have the sole
authority to amend or terminate the Plan, to appoint, remove, or enter into an
agreement with, the Funding Agent and to exercise such other powers and duties
as shall be specified herein.
2.2.4 An "AFFILIATE" is (i) a corporation which is a member of
a controlled group of corporations with the Employer under Code Section 414(b),
(ii) a trade or business which is under common control with the Employer under
Code Section 414(c), (iii) for plan years ending after November 30, 1980, if the
Plan was not established on such date, and for plan years beginning after
November 30, 1980, if the Plan was established on or before November 30, 1980,
an organization which is a member of an affiliated service group with the
Employer under Code Section 414(m), but only to the extent and for the purposes
required by Code Section 414(m) and the regulations promulgated thereunder, or
(iv) any other organization or entity specified in regulations prescribed by the
Secretary of the Treasury under Code Section 414(o) to prevent the avoidance of
employee benefit requirements, but only to the extent and for the purposes
required by such regulations; provided, however, that for purposes of applying
the limitations of Code Section 415, "AFFILIATE" shall be determined as herein
provided but as modified by Code Section 415(h).
2.2.5 The "TRUSTEE" or "TRUSTEES" means the person or persons
(including a corporate trustee) designated as the trustee of each trust
established under the Plan, if any, and any successor trustee or co-trustee duly
appointed.
2.2.6 The "FUNDING AGENT" is the Trustee or Trustees,
insurance company or insurance companies, or combination thereof, and any duly
appointed successor or successors, the singular at all times to include the
plural, designated in the Adoption Certificate to receive the contributions
under the Plan and to pay the benefits accrued under and in accordance with the
terms of the Plan.
2.2.7 An "EMPLOYEE" is any person employed by the Employer who
would be considered a common-law employee receiving remuneration for employment
and any self-employed individual (as defined in Section 2.7.5) who receives
compensation from the Employer. The term "EMPLOYEE" also includes an employee of
an Affiliate, but only for purposes of those Plan provisions in which there is a
specific reference to such employees.
2.2.7.1 LEASED EMPLOYEE. Pursuant to Code Section
414(n) and the regulations promulgated thereunder, the term "EMPLOYEE" also
refers to any person who must be treated as an employee on account of being a
leased employee directly or indirectly performing services for the Employer or
an Affiliate; provided, however, that contributions or benefits provided by the
leasing organization which are attributable to services performed for the
Employer shall be deemed to be provided by the Employer (but any such
contributions or benefits shall offset the amount of the Non-401(k) Contribution
which would otherwise be allocated to the account of the leased employee only if
(i) such offset is not made under another plan maintained by the Employer or an
Affiliate, and (ii) such offset would not adversely affect the qualification of
this Plan under Section 401(a) of the Internal Revenue Code).
2.2.7.1.1 TREATMENT OF CERTAIN LEASED
EMPLOYEES. Notwithstanding the provisions of Section 2.2.7.1, a person who
would otherwise be treated as an employee by being a leased employee shall not
be so treated (except as otherwise provided in this Plan or required under
applicable provisions of the Internal Revenue Code and the regulations
promulgated thereunder) if:
2.2.7.1.1.1 With respect to
services performed prior to January 1, 1987, such person was covered by a money
purchase pension plan which provided for an employer contribution rate (which
was not integrated with Social Security) which for periods after December 31,
1983, was at least 7-1/2% and which provided for immediate participation and
full and immediate vesting; and
2.2.7.1.1.2 With respect to
services performed after December 31, 1986, (i) such person is covered by a
money purchase pension plan maintained by the leasing organization which
provides for an employer contribution rate (which is not integrated with Social
Security) which is and always has been at least 10% of compensation (or, for
periods prior to January 1, 1987, at least 7-1/2%), full and immediate vesting
and immediate participation by each person employed by the leasing organization
other than individuals who perform substantially all of their services for the
leasing organization or whose compensation from the leasing organization for
each plan year during the four-year period ending with the last day of the plan
year is less than $1,000, and (ii) leased employees do not constitute more than
20% of the recipient's (as hereinafter defined) nonhighly compensated work force
for the plan year of a plan maintained by the recipient.
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2.2.7.1.2 LEASED EMPLOYEE DEFINITIONS. For
purposes of the provisions under this Section 2.2.7:
2.2.7.1.2.1 "LEASED EMPLOYEE" means
any person other than an employee of the recipient (within the meaning of the
first two sentences of Section 2.2.7) who, pursuant to one or more agreements
between the recipient and one or more leasing organizations, has directly or
indirectly performed services for the recipient (or for the recipient and
related persons determined in accordance with Code Section 414(n)(6)(A)) on a
substantially full-time basis for a period of at least one year (including for
such purpose services performed as an employee of the recipient) of a type
historically performed by employees in the business field of the recipient, all
within the meaning of Code Section 414(n) and the regulations promulgated
thereunder. A person generally becomes a leased employee with respect to the
recipient as of the first day immediately following the end of the one-year
period described in the preceding sentence; provided, however, that the
recipient may elect to treat all persons who otherwise satisfy the conditions of
this Section 2.2.7.1.2.1 as leased employees as of the first day of such
one-year period; and, provided further, that a person shall not be treated as a
leased employee for any plan year (or, in the case of a change in plan year or a
partial plan year, the periods determined in accordance with Sections 2.3.2.1.2
and 2.3.2.2, respectively) during which such person has less than 501 hours of
service for the recipient.
2.2.7.1.2.2 "LEASING ORGANIZATION"
means any individual, sole proprietorship, trust, estate, partnership,
association, company or corporation, or any group thereof, which must be
aggregated pursuant to subsections (b), (c), (m) and/or (o) of Code Section 414,
which provides services to a recipient through a leased employee.
2.2.7.1.2.3 "NONHIGHLY COMPENSATED
WORK FORCE" means the aggregate number of persons, other than highly compensated
employees, who either are (i) employees of the recipient (determined without
regard to Code Section 414(n) and the provisions under Section 2.2.7 relating to
leased employees) who have performed services for the recipient (or for the
recipient and related persons determined in accordance with Code Section
414(n)(6)(A)) on a substantially full-time basis for a period of at least one
year, or (ii) leased employees with respect to the recipient (including for this
purpose any person who performs services for the recipient both as an employee
and as a nonemployee, and who would be a leased employee if all such services
were performed as a nonemployee).
2.2.7.1.2.4 The "RECIPIENT" is the
Employer and all Affiliates.
2.2.7.1.3 MAINTENANCE OF RECORDS. Except
as otherwise provided in regulations promulgated pursuant to Code Section
414(n), the recipient must maintain employment records with sufficient detail to
determine whether, and to what extent, persons who provide services to the
recipient are leased employees.
2.2.7.1.4 CODE SECTION 414(o) EMPLOYEE.
The term "EMPLOYEE" also refers to any person who must be treated as an
employee, whether on account of being a leased employee or otherwise, pursuant
to regulations prescribed by the Secretary of the Treasury under Code Section
414(o) to prevent the avoidance of employee benefit requirements, but only to
the extent and for the purposes required by such regulations.
2.2.8 An "ELIGIBLE EMPLOYEE" is an employee of the Employer
who is either a United States citizen or resident. The term does not include any
employee who is included in a unit of employees covered by a collective
bargaining agreement between the Employer and the collective bargaining unit
unless such collective bargaining agreement provides for participation in the
Plan for the plan year. The term also does not include any other category of
employees designated in the Adoption Certificate.
2.2.9 A "HIGHLY COMPENSATED EMPLOYEE" means an employee of the
Employer or an Affiliate who (i) subject to the provisions of Section 2.2.9.5.3,
performs services during the plan year for which the determination is being made
(the "determination year"), and (ii) subject to the special rules set forth in
Sections 2.2.9.5.1 through 2.2.9.5.8, at any time during the determination year
or the 12-consecutive-month period immediately preceding the determination year
(the "look-back year") is a person described in one or more of the following
Sections 2.2.9.1 through 2.2.9.4:
2.2.9.1 A 5% owner (within the meaning of Section
2.5.6.3).
2.2.9.2 An employee who receives compensation from
the Employer and Affiliates for the determination year or the look-back year, as
the case may be, in excess of $75,000.
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2.2.9.3 An employee who receives compensation from
the Employer and Affiliates for the determination year or the look-back year, as
the case may be, in excess of $50,000 and is in the top-paid group of employees
for such year. Except as provided in Section 2.2.9.3.5, an employee is in the
top-paid group of employees for the determination year or the look-back year if
such employee (i) performs services during such year for the Employer or an
Affiliate, and (ii) is in the group consisting of the top 20% of employees of
the Employer and Affiliates when ranked on the basis of compensation received
during such year. In determining the number of employees in the top-paid group
for the determination year or the look-back year, but not their identity (except
as provided in Section 2.2.9.3.5), the following employees shall be excluded:
2.2.9.3.1 Employees who have not completed
six months of service by the end of such year;
2.2.9.3.2 Employees who normally work less
than 17-1/2 hours per week during such year. For purposes of this Section
2.2.9.3.2, an employee who works less than 17-1/2 hours per week for 50% or more
of the total weeks worked by such employee during such year is deemed to
normally work less than 17-1/2 hours per week during such year;
2.2.9.3.3 Employees who normally work less
than six months during any year, as determined on the basis of the facts and
circumstances evidenced by the customary experience of the Employer and
Affiliates in the years preceding the determination year. For purposes of this
Section 2.2.9.3.3, an employee who works one day during a month is deemed to
have worked during that month;
2.2.9.3.4 Employees who have not attained
age 21 by the end of such year; and
2.2.9.3.5 Employees who are included in a
unit of employees covered by one or more agreements that the Secretary of Labor
finds to be collective bargaining agreements between employee representatives
and the Employer or an Affiliate, which agreements satisfy the requirements of
Code Section 7701(a)(46) and Temp. Reg. Sections 301.7701-17T, if 90% or more of
the employees of the Employer and Affiliates are covered under such collective
bargaining agreements, but only for purposes of plans maintained by the Employer
and Affiliates which cover only employees who are not covered under such
agreements. Such employees shall also be excluded in determining the identity of
employees in the top-paid group.
The Employer and Affiliates may elect, on a
consistent and uniform basis with respect to all plans and situations to which
Code Section 414(q) is applicable, to reduce the service or age requirements set
forth in Sections 2.2.9.3.1 through 2.2.9.3.4, and/or to include employees
described in Section 2.2.9.3.5 for purposes of determining the number and
identity of employees in the top-paid group.
2.2.9.4 An employee who (i) is an officer of the
Employer or an Affiliate (within the meaning of Section 2.5.6.1) at any time
during the determination year or the look-back year, as the case may be, and
(ii) receives compensation for such year in excess of 50% of the dollar
limitation on benefits under Code Section 415(b)(1)(A) for the calendar year in
which such year begins. Notwithstanding the foregoing:
2.2.9.4.1 In no event shall more than 50
employees of the Employer and Affiliates or, if less, the greater of three
employees and 10% of all such employees who perform services for the Employer or
an Affiliate during such year, be treated as officers for each such year for
purposes of determining the group of highly compensated employees. Employees who
are excluded in determining the number of employees in the top-paid group
pursuant to Sections 2.2.9.3.1 through 2.2.9.3.5 shall be excluded in
determining the number of officers taken into account under this Section
2.2.9.4.1. If the number of officers of the Employer and Affiliates who are
described in Section 2.2.9.4 during any such year exceeds the limitation under
this Section 2.2.9.4.1, then the officers who will be considered as highly
compensated employees are those who receive the greatest compensation during
such year.
2.2.9.4.2 If, for the determination year or
the look-back year, no officer of the Employer or an Affiliate is described in
clause (ii) of Section 2.2.9.4, the highest paid officer for such year shall be
treated as a highly compensated employee.
2.2.9.5 For purposes of determining the group of
highly compensated employees under Sections 2.2.9.1 through 2.2.9.4, the
following special rules shall apply:
4
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2.2.9.5.1 If an employee who would
otherwise be included in one of the categories described in Sections 2.2.9.2,
2.2.9.3 and 2.2.9.4 for the determination year was not included in any of such
categories for the look-back year (without regard to the special rule set forth
in this Section 2.2.9.5.1), such employee shall not be included in any of such
categories for the determination year unless such employee is among the 100
employees of the Employer and Affiliates who perform services and receive the
greatest compensation during such year (the "top 100 employees").
2.2.9.5.2 A (i) highly compensated employee
who is one of the ten most highly compensated employees for either the
determination year or the look-back year when ranked on the basis of
compensation paid during such year (a "top-ten employee"), or (ii) 5% owner, and
the family members of such top-ten employee or 5% owner who are also employees
of the Employer or an Affiliate, shall be aggregated and treated as a single
highly compensated employee, and any compensation paid to any such family
member, and any contributions or benefits for such family member, shall be
treated as if paid to or on behalf of such top-ten employee or 5% owner. For
purposes of this Section 2.2.9.5.2:
2.2.9.5.2.1 "FAMILY MEMBERS" means
individuals who, on any day during the determination year or the look-back year,
are the spouse or lineal ascendants or descendants, or the spouses of such
lineal ascendants or descendants, of a top-ten employee or 5% owner. In
determining the identity of family members, legal adoptions shall be taken into
account.
2.2.9.5.2.2 Family members are
subject to aggregation under Section 2.2.9.5.2 whether or not they fall within
the categories of employees that may be excluded for purposes of determining the
number of employees in the top-paid group under Section 2.2.9.3, and whether or
not they are highly compensated employees when considered separately.
2.2.9.5.2.3 The determination of
(i) which employees are highly compensated employees, (ii) which highly
compensated employees are top-ten employees during either the determination year
or the look-back year, (iii) the number and identity of employees in the
top-paid group for the determination year and the look-back year under Section
2.2.9.3, and (iv) the identity of the top 100 employees will be made prior to
application of Section 2.2.9.5.2.
2.2.9.5.2.4 The provisions under
Section 2.2.9.5.2 shall apply in determining the compensation of, and any
contributions or benefits for, any participant for purposes of any provision of
the Plan which refers to a highly compensated employee or which is affected by a
section of the Internal Revenue Code or ERISA incorporating the definition of a
highly compensated employee contained in Code Section 414(q) by reference;
provided, however, that such provisions shall not apply for purposes of
determining a participant's base compensation.
2.2.9.5.3 An employee of the Employer or an
Affiliate who performs no services for the Employer or Affiliate during the
determination year (a "former employee") shall, to the extent required by
applicable provisions of the Internal Revenue Code, ERISA and the regulations
promulgated thereunder, be treated as a highly compensated employee for
determination years beginning after the actual termination year if such former
employee was a highly compensated employee for either:
2.2.9.5.3.1 Any determination year
ending on or after such former employee's 55th birthday; or
2.2.9.5.3.2 The determination year
in which such former employee terminated employment. For purposes of this
Section 2.2.9.5.3.2, a former employee will be treated as having terminated
employment in the earlier of the actual termination year and the deemed
termination year.
The "ACTUAL TERMINATION YEAR" is the
determination year in which the former employee last performs services for the
Employer or an Affiliate. The "DEEMED TERMINATION YEAR" is a determination year
prior to attainment of age 55 in which the former employee performs services for
the Employer or an Affiliate and receives compensation in an amount less than
50% of such former employee's average annual compensation for the three
consecutive calendar years preceding such determination year during which such
former employee received the greatest amount of compensation (or the total
period of such former employee's service with the Employer and Affiliates, if
less). Notwithstanding the foregoing, a former employee will not be treated as
having terminated employment in the deemed termination year if, after the deemed
termination year and before the actual termination year, such former employee's
services for and compensation from the Employer and Affiliates increase
significantly, as determined on the basis of the surrounding facts and
circumstances (which must include, but are not limited to, an increase in
compensation to the extent that such compensation would not result in a deemed
termination year). Nothing in this Section 2.2.9.5.3 shall affect the
determination of whether an employee is a highly compensated employee for any
determination year beginning prior to or coinciding with the actual termination
year.
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2.2.9.5.4 The $75,000 and $50,000 amounts
under Sections 2.2.9.2 and 2.2.9.3, respectively, shall be adjusted to take into
account any adjustments made by the Secretary of the Treasury pursuant to Code
Section 414(q)(1). Such adjustments shall be effective for the determination
year and the look-back year, as the case may be, beginning in the calendar year
for which such adjustments are made.
2.2.9.5.5 In the event that the plan year is
changed for any reason, the dollar amounts in effect under Sections 2.2.9.2 and
2.2.9.3 shall be adjusted for the determination year coinciding with the plan
year for which such change is effective by multiplying such dollar amounts by a
fraction, the numerator of which is the number of calendar months in such
determination year and the denominator of which is 12. Regardless of any such
change in plan year, the look-back year shall never be less than a
12-consecutive-month period.
2.2.9.5.6 If elected by the Employer and
Affiliates for all plans and arrangements to which Section 414(q) is applicable,
the look-back year shall be the calendar year ending with or within the
determination year (or, in the case of a determination year that is shorter than
12 months, the calendar year ending with or within the 12-consecutive-month
period ending with the end of the determination year). In such event, the
employees described in Sections 2.2.9.1 through 2.2.9.4 shall be determined for
the determination year on the basis of that portion of the determination year,
if any, which extends beyond the look-back year, and the dollar amounts in
effect under Sections 2.2.9.2 and 2.2.9.3 shall be adjusted for such period by
multiplying such dollar amounts by a fraction, the numerator of which is the
number of calendar months in such period and the denominator of which is 12.
2.2.9.5.7 Employees who are nonresident
aliens and receive no earned income (within the meaning of Code Section
911(d)(2)) from the Employer or an Affiliate from sources within the United
States (within the meaning of Code Section 861(a)(3)) shall not be treated as
employees for purposes of the provisions under Section 2.2.9.
2.2.9.5.8 If elected by the Employer and
Affiliates on a reasonable and consistent basis, leased employees who would not
otherwise be treated as employees on account of being covered by a money
purchase pension plan described in Section 2.2.7.1.1.2 shall be treated as
employees for purposes of the provisions under Section 2.2.9.
2.2.10 A "PARTICIPANT" is an employee who becomes a
participant in the Plan pursuant to Article 3 or Section 4.10 hereof. An
employee who becomes a participant shall remain a participant until the earlier
of:
2.2.10.1 The participant's death; and
2.2.10.2 The date on which payment is made from the
Fund to the participant of such participant's entire beneficial interest.
2.2.11 A "LIMITED PARTICIPANT" is an employee who has not
become a participant in the Plan under Article 3 but for whom a rollover or
transfer contribution is being held by the Funding Agent. Such an employee shall
be considered a participant other than for purposes of Sections 4.1 through 4.9
hereof.
2.2.12 A "BENEFICIARY" is the person or persons, natural or
otherwise, other than a joint or contingent annuitant, designated by a
participant to receive any benefit payable under the Plan on the participant's
death. Except as otherwise provided hereinbelow with respect to a married
participant, a participant may, without the consent of a beneficiary, revoke or
alter any such designation. To be effective, such designation, revocation or
alteration shall be in writing, in such form as may be approved by the
designated Employer, and shall be filed with and accepted by the designated
Employer. If a participant has been employed by more than one Employer
maintaining the Plan and has had separate accounts established hereunder with
respect to employment with each such Employer, a beneficiary designation form
filed with the designated Employer shall apply to all accounts established for
such participant. The most recently dated beneficiary designation form which is
validly filed with the designated Employer by a participant shall revoke all
previously dated beneficiary designation forms filed by such participant. If a
participant fails to validly designate a beneficiary or if no beneficiary
designated by the participant survives the participant, the following persons
shall be the beneficiary or beneficiaries in the order named:
2.2.12.1 The participant's surviving spouse;
2.2.12.2 If the participant is not survived by a
spouse, then the participant's surviving children and the surviving issue of any
child of the participant who is deceased at the participant's death, by right of
representation;
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2.2.12.3 If the participant is not survived by a
spouse, nor any issue, then the participant's parents in equal shares if both
are living or, if but one is living, such survivor;
2.2.12.4 If the participant is not survived by a
spouse, nor any issue, nor by a parent, then the brother(s) and sister(s) of the
participant who survive the participant and the surviving issue of any brother
or sister of the participant who predeceases the participant, by right of
representation; and
2.2.12.5 If the participant is not survived by any
of the above-designated persons, then the participant's estate.
A participant's designation of a beneficiary which is not the
participant's surviving spouse is not valid hereunder unless such designation
names a beneficiary which may not be changed without spousal consent (or the
consent of the spouse described below expressly permits the participant to
designate a different beneficiary without further consent by the spouse) and the
participant's surviving spouse consents to such designation in a written
instrument which acknowledges the effect of the participant's designation and
either (i) names the specific nonspouse beneficiary who may receive the
participant's benefit at the participant's death, or (ii) acknowledges that the
spouse has the right to limit consent to a specific nonspouse beneficiary and
that the spouse voluntarily relinquishes such right. In the case of a
participant to whom the provisions under Section 7.6.3 apply, see Section
7.6.3.2 for rules on when such designation may be made. Notwithstanding the
foregoing, spousal consent to such designation shall not be required (i) if the
Plan Administrator determines that such consent cannot be obtained because the
participant has no spouse or the spouse cannot be located, (ii) except as
otherwise provided in a qualified domestic relations order, if the participant
is legally separated or has been abandoned within the meaning of local law by
his or her spouse and the participant has a court order to that effect, or (iii)
in such other circumstances as may be provided in regulations prescribed by the
Secretary of the Treasury. Spousal consent under this Section 2.2.12 must be
witnessed by a notary public or an officer, managing partner or sole owner of
the designated Employer on behalf of the Plan, and shall be irrevocable unless
otherwise provided in uniform rules adopted by the designated Employer and
applied in a nondiscriminatory manner. The consent of the participant's spouse
or the determination that the consent of the participant's spouse shall not be
obtained shall be effective only with respect to such spouse. In the event that
the participant's spouse is legally incompetent to give consent, the spouse's
legal guardian, including a legal guardian who is the participant, may give
consent under this Section 2.2.12 on behalf of the spouse, subject to the
foregoing requirements.
If a beneficiary dies prior to complete payment to such
beneficiary, any amounts remaining to be paid shall be paid to the beneficiary's
estate.
The identity of each beneficiary shall be determined by the
designated Employer, which shall be entitled to rely on the statement of the
executor, administrator or other representative of the participant's estate as
to the identity of any beneficiary. A determination by the designated Employer
shall be final and binding on all persons, and payment in accordance therewith
shall fully discharge the designated Employer, the Employer and the Funding
Agent from all liability in connection with payment to any person.
2.2.13 The "DESIGNATED BENEFICIARY" is the beneficiary
determined under Section 2.2.12 as of the applicable date. For purposes of this
Section 2.2.13, the "APPLICABLE DATE" is (i) in the case of distributions
pursuant to Section 7.5, the participant's required beginning date (as
determined under Section 7.5.5), and (ii) in the case of distributions pursuant
to Section 7.6.1, the date of the participant's death; provided, however, that
for the purpose of applying the provisions of Section 7.6.1.3, the "APPLICABLE
DATE" is the date of the surviving spouse's death. Notwithstanding the
foregoing:
2.2.13.1 For the purpose of calculating the minimum
distribution required to be made to the participant for the first distribution
year pursuant to Section 7.5.2, the designated beneficiary may be determined as
of any date after December 31 of the first distribution year (as determined
under Section 7.5.2) but before the participant's required beginning date, and
the date of such determination shall be the applicable date for such purpose.
2.2.13.2 In the case of distribution under an
insurance policy pursuant to Section 7.5.3 or an annuity pursuant to Section
7.5.8, the designated beneficiary may be determined as of any date during the
90-day period prior to the date on which payments under such insurance policy
or annuity commence, and the date of such determination shall be the
applicable date.
2.2.13.3 If any beneficiary is not a natural person,
the participant shall be treated as having no designated beneficiary; provided,
however, that in the event a trust is the participant's beneficiary under
Section 2.2.12, all beneficiaries of the trust with respect to the trust's
interest in the participant's beneficial interest shall be treated as designated
beneficiaries hereunder (and distributions made to such trust pursuant to the
Plan shall be treated as having been made to such
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beneficiaries) if the following requirements are met as of (i) in the case of
distributions pursuant to Section 7.5, the later of the date on which the
trust is named as a beneficiary of the participant and the participant's
required beginning date, and all subsequent periods during which the trust is
named as a beneficiary, and (ii) in the case of distributions pursuant to
Section 7.6.1, the date of the participant's death:
2.2.13.3.1 The trust is a valid trust under
applicable state law, or would be but for the fact that there is no corpus;
2.2.13.3.2 The trust is irrevocable;
2.2.13.3.3 The beneficiaries of the trust
described in Section 2.2.13.3 are identifiable from the trust instrument as of
the applicable date and at all subsequent times; and
2.2.13.3.4 A copy of the trust instrument is
provided to the Plan.
2.2.13.4 If there is more than one beneficiary as of
the applicable date, or if a beneficiary is added or replaces a beneficiary
after the applicable date, the beneficiary with the shortest life expectancy
shall be the designated beneficiary; provided, however, that this Section
2.2.13.4 shall not apply to the extent that separate accounts described in
Section 7.7.3 are maintained with respect to such beneficiaries; and, provided
further, that in the event any person becomes entitled to a benefit hereunder on
account of the death of the designated beneficiary, such designated beneficiary
shall continue to be treated as the designated beneficiary for purposes of
determining the distribution period under Sections 7.5.2 and 7.6.1.2, regardless
of whether such person has a shorter life expectancy.
2.2.13.5 A person whose entitlement to a benefit
hereunder is contingent, as of the applicable date, on an event other than the
death of a beneficiary shall be considered a beneficiary for purposes of
Sections 2.2.13.3 and 2.2.13.4.
2.2.14 The "NAMED FIDUCIARY," for purposes of Section 402(a)
of ERISA, is the designated Employer. The designated Employer may from time to
time appoint one or more additional named fiduciaries. In addition, any
committee appointed pursuant to the provisions of the Plan as from time to time
constituted shall be considered a named fiduciary with respect to the powers and
duties delegated to such committee.
2.2.15 The "PLAN ADMINISTRATOR," for purposes of Section
3(16)(A) of ERISA, is the designated Employer unless otherwise designated in the
Adoption Certificate. The Plan Administrator shall maintain all records for the
Plan with the exception of Fund accountings, which shall remain the
responsibility of the Funding Agent.
2.3 IMPORTANT DATES.
2.3.1 The "EFFECTIVE DATE" of the Plan with respect to the
Employer that establishes the Plan by adoption of this plan instrument as the
first plan instrument for the Plan is the effective date set forth in the
Adoption Certificate. The "EFFECTIVE DATE" of the Plan with respect to the
Employer that adopts this plan instrument as a restatement of a prior plan
instrument is the date set forth in the Adoption Certificate. The "EFFECTIVE
DATE" of the Plan with respect to an Employer that adopts the Plan in accordance
with the provisions of Section 2.2.2 is the first day of the plan year in which
such Employer becomes an Employer or, if later, such other date designated by
such Employer. The "EFFECTIVE DATE" of any restatement or other amendment with
respect to an Employer shall be (i) the first day of the plan year within which
the restated Plan or amendment is adopted, (ii) such other date set forth in the
Adoption Certificate for the restated Plan or the amendment, or (iii) in the
case of an Employer that adopts the Plan in accordance with the provisions of
Section 2.2.2, the effective date of the Plan with respect to such Employer, if
later. The "EFFECTIVE DATE" of a provision of the Plan which is different from
any of the foregoing effective dates shall be as set forth in such provision or
in the Adoption Certificate or, in the event this Plan is maintained pursuant to
one or more collective bargaining agreements between employee representatives
and one or more Employers, as determined in accordance with applicable
provisions of the Code, ERISA and the regulations promulgated thereunder.
Notwithstanding the foregoing, in the event that this plan instrument is a
restatement of a prior plan instrument, the provisions of this plan instrument
shall not apply with respect to, nor affect the rights of, any participant whose
termination of employment occurs prior to the effective date of such restatement
except to the extent required by applicable provisions of the Code, ERISA or the
regulations promulgated thereunder.
2.3.2 The "FISCAL YEAR" means the 12-consecutive month period
corresponding with the Employer's fiscal year. The "PLAN YEAR" means the fiscal
year or such other period of consecutive months (which, except in the case of a
change in
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plan year, must be 12 months) selected in the Adoption Certificate as the
applicable accounting and computation period for the Plan.
2.3.2.1 In the event that the plan year is changed
(as the result of a change in the Employer's fiscal year, an amendment to the
elective provisions of the Adoption Certificate or otherwise), the otherwise
applicable rules under the "YEARS OF SERVICE" definition hereunder shall be
superseded by the following rules:
2.3.2.1.1 For purposes of determining an
employee's year(s) of service for eligibility, if the employee is not credited
with at least 1,000 hours of service during the 12-month period commencing with
his or her date of employment, the employee shall be credited with a year of
service if he or she is credited with at least 1,000 hours of service during the
12-month period commencing with the first day of the partial plan year resulting
from such change and with a second year of service if he or she is credited with
at least 1,000 hours of service during the 12-month period commencing with the
first day of the first full plan year with respect to which such change in plan
year is effective.
2.3.2.1.2 For purposes of determining an
employee's year(s) of service for vesting, the employee shall be credited with a
year of service if the employee is credited with at least 1,000 hours of service
during the 12-month period commencing with the first day of the partial plan
year resulting from such change and with a second year of service if he or she
is credited with at least 1,000 hours of service during the 12-month period
commencing with the first day of the first full plan year with respect to which
such change in plan year is effective.
2.3.2.1.3 For purposes of determining an
employee's break in service for eligibility and vesting purposes, an employee
shall incur a one-year break in service with respect to either or both of the
foregoing 12-month periods if the employee is credited with not more than 500
hours of service during the respective periods.
2.3.2.1.4 For purposes of determining
whether a participant has completed a year of service for allocation purposes,
the participant shall be credited with a year of service for the partial plan
year resulting from such change if he or she is credited with the number of
hours of service equal to the product of 1,000 times the ratio that the months
of the partial plan year bear to 12.
2.3.2.2 In the event that the initial or final plan
year is not a full 12-month period, for purposes of determining whether a
participant has completed a year of service for allocation purposes, the
participant shall be credited with a year of service for such partial plan year
if he or she is credited with the number of hours of service which is equal to
the product of 1,000 times the ratio that the days of the partial plan year bear
to 365 and, for purposes of determining an employee's year(s) of service for
vesting purposes, the employee shall be credited with a year of service for such
plan year if the employee completes at least 1,000 hours of service in either
the 12-month period ending on the last day of the partial plan year or the
12-month period commencing on the first day of the partial plan year.
2.3.2.3 In the case of a plan year which is less than
a 12-month period, either as the result of a change in plan year or as an
initial or final plan year:
2.3.2.3.1 The integration level shall be
adjusted for such partial plan year by multiplying the integration level in
effect pursuant to Section 2.6.14 by a fraction, the numerator of which is the
number of months and fractional months during such partial plan year and the
denominator of which is 12; and
2.3.2.3.2 The limitation on compensation
in effect pursuant to the final paragraph of Section 2.6.11 shall be adjusted
for such partial plan year by multiplying such limitation by a fraction, the
numerator of which is the number of full months during such partial plan year
and the denominator of which is 12.
2.3.3 The "ENTRY DATE" is the first day of the plan year and
the date six months from the first day of the plan year, unless the first day of
each month, each day of the year or any other date(s) consistent with the
requirements of Code Section 410 and the regulations thereunder are designated
as the entry date in the Adoption Certificate.
2.3.4 A "VALUATION DATE" refers to:
2.3.4.1 The "ANNUAL VALUATION DATE," which is the
last day of the plan year;
2.3.4.2 The "QUARTERLY VALUATION DATE," which is the
last day of each fiscal quarter other than the last day of the fiscal quarter
ending on the annual valuation date; and
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2.3.4.3 A "DISCRETIONARY VALUATION DATE," which is
the last day of any month selected by the designated Employer other than the
annual or a quarterly valuation date.
2.3.5 The "NORMAL RETIREMENT DATE" for a participant is the
later of:
2.3.5.1 That day on which such participant attains
the age set forth in the Adoption Certificate (not greater than age 65); and
2.3.5.2 That anniversary set forth in the Adoption
Certificate (not greater than the fifth) of the first day of the first plan year
in which the participant first commenced participation in the Plan. If, for plan
years beginning before January 1, 1988, the normal retirement date was
determined with reference to the anniversary of the participant's commencement
of participation which was greater than five but not greater than 10 years, the
anniversary date for participants who first commenced participation in a plan
year beginning before January 1, 1988, shall be the earlier of the tenth
anniversary of the date the participant commenced participation (or such earlier
anniversary as had been in effect under the Plan) and the fifth anniversary of
the first day of the first plan year beginning on or after January 1, 1988.
2.3.6 The "EARLY RETIREMENT DATE" for a participant is the day
on which such participant attains the age and completes the years of service, if
any, elected in the Adoption Certificate.
2.4 SERVICE.
2.4.1 "SERVICE" means employment as a common-law employee
with, or the performance of duties as a self-employed individual for, an
Employer or Affiliate (including employment or the performance of duties as a
leased employee as defined in Section 2.2.7.1.2.1, but without regard to the
requirement that services be performed on a substantially full-time basis for a
period of at least one year), whether or not as an eligible employee as herein
defined. To the extent provided in the "hour of service" definition herein,
service includes periods of vacation, leaves of absence, temporary layoffs,
disability, and military or government service. If elected in the Adoption
Certificate, solely for purposes of determining a participant's eligibility to
participate and vesting, service with an Employer shall be considered to include
service with a predecessor of such Employer designated in the Adoption
Certificate or any other employer designated in the Adoption Certificate, and
may include service as a self-employed individual as herein defined.
2.4.2 An "HOUR OF SERVICE" is computed as follows:
2.4.2.1 PAID SERVICE AND PAID ABSENCE WHERE RECORDS
KEPT. For an hourly paid or salaried employee or self-employed individual for
whom an Employer or Affiliate must keep records or does keep records with
respect to the number of hours of such person's performance of duties for such
Employer or Affiliate and with respect to whom such records are readily
available, such person shall be credited with an "hour of service" for each hour
for which such person is directly or indirectly compensated by such Employer or
Affiliate. Hours of service credit shall be given for vacations, holidays, sick
leaves, incapacity, layoffs, periods of jury or military duty, and leaves of
absence for which such person is paid, all such absences hereinafter referred to
as "paid absences," as determined in accordance with Section 2530.200b-2(b) and
(c) of the Regulations for Minimum Standards for Employee Pension Benefit Plans
issued by the Department of Labor; provided, however, that such person shall not
be credited with hours of service with respect to a paid absence:
2.4.2.1.1 To the extent that payment
solely reimburses the employee for medical or medically-related expenses or is
made under a plan of workers' compensation, unemployment compensation or
disability insurance required by law; or
2.4.2.1.2 In excess of 501 hours with
respect to any single continuous period of paid absence.
2.4.2.2 PAID SERVICE AND PAID ABSENCE WHERE RECORDS
NOT KEPT. For an hourly paid or salaried employee or self-employed individual
for whom an Employer or Affiliate need not and does not keep records with
respect to the number of hours of such person's performance of duties for such
Employer or Affiliate or with respect to whom such records are not readily
available, such person shall be credited with the number of hours of service for
each day, week, semi-monthly payroll period or month, as the case may be, as
designated in the Adoption Certificate, for which such employee would be
credited with at least one hour of service as determined under Section 2.4.2.1.
Notwithstanding the foregoing, in the event such person is credited with one or
more hours of service under Section 2.4.2.1 due to a payment not calculated on
the basis of units of time for
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any period for which no duties are performed by such person, the person shall
be credited for such period with the number of hours of service which would
be credited under Section 2.4.2.1 without regard to this Section 2.4.2.2.
2.4.2.3 UNPAID LEAVE OF ABSENCE, LAYOFF,
DISABILITY, MILITARY OR GOVERNMENT SERVICE. An employee shall be deemed to have
completed and been compensated for eight hours of service per day up to 40 hours
of service for each calendar week, or for such lesser number of hours per day
and week as constitutes a customary work day or work week for such employee
during periods for which the employee is not otherwise credited with hours of
service hereinabove and in which the employee is absent from work on a leave of
absence or as a result of a temporary layoff, if approved by the Employer for
purposes of the Plan under uniform rules to be adopted by the designated
Employer from time to time and applied in a nondiscriminatory manner or as
otherwise required by law; during periods of disability if the disability is
immediately preceded and succeeded by a period during which such individual is
an employee of an Employer or Affiliate; and during periods of service in the
Armed Forces or the government of the United States to the extent required under
the Plan or applicable law.
2.4.2.4 BREAK IN SERVICE DETERMINATION IN
CONNECTION WITH MATERNITY OR PATERNITY ABSENCES. Solely for purposes of
determining whether an individual has incurred a one-year break in service, as
elsewhere defined, an hour of service shall include each hour that the
individual is absent from work:
2.4.2.4.1 By reason of the pregnancy of the
individual;
2.4.2.4.2 By reason of the birth of a child
of the individual;
2.4.2.4.3 By reason of the placement of a
child with the individual in connection with the adoption of such child by such
individual; and
2.4.2.4.4 For purposes of caring for such
child for a period beginning immediately following such birth or placement.
The individual shall receive credit with respect to
such period of absence for the number of hours of service for which the
individual would normally have received credit but for such absence; provided,
however, that if the designated Employer is unable to determine the hours of
service for which the individual would have normally received credit but for
such absence, the individual shall receive credit for eight hours of service for
each day of such absence. Hours of service shall be credited to the applicable
computation period in which the absence from work begins if the individual would
be prevented from incurring a one-year break in service during such computation
period solely on account of credit for such period of absence and, in any other
case, in the immediately following applicable computation period. No more than
501 hours of service shall be credited to an individual in the applicable
computation period under this Section 2.4.2.4 for any period of absence which
occurs on account of the reasons set forth in Sections 2.4.2.4.1 through
2.4.2.4.4.
Notwithstanding any other provision of this Section
2.4.2.4, no credit will be given unless the individual furnishes to the
designated Employer such timely information as the designated Employer may
reasonably require to establish that the absence from work was for one of the
reasons referred to hereinabove and to establish the number of days of the
individual's absence.
2.4.2.5 AWARD OF BACK PAY. In the event that an
employee receives back pay for an hour of service (irrespective of mitigation of
damages) pursuant to an award or an agreement with the Employer or an Affiliate,
such hour, if not already credited to the employee, shall be credited to the
employee for the period to which the award or agreement pertains.
2.4.3 "YEAR OF SERVICE".
2.4.3.1 A "YEAR OF SERVICE" for purposes of
determining an employee's "ELIGIBILITY" to become a participant under the Plan
means a 12-consecutive-month computation period commencing with the date of
employment (the date the employee first completes one hour of service with an
Employer or Affiliate) or an anniversary date thereof, as the case may be,
during which the employee has completed at least 1,000 hours of service. If an
employee fails to complete a year of service in the initial 12-consecutive-month
computation period commencing with the date of employment, a year of service
shall mean any 12-consecutive-month computation period coinciding with the plan
year in which the employee completes at least 1,000 hours of service.
Nevertheless, an employee shall not receive credit for years of service for
eligibility if Section 2.4.3.1.1 or 2.4.3.1.2 applies.
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2.4.3.1.1 BREAK-IN-SERVICE RULE. If an
employee incurs a one-year break in service at a time when such employee has not
satisfied the years of service requirement for participation under Article 3 of
this Plan if this Plan requires more than one such year of service, then all
years of service preceding any such one-year break in service shall be excluded
in determining such employee's eligibility to become a participant.
2.4.3.1.2 RULE OF PARITY. If elected in the
Adoption Certificate, in the event an employee does not have a nonforfeitable
interest in any benefits hereunder resulting from Employer contributions at the
time of incurring a period of consecutive one-year breaks in service, then years
of service completed by such employee prior to such period of consecutive
one-year breaks in service shall be excluded for purposes of determining the
employee's eligibility to participate if the number of consecutive one-year
breaks in service equals or exceeds the greater of five and the aggregate number
of years of service prior to such period of consecutive one-year breaks in
service. Such aggregate number of years of service before any such period of
one-year breaks in service shall not include any years not required to be taken
into account by reason of any such prior period of one-year breaks in service or
under the break-in-service rules under the Plan prior to the effective date of
the Retirement Equity Act of 1984, and nothing in this Section 2.4.3.1.2 shall
require such years to be taken into account for purposes of determining the
employee's eligibility to participate.
2.4.3.2 A "YEAR OF SERVICE" for purposes of
determining "VESTING" means a 12-consecutive-month computation period coinciding
with the plan year in which the employee has completed at least 1,000 hours of
service; provided, however, that if designated in the Adoption Certificate, an
employee shall not receive credit for vesting purposes for:
2.4.3.2.1 All years of service prior to the
plan year in which the employee attains the age set forth in the Adoption
Certificate (which may not be greater than 18);
2.4.3.2.2 All years of service prior to the
plan year in which this Plan (or, if applicable, a predecessor plan) was adopted
by the Employer or an Affiliate;
2.4.3.2.3 All years of service preceding a
participant's termination of employment which occurred within or prior to the
plan year in which this Plan (or, if applicable, a predecessor plan) was adopted
by the Employer or an Affiliate;
2.4.3.2.4 All years of service following a
period of five consecutive one-year breaks in service and termination of
employment, but such years shall only be excluded with respect to determining
such participant's vested percentage interest in amounts credited to the
participant's Non-401(k) Contribution Account and Matching Contribution Account
prior to such period of consecutive one-year breaks in service;
2.4.3.2.5 All years of service preceding a
one-year break in service until that one-year break in service is followed by a
year of service;
2.4.3.2.6 In the case of a participant who
under the Plan does not have a nonforfeitable interest in the Fund resulting
from Employer contributions, years of service prior to any period of consecutive
one-year breaks in service if the number of consecutive one-year breaks in
service equals or exceeds the greater of five and the aggregate number of years
of service prior to such period of consecutive one-year breaks in service. Such
aggregate number of years of service before any such period of consecutive
one-year breaks in service shall not include any years not required to be taken
into account by reason of any such prior period of one-year breaks in service or
under the break in service rules under the Plan prior to the effective date of
the Retirement Equity Act of 1984, and nothing in this Section 2.4.3.2.6 shall
require such years to be taken into account for purposes of determining the
employee's years of vesting service; and
2.4.3.2.7 In the case of a plan which has
elected in the Adoption Certificate to adopt the cash-out rule set forth in
Section 7.1.4.2.2 of this Plan, years of service prior to a participant's
termination of employment if the participant either terminates employment and
receives a distribution from the Plan of the participant's entire beneficial
interest or terminates employment having no beneficial interest in the Plan,
until the unvested portion of the participant's account has been restored within
the applicable period of time in accordance with Section 7.1.4.2.2.
2.4.3.3 A "YEAR OF SERVICE" for purposes of
determining whether a participant shall have a portion of the Employer's
Non-401(k) Contribution and forfeitures (to the extent such forfeitures are to
be allocated together with the Employer's Non-401(k) Contribution) for the plan
year, if any, "ALLOCATED" to such participant's Non-401(k) Contribution Account
shall mean such participant has completed at least 1,000 hours of service during
such plan year; provided,
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however, that in determining if the participant has completed 1,000 hours of
service, the participant shall not be given credit for hours of service for
any period of service during which the participant is absent from work on a
leave of absence, temporary layoff, disability, or military or government
service and for which such participant is not otherwise credited with hours
of service under Sections 2.4.2.1 and 2.4.2.2.
2.4.3.4 Special Rules for Partial Plan Years and
Plan Year Changes. See "plan year" definition.
2.4.4 A "ONE-YEAR BREAK IN SERVICE" is any plan year in which
an employee does not complete more than 500 hours of service; provided, however,
that for purposes of determining whether the participant has completed a year of
service for eligibility to participate, a "BREAK IN SERVICE" shall be determined
with reference to the same 12-month period which is used to determine
eligibility to participate. For special rules relating to crediting service for
break-in-service purposes in connection with maternity or paternity absences,
see Section 2.4.2.4.
2.5 TOP-HEAVY PLAN DEFINITIONS. The definitions relating to
top-heavy plan provisions are as follows:
2.5.1 Except in the case of plans required to be included in
an aggregation group, a plan maintained by the Employer is a "TOP-HEAVY PLAN"
for a plan year if, as of the determination date, in the case of a defined
contribution plan, the aggregate of the account balances of key employees under
the plan exceeds 60% of the aggregate of the account balances of all employees
under such plan or, in the case of a defined benefit plan, the present value of
the cumulative accrued benefits under the plan for key employees exceeds 60% of
the present value of the cumulative accrued benefits under the plan for all
employees. Each plan maintained by the Employer or an Affiliate which is
required to be included in an aggregation group is a "TOP-HEAVY plan" for its
plan year for which such determination is being made if the sum of the aggregate
of the account balances of key employees under all defined contribution plans
included in the aggregation group plus the present value of the cumulative
accrued benefits for key employees under all defined benefit plans included in
the aggregation group, determined in each case as of the determination dates for
such plans falling within the same calendar year, exceeds 60% of the sum of such
amounts for all employees. The provisions of this Section 2.5.1 shall be applied
in accordance with the following rules:
2.5.1.1 In the event that this Plan is maintained by
two or more Employers which are not Affiliates, for purposes of Section 2.5.1,
the Plan shall be treated as a plan maintained by each such Employer to the
extent that benefits under the Plan are provided to participants who are
employees of the Employer on account of service with the Employer.
2.5.1.2 Except as otherwise provided in Section
2.5.1.4, for purposes of Section 2.5.1, an employee's account balance or present
value of cumulative accrued benefits as of any determination date is equal to
the sum of:
2.5.1.2.1 Such balance or present value as
of the most recent valuation date occurring within the 12-month period ending on
the determination date, including that portion of such balance or present value
attributable to employee contributions, whether voluntary or mandatory, other
than deductible employee contributions within the meaning of Code Section
72(o)(5)(A);
2.5.1.2.2 The aggregate amount of
distributions made with respect to such employee during the plan year which
includes the determination date and the four preceding plan years (except
distributions included in the employee's account balance or present value of
cumulative accrued benefits as of the applicable valuation date), including
distributions made during such period from a terminated plan which is required
to be included in an aggregation group. Benefits paid on account of death are
treated as distributions for purposes of this Section 2.5.1.2.2 to the extent
that such benefits do not exceed the present value of accrued benefits existing
immediately prior to death, and the distribution from a defined contribution
plan (including the cash value of life insurance policies) of a participant's
account balance on account of death shall be treated as a distribution for such
purposes;
2.5.1.2.3 In the case of a defined
contribution plan which is not subject to the minimum funding standards of Code
Section 412, the amount of any contributions allocated to the employee's account
which were actually made after the applicable valuation date but before the
determination date (provided, however, that in the first plan year of any such
plan the amount taken into account under this Section 2.5.1.2.3 shall include
the amount of any contributions made after the determination date that are
allocated as of a date in such first plan year); and
2.5.1.2.4 In the case of any other defined
contribution plan, the amount of any contributions which would be allocated as
of a date not later than the determination date, even though those amounts are
not yet required to be contributed.
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2.5.1.3 Solely for purposes of determining whether
this Plan and/or one or more defined benefit plans maintained by the Employer
or an Affiliate which are included in an aggregation group are top-heavy
plans, the accrued benefit of any employee, other than a key employee, under
such defined benefit plans shall be determined under the method, if any, that
uniformly applies for accrual purposes under all defined benefit plans
maintained by the Employer and Affiliates or, if there is no such method, as
if such benefit accrued not more rapidly than the slowest accrual rate
permitted under Code Section 411(b)(1)(C). Subject to the preceding
provisions of this Section 2.5.1.3, the accrued benefit of a current employee
under any defined benefit plan maintained by the Employer or an Affiliate
which is part of an aggregation group with this Plan shall be determined as
follows:
2.5.1.3.1 For the first plan year of any
such plan, the accrued benefit must be determined as if such employee terminated
service either as of the determination date or the applicable valuation date,
but in the latter case taking into account the estimated accrued benefit as of
the determination date;
2.5.1.3.2 For the second plan year of any
such plan, the accrued benefit taken into account must not be less than the
accrued benefit taken into account for the first plan year unless the difference
is attributable to using an estimate of the accrued benefit as of the
determination date for the first plan year and using the actual accrued benefit
as of the determination date for the second plan year; and
2.5.1.3.3 For any other plan year, the
accrued benefit must be determined as if such employee terminated service as of
the applicable valuation date.
2.5.1.4 Rollovers and trust-to-trust transfers
shall be treated as follows for purposes of determining an employee's account
balance or present value of cumulative accrued benefits:
2.5.1.4.1 In the case of unrelated rollovers
and transfers:
2.5.1.4.1.1 The plan making the
distribution or transfer shall treat the amount thereof as a distribution for
purposes of Section 2.5.1.2.2; and
2.5.1.4.1.2 The plan accepting the
rollover or transfer shall not include the amount thereof as part of the
employee's account balance or present value of cumulative accrued benefits under
such plan unless such rollover or transfer was accepted prior to January 1,
1984.
2.5.1.4.2 In the case of related rollovers
and transfers:
2.5.1.4.2.1 The plan making the
distribution or transfer shall not treat the amount thereof as a distribution
for purposes of Section 2.5.1.2.2; and
2.5.1.4.2.2 The plan accepting the
rollover or transfer shall include the amount thereof as part of the employee's
account balance or present value of cumulative accrued benefits under such plan,
regardless of the date on which such rollover or transfer was accepted.
2.5.1.4.3 Unrelated rollovers and transfers
are those which are both initiated by the employee and made from a plan
maintained by one employer to a plan maintained by another employer which is not
an Affiliate, and related rollovers and transfers are those which either are not
initiated by the employee or are made to a plan maintained by the same employer
or an Affiliate.
2.5.1.5 If an individual has not performed services
for the Employer or an Affiliate at any time during the five-year period ending
on the determination date, his or her interest in the Plan and any other plan
maintained by the Employer or an Affiliate shall not be taken into account for
purposes of determining whether this Plan or such other plan is a top-heavy
plan; provided, however, that if such individual subsequently performs services
for the Employer or an Affiliate, such interest shall thereafter be taken into
account for such purposes in accordance with the provisions of Section 2.5. If
an individual has ceased to be a key employee, the individual's interest in any
plan maintained by the Employer or an Affiliate shall not be taken into account
for such purposes.
2.5.2 A plan is a "SUPER TOP-HEAVY PLAN" if, as of the
determination date, the plan would be a top-heavy plan if 90% were substituted
for 60% in each place it appears in Section 2.5.1.
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2.5.3 An "AGGREGATION GROUP" consists of all plans of the
Employer and Affiliates which are required to be aggregated or, if elected by
the Employer, which may be permissively aggregated. Plans which are required to
be aggregated are those plans in which a key employee is a participant during
the plan year containing the determination date or any of the four preceding
plan years, and those plans which, during such period, enable any such plan
covering a key employee to meet the requirements of Code Section 401(a)(4) or
410, including in either case frozen plans and plans which were terminated
during such period. Plans may be permissively aggregated if the aggregation
group, taking into account contributions or benefits provided by the Employer
and Affiliates, continues to meet the requirements of Code Sections 401(a)(4)
and 410 after such aggregation; provided, however, that plans which are
permissively aggregated shall not be top-heavy regardless of whether the
aggregation group of which they are a part is top-heavy.
2.5.4 The "DETERMINATION DATE" for purposes of determining
whether a plan is top-heavy for a particular plan year is the last day of the
preceding plan year (or, in the case of the first plan year of a plan, the last
day of the first plan year).
2.5.5 The "VALUATION DATE" for purposes of valuing an
employee's account or cumulative accrued benefits as of a determination date, in
the case of a defined contribution plan, is the date as of which the assets of
the plan and individual accounts of participants are valued and, in the case of
a defined benefit plan, is the date as of which the plan costs are determined
for purposes of the minimum funding standards of the Code and ERISA, regardless
of whether a valuation is performed that year.
2.5.6 A "KEY EMPLOYEE" is any employee of the Employer or an
Affiliate (including a beneficiary of such employee) who at any time during the
plan year containing the determination date or any of the four preceding plan
years (the "determination period") is a person described in Sections 2.5.6.1
through 2.5.6.4 as follows:
2.5.6.1 An officer of the Employer or an Affiliate
with annual compensation from the Employer and/or Affiliates for the plan year
which exceeds 50% of the dollar limitation on benefits under Code Section
415(b)(1)(A) for such plan year. In no event shall the number of employees taken
into account under this Section 2.5.6.1 as key employees be more than 50
employees of the Employer and Affiliates or, if less, the greater of (i) three
employees, and (ii) 10% of the greatest number of all such employees who perform
services during any plan year in the determination period (rounded to the next
highest integer). Employees who are excluded in determining the number of
employees in the top-paid group pursuant to Sections 2.2.9.3.1 through 2.2.9.3.5
shall be excluded in determining the number of officers taken into account under
this Section 2.5.6.1. If the number of officers of the Employer and Affiliates
who are described in the first sentence of this Section 2.5.6.1 exceeds such
limitation, then the officers who will be considered as key employees are those
who receive the greatest annual compensation during any plan year in the
determination period. For purposes of this Section 2.5.6.1 and Section 2.2.9.4,
an officer generally is an administrative executive who is in regular and
continued service, as determined upon the basis of all the facts in accordance
with Code Section 416(i) and the regulations promulgated thereunder;
2.5.6.2 One of the ten employees owning (or
considered as owning within the meaning of Code Section 318, but substituting
the capital or profits interest for stock in the case of a noncorporate Employer
or Affiliate) during any plan year in the determination period both more than a
1/2% ownership interest in value and the largest percentage ownership interest
in value of the Employer or an Affiliate, and having during such plan year
annual compensation from the Employer and/or Affiliates which exceeds the annual
addition dollar limitation under Code Section 415(c)(1)(A) for such plan year;
provided, however that if two employees have the same interest, the employee
with the greater annual compensation for any plan year in the determination
period during which such employee owned such interest shall be considered to
have the larger interest. For purposes of this Section 2.5.6.2, an employee's
interest for any plan year is the largest interest owned by the employee at any
time during such plan year;
2.5.6.3 An employee owning (or considered as owning
within the meaning of Code Section 318, but substituting the capital or profits
interest for stock in the case of a noncorporate Employer or Affiliate) (i) in
the case of an Employer or Affiliate which is a corporation, more than 5% of the
value of the outstanding stock of such Employer or Affiliate or stock possessing
more than 5% of the total combined voting power of all stock of such Employer or
Affiliate, or (ii) in the case of an Employer or Affiliate which is not a
corporation, more than 5% of the capital or profits interest in such Employer or
Affiliate; or
2.5.6.4 An employee with annual compensation from the
Employer and/or Affiliates for the plan year of more than $150,000 and who would
be described in Section 2.5.6.3 if 1% were substituted for 5%.
The determination of whether an employee is a key employee
shall be made with reference to Code Section 416(i) and the regulations
thereunder. For purposes of applying Code Section 318 to the provisions under
this Section 2.5.6,
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Code Section 318(a)(2)(C) shall be applied by substituting
5% for 50%. In addition, the determination of ownership percentages under this
Section 2.5.6 shall be made separately with respect to the Employer and each
Affiliate, and the rules of Code Sections 414(b), (c) and (m) shall not apply
for such purpose.
2.5.7 A "NONKEY EMPLOYEE" is any employee of the Employer or
an Affiliate (including a beneficiary of such employee) who is not a key
employee.
2.6 MISCELLANEOUS.
2.6.1 The "INTERNAL REVENUE CODE" or the "CODE" means the
Internal Revenue Code of 1986, as amended, and any successor statute.
2.6.2 "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
2.6.3 The "FUND" is the total of all contributions and other
permissible transfers of assets to the Funding Agent from time to time in
support of the Plan, increased by profits, income, refunds, recoveries received
and accumulations thereon, and decreased by losses, expenses incurred in the
administration of the Plan or Fund which are paid by the Fund, and benefits
released or paid. In the event that property of the Plan is being held or
administered by more than one Funding Agent, the Fund shall be the total of all
amounts held by all Funding Agents.
2.6.4 The "VALUE" of an account is the value determined by the
Funding Agent in accordance with standard principles and practices for valuing
employee benefit plans.
2.6.5 A participant's "BENEFICIAL INTEREST" is the value of
the vested interest of such participant's accounts, excluding therefrom the
value of the participant's Deductible Employee Contribution Account, as
determined on the valuation date coinciding with or immediately preceding the
date of distribution or other event requiring a determination. Any excess amount
resulting from the application of the Code Section 415 limitations which has not
been subject to final allocation shall not be considered to be part of the
participant's beneficial interest.
2.6.6 The word "DISABLED" or "DISABILITY" means that a
participant is mentally or physically unable to perform such participant's usual
duties in the service of the Employer, and that such condition is likely to
continue. In determining whether such disability exists, an examining physician
acceptable to the designated Employer may take into consideration the standards
of disability for waiver of premium, if any, on the life insurance of the
participant and, also, the standards of disability, to the extent applicable,
for receipt of disability benefits under the Federal Social Security Act;
provided, however, that the conclusions of any insurance company or the Social
Security Administration as to disability of the participant shall not be binding
on the designated Employer, and the final determination of whether or not a
participant is disabled shall be in the sole discretion of such examining
physician. Notwithstanding the foregoing, an employee disabled on account of a
self-inflicted injury, ailment or condition, or on account of injury, ailment or
disability incurred in the service of the Armed Forces or the government of the
United States, or in employment with an employer other than an Employer
maintaining this Plan, shall not be considered disabled hereunder. This Plan is
intended to qualify as an accident or health plan for purposes of the Internal
Revenue Code with respect to the payment of benefits upon or after a
participant's disability, it also being intended that such benefits qualify for
income tax exclusion under applicable provisions of the Code.
2.6.7 Except as otherwise provided elsewhere in this Plan,
"TERMINATION OF EMPLOYMENT," or any variant thereof, in the case of a common-law
employee means complete severance of a participant's employment with an Employer
and Affiliates.
2.6.8 "AGE" means actual attained age.
2.6.9 The "NET INCOME" or "PROFITS" of the Employer, unless it
is a partnership or proprietorship, for a fiscal year of the Employer means
current and accumulated earnings of the Employer as defined by the Employer.
2.6.10 "COMPENSATION" with respect to any employee other than
a self-employed individual is the total amount paid or made available by the
Employer to or for an employee in a plan year (including amounts which are
deducted by the Employer for federal income tax purposes for the year but which
are paid immediately following the end of the plan year consistent with the
Employer's customary payroll practices, but only if compensation for purposes of
this definition is consistently determined in this manner) for services
rendered, including (i) wages, salaries, fees for professional services, and
other amounts received (whether or not paid in cash) for personal services
actually rendered in the course of employment with
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<PAGE>
the Employer to the extent includable in gross income for federal income tax
purposes (including, but not limited to, commissions paid to salesmen,
compensation for services on the basis of a percentage of profits,
commissions on insurance premiums, tips, bonuses, fringe benefits,
reimbursements and expense allowances); provided, however, that
foreign-earned income (as defined in Code Section 911(b)) shall be included
whether or not excludable from gross income for federal income tax purposes
under Code Section 911; (ii) amounts described in Code Sections 104(a)(3),
105(a) and 105(h) to the extent includable in the employee's gross income for
federal income tax purposes; (iii) amounts paid or reimbursed by the Employer
for moving expenses incurred by an employee to the extent not deductible by
the employee under Code Section 217; (iv) the value of a nonqualified stock
option granted to an employee by the Employer to the extent that the value of
the option is includable in the gross income of the employee for federal
income tax purposes for the taxable year in which the option is granted; and
(v) the amount includable in the gross income of an employee for federal
income tax purposes upon making the election described in Code Section 83(b).
"COMPENSATION" shall not include accruals under or contributions to a
deferred compensation plan or arrangement to the extent not includable in the
employee's gross income for federal income tax purposes; contributions to a
simplified employee pension to the extent not includable in the employee's
gross income for federal income tax purposes; distributions from a deferred
compensation plan or arrangement (other than an unfunded, nonqualified plan
or arrangement); amounts realized from the exercise, sale or exchange of a
nonqualified stock option or upon the discontinuance of conditions causing
restricted stock to become taxable; and other amounts paid to or for a
participant which receive special tax benefits. If elected in the Adoption
Certificate, for plan years beginning before January 1, 1992, for purposes
hereof, "COMPENSATION" shall include bonuses paid in such plan year but not
accrued for a prior year, and bonuses accrued for the plan year and paid not
later than the due date for filing the Employer's federal income tax return
for such plan year (whether or not deductible by the Employer for such plan
year). "COMPENSATION" as defined in this Section 2.6.10 shall be adjusted for
the following purposes:
2.6.10.1 For purposes of the 10% contribution rate
and the $1,000 rule set forth in Section 2.2.7.1.1.2, "COMPENSATION" includes
(i) employer contributions under a qualified cash or deferred arrangement or
simplified employee pension to the extent not included in gross income under
Code Section 402(a)(8) or 402(h)(1)(B), respectively, (ii) any amount which the
employee would have received in cash but for an election under a cafeteria plan
within the meaning of Code Section 125, and (iii) any amount contributed to an
annuity contract described in Code Section 403(b) pursuant to a salary reduction
agreement.
2.6.10.2 For purposes of the provisions of Section
2.2.9 defining a highly compensated employee and, for plan years beginning after
December 31, 1988, of Section 2.5.6 defining a key employee, "COMPENSATION"
includes contributions made by the Employer or an Affiliate (i) to a cafeteria
plan under Code Section 125, a qualified cash or deferred arrangement under Code
Section 401(k) or a simplified employee pension under Code Section 408(k)(6)
pursuant to an election by the participant, or (ii) to an annuity contract under
Code Section 403(b) pursuant to a salary reduction agreement.
2.6.10.3 For purposes of determining Actual Deferral
Percentages under Section 4.4 and Contribution Percentages under Section 4.9,
"COMPENSATION" includes compensation from Affiliates plus, if elected by the
designated Employer in its sole discretion for any plan year, any contribution
by the Employer or an Affiliate on behalf of the participant pursuant to a
salary reduction agreement which is not includable in the participant's gross
income under Code Section 125, 402(a)(8), 402(h) or 403(b). Notwithstanding the
preceding sentence, "COMPENSATION" excludes amounts paid to or for a participant
prior to the entry date on which the participant commences participation in the
Plan or recommences participation in the Plan following a one-year break in
service.
2.6.10.4 For plan years beginning after December 31,
1988, for all purposes other than determining compliance with the Code Section
415 limitations under Section 6.7, each participant's compensation for each such
plan year taken into account under this Plan shall not exceed $200,000;
provided, however, that such dollar limitation shall be adjusted to take into
account any adjustments made by the Secretary of the Treasury pursuant to Code
Section 415(d). The rules of Section 2.2.9.5.2 shall apply in determining a
participant's compensation for purposes of the limitation set forth in this
Section 2.6.10.4; provided, however, that solely for such purposes, "FAMILY
MEMBERS" shall include only the spouse of the participant and any lineal
descendants of the participant who have not attained age 19 by the end of the
plan year. The determination of a participant's compensation for purposes of the
limitation set forth in this Section 2.6.10.4 shall be made in compliance with
regulations prescribed by the Secretary of the Treasury to effectuate the intent
of such limitation. If the period used to determine a participant's compensation
for a plan year is less than 12 months, the amount taken into account in such
year shall be equal to the product of the above dollar limitation multiplied by
a fraction, the numerator of which is the number of months used to determine
compensation during such plan year and the denominator of which is 12.
2.6.11 "COVERED COMPENSATION" with respect to any participant
other than a self-employed individual is the amount of such participant's
compensation (as defined in Section 2.6.10, including the $200,000 limitation of
Section 2.6.10.4) plus salary reduction contributions made by the Employer on
behalf of the participant pursuant to Code Sections 125 (if elected
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in the Adoption Certificate), 401(k), 403(b) and 408(k)(6) and amounts
deferred under an eligible deferred compensation plan under Code Section
457(b), but excluding the following:
2.6.11.1 Amounts received by the participant in the
form of noncash compensation, such as insurance premium payments;
2.6.11.2 Qualified or nonqualified deferred
compensation accruals, payments or benefits;
2.6.11.3 Amounts paid to or for a participant for
services rendered while such participant was not an eligible employee as herein
defined;
2.6.11.4 Amounts paid to or for a participant under
any insurance or welfare plan maintained by the Employer;
2.6.11.5 Amounts paid to or for a participant as
club dues, expense reimbursements, automobile and other allowances, and other
fringe benefits within the meaning of Code Section 61 which are includable in
the participant's federal gross income but are not considered by the Employer to
constitute regular compensation, except as otherwise elected in the Adoption
Certificate;
2.6.11.6 Any amounts elected in the Adoption
Certificate paid to or for a participant as discretionary bonuses, formula
bonuses, incentive compensation payments, commissions or overtime;
2.6.11.7 Amounts paid to or for a participant prior
to the entry date on which the participant commences participation in the Plan
or recommences participation in the Plan following a one-year break in service,
except as otherwise elected in the Adoption Certificate; and
2.6.11.8 For any plan year beginning prior to
January 1, 1989, that the Plan is top-heavy, amounts which must be excluded
pursuant to Article 8.
2.6.12 The "ADJUSTED COMPENSATION" of each participant during
any plan year is such participant's covered compensation, if any, which is in
excess of the integration level.
2.6.13 The "BASE COMPENSATION" of each participant during any
plan year is such participant's covered compensation which is not in excess of
the integration level.
2.6.14 The "INTEGRATION LEVEL" is that amount, if any, elected
in the Adoption Certificate for determining the participant's adjusted
compensation. The integration level shall not exceed the taxable wage base in
effect as of the first day of the plan year under Code Section 3121(a)(1). The
designated Employer may, by written instrument executed on or before the end of
the plan year, adjust the integration level to an amount which is different from
the amount provided in the Adoption Certificate but which is not greater than
the taxable wage base as determined above. If a participant is employed during
the plan year by two or more Employers which are Affiliates, the integration
level with respect to such participant for such year as it applies to each such
Employer shall be equal to the product of the integration level determined under
this Section 2.6.14 multiplied by a fraction, the numerator of which is the
participant's covered compensation from such Employer and the denominator of
which is the participant's covered compensation from all such Employers. If the
participant enters the Plan or reenters active participation upon reemployment
on an entry date other than the first day of the plan year, and covered
compensation prior to such entry date is not taken into account for purposes of
allocating the Employer's contribution, the integration level with respect to
that participant for such year shall be determined by multiplying the
integration level for such year by a fraction, the numerator of which is the
number of months and fractions thereof during such plan year on and subsequent
to such entry date and the denominator of which is the number of months of the
plan year. In the event that any plan year is less than a 12-month period,
either as the result of a change in plan year or as an initial or final plan
year, the integration level determined under this Section 2.6.14 for such plan
year shall be adjusted as provided in Section 2.3.2.3.1.
2.6.15 "INTEGRATED WITH SOCIAL SECURITY" refers to an
arrangement under a plan in which the provisions regarding Employer
contributions and allocations thereof conform with the applicable regulations
and rulings of the Internal Revenue Service regarding integration with Social
Security.
2.6.16 The "APPLICABLE CONTRIBUTION" for any plan year is an
amount equal to the remainder of (i) the Employer's Non-401(k) Contribution and
forfeitures to be allocated pursuant to Section 6.2 minus (ii) the minimum
contribution
18
<PAGE>
to be allocated to the accounts of participants who have not
satisfied the requirements, if any, to share in the allocation under Section
6.2.2.
2.6.17 The "MINIMUM CONTRIBUTION" is that portion, if any, of
the applicable contribution which is allocated to participants' accounts
pursuant to Section 6.2.1.
2.6.18 The "BASE CONTRIBUTION" is equal to the remainder of:
2.6.18.1 The lesser of:
2.6.18.1.1 The product of the aggregate
amount of participants' base compensation multiplied by the greater of (i) the
percentage indicated under the following schedule:
<TABLE>
<CAPTION>
Maximum Percentage Under
Integration Level Section 2.6.18.1.1(i)
----------------- ---------------------
<S> <C>
20% to 80% of the taxable
wage base 4.3%
80% to any amount less than the
taxable wage base 5.4%
Taxable wage base 5.7%
</TABLE>
and (ii) the percentage equal to the portion of the rate of tax under Code
Section 3111(a) (in effect as of the beginning of the plan year) which is
attributable to old-age insurance, proportionately reduced in cases where the
integration level is less than the taxable wage base; and
2.6.18.1.2 The amount determined in
accordance with the applicable formula; minus
2.6.18.2 That portion of the minimum contribution, if
any, which is attributable to base compensation.
2.6.19 The "INTEGRATED CONTRIBUTION" is equal to the remainder
of:
2.6.19.1 The lesser of:
2.6.19.1.1 The product of the aggregate
amount of participants' adjusted compensation multiplied by the lesser of (i)
the applicable percentage determined under Section 2.6.18.1.1, and (ii) the
greater of (a) 11.4% and (b) two times the percentage equal to the portion of
the rate of tax under Code Section 3111(a) (in effect as of the beginning of the
plan year) which is attributable to old-age insurance; and
2.6.19.1.2 The amount determined in
accordance with the applicable formula; minus
2.6.19.2 That portion of the minimum contribution,
if any, which is attributable to adjusted compensation.
2.6.20 The "APPLICABLE FORMULA" is:
2.6.20.1 With respect to the base contribution:
bc + 2bc X AC = ac
--------
BC
2.6.20.2 With respect to the integrated
contribution:
ic + ic x BC = ac
-------
2AC
19
<PAGE>
For purposes of the applicable formulas under Sections
2.6.20.1 and 2.6.20.2, the letters contained therein mean:
bc - Base contribution
ic - Integrated contribution
ac - Applicable contribution
BC - Aggregate base compensation of
participants who have satisfied
the requirements to share in the
allocation under Section 6.2.2
AC - Aggregate adjusted compensation
of participants who have
satisfied the requirements to
share in the allocation under
Section 6.2.2
2.6.21 "INSURANCE" or "INSURANCE POLICY" means any type of
insurance company policy:
2.6.21.1 Providing life insurance protection; or
2.6.21.2 Providing payments over a period certain at
intervals not longer than one year and not requiring survival as a condition for
payment. Such periodic payments for the first distribution year (as determined
under Section 7.5.2) and each subsequent calendar year shall be combined and
treated as an annual amount, and such annual amount shall be nonincreasing
(except as otherwise permitted under rules and regulations prescribed by the
Secretary of the Treasury pursuant to Code Section 401(a)(9)). Such policy shall
be nontransferable when distributed to the participant.
2.6.22 "ANNUITY" means any type of insurance company contract
not providing life insurance protection other than the return of premiums or
cash value. Such contract shall be nontransferable when distributed and shall
conform to the requirements of the Plan.
2.6.23 "QUALIFIED JOINT AND SURVIVOR ANNUITY" means:
2.6.23.1 In the case of a participant who is married
on the annuity starting date, an immediate annuity for the life of the
participant with a survivor annuity for the life of the participant's spouse in
an amount equal to 50% of the amount of the annuity which is payable during the
joint lives of the participant and the participant's spouse and is the actuarial
equivalent of a single annuity for the life of the participant; and
2.6.23.2 In the case of a participant who is not
married on the annuity starting date, an immediate annuity for the life of the
participant.
Periodic payments under a qualified joint and survivor annuity
shall be made at intervals not longer than one year, and shall be nonincreasing
(except as otherwise permitted under rules and regulations prescribed by the
Secretary of the Treasury pursuant to Code Section 401(a)(9)).
2.6.24 "QUALIFIED PRERETIREMENT SURVIVOR ANNUITY" means an
annuity for the life of the participant's surviving spouse, the actuarial
equivalent of which is 50% of the beneficial interest of the participant
determined as of the date of the participant's death (after reduction for any
security interest held by the Plan pursuant to Sections 12.3.11.2.2 and
12.3.11.7 by reason of a loan outstanding to such participant on such date if
such loan is not repaid). Periodic payments under a qualified preretirement
survivor annuity shall be made at intervals not longer than one year, and shall
be nonincreasing (except as otherwise permitted under rules and regulations
prescribed by the Secretary of the Treasury pursuant to Code Section 401(a)(9)).
2.6.25 "ANNUITY STARTING DATE" means the first day of the
first period for which an amount is payable as an annuity or, in the case of a
benefit not payable in the form of an annuity, the first day on which all events
have occurred which entitle the participant to such benefit.
2.7 SPECIAL DEFINITIONS APPLICABLE TO PLAN MAINTAINED BY PARTNERSHIP
OR PROPRIETORSHIP.
20
<PAGE>
2.7.1 The "NET INCOME" or "PROFITS" of an Employer which is a
partnership or a proprietorship is the total earnings from the trade or business
prior to deduction for contributions to this Plan and any other plan maintained
by the Employer which is qualified under Code Section 401.
2.7.2 "EARNED INCOME" with respect to a self-employed
individual means the net earnings from self-employment in a trade or business in
which the personal services of such self-employed individual are a material
income-producing factor, excluding items not included in gross income for
federal income tax purposes and the deductions allocable to such items and
reduced by contributions to any plan qualified under Code Section 401 by the
employer maintaining the plan to the extent such contributions may be deducted
for federal income tax purposes. For taxable years beginning after December 31,
1989, net earnings from self-employment shall be determined taking into account
the deduction allowed to the self-employed individual by Code Section 164(f).
2.7.3 "COMPENSATION" with respect to a self-employed
individual is the amount for the plan year which is the participant's earned
income from the Employer plus salary reduction contributions made by the
Employer on behalf of the self-employed individual pursuant to Code Sections
401(k), 403(b) and 408(k)(6) and amounts deferred under an eligible deferred
compensation plan under Code Section 457(b); provided, however, that
compensation taken into account with respect to a self-employed individual shall
not exceed the limitations set forth in the final paragraph of Section 2.6.11;
and, provided further, that the compensation of each self-employed individual
shall be adjusted to equal the product of the self-employed individual's
compensation as otherwise determined multiplied by the ratio that the total
covered compensation of the common-law employees as a group (other than highly
compensated employees) bears to the total covered compensation of such
common-law employees for such plan year.
2.7.4 "COVERED COMPENSATION" with respect to a self-employed
individual means compensation as herein defined, but excluding amounts which
must be excluded pursuant to Article 8 for any plan year beginning prior to
January 1, 1989, during which the Plan is top-heavy.
2.7.5 "SELF-EMPLOYED INDIVIDUAL" is a sole proprietor or a
partner who has earned income for the taxable year from the trade or business
for which the Plan is established or who would have earned income from such
trade or business but for the absence of profits from the trade or business for
the taxable year.
2.7.6 "OWNER-EMPLOYEE" means a sole proprietor or a partner
who owns more than 10% of either the capital interest or the profits interest in
a partnership.
2.8 INTERPRETATION OF CERTAIN WORDS. Whenever appropriate, words used
in the singular may be read in the plural and words used in the plural may be
read in the singular; the masculine includes the feminine; and the words
"hereof," "herein" or "hereunder," or other similar compounds of the word
"here," shall mean and refer to the entire Plan and not to any particular
section unless the context clearly indicates otherwise.
ARTICLE 3.
PARTICIPATION
3.1 PARTICIPATION REQUIREMENTS. If the adoption of this Plan is an
amendment or restatement of a previously established plan, each employee who is
a participant in the Plan immediately prior to the later of the effective date
of the amendment or restatement and the date the amendment or restated Plan is
adopted shall continue as a participant until participation otherwise terminates
as herein provided, and each employee who has met all of the eligibility
requirements under the Plan as it read immediately prior to such date but has
not yet commenced participation shall become a participant on the earlier of (i)
the next succeeding entry date if such employee is an eligible employee of an
Employer on such entry date, and (ii) the date determined in accordance with the
provisions of Sections 3.1.1 through 3.1.4, but in such event, no earlier than
the effective date of the amendment or restatement. Any other employee shall
become a participant in the Plan on the first entry date on which such employee:
3.1.1 Is an eligible employee of an Employer as herein
defined;
3.1.2 Has either completed that number of years of service,
which is not more than one or, if immediate full vesting is provided under the
Plan, not more than three (reduced to two for plan years beginning after
December 31, 1988), or has completed six months of employment without an
intervening termination of employment or such other period of continuous
employment which is not greater than 30 months (reduced to 18 months for plan
years beginning after December 31,
21
<PAGE>
1988), as elected in the Adoption Certificate; provided, however, that in the
event this Plan provides for Cash Option Contributions and/or Salary Deferral
Contributions, for plan years beginning after December 31, 1988, the years of
service or period of continuous employment required under this Section 3.1.2
for purposes of sharing in the allocation of Cash Option Contributions and/or
entering into a Salary Deferral Agreement shall be the lesser of (i) the
years of service or period of continuous employment elected in the Adoption
Certificate pursuant to the foregoing provisions of this Section 3.1.2, (ii)
in the case of a Plan which has a years-of-service requirement, one year of
service, and (iii) in the case of a Plan which has a continuous employment
requirement, six months of continuous employment;
3.1.3 Has attained that age, which is not more than 21,
elected in the Adoption Certificate; and
3.1.4 Satisfies such additional requirements elected in the
Adoption Certificate which are not likely to result in discriminatory coverage
or would not cause the Plan to fail to satisfy the minimum age and service
provisions of Code Section 410.
3.2 EARLY ENTRY DATE IN CERTAIN CIRCUMSTANCES. If an eligible employee
would not otherwise commence participation hereunder by the first day of the
first plan year after the date on which the employee has completed the requisite
years of service or period of continuous employment and has attained the age for
participation elected in the Adoption Certificate pursuant to Sections 3.1.2 and
3.1.3 (the "completion date") or, if earlier, by the date which is six months
after the completion date, then such employee shall commence participation as of
the later of the entry date coinciding with or immediately preceding the
completion date and the date on which the employee both is an eligible employee
and satisfies any additional requirements elected in the Adoption Certificate
pursuant to Section 3.1.4.
3.3 REENTRY AFTER ONE-YEAR BREAK IN SERVICE. Any participant who
terminates employment, incurs a one-year break in service and is subsequently
reemployed by an Employer shall be treated as follows:
3.3.1 If such employee's years of service prior to a one-year
break in service have not been disregarded by the application of the provisions
of Section 2.4.3.1.2, such employee shall reenter active participation in the
Plan on the entry date coinciding with or immediately preceding such date of
reemployment; or
3.3.2 If such employee's years of service prior to a one-year
break in service have been disregarded by the application of the provisions of
Section 2.4.3.1.2, such employee shall be treated as a new employee for purposes
of the Plan and shall reenter active participation in the Plan on the first
entry date on which such employee has satisfied the requirements of Section 3.1.
Any participant who incurs a one-year break in service while employed
by an Employer shall, unless such participant's years of service prior to a
one-year break in service have been disregarded by the application of the
provisions of Section 2.4.3.1.2, reenter active participation in the Plan on the
entry date coinciding with or immediately preceding the date of such
participant's first hour of service during the first plan year which does not
constitute a one-year break in service.
3.4 EFFECT OF INVOLVEMENT OF OWNER-EMPLOYEES IN OTHER TRADES OR
BUSINESSES. If contributions are made for the benefit of one or more
owner-employees, the rules set forth in Sections 3.4.1 through 3.4.3 are
applicable.
3.4.1 If an owner-employee controls, or a group of
owner-employees together control, a trade or business with respect to which the
Plan is established, and such owner-employee or group of owner-employees also
control (as an owner-employee or owner-employees) one or more other trades or
businesses, this Plan and any other plan which is established with respect to
such controlled trades or businesses, when taken together, form a single plan
which must satisfy the requirements of Code Sections 401(a) and 401(d) with
respect to the employees of all such controlled trades or businesses.
3.4.2 If one or more owner-employees hereunder control as an
owner-employee one or more other trades or businesses, the employees of each
such other trade or business must be included in a plan which satisfies Code
Sections 401(a) and 401(d) and provides contributions and benefits not less
favorable than those provided for owner-employees under this Plan.
3.4.3 If an owner-employee hereunder participates as an
owner-employee in a plan or plans of two or more trades or businesses which such
owner-employee does not control, and such owner-employee controls a trade or
business, then the contributions or benefits of the employees under the plan of
the trade or business which such owner-employee does control must be as
favorable as those provided for such owner-employee under the most favorable
plan of the trade or business which such owner-employee does not control.
22
<PAGE>
3.4.4 For purposes of the provisions under Section 3.4, an
owner-employee or a group of two or more owner-employees shall be considered to
control a trade or business if such owner-employee or group of two or more
owner-employees together own the entire interest in an unincorporated trade or
business or, in the case of a partnership, more than 50% of either the capital
interest or the profits interest in such partnership.
3.5 NOTIFICATION OF PLAN PROVISIONS. If this is the first plan
instrument for the Plan, then within 120 days after execution of the plan
instrument (but in no event later than the last day of the first plan year for
which the Plan is effective), the designated Employer shall notify the employees
regularly employed by each Employer maintaining the Plan who will become
eligible to participate in the Plan and shall disclose to such employees the
basic provisions hereof. Thereafter, the designated Employer shall notify such
employees and shall disclose to such employees the basic provisions hereof
within 90 days after the date on which such an employee becomes a participant.
ARTICLE 4.
FUNDING AND EXPENSES
4.1 EMPLOYER'S REGULAR CONTRIBUTION. The Employer's contribution for
each fiscal year, subject to the limitations herein contained and until this
Plan shall be terminated or modified, shall be the amount established by the
Employer, in its sole discretion, before the later of the end of such fiscal
year and the last day on which the contribution may be fixed by the Employer if
such contribution is to be deductible for such fiscal year pursuant to the
provisions of the Internal Revenue Code; provided, however, that such
contribution (and forfeitures) shall be uniform with respect to all Employers
when determined as a percentage of participants' covered compensation unless the
designated Employer, in its sole discretion, determines that such uniformity is
not necessary in order for the Plan to satisfy the nondiscrimination rules and
other qualification rules under Code Section 401(a). The Employer's contribution
for a fiscal year shall consist of the following:
4.1.1 NON-401(k) CONTRIBUTIONS. The Non-401(k) Contributions,
which shall be deposited with the Funding Agent.
4.1.2 CASH OPTION CONTRIBUTION. If elected in the Adoption
Certificate, the Cash Option Contribution, which shall be made available to a
participant as a cash payment in lieu of deposit with the Funding Agent. Unless
otherwise designated in the Adoption Certificate or otherwise limited pursuant
to Section 4.3 or Section 4.4, the Cash Option Contribution with respect to any
participant for any year shall be equal to the lesser of (i) 20% of that portion
of the Employer's contribution which is allocated to such participant without
regard to Sections 6.2.2.2.1.1, 6.2.2.2.2.1, 6.2.2.2.2.2, 6.2.2.3.1.1,
6.2.2.3.2.1, 6.2.2.3.2.2 and 6.2.2.4 (the "nonintegrated contribution"), and
(ii) the amount of the nonintegrated contribution which is in excess of the
amount to be allocated under Section 6.2.1.
For each plan year that a Cash Option Contribution is made to
the Plan, the Employer shall notify each participant whom the Employer believes
will be eligible for an allocation of such Employer's contribution for the
fiscal year that such participant may elect to receive, as a cash payment in
lieu of a deposit to the Funding Agent, the Cash Option Contribution which would
otherwise be allocated to such participant's 401(k) Contribution Account. The
participant shall not be required to elect to receive any part of the Cash
Option Contribution as a cash payment. The amount which the participant does not
elect to receive as a cash payment shall be deposited with the Funding Agent.
The participant shall have a reasonable period of time after
receipt of notice of the Cash Option Contribution in which to notify the
Employer in writing of the participant's election to receive the cash payment in
lieu of its deposit with the Funding Agent. Rules governing such notice and the
election period shall be established by the designated Employer from time to
time and communicated to employees on a reasonable and uniform basis. In the
case of any participant from whom the Employer has not received a written notice
that such participant elects to receive any part of the Cash Option Contribution
as a cash payment within the election period, such participant shall be deemed
to have irrevocably elected not to receive the cash payment. Any part of the
Cash Option Contribution which a participant has elected to receive as a cash
payment shall be paid to such participant no later than the last day of the
period within which the Employer's Cash Option Contribution must be deposited
with the Funding Agent pursuant to Section 4.7.2.
4.2 SALARY DEFERRAL CONTRIBUTIONS. If elected in the Adoption
Certificate, Salary Deferral Contributions shall be permitted. (Hereafter,
Salary Deferral Contributions and Cash Option Contributions may from time to
time be referred to in the aggregate as 401(k) contributions.) Each participant
who desires to have Salary Deferral Contributions made on his or her behalf by
the Employer for a plan year shall be required to enter into a Salary Deferral
Agreement. The Salary Deferral Agreement shall provide for a reduction of the
participant's compensation for each payroll period during the plan year (or
portion thereof for which the Salary Deferral Agreement is effective) in an
amount equal to that percentage of his or her covered
23
<PAGE>
compensation for any such payroll period set forth by the participant in
such Salary Deferral Agreement (hereinafter referred to as the "Reduction
Percentage"). A participant's Reduction Percentage may be limited to a
maximum percentage and/or whole percentage by designation in the Adoption
Certificate upon the adoption or amendment of this Plan or, in the absence of
any such designation, by the designated Employer under uniform and
nondiscriminatory rules adopted from time to time. Salary Deferral Agreements
shall be further subject to the rules and limitations set forth in Sections
4.2.1 through 4.2.3.
4.2.1 A participant may enter into a Salary Deferral Agreement
as of any entry date by filing a properly executed Agreement with the Employer
at least 15 days prior to such entry date; provided, however, that the
designated Employer may provide that such Agreement shall be filed and become
effective as of any additional or different date or dates as it shall determine,
in its sole discretion, under uniform and nondiscriminatory rules. For purposes
of this Section 4.2.1, an employee who will become a participant on the next
succeeding entry date shall be deemed to be a participant; provided, however,
that a Salary Deferral Agreement filed by any such employee shall not become
effective prior to such entry date.
4.2.2 A participant's Salary Deferral Agreement shall
terminate upon the date the participant discontinues employment with the
Employer or otherwise ceases to be an eligible employee. A participant may
terminate or revise a Salary Deferral Agreement during the plan year and direct
the Employer to discontinue, decrease or increase Salary Deferral Contributions
on behalf of such participant for subsequent payroll periods by notifying the
Employer in writing at least 15 days prior to the entry date (or such other date
authorized by the designated Employer) during such plan year; such termination
or revision shall become effective as of the payroll period commencing with or
immediately following such entry date (or other authorized date).
Notwithstanding the participant's termination of a Salary Deferral Agreement,
the participant shall continue as a participant under this Plan and may direct
the Employer to reinstate Salary Deferral Contributions on his or her behalf by
filing a new Salary Deferral Agreement with the Employer in accordance with
Section 4.2.1.
4.2.3 Salary Deferral Contributions made pursuant to any
Salary Deferral Agreement shall at all times be subject to the limitations set
forth under Sections 4.3 and 4.4 and in Article 6.
4.3 EXCESS DEFERRALS.
4.3.1 DEFINITIONS. For purposes of the provisions of Section
4.3:
4.3.1.1 "ELECTIVE CONTRIBUTIONS" consist of the Cash
Option Contribution and/or Salary Deferral Contributions on behalf of any
participant plus contributions made by any employer (including but not limited
to an Employer maintaining this Plan) on behalf of such participant (i) to any
other plan containing a cash or deferred arrangement under Code Section 401(k)
pursuant to such participant's election, (ii) to a simplified employee pension
pursuant to an election by such participant under Code Section 408(k)(6), or
(iii) to purchase an annuity contract described in Code Section 403(b) on behalf
of such participant pursuant to a salary reduction agreement. "ELECTIVE
CONTRIBUTIONS" also include deductible employee contributions to a plan
described in Code Section 501(c)(18) and, effective for plan years beginning
after August 8, 1988, matching contributions with respect to a partner's
elective or employee contributions.
4.3.1.2 Except to the extent otherwise provided in
Section 1105(c) of the Tax Reform Act of 1986, "EXCESS DEFERRALS" are that
portion of the elective contributions on behalf of any participant for any
calendar year beginning after December 31, 1986, which exceed $7,000 or such
greater amount as may be prescribed by the Secretary of the Treasury pursuant to
Code Section 402(g)(5) (the "annual limitation"). Notwithstanding the foregoing
provisions of this Section 4.3.1.2:
4.3.1.2.1 The annual limitation shall be
increased, but not in excess of $9,500, by the amount of any elective
contributions for such calendar year described in clause (iii) of the first
sentence of Section 4.3.1.1; and
4.3.1.2.2 The annual limitation shall be
adjusted in the manner provided in Code Section 402(g)(8)(A).
4.3.2 LIMITATION ON ELECTIVE CONTRIBUTIONS BY EMPLOYER AND
AFFILIATES. Effective for calendar years beginning after December 31, 1986, the
elective contributions by the Employer and Affiliates on behalf of any
participant for any such calendar year shall not exceed the annual limitation.
For purposes of this Section 4.3.2, the amount of the annual limitation shall be
determined without regard to Sections 4.3.1.2.1 and 4.3.1.2.2, except to the
extent that the contributions described therein are made by the Employer or an
Affiliate.
24
<PAGE>
4.3.3 DISTRIBUTION OF EXCESS DEFERRALS. In the event that the
elective contributions by all employers on behalf of any participant for any
calendar year beginning after December 31, 1986, result in excess deferrals, the
Funding Agent shall distribute to such participant on or before the April 15
immediately following the close of the calendar year for which such excess
deferrals were made (the "applicable year") that portion of such excess
deferrals allocated to the Plan by the participant, increased by income
allocable to such excess deferrals (or reduced by losses allocable thereto);
provided, however, that the amount of excess deferrals that may be distributed
under this Section 4.3.3 for any calendar year shall be reduced by the amount of
any excess 401(k) contributions previously distributed to such participant or
redesignated as a Nondeductible Employee Contribution for the plan year
beginning with or within such taxable year; and, provided further, that such
amount may not exceed the amount of the Cash Option Contribution and/or Salary
Deferral Contributions on behalf of such participant for the applicable year.
The participant shall submit an allocation notice to the Plan Administrator in
writing, no later than the March 1 immediately following the close of the
applicable year, that states that excess deferrals were made on behalf of the
participant during the applicable year, specifies the amount of excess deferrals
allocated to the Plan, and certifies or otherwise establishes that such amount
is an excess deferral. The amount of income or loss allocable to any excess
deferrals allocated to the Plan for the applicable year shall be determined for
the applicable year and, for plan years beginning before January 1, 1992, the
period between the end of the applicable year and the date of distribution (the
"gap period"); provided, however, that such amount need not be determined for
the gap period relating to plan years beginning in 1987 unless otherwise elected
by the designated Employer in a consistent manner for all such excess deferrals.
For the applicable year, such amount shall be equal to the income or losses
allocable to the participant's 401(k) Contribution Account for the applicable
year multiplied by a fraction, the numerator of which is the participant's
excess deferrals allocated to the Plan for the applicable year, and the
denominator of which is the balance of the participant's 401(k) Contribution
Account as of the last day of the applicable year reduced for income and
increased for losses allocable thereto for the applicable year; provided,
however, that the designated Employer may use any other reasonable method for
determining the amount of income or loss allocable to excess deferrals that does
not violate Code Section 401(a)(4), is used consistently for all participants
and for all corrective distributions under this Section 4.3.3 for such year, and
is used by the Plan for allocating income to participants' accounts. For the gap
period, such amount shall be equal to the income or loss allocable to the
participant's 401(k) Contribution Account for the gap period multiplied by a
fraction, the numerator of which is the participant's excess deferrals allocated
to the Plan for the applicable year and the denominator of which is the balance
of the participant's 401(k) Contribution Account as of the last day of the
applicable year; provided, however, that if elected by the designated Employer,
the income or losses allocable to such excess deferrals for the gap period shall
be equal to the product of 10% of the income allocable to such excess deferrals
for the applicable year multiplied by the number of calendar months in the gap
period. A calendar month shall be deemed to be in the gap period if distribution
pursuant to this Section 4.3.3 occurs after the fifteenth day of such month, and
shall be deemed not to be in the gap period if such distribution occurs on or
before the fifteenth day of such month. If only a portion of any excess
deferrals allocated to the Plan (and income allocable to such excess deferrals)
is distributed, such portion shall be treated as having been distributed ratably
from such excess deferrals and such income. Distribution of excess deferrals
pursuant to this Section 4.3.3 may be made without regard to any contrary
provision of law or this Plan, and without regard to whether the participant or
the participant's spouse has consented to such distribution. For plan years
beginning on and after January 1, 1992 (except plan years with respect to which
the Employer used an alternate procedure), the Employer shall not determine the
amount of income or loss allocable to any excess deferrals allocated to the Plan
for the gap period defined above, and shall only determine the amount of income
or loss allocable to such excess deferrals for the applicable year pursuant to
the preceding provisions of this paragraph.
4.4 ACTUAL DEFERRAL PERCENTAGE LIMITATION. Notwithstanding the
preceding sections of this Article 4, for any plan year in which amounts are
contributed to the Plan by the Employer or an Affiliate as a Cash Option
Contribution or pursuant to Salary Deferral Agreements on behalf of participants
employed by such Employer, at least one of the tests under Section 4.4.1 shall
be met for such plan year.
4.4.1 ACTUAL DEFERRAL PERCENTAGE TEST. Subject to the
aggregate limit described in Section 4.9.2, the Actual Deferral Percentage of
participants employed by such Employer or an Affiliate who are highly
compensated employees must be equal to or less than either:
4.4.1.1 The product of the Actual Deferral Percentage
of all other participants employed by such Employer or an Affiliate multiplied
by 1.25; or
4.4.1.2 The lesser of (i) the sum of the Actual
Deferral Percentage of all other participants employed by such Employer or an
Affiliate plus two percentage points, and (ii) the product of the Actual
Deferral Percentage of such participants multiplied by two.
Notwithstanding the foregoing, failure to satisfy the
provisions of this Section 4.4.1 shall not occur merely because all of the
participants employed by such Employer and Affiliates are highly compensated
employees. Subject to rules and regulations prescribed by the Secretary of the
Treasury, this Plan and any other plan(s) maintained by the Employer or an
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Affiliate containing a cash or deferred arrangement shall be treated as a single
plan for purposes of the Actual Deferral Percentage Test if (i) the Employer so
elects and this Plan and such other plan(s) satisfy the requirements of Code
Sections 401(a)(4) and 410(b) in the aggregate, or (ii) this Plan and such other
plan(s) are otherwise treated as a single plan for purposes of Code Section
401(a)(4) or 410(b) (other than, for plan years beginning after December 31,
1988, Code Section 410(b)(2)(A)(ii)).
4.4.2 ACTUAL DEFERRAL PERCENTAGE. The "ACTUAL DEFERRAL
PERCENTAGE" for a group of participants is the average of the ratios, calculated
separately for each participant in such group, of (i) the sum of the amounts set
forth in Sections 4.4.2.1 through 4.4.2.4 which are contributed to the Plan or
another plan for the plan year by the Employer and Affiliates on behalf of the
participant, to (ii) the participant's compensation from the Employer and
Affiliates for such plan year (the "Deferral Percentage"):
4.4.2.1 In the discretion of the designated
Employer:
4.4.2.1.1 If the participant's Non-401(k)
Contribution Account is fully vested and nonforfeitable at all times, all or
part of that portion of the Non-401(k) Contribution for the plan year which is
allocated to the participant's account without regard to Sections 6.2.2.2.1.1,
6.2.2.2.2.1, 6.2.2.2.2.2, 6.2.2.3.1.1, 6.2.2.3.2.1, 6.2.2.3.2.2 and 6.2.2.4;
4.4.2.1.2 All or part of the Matching
Contribution for the plan year if the participant's Matching Contribution
Account is fully vested and nonforfeitable at all times (other than as provided
in Section 7.1.4.3); and
4.4.2.1.3 Qualified nonelective
contributions and qualified matching contributions, within the meaning of Code
Section 401(k) and the regulations promulgated thereunder, under any other plan
maintained by the Employer or an Affiliate;
provided, however, that such contributions may be taken into account under
Section 4.4.2 only if they satisfy any additional requirements under Treas.
Reg. Sections 1.401(k)-1(b), to the extent applicable.
4.4.2.2 The Cash Option Contribution to the extent
such contribution is not elected to be received as a cash payment by the
participant and/or Salary Deferral Contributions (including, except to the
extent provided under rules and regulations prescribed by the Secretary of the
Treasury, any portion of such contributions constituting an excess deferral
which was distributed to the participant pursuant to Section 4.3.3).
4.4.2.3 The 401(k) Remedial Contribution (see Section
4.4.4.2).
4.4.2.4 In the case of a partnership, matching
contributions with respect to a partner's elective or employee contributions.
For purposes of calculating Actual Deferral Percentages, the
term "PARTICIPANT" shall include an eligible employee who has entered into Plan
participation pursuant to Article 3 hereof, regardless of whether such eligible
employee (i) elects to enter into a Salary Deferral Agreement; (ii) has had Cash
Option Contributions and/or Salary Deferral Contributions on his or her behalf
suspended due to a distribution, a loan or an election not to participate in the
Plan; or (iii) may receive no additional annual additions pursuant to Section
6.7. In the case of any participant who is a highly compensated employee and is
also a participant in any other plan(s) maintained by the Employer or an
Affiliate containing a cash or deferred arrangement, the Deferral Percentage for
such participant shall be determined as if this Plan and such other plan(s) were
a single plan for their plan years ending with or within the same calendar year.
For plan years beginning after December 31, 1988, Actual Deferral Percentages
and Deferral Percentages shall be calculated to the nearest one-hundredth of one
percent.
4.4.3 FAMILY AGGREGATION. In the case of any highly
compensated employee and family members who must be aggregated and treated as a
single highly compensated employee (a "family group") pursuant to Section
2.2.9.5.2, the following special rules shall apply for purposes of the Actual
Deferral Percentage Test:
4.4.3.1 DEFERRAL PERCENTAGE. The Deferral
Percentage for a family group shall be equal to the Deferral Percentage
determined by combining the contributions taken into account under Section 4.4.2
and the compensation of all family group members who are participants.
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4.4.3.2 DETERMINATION OF ACTUAL DEFERRAL PERCENTAGE
OF PARTICIPANTS OTHER THAN HIGHLY COMPENSATED EMPLOYEES. The contributions taken
into account under Section 4.4.2 and the compensation of all family group
members shall be disregarded for purposes of determining the Actual Deferral
Percentage of participants other than highly compensated employees.
4.4.3.3 MULTIPLE FAMILY GROUPS. If an employee is a
member of two or more family groups that would each otherwise be treated as a
single highly compensated employee of the Employer or an Affiliate, such family
groups shall be aggregated and treated as a single family group in accordance
with the foregoing provisions under Section 4.4.3.
4.4.4 REMEDIAL ACTION. If the designated Employer determines
that the Actual Deferral Percentage Test set forth under Section 4.4 may be
exceeded for the plan year, the designated Employer (or, in the case of the
action set forth in Section 4.4.4.2, the Employer) may take any or all of the
following actions as shall be deemed necessary to cause such limitation to be
met:
4.4.4.1 REDUCE DEFERRAL PERCENTAGE. The designated
Employer, in its sole discretion, may cause a participant who is a highly
compensated employee to revise the participant's Salary Deferral Agreement by
reducing the Deferral Percentage effective as of the first day of any payroll
period. The reduction in the Deferral Percentage shall be effected by reducing
the Deferral Percentage of the participant who is a highly compensated employee
with the highest Deferral Percentage to the second highest Deferral Percentage
elected by a participant who is a highly compensated employee, and thereafter
reducing the Deferral Percentage of all such participants having the second
highest Deferral Percentage to the third highest Deferral Percentage elected by
a participant who is a highly compensated employee, and so forth, until it is
determined by the designated Employer that the Actual Deferral Percentage Test
will be met for the plan year. For plan years beginning after December 31, 1988,
Deferral Percentages must be rounded to the nearest one-hundredth of one percent
for purposes of this Section 4.4.4.1.
4.4.4.2 401(k) REMEDIAL CONTRIBUTION. The Employer,
in its sole discretion, may make a fully vested contribution to the Plan for the
plan year which may not be elected by a participant to be taken as a cash
payment and which shall be allocated to the accounts of participants employed by
such Employer other than highly compensated employees.
4.4.4.3 LIMIT AVAILABILITY OF CASH OPTION. The
designated Employer, in its sole discretion, may limit the percentage of the
Cash Option Contribution which may be elected as a cash payment by each
participant.
4.4.4.4 DISTRIBUTE EXCESS 401(k) CONTRIBUTIONS. In
the event that any excess 401(k) contributions remain in the Plan after
application, in the designated Employer's (or, in the case of the action set
forth in Section 4.4.4.2, the Employer's) sole discretion, of Sections 4.4.4.1
through 4.4.4.3, such excess 401(k) contributions (increased by any income, or
reduced by any loss, allocable to such contributions) shall be distributed to
participants who are highly compensated employees on the basis of the respective
portions of the excess 401(k) contributions attributable to each such
participant no later than two-and-one-half months after the close of such plan
year (or such later date determined by the designated Employer, but in no event
later than the last day of the immediately succeeding plan year); provided,
however, that the amount of excess 401(k) contributions to be distributed under
this Section 4.4.4.4 shall be reduced by the amount of any excess deferrals
previously distributed to such participants for the calendar year ending with or
within such plan year; and, provided further, that this Section 4.4.4.4 shall
not apply to excess 401(k) contributions that are redesignated as Nondeductible
Employee Contributions pursuant to Section 4.4.4.5. If only a portion of the
excess 401(k) contributions attributable to any participant (and income
allocable to such excess 401(k) contributions) is distributed, such portion
shall be treated as having been distributed ratably from such excess 401(k)
contributions and such income. Distribution of excess 401(k) contributions
pursuant to this Section 4.4.4.4 may be made without regard to any contrary
provision of law or this Plan, and without regard to whether the participant or
the participant's spouse has consented to such distribution. In the event of the
termination of the Plan during the plan year in which an excess 401(k)
contribution arose, distributions under this Section 4.4.4.4 shall be made as
soon as administratively feasible after the date of such termination, but in no
event later than the last day of the 12-month period immediately following such
date.
4.4.4.4.1 "EXCESS 401(k) CONTRIBUTIONS"
means, with respect to any plan year, the excess of the aggregate amount of
contributions made to this Plan which are taken into account for purposes of the
Actual Deferral Percentage Test (the "applicable contributions") on behalf of
participants who are highly compensated employees over the maximum amount of
such applicable contributions permitted under the Actual Deferral Percentage
Test (determined by reducing the Deferral Percentages of participants who are
highly compensated employees in the same manner as described in Section
4.4.4.1). The amount of excess 401(k) contributions attributable to any
participant is equal to the remainder of (i) the amount of applicable
contributions on behalf of such participant, minus (ii) the product of such
participant's Deferral Percentage (as reduced pursuant to this Section
4.4.4.4.1) multiplied by his or her compensation.
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4.4.4.4.2 The amount of income or loss
allocable to excess 401(k) contributions shall be determined for the plan year
and, for plan years beginning before January 1, 1992, the period between the end
of the plan year and the date of distribution (the "plan-year gap period");
provided, however, that such amount need not be determined for the plan-year gap
period relating to plan years beginning in 1987 unless otherwise elected by the
designated Employer in a consistent manner for all such excess 401(k)
contributions. For the plan year, such amount shall be equal to the income or
losses allocable to the participant's 401(k) Contribution Account (and
Non-401(k) Contribution Account and/or Matching Contribution Account, if
contributions allocated thereto are applicable contributions) (the "applicable
contribution accounts") for the plan year multiplied by a fraction, the
numerator of which is the excess 401(k) contributions attributable to the
participant for the plan year, and the denominator of which is the balance of
the participant's applicable contribution accounts as of the annual valuation
date for the plan year reduced for income and increased for losses allocable
thereto for the plan year; provided, however, that the designated Employer may
use any other reasonable method for determining the amount of income or losses
allocable to excess 401(k) contributions, provided that such method does not
violate Code Section 401(a)(4), is used consistently for all participants and
for all corrective distributions under Section 4.4.4.4 for such plan year, and
is used by the Plan for allocating income to participants' accounts. For the
plan-year gap period, such amount shall be equal to the income or losses
allocable to the participant's applicable contribution accounts for the
plan-year gap period multiplied by a fraction, the numerator of which is the
excess 401(k) contributions attributable to the participant for the plan year
and the denominator of which is the balance of the participant's applicable
contribution accounts as of the annual valuation date for the plan year;
provided, however, that if elected by the designated Employer, the income or
losses allocable to such excess 401(k) contributions for the plan-year gap
period shall be equal to the product of 10% of the income allocable to such
excess 401(k) contributions for the plan year multiplied by the number of
calendar months in the plan-year gap period. A calendar month shall be deemed to
be in the plan-year gap period if distribution pursuant to this Section
4.4.4.4.2 occurs after the fifteenth day of such month, and shall be deemed not
to be in the plan-year gap period if distribution occurs on or before the
fifteenth day of such month. For plan years beginning on and after January 1,
1992 (except plan years with respect to which the Employer used an alternate
procedure), the Employer shall not determine the amount of income or loss
allocable to any excess 401(k) contributions for the plan-year gap period
defined above, and shall only determine the amount of income or loss allocable
to such excess 401(k) contributions for the plan year pursuant to the preceding
provisions of this paragraph.
4.4.4.4.3 To the extent that Matching
Contributions are taken into account for purposes of the Actual Deferral
Percentage Test, distributions of excess 401(k) contributions with respect to
any plan year shall be charged against the participant's 401(k) Contribution
Account and Matching Contribution Account in proportion to the Salary Deferral
Contributions and such Matching Contributions, respectively, made on behalf of
such participant for such plan year. To the extent that Non-401(k) Contributions
are taken into account for purposes of the Actual Deferral Percentage Test,
distributions of excess 401(k) contributions shall then be charged against the
participant's Non-401(k) Contribution Account if such excess 401(k)
contributions exceed the balance in the participant's 401(k) Contribution
Account and that portion of the participant's Matching Contribution Account
attributable to Matching Contributions taken into account for purposes of the
Actual Deferral Percentage Test.
4.4.4.5 REDESIGNATE EXCESS 401(k) CONTRIBUTIONS AS
NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS. If the Plan as adopted by the designated
Employer permits Nondeductible Employee Contributions, excess 401(k)
contributions attributable to any participant (but not in excess of the Cash
Option Contribution and/or Salary Deferral Contributions on behalf of such
participant for such plan year) shall, to the extent elected by such participant
and permitted under the remaining provisions of this Plan, including but not
limited to Section 4.9, be redesignated as a Nondeductible Employee
Contribution. However, such redesignated 401(k) contributions shall be held in
the participant's 401(k) Contribution Account, subject to the distribution
limitations applicable to 401(k) contributions. Such election and redesignation
must occur no later than two-and-one-half months after the close of the plan
year or, if later, October 24, 1988. The Plan Administrator must report such
redesignated excess 401(k) contributions as Nondeductible Employee Contributions
to the Internal Revenue Service and such participant by timely providing such
forms as shall be designated by the Commissioner of Internal Revenue to such
participant and the Employer and taking such other action as the Commissioner of
Internal Revenue shall require.
4.4.4.6 EFFECT OF FAMILY AGGREGATION ON
DISTRIBUTION OR REDESIGNATION OF EXCESS 401(k) CONTRIBUTIONS. For purposes of
distributing or redesignating the excess 401(k) contributions attributable to a
family group, as determined under Section 4.4.3, excess 401(k) contributions
shall be determined and allocated among all family group members who are
participants in the ratio that the Cash Option Contribution and/or Salary
Reduction Contributions on behalf of each such family group member bear to the
aggregate amount of such contributions on behalf of all such family group
members.
4.4.5 RECORD-KEEPING. For plan years beginning after December
31, 1986, the designated Employer shall maintain such records as shall be
necessary to demonstrate compliance with the provisions of Section 4.4,
including the extent to which Non-401(k) Contributions, Matching Contributions
and qualified nonelective contributions and qualified matching contributions are
taken into account for such purposes.
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4.5 EMPLOYER'S MATCHING CONTRIBUTION. If elected in the Adoption
Certificate, the Employer shall make a Matching Contribution to the Plan for
each plan year on behalf of each participant for whom the Employer has made
Salary Deferral Contributions for such plan year. The amount of such Matching
Contribution shall be equal to the greater of the following:
4.5.1 That percentage of such Salary Deferral Contributions
set forth in the Adoption Certificate; and
4.5.2 That percentage of such Salary Deferral Contributions
established by the Employer and communicated to participants employed by it
during such plan year;
provided, however, that a Matching Contribution shall not be made with
respect to such Salary Deferral Contributions which exceed that percentage of
the participant's covered compensation, if any, elected in the Adoption
Certificate; and, provided further, that no Matching Contributions shall be
required or made with respect to (i) that portion of such Salary Deferral
Contributions which constitute an excess 401(k) contribution for such plan
year, or (ii) an amount equal to the excess deferrals allocated to the Plan
for the calendar year ending with or within such plan year; and, provided
further, that effective for plan years beginning after August 8, 1988,
matching contributions with respect to a partner's elective or employee
contributions shall be treated as elective contributions as defined in
Section 4.3.1.1 made on behalf of the partner. Notwithstanding the foregoing,
if elected in the Adoption Certificate, the Matching Contribution for any
plan year shall not exceed the Employer's profits for its fiscal year for
which such contributions are made and, if the Employer is not a partnership
or sole proprietor, its earned surplus as of the beginning of such fiscal
year.
4.6 CONTRIBUTIONS NOT LIMITED TO PROFITS AND EARNED SURPLUS. For
plan years beginning after December 31, 1985, the Employer's contribution
(consisting of the Non-401(k) Contribution and, if applicable, the Cash Option
Contribution), Salary Deferral Contributions, Matching Contribution (except as
otherwise elected in the Adoption Certificate pursuant to Section 4.5) and
401(k) Remedial Contribution may be made without regard to whether the Employer
has profits for its fiscal year for which such contributions are made or, if the
Employer is not a partnership or sole proprietor, earned surplus as of the
beginning of such fiscal year. Notwithstanding the foregoing provisions of this
Section 4.6, the Plan is intended to qualify as a profit sharing plan within the
meaning of applicable law for all purposes including, but not limited to, the
provisions of Code Sections 401, 402, 404, 412 and 417 and the corresponding
provisions, if any, of ERISA and the regulations promulgated thereunder.
4.7 TIME AND DEDUCTIBILITY OF CONTRIBUTIONS MADE BY EMPLOYER
DIRECTLY OR ON BEHALF OF PARTICIPANT.
4.7.1 EMPLOYER'S REGULAR CONTRIBUTION.
4.7.1.1 NON-401(k) CONTRIBUTION. The Employer's
Non-401(k) Contribution may be made on the date or dates selected by the
Employer; provided, however, that the total contribution for the fiscal year
shall be made within the time required in order for the payment to be deductible
under applicable provisions of the Code; and, provided further, that in the
event the Employer is unable to determine and pay the correct amount of its
contribution within such time, it shall contribute an amount designated as an
estimated contribution and shall pay any deficiency as soon as the amount
thereof is determined.
4.7.1.2 EMPLOYER'S CASH OPTION CONTRIBUTION. The
Employer's Cash Option Contribution for the plan year, except to the extent
received by participants as cash payments, shall be deposited with the Funding
Agent within the same period as provided for the Employer's Non-401(k)
Contribution.
4.7.2 SALARY DEFERRAL CONTRIBUTIONS. The Salary Deferral
Contributions made on behalf of participants who have entered into Salary
Deferral Agreements for a plan year shall be deposited by the Employer with the
Funding Agent on the earliest date on which such contributions can reasonably be
segregated from the Employer's general assets, but in no event later than the
earlier of 90 days following the date on which such contributions have been
deducted and withheld from the participants' compensation and the last day of
the same period as provided for the Employer's Non-401(k) Contribution. The
Funding Agent shall hold any such Salary Deferral Contributions which are made
to the Plan on dates other than valuation dates in a segregated fund or funds,
as determined by the designated Employer under rules adopted from time to time.
Amounts so held shall be commingled with the other assets of the Fund for
investment by the Funding Agent on the next succeeding valuation date.
4.7.3 401(k) REMEDIAL CONTRIBUTION. The Employer's 401(k)
Remedial Contribution shall be made within the same period as provided for the
Employer's Non-401(k) Contribution.
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4.7.4 MATCHING CONTRIBUTION. The Employer's Matching
Contribution shall be made within the same period as provided for the Employer's
Non-401(k) Contribution.
4.8 NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS.
4.8.1 AUTHORIZATION AND LIMITATION. If elected in the Adoption
Certificate, a participant may make contributions to the Fund for each plan year
prior to the participant's termination of employment; provided, however, that no
participant, in order to remain a participant, shall be required to contribute
any amount to the Fund and any participant so contributing may, at any time,
discontinue making contributions to the Fund; and, provided further, that no
contribution under this section shall be accepted by the Funding Agent until the
designated Employer determines that the annual addition limitation described
elsewhere in this Plan will not thereby be exceeded.
4.8.2 TIME OF NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS. The
contributions of participants who elect to contribute shall be made annually on
the last day of the plan year or on any valuation date of the Plan and on such
other dates as may be permitted under rules of uniform application adopted by
the designated Employer from time to time.
4.8.3 CONTRIBUTION OF INSURANCE POLICIES. If elected in the
Adoption Certificate, a participant's contribution under Section 4.8 may consist
in whole or in part of the transfer of ownership of a policy insuring the life
of the participant. If there is a loan against such transferred policy at the
time of transfer, the participant shall make all interest payments with respect
to such loan when due, and may repay such loan through additional voluntary
contributions. The Employer's contributions shall not be used to pay interest or
principal amounts on loans outstanding at the time of transfer. Any life
insurance policy transferred to the Fund pursuant to this section shall, from
the date of such transfer, be subject to limitations set forth in the Plan
relating to the purchase and continuation of life insurance coverage for a
participant.
4.9 CONTRIBUTION PERCENTAGE LIMITATION. Notwithstanding the preceding
sections of this Article 4, for any plan year in which Matching Contributions
are made by the Employer on behalf of participants employed by such Employer, or
in which Nondeductible Employee Contributions are made for such plan year by
participants employed by such Employer, at least one of the tests under Section
4.9.1 shall be met for such plan year.
4.9.1 CONTRIBUTION PERCENTAGE TEST. Subject to the aggregate
limit described in Section 4.9.2, the Contribution Percentage of participants
employed by such Employer or an Affiliate who are highly compensated employees
must be equal to or less than either (hereinafter referred to as the
"Contribution Percentage Test"):
4.9.1.1 The product of the Contribution Percentage of
all other participants employed by such Employer or an Affiliate multiplied by
1.25; or
4.9.1.2 The lesser of (i) the sum of the
Contribution Percentage of all other participants employed by such Employer or
an Affiliate plus two percentage points, and (ii) the product of the
Contribution Percentage of such participants multiplied by two.
Subject to rules and regulations prescribed by the Secretary
of the Treasury, this Plan and any other plan(s) maintained by the Employer or
an Affiliate to which employee contributions and/or matching contributions
(within the meaning of Code Section 401(m) and the regulations promulgated
thereunder) are made shall be treated as a single plan for purposes of the
Contribution Percentage Test if (i) the Employer so elects and this Plan and
such other plan(s) satisfy the requirements of Code Sections 401(a)(4) and
410(b) in the aggregate, or (ii) this Plan and such other plan(s) are otherwise
treated as a single plan for purposes of Code Section 401(a)(4) or 410(b) (other
than, for plan years beginning after December 31, 1988, Code Section
410(b)(2)(A)(ii)).
4.9.2 AGGREGATE LIMIT.
4.9.2.1 For plan years beginning after December 31,
1988, in the event that:
4.9.2.1.1 One or more participants who are
highly compensated employees of the Employer or an Affiliate may, under this
Plan or any other plan maintained by the Employer or an Affiliate, have elective
contributions made on his or her behalf and make employee contributions or have
matching contributions (other than qualified matching contributions) made on his
or her behalf;
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4.9.2.1.2 The Actual Deferral Percentage of
all highly compensated employees exceeds the percentage determined under Section
4.4.1.1; and
4.9.2.1.3 The Contribution Percentage of
all highly compensated employees exceeds the percentage determined under Section
4.9.1.1;
then the sum of the Actual Deferral Percentage and the Contribution
Percentage of all highly compensated employees for any plan year under this
Plan and such other plan, if any, may not exceed the aggregate limit. For
purposes of Section 4.9.2, the following terms shall have the meanings
ascribed to them as follows: "ELECTIVE CONTRIBUTIONS" means any contribution
made by an employer to a qualified plan that was subject to a cash or
deferred election under a cash or deferred arrangement, whether or not the
arrangement is qualified, within the meaning of the regulations under Code
Section 401(k); "EMPLOYEE CONTRIBUTIONS" means any mandatory or voluntary
contribution to a qualified plan that is treated at the time of contribution
as an after-tax employee contribution and is allocated to a separate account
to which the attributable earnings and losses are allocated, excluding and
including amounts set forth in Treas. Reg. Section 1.401(m)-1(f)(6);
"MATCHING CONTRIBUTIONS" means any employer contribution to a qualified
defined contribution plan on account of an employee contribution or elective
contribution to such plan and any forfeiture allocated on the basis of
employee contributions, matching contributions, or elective contributions;
and "QUALIFIED MATCHING CONTRIBUTIONS" means any matching contribution to a
qualified plan which is subject to the distribution and nonforfeitability
requirements of Code Section 401(k) when it is contributed to the plan.
4.9.2.2 For purposes of Section 4.9.2, the "AGGREGATE
LIMIT" means the greater of:
4.9.2.2.1 The sum of:
4.9.2.2.1.1 1.25 times the greater
of the Actual Deferral Percentage and the Contribution Percentage for the plan
year of participants other than highly compensated employees under this Plan and
any other plan maintained by the Employer or an Affiliate; and
4.9.2.2.1.2 Two plus the lesser of
such Actual Deferral Percentage and Contribution Percentage, but not in excess
of the product of such Actual Deferral Percentage or Contribution Percentage
multiplied by two; and
4.9.2.2.2 The sum of:
4.9.2.2.2.1 1.25 times the lesser
of the Actual Deferral Percentage and the Contribution Percentage for the plan
year of participants other than highly compensated employees under this Plan and
any other plan maintained by the Employer or an Affiliate; and
4.9.2.2.2.2 Two plus the greater of
such Actual Deferral Percentage and Contribution Percentage, but not in excess
of the product of such Actual Deferral Percentage or Contribution Percentage
multiplied by two.
4.9.2.3 For purposes of Section 4.9.2, the Actual
Deferral Percentage and Contribution Percentage of the highly compensated
employees shall be determined after:
4.9.2.3.1 Use of Non-401(k) Contributions,
Matching Contributions, qualified nonelective contributions and qualified
matching contributions described under Section 4.4.2.1 to satisfy the Actual
Deferral Percentage Test;
4.9.2.3.2 Use of Non-401(k) Contributions,
Cash Option Contributions, Salary Deferral Contributions, qualified nonelective
contributions and elective contributions described under Section 4.9.3.1 to
satisfy the Contribution Percentage Test; provided, however, that that use of
Cash Option Contributions, Salary Deferral Contributions and elective
contributions shall be limited to the amount necessary to satisfy that portion
of the Contribution Percentage Test described in Section 4.9.1.2; and
4.9.2.3.3 Distribution of any excess
deferrals, distribution or redesignation of any excess 401(k) contributions, or
distribution of any excess aggregate contributions required without regard to
Section 4.9.2.5.
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4.9.2.4 In the event that this Plan and any other
plan are aggregated for purposes of the Actual Deferral Percentage Test or the
Contribution Percentage Test pursuant to Section 4.4.1 or Section 4.9.1, this
Plan and such other plan(s) shall be treated as a single plan for purposes of
testing compliance with the aggregate limit. This Plan, and any other plans
maintained by the Employer or an Affiliate, which are subject to Code Sections
401(k) and/or 401(m) but are not so aggregated shall be tested separately for
such purposes.
4.9.2.5 In the event that the aggregate limit would
otherwise be exceeded, the Participants' Percentages, under this Plan or any
other plan maintained by the Employer or an Affiliate that is subject to the
aggregate limit, of the highly compensated employees who are participants in
plans described in Section 4.9.2.1.1 shall be reduced in the manner described in
Section 4.9.5.2.1 until the aggregate limit is satisfied with respect to such
highly compensated employees. The amount which is in excess of the aggregate
limit shall be treated as an excess aggregate contribution subject to Section
4.9.5.2.
4.9.3 CONTRIBUTION PERCENTAGE. The "Contribution Percentage"
for a group of participants is the average of the ratios, calculated separately
for each participant in such group, of (i) the sum of the amounts set forth in
Sections 4.9.3.1 through 4.9.3.3 which are contributed to the Plan or another
plan for the plan year by the Employer and Affiliates on behalf of the
participant or by such participant while employed by the Employer or an
Affiliate, to (ii) the participant's compensation for such plan year (the
"Participant's Percentage"). The following amounts shall be taken into account
under this Section 4.9.3:
4.9.3.1 In the discretion of the designated
Employer, and only if they satisfy any additional requirements of Prop. Reg.
Section 1.401(m)-1(b) (or any successor provision thereto), to the extent
applicable:
4.9.3.1.1 If the participant's Non-401(k)
Contribution Account is fully vested at all times, all or part of that portion
of the Non-401(k) Contribution for the plan year which is allocated to the
participant's account without regard to Sections 6.2.2.2.1.1, 6.2.2.2.2.1,
6.2.2.2.2.2, 6.2.2.3.1.1, 6.2.2.3.2.1, 6.2.2.3.2.2 and 6.2.2.4;
4.9.3.1.2 All or part of the Salary
Deferral Contributions;
4.9.3.1.3 All or part of the Cash Option
Contribution to the extent such contribution is not elected to be received as a
cash payment by the participant; and
4.9.3.1.4 All or part of the elective
contributions and qualified nonelective contributions, within the meaning of
Code Section 401(m) and the regulations promulgated thereunder, under any other
plan maintained by the Employer or an Affiliate;
4.9.3.2 The Matching Contribution, including any
forfeitures used to reduce the Matching Contribution pursuant to Section
7.1.4.4.2; provided, however, that the Matching Contribution shall not be taken
into account for purposes of determining Contribution Percentages for any plan
year to the extent such contribution was taken into account for purposes of
determining Actual Deferral Percentages; and
4.9.3.3 Nondeductible Employee Contributions,
including excess 401(k) contributions for such plan year which are redesignated
as Nondeductible Employee Contributions pursuant to Section 4.4.4.5.
For purposes of calculating Contribution Percentages, the term
"PARTICIPANT" shall include an eligible employee who has entered into Plan
participation pursuant to Article 3 hereof, regardless of whether such eligible
employee (i) makes Nondeductible Employee Contributions or has a portion of the
Matching Contribution, if any, allocated to his or her Matching Contribution
Account for the plan year; (ii) if Salary Deferral Contributions are taken into
account in calculating Contribution Percentages, elects to enter into a Salary
Deferral Agreement; (iii) has had Nondeductible Employee Contributions suspended
due to a distribution, a loan or an election not to participate in the Plan; or
(iv) may receive no additional annual additions pursuant to Section 6.7. In the
case of any participant who is a highly compensated employee and is also a
participant in any other plan(s) maintained by the Employer or an Affiliate to
which employee contributions and/or matching contributions (within the meaning
of Code Section 401(m) and the regulations promulgated thereunder) are made,
such contributions to this Plan and such other plan(s) shall be aggregated for
purposes of determining the Participant's Percentage for such participant. For
plan years beginning after December 31, 1988, Contribution Percentages and
Participants' Percentages shall be calculated to the nearest one-hundredth of
one percent.
4.9.4 FAMILY AGGREGATION. In the case of any highly
compensated employee and family members who must be aggregated and treated as a
single highly compensated employee (a "family group") pursuant to Section
2.2.9.5.2, the following special rules shall apply for purposes of the
Contribution Percentage Test:
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4.9.4.1 PARTICIPANT'S PERCENTAGE. The
Participant's Percentage for a family group shall be equal to the Participant's
Percentage determined by combining the contributions taken into account under
Section 4.9.3 and the compensation of all family group members who are
participants.
4.9.4.2 DETERMINATION OF CONTRIBUTION PERCENTAGE OF
PARTICIPANTS OTHER THAN HIGHLY COMPENSATED EMPLOYEES. The contributions taken
into account under Section 4.9.3 and the compensation of all family group
members shall be disregarded for purposes of determining the Contribution
Percentage of participants other than highly compensated employees.
4.9.4.3 MULTIPLE FAMILY GROUPS. If an employee is
a member of two or more family groups that would each otherwise be treated as a
single highly compensated employee of the Employer or an Affiliate, such family
groups shall be aggregated and treated as a single family group in accordance
with the foregoing provisions under Section 4.9.4.
4.9.5 REMEDIAL ACTION. If the designated Employer determines
that the limitations under the Contribution Percentage Test set forth in Section
4.9 might be exceeded for the plan year, the designated Employer may take any or
all of the following actions as shall be determined necessary to cause such
limitations to be met:
4.9.5.1 LIMIT NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS.
The designated Employer, in its sole discretion, may limit the amount of the
Nondeductible Employee Contribution which may be made to the Plan by a
participant who is a highly compensated employee to an amount which will not
cause the Contribution Percentage limitations to be exceeded.
4.9.5.2 DISTRIBUTE OR FORFEIT EXCESS AGGREGATE
CONTRIBUTIONS. In the event that any excess aggregate contributions remain in
the Plan after application, in the designated Employer's sole discretion, of
Section 4.9.5.1, no later than two-and-one-half months after the close of such
plan year (or such later date determined by the designated Employer, but in no
event later than the last day of the immediately succeeding plan year), such
excess aggregate contributions (increased by any income, or reduced by any loss,
allocable to such contributions) shall be distributed to participants who are
highly compensated employees on the basis of the respective portions of the
excess aggregate contributions attributable to each such participant or, if
forfeitable under the remaining provisions of this Plan other than Section
7.1.4.3, shall be forfeited as of the last day of the plan year to which such
excess aggregate contributions are attributable. If only a portion of the excess
aggregate contributions attributable to any participant (and income allocable to
such excess aggregate contributions) is distributed, such portion shall be
treated as having been distributed ratably from such excess aggregate
contributions and such income. Distribution of excess aggregate contributions
pursuant to this Section 4.9.5.2 may be made without regard to any contrary
provision of law or this Plan, and without regard to whether the participant or
the participant's spouse has consented to such distribution. In the event that
any excess aggregate contributions are forfeited pursuant to this Section
4.9.5.2, such forfeitures shall be treated in the manner provided under Section
7.1.4, except that such forfeitures may not be reallocated to the accounts of
any participants whose Participant's Percentages have been reduced hereunder. In
the event of the termination of the Plan during the plan year in which an excess
aggregate contribution arose, distributions under this Section 4.9.5.2 shall be
made as soon as administratively feasible after the date of such termination,
but in no event later than the last day of the 12-month period immediately
following such date.
4.9.5.2.1 For purposes hereof, "excess
aggregate contributions" means, with respect to any plan year, the excess of the
aggregate amount of contributions made to this Plan which are taken into account
for purposes of the Contribution Percentage Test (the "aggregate contributions")
on behalf of or by participants who are highly compensated employees over the
maximum amount of such aggregate contributions permitted under the Contribution
Percentage Test, determined by reducing the Participant's Percentage of the
participant who is a highly compensated employee with the highest Participant's
Percentage to the second-highest Participant's Percentage of a participant who
is a highly compensated employee, and thereafter decreasing the Participant's
Percentage of all such participants having the second-highest Participant's
Percentage to the third-highest Participant's Percentage of a participant, and
so forth, until it is determined by the designated Employer that the
Contribution Percentage Test will be met for the plan year. The amount of excess
aggregate contributions attributable to any participant is equal to the
remainder of (i) the amount of aggregate contributions by or on behalf of such
participant, minus (ii) the product of such participant's Participant's
Percentage (as reduced pursuant to this Section 4.9.5.2.1) multiplied by his or
her compensation; provided, however, that the excess aggregate contributions
attributable to any participant for any plan year shall not exceed the
Nondeductible Employee Contributions and Matching Contributions made by or on
behalf of such participant for such plan year. The determination of the amount
of excess aggregate contributions under this Section 4.9.5.2.1 with respect to
any plan year shall be made after determining the amount of excess 401(k)
contributions for such plan year, if any, to be redesignated as Nondeductible
Employee Contributions pursuant to Section 4.4.4.5. For plan years beginning
after December 31, 1988, a Participant's Percentage must be rounded to the
nearest one-hundredth of one percent for purposes of this Section 4.9.5.2.1.
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4.9.5.2.2 The amount of income or loss
allocable to excess aggregate contributions shall be determined for the plan
year and, for plan years beginning before January 1, 1992, the plan-year gap
period, as determined under Section 4.4.4.4.2; provided, however, that such
amount need not be determined for the plan-year gap period relating to plan
years beginning in 1987 unless otherwise elected by the designated Employer in a
consistent manner for all such excess aggregate contributions. For the plan
year, such amount shall be equal to the income or loss allocable to the
participant's Nondeductible Employee Contribution Account (and Matching
Contribution Account, Non-401(k) Contribution Account and/or 401(k) Contribution
Account, if contributions allocated thereto are aggregate contributions) (the
"aggregate contribution accounts") for the plan year multiplied by a fraction,
the numerator of which is the excess aggregate contributions attributable to the
participant for the plan year, and the denominator of which is the balance of
the participant's aggregate contribution accounts as of the annual valuation
date for the plan year reduced for income and increased for losses allocable
thereto for the plan year; provided, however, that the designated Employer may
use any other reasonable method for determining the amount of income or loss
allocable to excess aggregate contributions, provided that such method does not
violate Code Section 401(a)(4), is used consistently for all participants and
for all corrective distributions under Section 4.9.5.2 for such plan year, and
is used by the Plan for allocating income to participants' accounts. For the
plan-year gap period, such amount shall be equal to the income or loss allocable
to the participant's aggregate contribution accounts for the plan-year gap
period multiplied by a fraction, the numerator of which is the excess aggregate
contributions attributable to the participant for the plan year and the
denominator of which is the balance of the participant's aggregate contribution
accounts as of the annual valuation date for the plan year; provided, however,
that if elected by the designated Employer, the income or loss allocable to such
excess aggregate contributions for the plan-year gap period shall be equal to
the product of 10% of the income allocable to such excess aggregate
contributions for the plan year multiplied by the number of calendar months in
the plan-year gap period. A calendar month shall be deemed to be in the
plan-year gap period if distribution pursuant to this Section 4.9.5.2.2 occurs
after the fifteenth day of such month, and shall be deemed not to be in the
plan-year gap period if distribution occurs on or before the fifteenth day of
such month. For plan years beginning on and after January 1, 1992 (except plan
years with respect to which the Employer used an alternate procedure), the
Employer shall not determine the amount of income or loss allocable to any
excess aggregate contributions for the plan-year gap period defined above, and
shall only determine the amount of income or loss allocable to such excess
contributions for the plan year pursuant to the preceding provisions of this
paragraph.
4.9.5.2.3 Amounts to be distributed or
forfeited under Section 4.9.5 shall first be distributed from the participant's
Nondeductible Employee Contribution Account, and then be distributed from or
forfeited under the participant's Matching Contribution Account.
4.9.5.3 EFFECT OF FAMILY AGGREGATION ON
DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS. For purposes of distributing the
excess aggregate contributions attributable to a family group, as determined
under Section 4.9.3, excess aggregate contributions shall be determined and
allocated among all family group members who are participants in the ratio that
the Matching Contribution and/or Nondeductible Employee Contributions on behalf
of each such family group member bear to the aggregate amount of such
contributions on behalf of all such family group members.
4.9.6 RECORD-KEEPING. The designated Employer shall maintain
such records as shall be necessary to demonstrate compliance with the provisions
of Section 4.9, including the extent to which Non-401(k) Contributions, Salary
Deferral Contributions, Cash Option Contributions and other elective
contributions and qualified nonelective contributions are taken into account for
such purpose.
4.10 ROLLOVER AND TRANSFER CONTRIBUTIONS. Subject to rules adopted by
the designated Employer from time to time, an employee, whether or not he or she
has satisfied the participation requirements of Article 3, may become a limited
participant by contributing or having contributed for such employee's benefit
rollover or transfer contributions, as the case may be, which meet the following
requirements:
4.10.1 ROLLOVER FROM QUALIFIED PLAN. The amount contributed
consists only of all or part of the properties such employee received or the
proceeds from the sale of such properties such employee received:
4.10.1.1 Within one taxable year of the employee on
account of a termination of the plan of which the trust is a part or, in the
case of a profit sharing or stock bonus plan, a complete discontinuance of
contributions under such plan; or
4.10.1.2 In one or more distributions which
constitute a lump-sum distribution within the meaning of Code Section
402(e)(4)(A) (determined without reference to subsection (e)(4)(B) or (e)(4)(H)
of Section 402);
from an employees' trust described in Code Section 401(a) and exempt under Code
Section 501(a) (exclusive of amounts considered contributed by such employee
reduced by amounts theretofore distributed which were not includable in gross
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income), and such amount is transferred on or before the sixtieth day after the
day on which he or she received such property; provided, however, that this
Section 4.10.1 shall not apply to any distribution required under Code Section
401(a)(9), or to any distribution occurring after the participant's required
beginning date (as defined in Section 7.5.5) under both the distributing plan
and this Plan; and, provided further, that no rollover contribution shall be
accepted to the extent it consists of amounts attributable to accumulated
deductible employee contributions within the meaning of Code Section
72(o)(5)(B).
4.10.2 ROLLOVER FROM INDIVIDUAL RETIREMENT ACCOUNT, ANNUITY OR
BOND. The amount contributed consists only of all or part of the amount in an
individual retirement account described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(b), or a retirement bond
described in Code Section 409 as it read prior to its repeal by the Tax Reform
Act of 1984, and no amount in such account, annuity or bond is attributable to
any source other than a rollover contribution of the type described in Section
4.10.1 hereof, and any earnings on such rollover contribution; and such amount
is transferred hereto on or before the sixtieth day after the date on which such
employee received a distribution of the entire amount in such individual
retirement account, annuity or bond; provided, however, that no such rollover
contribution shall be accepted to the extent it consists of amounts attributable
to accumulated deductible employee contributions within the meaning of Code
Section 72(o)(5)(B).
4.10.3 DIRECT TRANSFER FROM QUALIFIED PLAN. The contribution
consists of an amount transferred directly to the Fund by the trustee of an
employees' trust described in Code Section 401(a) and exempt under Code Section
501(a); provided, however, that no such transfer shall be accepted to the extent
it consists of amounts attributable to accumulated deductible employee
contributions within the meaning of Code Section 72(o)(5)(B), or if such
transfer would occur after the participant's required beginning date (as defined
in Section 7.5.5) under both the transferor plan and this Plan; and, provided
further, that no such transfer shall be accepted during plan years beginning
after December 31, 1988. Notwithstanding the foregoing, in the event this Plan
is a "successor plan," as defined in Treas. Reg. Section 401(k)-1(d)(3), the
designated Employer may permit transfers from a terminating plan with a
qualified cash or deferred arrangement after December 31, 1988, if such
transfers would enable such terminating plan to liquidate its assets; provided,
however, that, notwithstanding any other provisions of this Plan to the
contrary, all of the distribution options available to participants and
beneficiaries under the terminating plan's document or practice shall be
preserved and made available to participants in this Plan with respect to
amounts attributable to such transferred amounts.
4.10.4 COMMINGLING ON VALUATION DATES. Upon acceptance of any
rollover or transfer contribution, the Funding Agent shall hold such
contribution in a segregated fund until the valuation date selected by the
designated Employer, but not later than the next annual valuation date, at which
time such contribution shall be commingled and invested with the balance of the
Fund. In the event that a contribution made under Section 4.10 is subsequently
determined not to meet the requirements set forth above, then such amount and
any earnings attributable thereto shall be returned to the participant, limited
participant or trustee, as the case may be, as soon as reasonably practicable.
4.11 EXPENSES. All reasonable expenses of the Plan and Fund, if not
paid directly by an Employer, shall be paid by the Fund. Reasonable expenses of
the Fund shall include reasonable compensation of any Funding Agent who is not
an individual receiving full-time compensation from an Employer.
ARTICLE 5.
DEDUCTIBLE EMPLOYEE CONTRIBUTIONS
5.1 CESSATION OF DEDUCTIBLE EMPLOYEE CONTRIBUTIONS. The Plan shall not
accept any deductible employee contributions for a taxable year of a participant
beginning after December 31, 1986.
5.2 SEPARATE ACCOUNTS. The designated Employer shall maintain a
Deductible Employee Contribution Account for each participant who has either
made a deductible employee contribution to this Plan for one or more taxable
years of the participant beginning before January l, 1987, or had amounts
attributable to accumulated deductible employee contributions within the meaning
of Code Section 72(o)(5)(B) rolled over or transferred to this Plan during any
such taxable year. Such Deductible Employee Contribution Account shall be
maintained solely for purposes of properly accounting for each participant's
interest in the Fund attributable to deductible employee contributions, and
shall not restrict the Funding Agent in managing and operating the Fund as a
single fund.
5.3 VESTING AND DISTRIBUTION.
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5.3.1 VESTING. A participant's Deductible Employee
Contribution Account shall be fully vested at all times.
5.3.2 DISTRIBUTION. Unless otherwise restricted by this
Section 5.3.2, distribution of a participant's beneficial interest in such
participant's Deductible Employee Contribution Account shall be made at the same
time, in the same manner and subject to the same rules as such participant's
Non-401(k) Contribution Account; provided, however, that the rules relating to
the distribution of the participant's Non-401(k) Contribution Account in the
form of a qualified joint and survivor annuity or qualified preretirement
survivor annuity shall not apply. No portion of such participant's beneficial
interest in his or her Deductible Employee Contribution Account shall be
distributed to the participant prior to attaining age 59-1/2, nor shall a
participant have any right to borrow from or against, assign (or agree to
assign), or pledge (or agree to pledge) as security any portion of such
beneficial interest; provided, however, that a participant's beneficial interest
in his or her Deductible Employee Contribution Account may be distributed prior
to such time if:
5.3.2.1 PLAN TERMINATION. There is a partial or
complete termination of the Plan;
5.3.2.2 DISABILITY. The participant becomes
disabled within the meaning of Code Section 72(m)(7);
5.3.2.3 SEPARATION FROM SERVICE. The participant
terminates employment and the designated Employer distributes the participant's
beneficial interest; or
5.3.2.4 CONSENT OF DESIGNATED EMPLOYER. The
designated Employer consents to such distribution after receiving a written
request from the participant on a form provided by the designated Employer. Such
consent shall not be withheld unless the designated Employer determines that
such consent would adversely affect Plan qualification or the integrity of Plan
assets, result in the imposition of a tax or penalty on a Plan fiduciary, or
result in such other consequences as would make such distribution unreasonable
or imprudent.
5.4 INVESTMENT RESTRICTIONS. In no event shall any amounts credited to
such participant's Deductible Employee Contribution Account be used to purchase
insurance on the life of the participant. In addition, no loans of any such
amounts shall be authorized from the Fund to a participant or a beneficiary.
ARTICLE 6.
ALLOCATION OF CONTRIBUTIONS
6.1 SEPARATE ACCOUNTS. The designated Employer shall create and
maintain separate accounts for each participant. One account, designated
Non-401(k) Contribution Account, shall be credited with an amount equal to the
Employer's Non-401(k) Contribution to the Fund and, except to the extent used to
reduce the Matching Contribution pursuant to Section 7.1.4.4.2, all forfeitures
which are allocated for the participant for each plan year. A second account,
designated 401(k) Contribution Account, shall be credited with the Employer's
Cash Option Contribution, Salary Deferral Contributions (including those
redesignated as Nondeductible Employee Contributions) and 401(k) Remedial
Contribution to the Fund for the participant for each plan year. A third
account, designated Matching Contribution Account, shall be credited with the
Employer's Matching Contribution for the participant for each plan year. A
fourth account, designated Nondeductible Employee Contribution Account, shall be
credited with the amount of the participant's Nondeductible Employee
Contributions to the Fund for each plan year (except redesignated Salary
Deferral Contributions). In the event that on May 5, 1986, this Plan or a
predecessor plan permitted the withdrawal of Nondeductible Employee
Contributions prior to termination of employment, the designated Employer may,
in its sole discretion, as of any date, create and maintain subaccounts under
such Nondeductible Employee Contribution Account to separately account for
Nondeductible Employee Contributions made prior to such date and earnings
thereon ("Subaccount I"), and for Nondeductible Employee Contributions made on
or after such date and earnings thereon ("Subaccount II"); provided, however,
that such subaccounts may not be established retroactively. In the event that
the designated Employer maintains such subaccounts, Subaccount II shall be a
separate contract within the meaning of the applicable provisions of the Code
and the regulations promulgated thereunder; otherwise, the Nondeductible
Employee Contribution Account shall constitute such separate contract. The
designated Employer shall also create and maintain a separate account,
designated Rollover/Transfer Account, for an employee for whom the Fund has
received a rollover or transfer contribution and shall credit thereto the amount
of any such rollover or transfer contribution. The designated Employer shall
also create and maintain a separate account, designated Insurance Proceeds
Account, which will be credited with the proceeds of any life insurance payable
as a result of the death of the participant in accordance with provisions of the
Plan. If this Plan is a restatement of a prior plan, any amounts held under such
prior plan shall be allocated to the accounts established hereinabove, as
determined by the designated Employer in accordance with a uniform policy, as
the opening balance under the restated plan. In
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the event that a participant is or has been an employee of more than one
Employer, separate accounts shall be maintained for amounts attributable to
each Employer's contributions to the Plan and forfeitures, if any, allocated
for such participant and for amounts contributed, rolled over or transferred
to the Plan by or on behalf of such participant while employed by each such
Employer. The accounts described in this Section 6.1 shall be established
solely for accounting purposes and shall not restrict the Funding Agent in
managing and operating the Fund as a single fund. The value of such accounts
shall be subject to fluctuations based upon fluctuations in value of the
underlying investments of the Fund.
6.2 ALLOCATION OF EMPLOYER'S NON-401(k) CONTRIBUTION AND FORFEITURES.
Subject to the limitations upon the allocation of contributions and forfeitures
more fully described below and, if elected in the Adoption Certificate, the
provisions of Section 7.1.4.4.2 providing for the use of forfeitures to reduce
the Matching Contribution, the Employer's Non-401(k) Contribution and
forfeitures to be allocated for the plan year shall be allocated by the
designated Employer as of the last day of such plan year to the Non-401(k)
Contribution Account of each participant employed by the Employer as an eligible
employee during such plan year (including participants who cease to be eligible
employees during such plan year) in accordance with and subject to the following
provisions:
6.2.1 TOP-HEAVY MINIMUM. First, to the account of each
participant who is employed by an Employer or Affiliate on the last day of the
plan year in which the Plan is top-heavy. If this Plan is the only pension,
profit sharing or stock bonus plan qualified under Code Section 401 that is
maintained by the Employer or an Affiliate, the Employer's contribution and
forfeitures shall be allocated as of the last day of the plan year among all
such participants' accounts in the ratio that each such participant's
compensation bears to the total compensation of all such participants; provided,
however, that in no event shall the amount allocated to any participant's
account under this Section 6.2.1 exceed 3% of such participant's compensation;
and, provided further, that for plan years beginning prior to January 1, 1989,
the amount allocated to any participant's account under this Section 6.2.1 for
any plan year shall be reduced by the amount of any contributions made by the
Employer on behalf of such participant for such plan year under Code Sections
401(k) and 401(m); and, provided further, that in the case of participants who
are key employees, only such participants who are entitled to share in the
allocation under Section 6.2.2 hereof shall have a portion of the contribution
and forfeitures allocated to their accounts under this Section 6.2.1. If the
Employer or an Affiliate maintains another pension, profit sharing or stock
bonus plan qualified under Code Section 401, the Employer's contribution and
forfeitures shall be allocated under this Section 6.2.1 to the extent required
by Article 8 of the Plan.
6.2.2 NONTOP-HEAVY ALLOCATION. Second, to the account of each
participant who, if elected in the Adoption Certificate, is employed on the last
day of the plan year and completed a year of service during the plan year, or
terminated employment during such plan year on account of death, disability,
early retirement (if the Adoption Certificate for this Plan provides for early
retirement) or retirement at or after the normal retirement date in accordance
with the formula set forth below which is selected in the Adoption Certificate:
6.2.2.1 NONINTEGRATED ALLOCATION. If elected in the
Adoption Certificate, among all such participants' accounts in the ratio that
each such participant's covered compensation bears to the total covered
compensation of all such participants for such plan year taking into account any
amounts allocated for the plan year under Section 6.2.1. An Employer's election
in the Adoption Certificate to have contributions and forfeitures allocated in
accordance with one of the integrated methods set forth in Sections 6.2.2.2 and
6.2.2.3 shall be disregarded if the Employer or Affiliate maintains any other
qualified plan which is integrated with Social Security and benefits any of the
same participants as this Plan and such Employer shall be deemed to have elected
the allocation method set forth in this Section 6.2.2.1.
6.2.2.2 THREE-STEP INTEGRATED ALLOCATION. If
elected in the Adoption Certificate:
6.2.2.2.1 For plan years beginning prior to
January 1, 1989:
6.2.2.2.1.1 First, among all such
participants' accounts in the ratio that the participant's adjusted compensation
for the plan year bears to the total adjusted compensation of all such
participants for such year; provided, however, that in no event shall the amount
allocated to any participant's account under this Section 6.2.2.2.1.1 exceed an
amount equal to the product of the OASDI tax rate in effect on the first day of
the plan year (5.7% tax rate in effect on the first day of the plan year (5.7%
with respect to plan years beginning in 1987 and 6.06% with respect to plan
years beginning in 1988) multiplied by such participant's adjusted compensation.
6.2.2.2.1.2 Second, any excess
shall be allocated among all such participants' accounts in the ratio that the
participant's covered compensation for the plan year bears to the total covered
compensation of all such participants for such year taking into account any
amounts allocated for the plan year under Section 6.2.1.
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6.2.2.2.2 For plan years beginning after
December 31, 1988:
6.2.2.2.2.1 The base contribution,
reduced by that portion of the applicable contribution which is allocated
pursuant to Section 6.2.1 and is attributable to base compensation, shall be
allocated among all such participants' accounts in the ratio that each such
participant's base compensation for the plan year bears to the total base
compensation of all such participants for such year.
6.2.2.2.2.2 The integrated
contribution, reduced by that portion of the applicable contribution which is
allocated pursuant to Section 6.2.1 and is attributable to adjusted
compensation, shall be allocated among all such participants' accounts in the
ratio that each such participant's adjusted compensation for the plan year bears
to the total adjusted compensation of all such participants for such year.
6.2.2.2.2.3 The portion of the
applicable contribution in excess of the sum of the base contribution and the
integrated contribution, if any, shall be allocated among all such participants'
accounts in the ratio that the participant's covered compensation for the plan
year bears to the total covered compensation of all such participants for such
year.
6.2.2.3 FOUR-STEP INTEGRATED ALLOCATION. If elected
in the Adoption Certificate, among all such participants' accounts in the ratio
that the participant's covered compensation for the plan year bears to the total
covered compensation of all such participants for such year taking into account
any amounts allocated for the plan year under Section 6.2.1; provided, however,
that in no event shall the amount allocated to any participant's account under
this sentence exceed an amount equal to the product of a percentage elected in
the Adoption Certificate multiplied by such participant's covered compensation.
Thereafter:
6.2.2.3.1 For plan years beginning prior to
January 1, 1989:
6.2.2.3.1.1 First, any excess shall
be allocated among all such participants' accounts in the ratio that the
participant's adjusted compensation for such year bears to the total adjusted
compensation of all such participants for such year; provided, however, that in
no event shall the amount so allocated to any participant's account exceed an
amount equal to the product of the OASDI tax rate in effect on the first day of
the plan year (5.7% with respect to plan years beginning in 1987 and 6.06% with
respect to plan years beginning in 1988) multiplied by such participant's
adjusted compensation.
6.2.2.3.1.2 Second, any further
excess shall be allocated among all such participants' accounts in the ratio
that the participant's covered compensation for the plan year bears to the total
covered compensation of all such participants for such year taking into account
any amounts allocated for the plan year under Section 6.2.1 to the extent not
already taken into account under Section 6.2.2.3.
6.2.2.3.2 For plan years beginning after
December 31, 1988:
6.2.2.3.2.1 The base contribution,
reduced by that portion of the applicable contribution which is allocated
pursuant to Section 6.2.1 and/or Section 6.2.2.3 and is attributable to base
compensation, shall be allocated among all such participants' accounts in the
ratio that each such participant's base compensation for the plan year bears to
the total base compensation of all such participants for such year.
6.2.2.3.2.2 The integrated
contribution, reduced by that portion of the applicable contribution which is
allocated pursuant to Section 6.2.1 and/or Section 6.2.2.3 and is attributable
to adjusted compensation, shall be allocated among all such participants'
accounts in the ratio that each such participant's adjusted compensation for the
plan year bears to the total adjusted compensation of all such participants for
such year.
6.2.2.3.2.3 The portion of the
applicable contribution in excess of the sum of the base contribution and the
integrated contribution, if any, shall be allocated among all such participants'
accounts in the ratio that the participant's covered compensation for the plan
year bears to the total covered compensation of all such participants for such
year.
6.2.2.4 UNIT ALLOCATION. If elected in the
Adoption Certificate:
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6.2.2.4.1 For plan years beginning prior
to January 1, 1989, among all such participants' accounts in the ratio that
the participant's adjusted compensation for the plan year bears to the total
adjusted compensation of all such participants for such year; provided,
however, that in no event shall the amount so allocated to any participant's
account exceed an amount equal to the product of a percentage elected in the
Adoption Certificate which is not greater than the OASDI tax rate in effect
on the first day of the plan year (5.7% with respect to plan years beginning
in 1987 and 6.06% with respect to plan years beginning in 1988) multiplied by
such participant's adjusted compensation. Any excess shall be allocated among
all such participants' accounts in the ratio that each such participant's
units for the plan year bear to the total units of all such participants for
such year taking into account any amounts allocated for the plan year under
Section 6.2.1. For purposes hereof, units shall be credited to each
participant as follows:
6.2.2.4.1.1 The number of full
units for each full increment of covered compensation of such participant for
such plan year designated in the Adoption Certificate; and
6.2.2.4.1.2 The number of full
units for each full year of service with the Employer, any predecessor of the
Employer or any Affiliate up to a maximum of 40 units designated in the
Adoption Certificate. An "Affiliate" for purposes of this paragraph is an
Affiliate as otherwise defined in the Plan, except that the common ownership
test shall be based on a 50% test rather than an 80% test.
6.2.2.4.2 For plan years beginning after
December 31, 1988:
6.2.2.4.2.1 The base
contribution, reduced by that portion of the applicable contribution which is
allocated pursuant to Section 6.2.1 and is attributable to base compensation,
shall be allocated among all such participants' accounts in the ratio that
each such participant's base compensation for the plan year bears to the
total base compensation of all such participants for such year.
6.2.2.4.2.2 The integrated
contribution, reduced by that portion of the applicable contribution which is
allocated pursuant to Section 6.2.1 and is attributable to adjusted
compensation, shall be allocated among all such participants' accounts in the
ratio that each such participant's adjusted compensation for the plan year
bears to the total adjusted compensation of all such participants for such
year.
6.2.2.4.2.3 Any excess remaining
after allocation of the base contribution and the integrated contribution
under Sections 6.2.2.4.2.1 and 6.2.2.4.2.2, respectively, shall be allocated
among all such participants' accounts in the ratio that each such
participant's units for the plan year bear to the total units of all such
participants for such year. For purposes hereof, units shall be credited to
each participant in accordance with the provisions of Sections 6.2.2.4.1.1
and 6.2.2.4.1.2.
6.2.3 EFFECT OF SECTION 410(b) COVERAGE REQUIREMENTS. For
any plan year beginning after December 31, 1989, in which the Plan fails to
meet one of the minimum coverage tests under Code Section 410(b), the
following steps shall be taken:
6.2.3.1 The Employer's Non-401(k) Contributions
and forfeitures otherwise allocated under Section 6.2.2 shall be allocated to
the account of each participant who, if elected in the Adoption Certificate,
is employed on the last day of the plan year, or terminated employment during
such plan year on account of death, disability, early retirement (if the
Adoption Certificate for this Plan provides for early retirement), or
retirement at or after the normal retirement date in accordance with the
formula set forth in Section 6.2.2.1, 6.2.2.2, 6.2.2.3 or 6.2.2.4, whichever
is selected in the Adoption Certificate.
6.2.3.2 If, after application of Section 6.2.3.1,
the Plan still fails to meet one of the minimum coverage tests under Code
Section 410(b), the Employer's Non-401(k) Contributions and forfeitures shall
be allocated to each participant who (i) completes more than 500 hours of
service during the plan year, (ii) is employed on the last day of the plan
year, or (iii) terminated employment during such plan year on account of
death, disability, early retirement (if the Adoption Certificate for this
Plan provides for early retirement), or retirement at or after the normal
retirement date in accordance with the formula set forth in Section 6.2.2.1,
6.2.2.2, 6.2.2.3 or 6.2.2.4, whichever is selected in the Adoption
Certificate.
6.2.3.3 If allocations have been completed
pursuant to Section 6.2.2, such additional allocation as may be required to
be allocated under either Section 6.2.3.1 or Section 6.2.3.2 may be made in
an appropriate manner determined by the Employer, including but not limited
to the application of forfeitures, income of the fund and/or the contribution
of an additional amount necessary to make such allocation.
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6.3 EMPLOYER'S CASH OPTION CONTRIBUTION. The Employer's Cash
Option Contribution shall be allocated to the 401(k) Contribution Account of
each participant employed by such Employer in the same manner as set forth
under Section 6.2.2.1.
6.4 SALARY DEFERRAL CONTRIBUTIONS. Salary Deferral Contributions
for the plan year (increased by any earnings or increments thereon and
decreased by any losses with respect thereto while such contributions are
held in a segregated fund or funds) shall be credited to the participant's
401(k) Contribution Account as of the date on which such contribution is made
to the Fund but not commingled for investment until a subsequent valuation
date selected by the designated Employer which is not later than the next
annual valuation date.
6.5 EMPLOYER'S 401(k) REMEDIAL CONTRIBUTION. The Employer's 401(k)
Remedial Contribution shall be allocated to the 401(k) Contribution Accounts
of all participants employed by such Employer other than highly compensated
employees who received an allocation of the Employer's Cash Option
Contribution for the plan year or on whose behalf the Employer made Salary
Deferral Contributions to the Plan for the plan year in the ratio that each
such participant's Cash Option Contribution allocation and Salary Deferral
Contributions for the year bear to the Cash Option Contribution allocations
and Salary Deferral Contributions for all such participants.
6.6 EMPLOYER'S MATCHING CONTRIBUTION. The Employer's Matching
Contribution for each participant employed by such Employer for the plan
year, as determined under Section 4.5, shall be allocated as of the last day
of such plan year to the participant's Matching Contribution Account.
6.7 CODE SECTION 415 LIMITATIONS ON ALLOCATION OF CONTRIBUTIONS AND
FORFEITURES. No contributions or forfeitures shall be allocated to a
participant's account under the Plan for any limitation year either in excess
of an amount which, when expressed as an annual addition to the participant's
account, is equal to the lesser of (i) the greater of $30,000 and 25% of the
dollar limitation applicable to defined benefit plans in effect under Code
Section 415(b)(1)(A) for the limitation year, and (ii) 25% of the
participant's compensation for the limitation year, or in excess of an amount
which would cause the sum of the defined benefit and defined contribution
fractions described below to equal 1.0. For purposes hereof, the limitation
year shall be considered to be the plan year and the participant's
compensation shall be compensation as defined in Section 2.6.10, but
including compensation (as so defined but without regard to the requirement
that it be paid or made available by the Employer) from all Affiliates. This
section shall be implemented as follows:
6.7.1 GENERAL RULE. "Annual addition" shall mean the sum
for any limitation year of the following amounts as determined on an
aggregate basis for this Plan and each other defined contribution plan of the
Employer or any Affiliates in which the participant participates:
6.7.1.1 Employer contributions;
6.7.1.2 Such participant's employee
contributions, excluding from such employee contributions (i) any rollover or
transfer contributions and (ii) any deductible employee contributions within
the meaning of Code Section 72(o)(5) made for a taxable year of the
participant beginning before January 1, 1987. Employee contributions shall be
considered to be made for a plan year if such contributions are actually made
during the plan year or within 30 days after the close of such plan year;
6.7.1.3 Forfeitures; and
6.7.1.4 Amounts described in Code Sections 415(l)(1)
and 419A(d)(2); provided, however, that the limitation described in clause (ii)
of Section 6.7 shall not apply with respect to such amounts.
The annual addition for any limitation year beginning
before January 1, 1987, shall not be recomputed to treat all employee
contributions as part of the annual addition for any such year.
6.7.2 MULTIPLE DEFINED CONTRIBUTION PLANS. In the event
that the annual additions which would otherwise be made to the participant's
accounts under all defined contribution plans of the Employer and Affiliates
for any limitation year exceed the limitations set forth herein, the excess
annual addition shall be attributable first to this Plan and the Employer
shall take such steps with respect to this Plan as may be required so that no
excess annual addition is made.
6.7.3 DEFINED BENEFIT AND DEFINED CONTRIBUTION PLANS. In
the event a participant is or has been a participant under any defined
benefit plan(s) maintained by the Employer or an Affiliate, then the sum of
such participant's
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defined benefit plan fraction and defined contribution plan fraction, as
determined pursuant to Code Section 415 (as modified by Code Section 416(h)
to the extent applicable) and the regulations promulgated thereunder, for any
limitation year may not exceed 1.0.
6.7.3.1 DEFINED BENEFIT PLAN FRACTION. The
defined benefit plan fraction for any limitation year is a fraction, the
numerator of which is the sum of the projected annual benefits of the
participant under all such defined benefit plans determined as of the last
day of such limitation year and the denominator of which is the lesser of:
6.7.3.1.1 The product of 1.25 (reduced
to 1.0 for each plan year that the plan is a super top-heavy plan as herein
defined) multiplied by the greatest of (i) the dollar limitation in effect
under Code Section 415(b)(1)(A) for such limitation year, (ii) in the case of
an individual who was a participant prior to January 1, 1983, in one or more
such defined benefit plans which were in existence on July 1, 1982 (or, in
the case of a master or prototype plan with an opinion letter issued before
January 1, 1983, which was adopted on or before September 30, 1983), and
which individually and in the aggregate satisfied the requirements of Code
Section 415 as in effect for all limitation years beginning before January 1,
1983, such participant's accrued benefit as of the later of September 30,
1983, and the close of the last limitation year beginning before January 1,
1983, when expressed as an annual benefit within the meaning of Code
Section 415(b)(2) (but without regard to any change in the terms and
conditions of the plan which occurred after July 1, 1982), and (iii) in the
case of an individual who was a participant as of the first day of the first
limitation year beginning after December 31, 1986, in one or more such
defined benefit plans which were in existence on May 6, 1986, and which
individually and in the aggregate satisfied the requirements of Code
Section 415 as in effect for all limitation years beginning before January 1,
1987, such participant's accrued benefit as of the close of the last
limitation year beginning before January 1, 1987, when expressed as an annual
benefit within the meaning of Code Section 415(b)(2) (but without regard to
any change in the terms and conditions of the plan occurring after May 5,
1986); and
6.7.3.1.2 The product of 1.4 multiplied
by the amount which may be taken into account under Code Section 415(b)(1)(B)
with respect to such participant for such limitation year.
For purposes hereof, a defined benefit plan is any
plan which is not a defined contribution plan.
6.7.3.2 DEFINED CONTRIBUTION PLAN FRACTION. The
defined contribution plan fraction for any limitation year is a fraction, the
numerator of which is the sum of the annual additions to the participant's
account as of the last day of the plan year and the denominator of which is
the sum of the lesser of (i) and (ii) for such limitation year and for each
prior year of service with the Employer or an Affiliate (regardless of
whether any such defined contribution plan was in existence during such prior
years of service), where (i) is the product of 1.25 (reduced to 1.0 for each
plan year that the plan is a super top-heavy plan as herein defined)
multiplied by the dollar limitation in effect under Code Section 415(c)(1)(A)
for such limitation year (determined without regard to Code Section 415(c)(6)),
and (ii) is the product of 1.4 multiplied by the amount which may be taken
into account under Code Section 415(c)(1)(B) with respect to such participant
under the plan for such limitation year. The Plan Administrator may, in
calculating the defined contribution plan fraction, elect to apply the
transitional rule provided in Code Section 415(e)(6). In addition, if this
Plan and all other pension, profit sharing or stock bonus plan(s) qualified
under Code Section 401 and maintained by the Employer or an Affiliate
satisfied the requirements of Code Section 415 for the last limitation year
beginning before January 1, 1987, an amount shall be subtracted from the
numerator of the defined contribution plan fraction (not exceeding such
numerator) so that the sum of the defined benefit plan fraction and the
defined contribution plan fraction does not exceed 1.0 for such limitation
year (determined as if the rules set forth under Section 6.7 were in effect
for such year). Such amount shall be equal to the product of (i) the sum of
the defined contribution fraction plus the defined benefit fraction as of the
last day of the last limitation year ending on or after December 31, 1986,
minus one, multiplied by (ii) the denominator of the defined contribution
fraction as of such date. For purposes hereof, a defined contribution plan is
a plan which provides for an individual account for each participant and for
benefits based solely upon the amount contributed to the participant's
account and any income, expenses, gains, losses and forfeitures which may be
allocated to such participant's account.
6.7.3.3 ADJUSTMENTS. In the event that the sum
of a participant's defined contribution plan fraction and defined benefit
plan fraction would otherwise exceed 1.0 for any limitation year, then the
benefit which would otherwise be projected or accrued with respect to such
participant under any applicable defined benefit plan shall be adjusted or
considered not to have accrued, as the case may be, and will be limited to
the extent necessary so that the sum does not exceed 1.0. If, after all such
adjustments, the sum of the fractions would still exceed 1.0, then the annual
additions which would otherwise be made under all applicable defined
contribution plans for such participant shall be adjusted as herein provided,
to the extent necessary, so that the sum of such fractions does not exceed
1.0.
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6.7.4 CHANGE OF LIMITATION YEAR. In the event that the
limitation year is changed, as the result of a change in the plan year or
otherwise, the new limitation year must begin on a day within the current
limitation year during which such change becomes effective. The limitations
under Section 6.7 shall be separately applied to the short limitation year
resulting from such change which begins on the first day of the current
limitation year and ends on the day before the day the new limitation year
begins. The dollar limitation under clause (i) of the first sentence of
Section 6.7 shall be determined for such short limitation year by multiplying
(a) such dollar limitation in effect for the calendar year during which such
short limitation year ends, by (b) a fraction, the numerator of which is the
number of months (and fractions thereof) in such short limitation year and
the denominator of which is 12.
6.8 DUTIES OF DESIGNATED EMPLOYER REGARDING LIMITATIONS. If the
allocation which would otherwise be made to the accounts of a participant
exceeds the limitations of Code Section 415 as set forth hereinabove (such
excess hereinafter referred to as an "excess amount"), the designated
Employer shall take as many of the following steps as necessary in the order
listed:
6.8.1 RETURN OF NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS.
Return to the participant that portion of such participant's Nondeductible
Employee Contributions which contributes to the excess amount and, to the
extent income and gains have been allocated thereon, such income and gains.
6.8.2 RETURN OF SALARY DEFERRAL CONTRIBUTIONS. To the
extent permitted by applicable provisions of the Code or the regulations,
revenue rulings, notices or other documents of general applicability
promulgated thereunder, that portion of the Salary Deferral Contributions
made on behalf of the participant for the plan year which contributes to the
excess shall be returned to the participant, together with income or gains
allocated thereon, after deduction of income and any employee taxes with
respect thereto.
6.8.3 DISPOSITION OF EMPLOYER CONTRIBUTIONS AND
FORFEITURES. Thereafter, if necessary after considering any actions taken in
connection with other qualified plans maintained by the Employer or an
Affiliate, Employer contributions (other than Salary Deferral Contributions)
and forfeitures in the remaining excess amount shall be treated as follows:
6.8.3.1 RETENTION IN PARTICIPANT ACCOUNT OR
CREATION OF SUSPENSE ACCOUNT. If the excess amount would result from the
allocation of forfeitures, a reasonable error in estimating the participant's
compensation, a reasonable error in determining the amount of elective
contributions (as defined in Section 4.3.1.1) that may be made with respect
to any participant under the limits of Code Section 415 or from such other
circumstances as the Commissioner of Internal Revenue may permit, the excess
amount will be held in the participant's account in the Plan and used to
reduce the amount of Employer contributions and forfeitures otherwise
allocable to such participant for the next plan year and, if necessary,
succeeding plan years; provided, however, that if for any such succeeding
plan year the participant is not entitled to share in an allocation of the
Employer's contribution and there is any remaining excess amount which has
not been used to reduce the Employer's contributions and forfeitures, then
any remaining excess amount shall be held unallocated in a suspense account
and allocated and reallocated in the succeeding plan year or years to the
accounts of all of the remaining participants employed by the Employer in the
same manner and subject to the same restrictions as Employer contributions.
The Employer's contribution for such a succeeding plan year shall be reduced
by the excess amount which is allocated from the suspense account to Plan
participants for such year, and all amounts in the suspense account must be
allocated to participants' accounts before any Employer contributions which
would otherwise constitute annual additions may be made to such accounts. If
a suspense account is created hereunder, amounts held in such account shall
not be credited with investment earnings or gains nor charged with investment
losses. Upon termination of the Plan, amounts credited to a suspense account
created hereunder which have not been allocated and reallocated to
participants' accounts as of the date of Plan termination shall be returned
to the Employer.
6.8.3.2 REALLOCATION TO REMAINING PARTICIPANTS.
In the event that the provisions of Section 6.8.3.1 hereof are not
applicable, the excess amount shall be allocated and reallocated to the
accounts of the remaining participants employed by the Employer in the same
manner and subject to the same restrictions as Employer contributions. Any
remaining excess amounts shall be held in a suspense account and allocated in
accordance with the provisions of Section 6.8.3.1 hereof relating to suspense
accounts.
6.8.3.3 RETURN TO EMPLOYER. Notwithstanding the
provisions of Sections 6.8.3.1 and 6.8.3.2 hereof, any excess amounts subject
to Section 6.8.3 which are not attributable to forfeitures may be returned to
the Employer upon its demand pursuant to other provisions of this Plan
relating to the return of the Employer's contribution in certain
circumstances, to the extent such provisions are deemed applicable.
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ARTICLE 7.
BENEFITS
7.1 VESTING, VALUATION AND DISTRIBUTION OF A PARTICIPANT'S NON-401(K)
CONTRIBUTION ACCOUNT AND MATCHING CONTRIBUTION ACCOUNT.
7.1.1 RETIREMENT, DISABILITY AND DEATH.
7.1.1.1 VESTING. In the event of the occurrence
of one or more of the following events of maturity:
7.1.1.1.1 A participant's attainment of
the normal retirement date prior to such participant's termination of
employment;
7.1.1.1.2 If an early retirement date
has been elected in the Adoption Certificate, a participant's termination of
employment on or after attainment of such early retirement date;
7.1.1.1.3 A participant's termination of
employment on account of disability; or
7.1.1.1.4 A participant's death prior to
such participant's termination of employment for any other reason; such
participant's Non-401(k) Contribution Account and Matching Contribution
Account shall be fully vested and nonforfeitable.
7.1.1.2 DISTRIBUTION TO THE PARTICIPANT. If such
participant's employment terminates upon or after an event described in
Sections 7.1.1.1.1 through 7.1.1.1.3, distribution of such participant's
beneficial interest in his or her Non-401(k) Contribution Account and
Matching Contribution Account shall be made or commence in a form determined
under and complying with Section 7.5 on, or as soon as administratively
feasible after, the valuation date coinciding with or immediately following
the date of the occurrence of the applicable event described therein;
provided, however, that except as otherwise set forth in this Section 7.1.1.2,
such distribution shall be made or commence prior to the later of attainment
of age 62 and the normal retirement date only if such participant files a
written election with the designated Employer which is made (i) within 90 days
before the annuity starting date, (ii) after a notice has been delivered to
the participant, during the period beginning 90 days prior to the annuity
starting date and ending 30 days prior thereto, generally describing the
material features and explaining the relative values of the forms of benefit
under the Plan, and informing the participant of his or her right to defer
distribution, all in accordance with Code Section 411(a)(11) and the
regulations promulgated thereunder, and (iii) in the event that distribution
is to be made to a participant to whom the provisions of Section 7.5.8 apply,
in any form other than a qualified joint and survivor annuity, with the
written consent of the participant's spouse; and, provided further, that in
the event the participant's beneficial interest does not, as of any valuation
date coinciding with or subsequent to such termination but prior to the
commencement of distribution under this Section 7.1.1.2 (and at the time of
any prior distribution did not), exceed $3,500, distribution of such
participant's beneficial interest shall be made in a lump sum on, or as soon
as administratively feasible after, such valuation date without regard to
whether such participant has made any such election; and, provided further,
that in the case of a participant whose Non-401(k) Contribution Account
and/or Matching Contribution Account have been segregated in whole or in part
pursuant to Section 12.4.3 or Section 12.4.4, distribution of such segregated
account shall be made or commence on, or as soon as administratively feasible
after, the date of the occurrence of the applicable event described in
Sections 7.1.1.1.1 through 7.1.1.1.3, provided that the remaining conditions
set forth in this Section 7.1.1.2 have been satisfied. In no event shall
distribution be made or commence later than the sixtieth day after the close
of the plan year in which the participant terminates employment upon or after
an event described in Sections 7.1.1.1.1 through 7.1.1.1.3 unless, in the
case of a participant whose beneficial interest exceeds (or at the time of
any prior distribution exceeded) $3,500, the participant elects otherwise. To
be effective, such election must be in writing, signed by the participant,
filed with the Plan Administrator at least 30 days prior to the date payment
is otherwise to commence, and in compliance with the restrictions with
respect to the maximum age at which and the maximum period over which payment
may be made set forth in Sections 7.5.2, 7.5.3 and 7.5.4. The participant
shall be considered to have so elected to defer the distribution of his or
her benefit without filing such written election if the participant's
employment terminates prior to the later of attainment of age 62 and the
normal retirement date and the participant does not make a valid election
under this Section 7.1.1.2 to receive his or her beneficial interest. If the
participant remains employed by an Employer after the normal retirement date,
distribution shall not commence in any case until the participant's
employment terminates, unless the participant elects in writing to have
distribution commence at an earlier date (in accordance with the provisions
hereof relating to distribution prior to the later of attainment of age 62
and the normal retirement date, if applicable), or the provisions of the Plan
require an earlier commencement.
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Under no circumstances shall distribution to the
participant of the participant's beneficial interest, either directly from
the Plan or under an annuity or insurance policy, be made or commence later
than the later of the required beginning date and the date elected under
Section 7.5.6.
7.1.2 TERMINATION OF PLAN.
7.1.2.1 VESTING. Upon the termination of the
Plan by the designated Employer (whether or not the Fund is terminated and
its assets distributed) or the complete discontinuance of contributions to
the Fund, a participant's Non-401(k) Contribution Account and Matching
Contribution Account shall be fully vested and nonforfeitable. If the Plan is
replaced by or otherwise continued in the form of another comparable plan
which is qualified under Code Section 401, then this Plan may not be
considered terminated for purposes of determining whether full vesting is
required.
7.1.2.2 DISTRIBUTION. In the event of termination
of the Plan by the designated Employer, distribution of each participant's
beneficial interest shall be made in the manner and at the time as the
document terminating the Plan shall provide, but in accordance with the rules
set forth in other provisions of this Article 7 with respect to the maximum
age at which and the maximum period over which payment may be made (and, in
the case of a Plan described in Section 7.4, the rules set forth in
Section 7.4.1).
7.1.3 PARTIAL TERMINATION OF PLAN. Upon a partial
termination of the Plan with respect to a participant, such participant's
Non-401(k) Contribution Account and Matching Contribution Account, determined
as of the date of partial termination, shall be fully vested and nonforfeitable.
Distribution of such participant's beneficial interest under the partially
terminated Plan shall be made at the time and in the manner as otherwise
provided for under the applicable provisions of the Plan.
7.1.4 VESTING IN ABSENCE OF EVENT OF MATURITY; DISTRIBUTION
UPON OTHER TERMINATIONS OF EMPLOYMENT.
7.1.4.1 VESTING. At any time prior to the
occurrence of any of the events of maturity requiring full vesting described
in the preceding provisions of Article 7, a participant's Non-401(k)
Contribution Account and Matching Contribution Account shall be vested in
such participant in accordance with one of the following schedules selected
in the Adoption Certificate with respect to each such account (either the
same or different schedules may be selected for each such account):
7.1.4.1.1 Immediate full vesting.
7.1.4.1.2 Vesting in accordance with a
schedule which complies with the provisions of Section 8.2 applicable to
top-heavy plans.
7.1.4.1.3 Vesting in accordance with the
following table or any other schedule which provides for at least as great a
percentage of interest vested for each year of service as provided in the
following table:
<TABLE>
<CAPTION>
Percentage of
Years of Service Interest Vested
---------------- ---------------
<S> <C>
Less than 3 years 0%
3 years but less than 4 years 20%
4 years but less than 5 years 40%
5 years but less than 6 years 60%
6 years but less than 7 years 80%
7 years or more 100%
</TABLE>
7.1.4.1.4 Vesting in accordance with the
following table (but only with respect to plan years beginning prior to
January 1, 1989):
44
<PAGE>
<TABLE>
<CAPTION>
Percentage of
Years of Service Interest Vested
---------------- ---------------
<S> <C>
Less than 4 years 0%
4 years but less than 5 years 40%
5 years but less than 6 years 45%
6 years but less than 7 years 50%
7 years but less than 8 years 60%
8 years but less than 9 years 70%
9 years but less than 10 years 80%
10 years but less than 11 years 90%
11 years or more 100%
</TABLE>
7.1.4.1.5 Vesting in accordance with any
other schedule adopted in the Adoption Certificate which provides for a 100%
vested interest after completion of not more than ten years of service
(reduced to five years of service for plan years beginning after December 31,
1988).
Provided, however, that if this is a restated
Plan, the participant's percentage of interest vested shall not be less than
it was as of the later of the effective date of the restatement and the date
the restated Plan is adopted.
7.1.4.2 DETERMINATION OF BENEFICIAL INTEREST AND
FORFEITURE OF UNVESTED PORTION OF ACCOUNTS. The value of the participant's
beneficial interest in such participant's Non-401(k) Contribution Account and
Matching Contribution Account shall be determined by multiplying the
participant's percentage vested interest in each such account by the full
value of each such account as of the valuation date coinciding with or
immediately preceding the date on which distribution is to be made, but no
later than the valuation date on which the participant has incurred five
consecutive one-year breaks in service. In the case of a participant whose
percentage of interest vested is less than 100%, the unvested portion of each
such account shall be forfeited as follows:
7.1.4.2.1 FIVE-YEAR RULE. Except as
otherwise provided in Section 7.1.4.2.2:
7.1.4.2.1.1 In the event that no
portion of the participant's Non-401(k) Contribution Account or Matching
Contribution Account, as the case may be, is distributed prior to the
valuation date on which the participant has incurred five consecutive
one-year breaks in service, the unvested portion of the participant's
Non-401(k) Contribution Account and/or Matching Contribution Account shall be
forfeited as of the annual valuation date coinciding with the date on which
the participant has incurred five consecutive one-year breaks in service and
as of which the participant is not employed by the Employer or an Affiliate
(hereinafter the "relevant time").
7.1.4.2.1.2 In the event that
any portion of the participant's vested Non-401(k) Contribution Account or
Matching Contribution Account, as the case may be, is distributed prior to
the valuation date on which the participant has incurred five consecutive
one-year breaks in service (including distributions authorized under the Plan
prior to a participant's termination of employment), the remaining portion of
such Non-401(k) Contribution Account or Matching Contribution Account shall
be held in a separate Non-401(k) Contribution Account or Matching Contribution
Account for the participant until the relevant time, when the unvested
portion of such separate Non-401(k) Contribution Account or Matching
Contribution Account shall be forfeited. At any time prior to the relevant
time, the participant's vested interest in such separate Non-401(k)
Contribution Account or Matching Contribution Account shall be determined by
the following formula:
Beneficial Interest = P[AB + (R x D)] - (R x D)
For purposes of this formula, the letters contained therein mean:
P - Percentage vested at the determination date
AB - Balance in such separate Non-401(k)
Contribution Account or Matching
Contribution Account at the determination
date
D - Amount of the distribution
45
<PAGE>
R - Ratio of the account balance at the
determination date to the balance in such
separate Non-401(k) Contribution Account or
Matching Contribution Account after
distribution
7.1.4.2.2 CASH-OUT RULE. If elected in
the Adoption Certificate, the provisions of this Section 7.1.4.2.2 shall
apply with respect to any participant who has no beneficial interest in his
or her accounts at the time of termination of employment or receives a
distribution of his or her entire beneficial interest on account of
termination of participation in the Plan prior to incurring five consecutive
one-year breaks in service. The unvested portion of any such participant's
Non-401(k) Contribution Account and Matching Contribution Account shall be
forfeited (i) in the case of a participant who has no beneficial interest in
his or her accounts, as of the date of termination of employment, or (ii) in
the case of a participant who receives a distribution of his or her entire
beneficial interest, as of the date of such distribution. With respect to a
participant whose unvested account balance was forfeited under clause (i) of
the preceding sentence, if such participant resumes employment with an
Employer or Affiliate before the date the participant incurs five consecutive
one-year breaks in service, upon such reemployment the unvested portion of
the participant's Non-401(k) Contribution Account and Matching Contribution
Account previously forfeited will be restored to such participant's
Non-401(k) Contribution Account and Matching Contribution Account,
respectively, without regard to subsequent gains or losses experienced by the
Fund. With respect to a participant whose unvested account balance was
forfeited under clause (ii) of the second sentence of this Section 7.1.4.2.2,
if such participant resumes employment with an Employer or Affiliate and pays
to the Fund the full amount of his or her distribution from the Non-401(k)
Contribution Account and/or the Matching Contribution Account, if any, on or
before the earlier of five years after the first date on which the
participant is subsequently reemployed by such Employer or Affiliate and the
date on which such participant incurs five consecutive one-year breaks in
service commencing after the date of such distribution, the unvested portion
of the participant's Non-401(k) Contribution Account and Matching
Contribution Account previously forfeited will be restored to such
participant's Non-401(k) Contribution Account and Matching Contribution
Account, respectively, without regard to subsequent gains or losses
experienced by the Fund. Such restorations shall be made in an appropriate
manner determined by the Employer that made the contribution which was
forfeited hereunder, including but not limited to the application of
forfeitures, income of the Fund and/or the Employer's Non-401(k) Contribution
for the plan year, if any, for such purpose, or the contribution of an
additional amount necessary to make such restoration.
7.1.4.3 SPECIAL RULE FOR MATCHING CONTRIBUTIONS.
Any Matching Contributions made with respect to that portion of a
participant's Salary Deferral Contributions which are treated as excess
401(k) contributions or as excess deferrals allocated to this Plan shall be
forfeited as of the annual valuation date for the plan year:
7.1.4.3.1 With respect to which any such
excess 401(k) contributions are made; and
7.1.4.3.2 During which the calendar year
with respect to which such excess deferrals are allocated to the Plan ended.
7.1.4.4 TREATMENT OF FORFEITURES. Any forfeitures
for any plan year under Section 7.1.4.2.1, Section 7.1.4.2.2 or Section 7.1.4.3
shall be treated as follows:
7.1.4.4.1 ALLOCATION WITH NON-401(k)
CONTRIBUTION. Except as otherwise provided in Section 7.1.4.4.2, such
forfeitures shall be allocated as of the annual valuation date for such plan
year, in accordance with the applicable provisions of Section 6.2, among the
Non-401(k) Contribution Accounts of the participants employed during such
plan year by the Employer whose contributions were allocated to the account
which is forfeited hereunder.
7.1.4.4.2 REDUCTION OF MATCHING
CONTRIBUTION. If elected in the Adoption Certificate, any such forfeitures
shall first be applied to reduce the Matching Contribution for the plan year
of the Employer whose contributions were allocated to the account which is
forfeited hereunder, and shall be allocated as of the applicable annual
valuation date among the Matching Contribution Accounts of the participants
employed during such plan year by such Employer who are entitled to share in
such Matching Contribution in accordance with the provisions of Section 6.6.
Any forfeitures remaining thereafter shall be allocated in accordance with
the provisions of Section 7.1.4.4.1.
7.1.4.5 DISTRIBUTION. Distribution of a
participant's beneficial interest shall be made or commence in a form
determined under and complying with Section 7.5 at such time as shall be
determined in accordance with whichever of the following is elected in the
Adoption Certificate:
7.1.4.5.1 At the same time and in the
same manner as provided in Section 7.1.1.2 following the participant's
attainment of the normal retirement date; provided, however, that the
participant may elect to have the distribution of such beneficial interest be
made or commence on, or as soon as administratively feasible after, the
valuation date coinciding with or immediately following the early retirement
date; or
46
<PAGE>
7.1.4.5.2 On, or as soon as
administratively feasible after, the valuation date coinciding with or
immediately following the participant's termination of employment; provided,
however, that except as otherwise set forth in Section 7.1.4.5, such
distribution shall be made or commence prior to the later of attainment of
age 62 and the normal retirement date only if such participant files a
written election with the designated Employer which is made (i) within 90 days
before the annuity starting date, (ii) after a notice has been delivered to
the participant, during the period beginning 90 days prior to the annuity
starting date and ending 30 days prior thereto, generally describing the
material features and explaining the relative values of the forms of benefit
under the Plan, and informing the participant of his or her right to defer
distribution, all in accordance with Code Section 411(a)(11) and the
regulations promulgated thereunder, and (iii) in the event that distribution
is to be made to a participant to whom the provisions of Section 7.5.8 apply,
in any form other than a qualified joint and survivor annuity, with the
written consent of the participant's spouse; and, provided further, that
distribution pursuant to this Section 7.1.4.5.2 shall be subject to and
conditioned upon satisfaction of such objective criteria not within the
discretion of the Employer, if any, which are set forth in the Adoption
Certificate; and, provided further, that distribution under this
Section 7.1.4.5.2 shall not be made or commence later than the date
determined in accordance with the provisions of Section 7.1.1.2 following the
participant's attainment of the normal retirement date; and, provided
further, that in the case of a participant whose Non-401(k) and/or Matching
Contribution Account have been segregated in whole or in part pursuant to
Section 12.4.3 or Section 12.4.4, distribution of such segregated account
shall be made or commence on, or as soon as administratively feasible after,
the date of the participant's termination of employment, provided that the
other conditions set forth in this Section 7.1.4.5.2 have been satisfied.
Notwithstanding the foregoing, in the event the
participant's beneficial interest does not, as of any valuation date
coinciding with or subsequent to termination of employment but prior to the
commencement of distribution under this Section 7.1.4.5 (and at the time of
any prior distribution did not), exceed $3,500, distribution of such
participant's beneficial interest shall be made in a lump sum on, or as soon
as administratively feasible after, such valuation date without regard to
whether such participant has made any such election.
7.2 NONDEDUCTIBLE EMPLOYEE CONTRIBUTION ACCOUNT.
7.2.1 VESTING AND DISTRIBUTION. A participant's
Nondeductible Employee Contribution Account shall be fully vested at all
times. Subject to the provisions of Section 7.2.2 hereof, distribution of
such participant's beneficial interest in his or her Nondeductible Employee
Contribution Account shall be made at the same time and in the same manner as
such participant's Non-401(k) Contribution Account and Matching Contribution
Account.
7.2.2 WITHDRAWALS. Notwithstanding any other provision of
the Plan to the contrary, a participant who has made Nondeductible Employee
Contributions to the Fund shall be entitled to make withdrawals from his or
her Nondeductible Employee Contribution Account as of any Plan valuation date
or, if the withdrawal is from a segregated account, any other date. Such
withdrawals shall be made only upon written request to the designated
Employer which is given by the participant at least 30 days prior to such
date and which is in compliance with the requirements for distributions prior
to the later of attainment of age 62 and the normal retirement date set forth
in Section 7.1.1.2, if applicable. Further, in the case of a participant to
whom the provisions of Section 7.5.8 apply, such withdrawals shall at all
times be made in the form of a qualified joint and survivor annuity unless
the participant's written request complies with the spousal consent
requirements of Section 7.5.8.2. Such withdrawals shall be paid over to the
participant as soon after the valuation date or other applicable date as the
Funding Agent considers administratively feasible. The amount so withdrawn
shall be the amount specified by the participant in the aforementioned
written notice. In the event of such a withdrawal, the participant will not
be eligible to make Nondeductible Employee Contributions until the plan year
following the plan year during which such withdrawal is made. In the event
that the participant's Nondeductible Employee Contribution Account has been
subdivided into Subaccount I and Subaccount II, withdrawals under this
Section 7.2.2 shall be made first from the participant's Subaccount I, but
not in excess of the amount of Nondeductible Employee Contributions credited
thereto on December 31, 1986, then from the participant's Subaccount II so
long as any amount is credited thereto, and finally from any amount remaining
in the participant's Subaccount I.
7.3 VESTING AND DISTRIBUTION OF 401(K) CONTRIBUTION ACCOUNT,
ROLLOVER/TRANSFER ACCOUNT AND INSURANCE PROCEEDS ACCOUNT. A participant's
401(k) Contribution Account, Rollover/Transfer Account and Insurance Proceeds
Account shall be fully vested at all times. Subject to the provisions of
Section 7.4, distribution of such participant's beneficial interest in such
accounts shall be made at the same time and in the same manner as such
participant's Non-401(k) Contribution Account and Matching Contribution
Account. Notwithstanding the foregoing, to the extent permitted under
applicable law and regulations, a participant shall be entitled to make
withdrawals from his or her Rollover/Transfer Account (other than any portion
thereof attributable to elective contributions, qualified nonelective
contributions and/or qualified matching contributions, within the meaning of
Code Section 401(k) and the regulations promulgated thereunder, transferred
from another plan) in the manner, and in accordance with the procedures,
described in Section 7.2.2.
47
<PAGE>
7.4 SPECIAL RULES FOR PLANS WITH 401(K) CONTRIBUTION ACCOUNTS.
Notwithstanding any other provisions hereof, in the event the Plan has
amounts credited to any participant's 401(k) Contribution Account (or to any
participant's Rollover/Transfer Account consisting of elective contributions,
qualified nonelective contributions and/or qualified matching contributions,
within the meaning of Code Section 401(k) and the regulations promulgated
thereunder, transferred from another plan), then effective as of the later of
January 1, 1985, and the effective date of this Plan, the participant's
beneficial interest in any such account (and the participant's Non-401(k)
Contribution Account and/or Matching Contribution Account if such accounts
are applicable contribution accounts under Section 4.4.4.4.2) may be
distributed under the following circumstances:
7.4.1 TERMINATION OF PLAN. With respect to distributions
after October 16, 1987, upon termination of the Plan without the
establishment or maintenance of another defined contribution plan (other than
an employee stock ownership plan as defined in Code Section 4975(e) or a
simplified employee pension as defined in Code Section 408(k)); provided,
however, that if fewer than 2% of the employees who are eligible under this
Plan at the time of its termination are or were eligible under another
defined contribution plan at any time during the 24-month period beginning
12 months before the time of the termination, the other defined contribution
plan is not a successor plan; and, provided further, that a plan is a
successor plan only if it exists at the time of such termination or within
the period ending 12 months after the distribution of all assets.
7.4.2 SALE OF ASSETS. Upon the disposition by an Employer
which is a corporation of substantially all the assets (within the meaning of
Code Section 409(d)(2)) used by such Employer in a trade or business in which
the participant is employed to a corporation which is not an Affiliate;
provided, however, that this Section 7.4.2 shall apply only with respect to a
participant who continues employment with the corporation acquiring such
assets, and only in the event that the Employer continues to maintain this
Plan, the purchaser does not adopt or otherwise maintain this Plan after the
disposition and none of the assets or liabilities of this Plan are merged
with, consolidated with or transferred to a plan maintained by the purchaser.
For purposes of this Section 7.4.2, a sale of 85% or more of the assets used
in a trade or business shall be deemed a sale of substantially all the assets
used in such trade or business.
7.4.3 SALE OF SUBSIDIARY. Upon the disposition by an
Employer which is a corporation of such Employer's interest in a subsidiary
(within the meaning of Code Section 409(d)(3)) by which the participant is
employed to an entity which is not an Affiliate and does not maintain this
Plan; provided, however, that this Section 7.4.3 shall apply only with
respect to a participant who continues employment with such subsidiary, and
only in the event that the Employer continues to maintain this Plan, the
purchaser does not adopt or otherwise maintain this Plan after the
disposition and none of the assets or liabilities of this Plan are merged
with, consolidated with or transferred to a plan maintained by the purchaser.
Distributions under this Section 7.4 shall be made as soon as
administratively feasible after the occurrence of an event described in
Sections 7.4.1 through 7.4.3 and, with respect to distributions after March 31,
1988, such distributions shall be made in the form of a lump sum within the
meaning of Code Section 402(e)(4) (without regard to clauses (i), (ii), (iii)
and (iv) of subparagraph (A), subparagraph (B) or subparagraph (H) thereof).
7.5 METHODS OF DISTRIBUTION OF ACCOUNTS TO PARTICIPANT. Except as
otherwise provided in Section 7.5.8, distribution of a participant's
beneficial interest shall be made to the participant or to the trustee or
custodian of an employees' trust qualified under Code Section 401(a), as the
case may be, in cash or in kind, under the method of settlement set forth in
Section 7.5.1 or, if elected in the Adoption Certificate, one of the methods
of settlement set forth in Sections 7.5.2. and 7.5.3, as selected by the
participant; provided, however, that if this Plan is a restatement of a prior
plan instrument under which participants could elect to receive distributions
in the form of installments or an insurance policy, participants who had
amounts credited to their accounts as of the later of the effective date of
such restatement and the date this restated Plan is adopted shall be entitled
to select one of the methods of settlement set forth in Sections 7.5.2 and
7.5.3 without regard to whether such option has been elected in the Adoption
Certificate; and, provided further, that in the event a participant's
beneficial interest does not, as of the valuation date coinciding with or
immediately preceding the date on which distribution hereunder is to be made
or commence (and at the time of any prior distribution did not), exceed
$3,500, such beneficial interest shall be distributed in a lump sum pursuant
to Section 7.5.1 without regard to any other provisions of the Plan or any
election by the participant.
7.5.1 LUMP SUM. By payment in a lump sum. Payment shall
be made to the participant unless the participant files a written direction
with the designated Employer to transfer all or part of the participant's
beneficial interest directly to the trustee or custodian of an employees'
trust which is qualified under Code Section 401(a) and which permits such
direct transfer.
7.5.2 INSTALLMENTS. By payment to the participant in
installments over a period beginning not later than the required beginning
date and not extending beyond the life expectancy of the participant or the
joint life and last survivor expectancy of such participant and such
participant's designated beneficiary determined on the basis of the
participant's attained age (and the designated beneficiary's attained age) as
of the participant's birthday (and the designated beneficiary's birthday) in
48
<PAGE>
the calendar year immediately preceding the participant's required beginning
date (the "first distribution year"); provided, however, that the life
expectancy of the participant and of his or her spouse (if the spouse is the
designated beneficiary) shall be redetermined annually, unless otherwise
irrevocably elected by the participant no later than the required beginning
date; and, provided further, that the joint life and last survivor expectancy
of the participant and a designated beneficiary other than the participant's
spouse shall be determined for each calendar year after the first
distribution year in accordance with regulations prescribed by the Secretary
of the Treasury under Code Section 401(a)(9). Life expectancy and joint life
and last survivor expectancy shall be determined by use of the expected
return multiples in Tables V and VI of Treas. Reg. Sections 1.72-9. The
amount which shall be distributed under this Section 7.5.2 for the first
distribution year and each subsequent calendar year shall not be less than an
amount equal to the quotient obtained by dividing the balance in the
participant's accounts (including any unvested portion thereof) as of the
last valuation date in the calendar year immediately preceding the year for
which the distribution is to be made, adjusted as provided in regulations
prescribed by the Secretary of the Treasury under Code Section 401(a)(9), by
the life expectancy of the participant or the joint life and last survivor
expectancy of the participant and his or her designated beneficiary, as the
case may be, as determined pursuant to the preceding provisions of this
Section 7.5.2; provided, however, that if the vested portion of the
participant's account balance is less than the amount to be distributed
hereunder for any year, only such vested portion, if any, shall be
distributed for such year; and, provided further, that for any year in which
an unvested portion of the participant's account balance becomes vested, an
additional amount shall be distributed for such year which is equal to the
lesser of (i) the participant's vested account balance, and (ii) the sum of
the amounts not distributed in prior years because the participant's vested
account balance was less than the minimum required distribution. The amount
to be distributed for the first distribution year shall be distributed not
later than the required beginning date, and the amount to be distributed for
each subsequent calendar year shall be distributed not later than December 31
of such year.
7.5.3 INSURANCE POLICY. By distribution of an insurance
policy purchased from a legal reserve life insurance company selected by the
designated Employer which provides for payment in installments over a period
beginning not later than the required beginning date and not extending beyond
the life expectancy of the participant or the joint life and last survivor
expectancy of such participant and such participant's designated beneficiary.
Life expectancy and joint life and last survivor expectancy shall be
determined as provided in Section 7.5.2; provided, however, that if payment
under such an insurance policy irrevocably (except for acceleration)
commences prior to the participant's required beginning date, the life
expectancy of the participant or the joint life and last survivor expectancy
of such participant and such participant's designated beneficiary shall be
determined on the basis of the participant's attained age (and the designated
beneficiary's attained age) as of the participant's birthday (and the
designated beneficiary's birthday) in the calendar year in which such payment
commences; and, provided further, that for purposes of this Section 7.5.3,
the life expectancy of the participant and his or her spouse shall not be
redetermined. Once payment under any such insurance policy has commenced, the
period certain thereunder may not be lengthened even if such period certain
is shorter than the maximum permitted under this Section 7.5.3. The annual
amount to be paid under an insurance policy for the first distribution year
shall be paid not later than the required beginning date, and the annual
amount for each subsequent calendar year shall be paid not later than
December 31 of such year.
7.5.4 INCIDENTAL DEATH BENEFIT REQUIREMENT. In addition
to the requirements of Section 7.5.2 or 7.5.3, as the case may be, payments
thereunder shall comply with the incidental death benefit requirements of
Code Section 401(a). For calendar years beginning prior to January 1, 1989,
distributions thereunder shall be in compliance with this Section 7.5.4 if
such distributions satisfy the requirements of Section 7.5.4.1, Section
7.5.4.2 or Section 7.5.4.3. For calendar years beginning after December 31,
1988, distributions thereunder must satisfy the requirements of Section 7.5.4.3.
7.5.4.1 50% PRESENT VALUE TEST. The present
value of payments to be made to the participant must be more than 50% of the
present value of the total payments to be made to the participant and the
participant's beneficiaries, all as determined as of the later of (i) such
participant's normal retirement date, and (ii) the earlier of the date of the
participant's termination of employment and his or her required beginning
date.
7.5.4.2 EQUAL INSTALLMENTS. Payment must be made
over a period not exceeding the normal joint life and last survivor
expectancy of the participant and the participant's spouse, in the form of
annual or more frequent installments, with the value of each periodic payment
to be made after the expiration of the participant's life expectancy, not
greater than the value of each periodic payment to be made during such
participant's life expectancy. The payment option contained in this paragraph
shall be available only if payment commences on or before the later of the
normal retirement date and the participant's termination of employment. If
payment is to commence at a later date, it must comply with the option
described in Section 7.5.4.1 or Section 7.5.4.3.
7.5.4.3 MINIMUM DISTRIBUTION INCIDENTAL BENEFIT
REQUIREMENT. Payment must be made in accordance with the following:
49
<PAGE>
7.5.4.3.1 In the case of distributions
pursuant to Section 7.5.2, the amount to be distributed for the first
distribution year and each subsequent calendar year may not be less than the
amount determined by dividing (i) the participant's account balance as of the
last valuation date in the calendar year immediately preceding the year for
which the distribution is to be made, adjusted as provided in regulations
prescribed by the Secretary of the Treasury under Code Section 401(a)(9), by
(ii) the applicable divisor set forth in such regulations; or
7.5.4.3.2 In the case of payments under
an insurance policy described in Section 7.5.3, the period certain thereunder
may not exceed the applicable period determined under regulations prescribed
by the Secretary of the Treasury under Code Section 401(a)(9) (the "maximum
period certain"). Such determination shall be made using the participant's
attained age as of the participant's birthday in the calendar year in which
payments commence; provided, however, that if payments commence after the
first distribution year but on or before the participant's required beginning
date, such determination shall be made using the participant's attained age
as of the participant's birthday in the first distribution year; and,
provided further, that if payments commence prior to the first distribution
year, the insurance policy must provide that the remaining period certain
thereunder from and after the beginning of the first distribution year may
not exceed the maximum period certain determined using the participant's
attained age as of the participant's birthday in the first distribution year.
7.5.5 REQUIRED BEGINNING DATE. The "required beginning
date" means:
7.5.5.1 With respect to participants who attain
age 70-1/2 prior to January 1, 1988:
7.5.5.1.1 In the case of a participant
who is a 5% owner (within the meaning of Section 2.5.6.3, but without regard
to whether the Plan is top-heavy) at any time during the period of five
consecutive plan years ending in the calendar year in which the participant
attains age 70-1/2, the April 1 of the calendar year following the calendar
year in which the participant attains age 70-1/2.
7.5.5.1.2 In the case of any other
participant, the April 1 of the calendar year following the calendar year in
which the later of the following events occurs:
7.5.5.1.2.1 The participant's
attainment of age 70-1/2; and
7.5.5.1.2.2 The earlier of (i) the
date of the participant's retirement, and (ii) the end of a plan year in which
the participant becomes a 5% owner.
7.5.5.2 With respect to participants who attain
age 70-1/2 after December 31, 1987, the April 1 of the calendar year
following the calendar year in which the participant attains age 70-1/2.
7.5.6 SECTION 242(b) ELECTION HONORED. Notwithstanding
anything herein to the contrary, distribution shall be made in accordance
with an election made under this Plan prior to January 1, 1984, by a
participant who had accrued a benefit under the Plan or a predecessor plan as
of December 31, 1983, pursuant to Section 242(b) of the Tax Equity and Fiscal
Responsibility Act of 1982, of a form of distribution which does not
otherwise comply with the provisions under Section 7.5 but which provides for
installment payments over a period certain and which meets the rules set
forth in either Section 7.5.4.1 or Section 7.5.4.2, unless such election is
revoked by the participant. Any such election must be in writing, must have
been filed with the designated Employer or the Employer by the date required
by law, and must specify the date upon which payment is to commence, the form
of payment, the period over which payments are to be made, and the
participant's beneficiaries in order of priority. The designated Employer
shall be entitled to accelerate or otherwise modify the form, time or method
of payment so elected to the extent necessary to preserve the tax
qualification of the Plan. In addition, if the election is revoked by the
participant, the designated Employer shall distribute benefits after such
revocation in accordance with the restrictions and requirements set forth
under Section 7.5 which are applicable absent such an election and, to the
extent necessary, shall provide a make-up distribution after such revocation
of those amounts which should have been distributed, absent such an election,
prior to the revocation. Any make-up distribution hereunder shall be made by
the end of the calendar year following the calendar year in which the
revocation occurs. No such election shall be applicable with respect to
amounts held in a participant's account which are attributable to a plan
which provided contributions or benefits for any employees who were employees
within the meaning of Code Section 401(c)(1). In addition, no such election
shall be applicable with respect to amounts held in a participant's
Rollover/Transfer Account; provided, however, that if the entire balance of
the participant's Rollover/Transfer Account is attributable to a
trust-to-trust transfer which was not made at the participant's election,
such balance shall be distributed in accordance with a valid election made
under the transferor plan pursuant to Section 242(b) of the Tax Equity and
Fiscal Responsibility Act of 1982, unless such election is revoked by the
participant. Notwithstanding the foregoing, in the case of a participant to
whom the provisions of Section 7.5.8 apply, distribution pursuant to an
election described herein shall be subject to the spousal consent
requirements of Section 7.5.8.2.
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7.5.7 IN-KIND DISTRIBUTIONS. If the participant has
directed the investment of any assets of his or her account, including the
direction of investments in participant loans, the designated Employer shall,
except to the extent otherwise provided under the provisions of this Plan or
applicable provisions of the Code, ERISA or the regulations promulgated
thereunder, direct the Funding Agent to make an in-kind distribution of any
such assets (including any promissory note which represents a participant
loan) in full or partial satisfaction of such participant's beneficial
interest hereunder; provided, however, that the participant may elect to
receive a cash distribution of any such assets except a promissory note
representing a participant loan. The value of any promissory note which is so
distributed and which represents a loan from the Plan to the participant
shall be considered to be the full unamortized principal balance of such loan
plus accrued interest thereon as of the applicable date.
7.5.8 DISTRIBUTION OF BENEFICIAL INTEREST TO CERTAIN
PARTICIPANTS IN FORM OF QUALIFIED JOINT AND SURVIVOR ANNUITY.
7.5.8.1 DISTRIBUTION REQUIREMENT.
Notwithstanding any other provisions of this Article 7, and unless otherwise
elected by the participant under the procedures set forth hereinafter,
distribution of a participant's beneficial interest, other than that portion
of such beneficial interest which is distributed in kind to satisfy any
security interest in the participant's accounts granted to the Plan with
respect to a loan to a participant pursuant to the provisions of
Sections 12.3.11.2.2 and 12.3.11.7, shall be made in the form of a qualified
joint and survivor annuity if the participant's Rollover/Transfer Account is
credited with amounts attributable to a trust-to-trust transfer made to the
Plan on or after January 1, 1985, from either (i) a defined contribution plan
which was a transferee plan with respect to the participant under Code
Sections 401(a)(11) and 417, or (ii) a pension plan. Such distribution shall
commence on the date otherwise provided in Section 7.1.1.2 or 7.1.4.5, as the
case may be; provided, however, that in each instance where the participant's
written consent is required to make a distribution, the written consent of
the participant's spouse, if any, shall also be required. For purposes of the
provisions under Section 7.5.8, the spouse to whom the participant is married
on the annuity starting date will be treated as the participant's spouse even
if the participant and such spouse are not married on the date of the
participant's death, except as provided in a qualified domestic relations
order.
7.5.8.2 ELECTION AND REVOCATION. The
participant may elect to waive the qualified joint and survivor annuity form
of payment and select:
7.5.8.2.1 A manner of distribution
authorized under Section 7.5.1, 7.5.2 or 7.5.3; or
7.5.8.2.2 Distribution in the form of an
annuity providing for payments beginning not later than the required
beginning date and continuing over the life of the participant, with or
without a period certain. Any such period certain may not exceed the life
expectancy of the participant or the joint life and last survivor expectancy
of such participant and such participant's designated beneficiary, as
determined under Section 7.5.3, and once payments over such period certain
have commenced, such period certain may not be lengthened even if it is
shorter than the maximum permitted thereunder. Further:
7.5.8.2.2.1 In the case of a
life annuity (or a life annuity with a period certain not exceeding 20
years), payments thereunder shall be made at intervals not longer than one
year, and shall be nonincreasing (except as otherwise permitted under
regulations prescribed by the Secretary of the Treasury pursuant to Code
Section 401(a)(9)). In addition, the period certain, if any, shall be in
compliance with the provisions of Section 7.5.4.
7.5.8.2.2.2 In the case of a
life annuity with a period certain exceeding 20 years, payments thereunder
shall comply with the rules applicable to payments under an insurance policy
set forth in Sections 7.5.3 and 7.5.4.
The participant may also revoke any election
described in the preceding provisions under this Section 7.5.8.2. Any such
election or revocation must be in writing and must be filed with the
designated Employer during the 90-day period ending on the annuity starting
date. The participant's election to waive the qualified joint and survivor
annuity form of payment shall be effective only if such election designates a
beneficiary and a form of benefit which may not be changed without spousal
consent (or the consent of the spouse described below expressly permits the
participant to designate a different beneficiary or form of benefit without
further consent by the spouse) and if the participant's spouse files a
written consent to such election on a form prescribed by the Plan
Administrator which acknowledges the effect of such election and either
(i) names the specific nonspouse beneficiary, if any, who may receive the
participant's benefit at the participant's death and the form of benefit to
be paid under the Plan, or (ii) acknowledges that the spouse has the right to
limit consent to a specific nonspouse beneficiary and form of benefit and
that the spouse voluntarily relinquishes one or both of such rights. In the
event that the participant's spouse is legally incompetent to give consent,
the spouse's legal guardian, including a legal guardian who is the
participant, may give consent under this Section 7.5.8.2 on behalf of the
spouse. Spousal consent under this Section
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7.5.8.2 must be witnessed by a notary public or an officer, managing partner
or sole owner of the designated Employer on behalf of the Plan.
Notwithstanding the foregoing, spousal consent under this Section 7.5.8.2
shall not be required (i) if the Plan Administrator determines that the
spouse's consent cannot be obtained because the participant has no spouse or
the spouse cannot be located, (ii) except as otherwise provided in a
qualified domestic relations order, if the participant is legally separated
or has been abandoned within the meaning of local law by his or her spouse
and the participant has a court order to that effect, or (iii) in such other
circumstances as may be provided in regulations prescribed by the Secretary
of the Treasury. Any spousal consent which complies with the requirements of
this Section 7.5.8.2 shall be irrevocable unless otherwise provided in
uniform rules adopted by the designated Employer and applied in a
nondiscriminatory manner. The consent of the participant's spouse, or the
determination that the consent of the participant's spouse shall not be
obtained, shall be effective only with respect to such spouse. In the event a
participant makes an election to waive the qualified joint and survivor
annuity under this Section 7.5.8.2 and later revokes such election, any
subsequent election by the participant to waive the qualified joint and
survivor annuity must again be consented to by the participant's spouse in
the manner prescribed herein.
7.5.8.3 DISCLOSURE. The Plan Administrator shall
provide to the participant by mail or personal delivery, within the period
beginning 90 days prior to the annuity starting date and ending 30 days prior
thereto, a written explanation of (i) the terms and conditions of the
qualified joint and survivor annuity form of payment which complies with the
requirements of Treas. Reg. Sections 1.401(a)-11(c)(3), (ii) the
participant's right to elect to waive the qualified joint and survivor
annuity form of payment and the effect thereof, (iii) the spousal consent
requirement set forth in Section 7.5.8.2, (iv) the participant's right to
revoke an election to waive the qualified joint and survivor annuity and the
effect thereof, and (v) for plan years beginning after December 31, 1988, the
eligibility conditions and other material features of the optional forms of
benefit under Sections 7.5.1, 7.5.2 and 7.5.3, together with sufficient
additional information to explain the relative values of such optional forms
of benefit.
7.5.8.4 DISTRIBUTION OF BENEFICIAL INTEREST OF
$3,500 OR LESS IN A LUMP SUM. Notwithstanding the foregoing provisions of
Sections 7.5.8.1 through 7.5.8.3, the designated Employer shall direct the
Funding Agent to distribute the entire beneficial interest of the participant
in a lump sum if such beneficial interest on the valuation date coinciding
with or immediately preceding the date of distribution is not (and at the
time of any prior distribution was not) greater than $3,500; provided,
however, that if such distribution will occur after the annuity starting date
and the participant will not have attained the later of age 62 and the normal
retirement date, such distribution shall be made only with the written
consent of the participant and the participant's spouse, if any, given within
90 days prior to the date of distribution which complies with the
requirements of Sections 7.5.8.2 and 7.5.8.3.
7.6 DISTRIBUTION OF BENEFITS UPON DEATH OF A PARTICIPANT. Death
benefits shall be paid under the Plan as follows:
7.6.1 DEATH PRIOR TO COMMENCEMENT OF REQUIRED
DISTRIBUTIONS. If a participant dies prior to his or her required beginning
date, and distributions have not irrevocably (except for acceleration)
commenced under an insurance policy described in Section 7.5.3 or in the form
of a qualified joint and survivor annuity or another form of annuity pursuant
to Section 7.5.8, such participant's beneficial interest shall, except as
otherwise provided under Sections 7.6.2 and 7.6.3, be distributed to the
participant's beneficiary in accordance with the following:
7.6.1.1 GENERAL RULE. The participant's entire
beneficial interest (reduced by any security interest held by the Plan
pursuant to Sections 12.3.11.7 and, if applicable, 12.3.11.2.2, by reason of
a loan outstanding to such participant on the date of the participant's death
if such loan is not repaid) shall be distributed in a lump sum on, or as soon
as administratively feasible after, the valuation date coinciding with or
immediately following the date a written election to receive such
distribution is filed with the designated Employer by such participant's
beneficiary, but not later than December 31 of the calendar year which
contains the fifth anniversary of the date of the participant's death.
7.6.1.2 INSTALLMENT PAYMENTS. Notwithstanding
the provisions of Section 7.6.1.1, if elected in the Adoption Certificate,
the participant or such participant's designated beneficiary may file a
written election with the designated Employer that any beneficial interest
payable to or for the benefit of the designated beneficiary shall be
distributed over a period beginning on, or as soon as administratively
feasible after, the valuation date coinciding with or immediately following
the date specified in such election, but in no event later than December 31
of the calendar year following the calendar year in which the participant
died or, if the designated beneficiary is the surviving spouse of the
participant, the later of December 31 of the calendar year following the
calendar year in which the participant died and December 31 of the calendar
year in which the participant would have attained age 70-1/2; provided,
however, that if this Plan is a restatement of a prior plan instrument under
which participants or their designated beneficiaries could direct the payment
of death benefits in the form of installments, participants who had amounts
credited to their accounts as of the later of the effective date of such
restatement and the date this restated Plan is adopted, or such participants'
designated beneficiaries, shall be entitled to direct that any beneficial
interest payable to or for the benefit of such designated beneficiaries shall
be distributed in installments without regard to
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whether such option has been elected in the Adoption Certificate. Such
election (i) must be filed with the designated Employer no later than
December 31 of the earlier of (A) the calendar year in which distributions
pursuant to this Section 7.6.1.2 must commence (the "first post-death
distribution year"), and (B) the calendar year which contains the fifth
anniversary of the date of the participant's death, (ii) must be irrevocable
as of the date determined under clause (i) of this sentence with respect to
the designated beneficiary and all subsequent beneficiaries, and (iii) must
apply to all subsequent years. The payment period pursuant to such election
may not extend beyond the life expectancy of such designated beneficiary
determined on the basis of the designated beneficiary's attained age as of
the designated beneficiary's birthday in the first post-death distribution
year; provided, however, that the life expectancy of a designated beneficiary
who is the participant's surviving spouse shall be redetermined annually,
unless otherwise irrevocably elected by such surviving spouse no later than
the date distribution under this Section 7.6.1.2 must commence. Life
expectancy shall be determined by the use of the expected return multiples in
Table V of Treas. Reg. Sections 1.72-9. The amount which shall be distributed
under this Section 7.6.1.2 for the first post-death distribution year and
each subsequent calendar year shall not be less than an amount equal to the
quotient obtained by dividing the balance in the participant's accounts as of
the last valuation date in the calendar year preceding the year for which the
distribution is to be made, adjusted as provided in regulations prescribed by
the Secretary of the Treasury under Code Section 401(a)(9), by the life
expectancy of the designated beneficiary, as determined pursuant to the
preceding provisions of this Section 7.6.1.2 and, in the case of a designated
beneficiary other than the participant's surviving spouse, reduced by one for
each calendar year which has elapsed since the first post-death distribution
year. The amount to be distributed for the first post-death distribution year
and each subsequent calendar year shall be distributed by December 31 of such
year.
7.6.1.3 DEATH OF SURVIVING SPOUSE. In the event
that the participant's designated beneficiary is such participant's surviving
spouse, and such surviving spouse dies prior to (i) the date distributions to
such surviving spouse are required to commence pursuant to an election
described in Section 7.6.1.2, or (ii) if earlier, the irrevocable (except for
acceleration) commencement of benefits in the form of a qualified
preretirement survivor annuity under Section 7.6.3, for the purpose of
determining the date by which distributions must be made or commence, the
provisions of Sections 7.6.1.1 and 7.6.1.2 shall be applied as if such
deceased surviving spouse were the participant.
7.6.2 SECTION 242(b) ELECTION HONORED. Notwithstanding
anything herein to the contrary, distribution shall be made in accordance
with an election made under this Plan prior to January 1, 1984, by a
participant who had accrued a benefit under the Plan or a predecessor plan as
of December 31, 1983, pursuant to Section 242(b) of the Tax Equity and Fiscal
Responsibility Act of 1982, of a form of death benefit distribution which
provides for payments extending beyond the period otherwise permitted under
Section 7.6.1, unless such election is revoked by the participant or such
participant's beneficiary. Any such election must be in writing, must have
been filed with the designated Employer or the Employer by the date required
by law, and must set forth the time for commencement of payments after such
participant's death, the form of payment, the period over which death
benefits are to be paid, and the participant's beneficiaries in order of
priority. The designated Employer shall be entitled to accelerate or
otherwise modify the payment form, time or method otherwise elected if it
determines that such acceleration or modification is necessary to preserve
the tax qualification of the Plan. In addition, if the election is revoked by
the participant or beneficiary, the designated Employer shall distribute
benefits after such revocation in accordance with the restrictions and
requirements set forth in Section 7.6.1 which are applicable absent such an
election and, to the extent necessary, shall provide a make-up distribution
after such revocation of those amounts which should have been distributed,
absent an election, prior to such revocation. Any make-up distribution
hereunder shall be made by the end of the calendar year following the
calendar year in which the revocation occurs. No such election shall be
applicable with respect to amounts held in a participant's account which are
attributable to amounts contributed to a plan under which the participant was
an owner-employee within the meaning of Code Section 401(c)(3). In addition,
no such election shall be applicable with respect to amounts held in a
participant's Rollover/Transfer Account; provided, however, that if the
entire balance of the participant's Rollover/Transfer Account is attributable
to a trust-to-trust transfer which was not made at the participant's
election, such balance shall be distributed in accordance with a valid
election made under the transferor plan pursuant to Section 242(b) of the Tax
Equity and Fiscal Responsibility Act of 1982, unless such election is revoked
by the participant or such participant's beneficiary. Notwithstanding the
foregoing, in the case of a participant to whom the provisions of Section 7.6.3
apply, distribution pursuant to an election described herein shall be subject
to the spousal consent requirements of Section 7.6.3.2.
7.6.3 PAYMENT OF BENEFICIAL INTEREST IN FORM OF QUALIFIED
PRERETIREMENT SURVIVOR ANNUITY IN THE EVENT OF MARRIED PARTICIPANT'S DEATH
PRIOR TO ANNUITY STARTING DATE.
7.6.3.1 DISTRIBUTION REQUIREMENTS. If a married
participant dies prior to the annuity starting date and the participant's
Rollover/Transfer Account is credited with amounts attributable to a
trust-to-trust transfer made to the Plan on or after January 1, 1985, from
either (i) a defined contribution plan which was a transferee plan with
respect to the participant under Code Sections 401(a)(11) and 417, or (ii) a
pension plan, then notwithstanding any other provisions hereof, such portion
of the participant's beneficial interest as is required to satisfy the
requirements of Section 2.6.24 (after reduction for any security interest
held by the Plan pursuant to Sections 12.3.4.7 and 12.3.11.2.2 by reason of a
loan outstanding to such
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participant on such date if such loan is not repaid) shall be distributed in
the form of a qualified preretirement survivor annuity commencing on the date
determined in accordance with the provisions of Section 7.6.1.2 (but without
regard to whether such participant or such participant's surviving spouse has
filed an election thereunder).
7.6.3.2 ELECTION AND REVOCATION. The participant
may elect to waive the qualified preretirement survivor annuity form of
payment or revoke such election at any time during the period which begins on
the first day of the plan year in which the participant attains age 35 (or
the participant's date of separation from service, if earlier, but applicable
only to amounts attributable to contributions made prior to such separation
from service) and ending on the date of the participant's death; provided,
however, that any such election made prior to August 23, 1984, shall not be
valid; and, provided further, that the participant may elect to waive the
qualified preretirement survivor annuity form of payment or revoke such
election prior to the first day of the plan year in which the participant
attains age 35 if the participant is given the information described in
Section 7.6.3.3, but such election shall become invalid on the first day of
the plan year in which the participant attains age 35. The participant's
election to waive the qualified preretirement survivor annuity form of
payment shall be effective only if such election designates a beneficiary
which may not be changed without spousal consent (or the consent of the
spouse described below expressly permits the participant to designate a
different beneficiary without further consent by the spouse) and if the
participant's spouse files a written consent to such election on a form
prescribed by the Plan Administrator which acknowledges the effect of such
election and either (i) names the specific nonspouse beneficiary, if any, who
may receive the participant's benefit at the participant's death, or
(ii) acknowledges that the spouse has the right to limit consent only to a
specific nonspouse beneficiary and that the spouse voluntarily relinquishes
such right. In the event that the participant's spouse is legally incompetent
to give consent, the spouse's legal guardian, including a legal guardian who
is the participant, may give consent under this Section 7.6.3.2 on behalf of
the spouse. Spousal consent under this Section 7.6.3.2 must be witnessed by a
notary public or an officer, managing partner or sole owner of the designated
Employer on behalf of the Plan. Notwithstanding the foregoing, spousal
consent under this Section 7.6.3.2 shall not be required (i) if the Plan
Administrator determines that the spouse's consent cannot be obtained because
the participant has no spouse or the spouse cannot be located, (ii) except as
otherwise provided in a qualified domestic relations order, if the
participant is legally separated or has been abandoned within the meaning of
local law by his or her spouse and the participant has a court order to that
effect, or (iii) in such other circumstances as may be provided in
regulations prescribed by the Secretary of the Treasury. Any spousal consent
which complies with the requirements of this Section 7.6.3.2 shall be
irrevocable unless otherwise provided in uniform rules adopted by the
designated Employer and applied in a nondiscriminatory manner. The consent of
the participant's spouse, or the determination that the consent of the
participant's spouse shall not be obtained, shall be effective only with
respect to such spouse. In the event a participant makes an election to waive
the qualified preretirement survivor annuity under this Section 7.6.3.2 and
later revokes such election, any subsequent election by the participant to
waive the qualified preretirement survivor annuity must again be consented to
by the participant's spouse in the manner prescribed herein.
7.6.3.3 DISCLOSURE. The Plan Administrator shall
provide the participant, by mail or personal delivery, a written explanation
(described below) within whichever of the following periods ends last:
(i) the period beginning with the first day of the plan year in which the
participant attains age 32 and ending on the last day of the plan year
preceding the plan year in which the participant attains age 35; (ii) the
period beginning one year prior to the date such participant becomes a
participant and ending one year after such date; and (iii) the period
beginning one year prior to the date the provisions under Section 7.6.3
become applicable with respect to the participant and ending one year after
such date. Notwithstanding the foregoing provisions of this Section 7.6.3.3,
in the case of a participant whose employment terminates prior to age 35,
such explanation shall be mailed or delivered to such participant within the
period beginning one year prior to the date of such termination of employment
and ending one year after such date. Such explanation shall describe (i) the
terms and conditions of the qualified preretirement survivor annuity form of
payment in a manner which complies with the requirements of Treas. Reg.
Sections 1.401(a)-11(c)(3), (ii) the participant's right to elect to waive
such form of payment and the effect thereof, (iii) the spousal consent
requirement set forth in Section 7.6.3.2, (iv) the participant's right to
revoke an election to waive the qualified preretirement survivor annuity and
the effect thereof, and (v) for plan years beginning after December 31, 1988,
the eligibility conditions and other material features of the optional forms
of benefit under Section 7.6.1, together with sufficient additional
information to explain the relative values of such optional forms of benefit.
7.6.3.4 DISTRIBUTION OF BENEFICIAL INTEREST IN A
LUMP SUM. Notwithstanding the foregoing provisions of Section 7.6.3, the
designated Employer shall direct the Funding Agent to distribute that part of
the participant's beneficial interest that would otherwise be used to
purchase a preretirement survivor annuity in a lump sum on the date otherwise
provided under Section 7.6.1 if such part does not, on the valuation date
coinciding with or immediately preceding the distribution date (and at the
time of any prior distribution did not), exceed $3,500; provided, however,
that such distribution may be made after the annuity starting date but prior
to the date the participant would have attained the later of age 62 and the
normal retirement date only if the surviving spouse consents in writing
within 90 days prior to the date of distribution. If such part exceeds (or at
the time of any prior distribution exceeded) $3,500, such part may be
distributed in a lump sum only if the
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participant's spouse consents in writing within 90 days prior to the date of
distribution. The spouse's consent under this Section 7.6.3.4 must comply
with the requirements of Section 7.6.3.2.
7.6.4 DEATH AFTER COMMENCEMENT OF REQUIRED DISTRIBUTIONS.
In the event that a participant dies after (i) the required beginning date,
or (ii) if earlier, the irrevocable (except for acceleration) commencement of
benefits under an insurance policy described in Section 7.5.3 or in the form
of a qualified joint and survivor annuity or another form of annuity pursuant
to Section 7.5.8, distribution shall continue as provided under the form of
benefit paid to the participant prior to his or her death, unless the
beneficiary elects in writing to accelerate such distribution and such
acceleration can be effected by the designated Employer. Notwithstanding the
foregoing, if distributions to the participant under Section 7.5.2 were
calculated on the basis of the applicable divisor described in
Section 7.5.4.3.1, distributions to the designated beneficiary, if any, for
calendar years after the calendar year of the participant's death may be
calculated on the basis of the designated beneficiary's life expectancy, as
determined pursuant to Section 7.5.2, and, in the case of a designated
beneficiary other than the surviving spouse of a participant whose life
expectancy is being recalculated, reduced by one for each calendar year which
has elapsed since the first distribution year.
7.7 ADDITIONAL RULES RELATING TO DISTRIBUTIONS. In addition to the
requirements of Sections 7.5 and 7.6, distributions under this Plan shall be
subject to the following rules:
7.7.1 DISTRIBUTIONS SUBJECT TO REGULATIONS. Distributions
under this Plan shall be made in accordance with regulations relating to
required distributions prescribed by the Secretary of the Treasury under Code
Section 401(a)(9), including regulations relating to the incidental death
benefit requirement.
7.7.2 INCONSISTENT PROVISIONS. The provisions of this
Plan which reflect the rules relating to required distributions under Code
Section 401(a)(9) shall take precedence over and supersede any distribution
options hereunder which are inconsistent with Code Section 401(a)(9).
7.7.3 SEPARATE ACCOUNTS. A participant's accounts
hereunder (including such participant's Deductible Employee Contribution
Account, if any) shall be aggregated for purposes of satisfying the rules
relating to required distributions under Code Section 401(a)(9).
Notwithstanding the foregoing, in the case of separate accounts for which
there are different beneficiaries as of the applicable date, the rules of
Code Section 401(a)(9) shall apply separately with respect to each such
separate account. For purposes of this Section 7.7.3, a "separate account" is
a portion of a participant's interest in the Plan determined by an acceptable
separate accounting, including allocating investment gains and losses, and
contributions and forfeitures, on a pro-rata basis in a reasonable and
consistent manner between such portion and the remaining portion of the
participant's interest in the Plan.
7.7.4 NO CONSENT NECESSARY FOR REQUIRED DISTRIBUTIONS. In
the event that the consent of the participant and/or the participant's spouse
is required under applicable provisions of this Plan prior to distribution of
the participant's beneficial interest, and such participant and/or spouse
fail to give such consent on or before the date distribution is otherwise
required to commence hereunder:
7.7.4.1 Distribution shall nonetheless commence
on such date pursuant to the applicable provisions of this Plan; and
7.7.4.2 The applicable consent requirements under
the Plan shall be deemed to be satisfied if the Plan Administrator made a
reasonable effort to obtain the consent of the participant and/or the
participant's spouse and the distribution otherwise satisfies the
requirements of Code Section 417.
7.7.5 EFFECTIVE DATE. The provisions under Sections 7.5
and 7.6 shall be effective for plan years beginning after December 31, 1984,
except as otherwise provided therein; provided, however, that:
7.7.5.1 With respect to a participant whose
required beginning date, as determined pursuant to Section 7.5.5, was on or
before April 1, 1987:
7.7.5.1.1 Such participant's required
beginning date for all purposes hereunder, including, but not limited to, the
commencement of distributions and the determination of the participant's
designated beneficiary, shall be deemed to be December 31, 1987;
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7.7.5.1.2 The amount to be distributed
as of such required beginning date shall be determined by the Plan
Administrator, in its sole discretion, in accordance with regulations
prescribed by the Secretary of the Treasury under Code Section 401(a)(9); and
7.7.5.1.3 Solely for purposes of
determining the life expectancy of the participant or the joint life and last
survivor expectancy of the participant and the participant's designated
beneficiary, the first distribution year shall be 1987.
7.7.5.2 With respect to a participant who died
prior to January 1, 1986, and whose beneficial interest is to be distributed
pursuant to Section 7.6.1.2:
7.7.5.2.1 The date by which
distributions to the participant's designated beneficiary must commence is
December 31, 1987;
7.7.5.2.2 The amount to be distributed
as of such date shall be determined by the Plan Administrator, in its sole
discretion, in accordance with regulations prescribed by the Secretary of the
Treasury under Code Section 401(a)(9); and
7.7.5.2.3 Such participant's designated
beneficiary may be determined as of any date in 1987, and the life expectancy
of any such designated beneficiary other than the participant's spouse will
be determined on the basis of the designated beneficiary's attained age as of
the designated beneficiary's birthday in 1987.
7.7.5.3 With respect to a participant who died
prior to January 1, 1985, and whose beneficial interest is to be distributed
pursuant to Section 7.6.1.1, such beneficial interest shall be distributed in
its entirety as of the later of (i) December 31 of the calendar year which
contains the fifth anniversary of the participant's death, and (ii) December
31, 1987.
7.8 REEMPLOYMENT OF A PARTICIPANT RECEIVING BENEFITS HEREUNDER. In
the event that a participant has terminated employment and is receiving Plan
benefits hereunder in any form other than under an insurance policy or
annuity and is subsequently reemployed by an Employer, payment of the
participant's benefits hereunder shall be suspended during the period of
reemployment; provided, however, that the participant may elect in writing to
continue the payment of benefits during such period of reemployment, or to
recommence such payment upon or after the participant's normal retirement
date.
7.9 PAYMENT IN CASE OF INCOMPETENCY. If, in the judgment of the
designated Employer based upon facts and information readily available to it,
any person entitled to receive a payment hereunder is incapable for any
reason of personally receiving and giving a valid receipt of the payment of a
benefit, the designated Employer or the Funding Agent may cause such payment
or any part thereof to be made to the duly appointed guardian or to the legal
representative of such person, or to any person or institution contributing
to or providing for the care and maintenance of such person, provided that no
prior claim for said payment has been made by a duly appointed guardian or
legal representative of such person. Neither the designated Employer nor the
Funding Agent shall be required to see to the proper application of any such
payment made in accordance with the provisions hereof, and any such payment
shall constitute payment for the account of such person and a full discharge
of any liability or obligation of the designated Employer, the Employer, the
Funding Agent, and the Plan and Fund for the amount so paid.
7.10 NONALIENATION OF BENEFITS. Except with respect to the
enforcement of marital interests or family support obligations which may be
permitted by authoritative federal law, regulations or rulings as determined
by the designated Employer or as specifically provided in this Plan:
7.10.1 No participant or beneficiary shall have any
transmissible interest in the Fund or in his or her beneficial interest,
either before or after the vesting thereof;
7.10.2 No participant or beneficiary shall have power to
anticipate, alienate, sell, transfer, assign, pledge, encumber or charge any
benefit provided hereunder, and any attempt to do so, in whole or in part,
shall be void; and
7.10.3 The benefits of any participant or beneficiary
shall not in any manner be subject to the debts, contracts, liabilities or
torts of such participant or beneficiary and shall not be subject to
attachment, garnishment, execution or other legal process.
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7.11 PAYMENT OF TAXES. Anything herein to the contrary
notwithstanding, the designated Employer or the Funding Agent, as a condition
of making payment of any benefit hereunder, may require the participant or
beneficiary to agree to indemnify and hold the designated Employer, the
Employer, the Funding Agent and the Fund harmless, or to furnish them with
proof of payment of all income, inheritance, estate, transfer, legacy and/or
succession taxes, and all other taxes of any different type or kind that may
be imposed under or by virtue of any law upon the payment, transfer, descent
or distribution of such benefit and for the payment of which the designated
Employer or Funding Agent has determined the designated Employer, the
Employer, the Funding Agent or the Fund may be directly or indirectly liable.
In lieu of the foregoing, the Funding Agent may deduct, withhold and transmit
and, on instructions from the designated Employer, shall deduct, withhold and
transmit to the proper tax authorities any such tax which may be permitted or
required to be deducted and withheld, and the payments to the participant or
beneficiary in such case shall be correspondingly reduced.
7.12 DISTRIBUTIONS FROM A PARTICIPANT'S ACCOUNTS PRIOR TO THE
OCCURRENCE OF ANOTHER EVENT OF MATURITY. If elected in the Adoption
Certificate, the designated Employer shall permit distributions to be made to
participants of all or part of their respective beneficial interests prior to
the time benefits are otherwise payable under the provisions hereinabove for
the purpose of meeting financial hardships, subject to the conditions and
limitations hereinafter set forth. In such event, the Funding Agent shall
make such distributions in accordance with the written direction of the
designated Employer. Subject to the provisions of Sections 7.12.5 and 7.12.6,
the designated Employer shall consider the written request of a participant
for such a distribution, and shall authorize a distribution for any of the
purposes set forth in Sections 7.12.1 through 7.12.4. The participant's
written request must contain sufficient evidence indicating that the
distribution is for one of the permitted purposes set forth hereinbelow, and
the amount necessary for such purpose. In the case of any participant to whom
the provisions of Section 7.5.8 apply, such written request must comply with
the spousal consent requirements of Section 7.5.8.2.
7.12.1 ILLNESS. Distributions upon or after the grant of
a leave of absence for the participant because of a prolonged illness.
7.12.2 FAMILY ILLNESS. Distributions for the purpose of
enabling a participant to meet emergency conditions in such participant's
financial affairs resulting from the illness of the participant or a member
of the participant's family who is dependent upon the participant for care
and support, but only to the extent necessary to defray expenses of medical
and/or hospital care reasonably attributable to such illness or to preserve
the health of such participant or family member.
7.12.3 EDUCATIONAL PURPOSES. Distributions for the
purpose of meeting and defraying the expenses of education of the participant
or any member of the family of such participant who is dependent upon such
participant for care and support.
7.12.4 FINANCIAL HARDSHIP AS A RESULT OF INABILITY TO MEET
CURRENT OBLIGATIONS. Distributions for the purpose of enabling a participant
to meet unforeseen and severe conditions in his or her financial affairs
resulting from a substantial inability to satisfy immediate obligations, but
only to the extent necessary to alleviate said unforeseen and severe
conditions. The designated Employer shall consider the participant's
immediate financial obligations, the current and anticipated cash flow
available to the participant for satisfaction of obligations as they come
due, the availability of other assets to satisfy the participant's financial
obligations (including checking accounts, savings accounts, marketable
securities and other such investments), and other factors which bear on the
severity of the participant's financial condition.
7.12.5 CHARGING ACCOUNTS AND SPECIAL LIMITATIONS
APPLICABLE TO CERTAIN ACCOUNTS. Amounts to be distributed under Section 7.12
shall be charged against the participant's accounts in the following order:
Nondeductible Employee Contribution Account (if subaccounts have been
established thereunder, first against Subaccount I and thereafter
Subaccount II), 401(k) Contribution Account, Rollover/Transfer Account,
Matching Contribution Account and Non-401(k) Contribution Account; provided,
however, that such amounts may not be distributed from or charged against the
participant's 401(k) Contribution Account, Rollover/Transfer Account (if such
account is credited with elective contributions, qualified nonelective
contributions and/or qualified matching contributions, within the meaning of
Code Section 401(k) and the regulations promulgated thereunder, transferred
from another plan), Matching Contribution Account (if any part of such
account has enabled the Plan to meet the Actual Deferral Percentage Test) or
Non-401(k) Contribution Account (if any part of such account has enabled the
Plan to meet the Actual Deferral Percentage Test or the Contribution
Percentage Test) unless the requirements of Section 7.12.6 are satisfied. The
amount distributed shall be the amount considered necessary by the designated
Employer to meet the purpose or circumstance for which distribution is
approved.
7.12.6 SPECIAL REQUIREMENTS APPLICABLE TO CERTAIN
DISTRIBUTIONS. The requirements under this Section 7.12.6 are as follows:
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7.12.6.1 IMMEDIATE AND HEAVY FINANCIAL NEED. The
distribution must be made on account of an immediate and heavy financial
need. Unless other objective conditions are set forth in the Adoption
Certificate, a distribution shall be deemed to be made on account of an
immediate and heavy financial need if it is for:
7.12.6.1.1 Medical expenses described in
Code Section 213(d) previously incurred by the participant, the participant's
spouse or the participant's dependents (as defined in Code Section 152) or
necessary for such persons to obtain medical care described in Code
Section 213(d);
7.12.6.1.2 Costs directly related to the
purchase of a principal residence for the participant (but excluding mortgage
payments);
7.12.6.1.3 Payment of tuition and
related educational fees for the next 12 months of post-secondary education
for the participant or the participant's spouse, children or dependents (as
defined in Code Section 152);
7.12.6.1.4 Payments necessary to prevent
eviction of the participant from, or foreclosure of the mortgage on, the
participant's principal residence; or
7.12.6.1.5 Such other circumstances
prescribed by the Commissioner of Internal Revenue from time to time in
revenue rulings, notices and other documents of general applicability.
7.12.6.2 NECESSARY TO SATISFY FINANCIAL NEED.
The distribution must be necessary to satisfy the immediate and heavy
financial need. Unless other objective conditions are set forth in the
Adoption Certificate, a distribution shall be deemed necessary to satisfy an
immediate and heavy financial need if (i) the distribution is not in excess
of the amount of the immediate and heavy financial need, including any
amounts necessary to pay any federal, state or local income taxes or
penalties reasonably anticipated to result from the distribution, and (ii) the
participant has obtained all distributions, other than hardship
distributions, and all nontaxable (at the time of the loan) loans currently
available under this Plan and all other plans maintained by the Employer. In
the case of any participant who receives a distribution under Section 7.12
that is subject to this Section 7.12.6.2:
7.12.6.2.1 Such participant shall be
prohibited from making elective contributions (as defined in Section 4.3.1.1)
or employee contributions (within the meaning of Code Section 401(m) and the
regulations promulgated thereunder) to this Plan or any other plan maintained
by the Employer (including qualified and nonqualified plans of deferred
compensation, stock option, stock purchase or similar plans, or a
cash-or-deferred arrangement that is part of a cafeteria plan under Code
Section 125) for a period of 12 months after receipt of such distribution; and
7.12.6.2.2 Such participant may not make
elective contributions to this Plan or any other plan for the participant's
taxable year immediately following the taxable year of such distribution in
excess of the annual limitation, as defined in Section 4.3.1.2, in effect for
such subsequent taxable year less the amount of the participant's elective
contributions for the year of such distribution.
In addition to the foregoing, a distribution shall
be deemed necessary to satisfy an immediate and heavy financial need under
any other circumstances prescribed by the Commissioner of Internal Revenue
from time to time in revenue rulings, notices and other documents of general
applicability.
7.12.6.3 MAXIMUM AMOUNT OF DISTRIBUTION. The
distribution shall not exceed the participant's beneficial interest nor the
sum of (i) Cash Option Contributions and Salary Deferral Contributions
credited to the participant's 401(k) Contribution Account, (ii) amounts
credited to the participant's Rollover/Transfer Account that consist of
elective contributions transferred from another plan, (iii) income
attributable and credited thereto as of the last day of the last plan year
ending before July 1, 1989, and (iv) amounts credited to the participant's
Non-401(k) Contribution Account consisting of Employer contributions and
forfeitures and amounts attributable thereto other than (a) amounts that were
taken into consideration in any plan year for purposes of the Actual Deferral
Percentage Test and (b) income and gains attributable thereto.
7.13 DISTRIBUTION FROM A PARTICIPANT'S ACCOUNTS UPON COMPLETION OF
FIVE YEARS OF SERVICE AS A PARTICIPANT OR ATTAINMENT OF SPECIFIED AGE. Any
participant who has completed five or more years of service as a participant
or attained a specified age, or satisfied both conditions, if elected in the
Adoption Certificate, may withdraw amounts equal to all or part of the
beneficial interest of such participant in his or her accounts; provided,
however, that no such withdrawal shall be authorized by the designated
Employer unless and until the participant shall have repaid all outstanding
loans from the Plan to such participant, together with accrued interest, if
any; and, provided further, that no such withdrawal shall be permitted from
any
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applicable contribution account described in Section 4.4.4.4.2 prior to the
participant's attainment of age 59-1/2. The designated Employer shall
establish procedures from time to time for withdrawals of funds pursuant to
this section which shall be applied to all participants on a uniform and
nondiscriminatory basis. In the case of a participant to whom the provisions
of Section 7.5.8 apply, such withdrawals shall at all times be made in the
form of a qualified joint and survivor annuity unless the participant's
request complies with the spousal consent requirements of Section 7.5.8.2.
7.14 DISTRIBUTION PURSUANT TO QUALIFIED DOMESTIC RELATIONS ORDER.
Notwithstanding any other provisions of this Plan, the designated Employer
shall direct the Funding Agent to pay amounts from the participant's accounts
to an alternate payee, as defined in Code Section 414(p)(8), in accordance
with a domestic relations order received by the Plan Administrator with
respect to a participant which has been determined by the Plan Administrator
to be a qualified domestic relations order within the meaning of Code Section
414(p). Payment shall be made to the alternate payee in a form permitted
hereunder and prescribed in the qualified domestic relations order, including
a form permitted under the Plan at the time the qualified domestic relations
order is received by the Plan Administrator but which is eliminated by an
amendment to the Plan prior to the date payment is made pursuant thereto,
unless the alternate payee elects in a writing filed with the Plan
Administrator to receive payment in another form then permitted under the
Plan which does not affect, in any way, the amount or form of benefit payable
to the participant hereunder. In the event that the form of payment
prescribed in the qualified domestic relations order is prohibited by a
change in applicable law which is effective prior to payment pursuant
thereto, the alternate payee may elect in a writing filed with the Plan
Administrator to receive payment in another form then permitted under the
Plan which does not affect, in any way, the amount or form of benefit payable
to the participant hereunder. Payment to the alternate payee shall be made or
commence on the date provided in the qualified domestic relations order,
regardless of whether such participant has terminated employment or whether
such participant has attained the earliest retirement age under the Plan
(within the meaning of Code Section 414(p)) as of such date.
Upon receipt of a domestic relations order, the Plan Administrator
shall promptly notify the participant and any alternate payee that the Plan
Administrator has received such order and shall describe the Plan's procedure
for determining whether a domestic relations order is a qualified domestic
relations order. Within a reasonable period of time following receipt of such
domestic relations order, the Plan Administrator shall determine whether such
order is a qualified domestic relations order and notify the participant and
each alternate payee of such determination. The Plan Administrator shall
establish procedures to determine whether the domestic relations order is a
qualified domestic relations order and to administer distributions pursuant
to this Section 7.14.
During the period in which the Plan Administrator is determining
whether a domestic relations order is a qualified domestic relations order,
the Plan Administrator shall separately account for the amounts (hereinafter
the "segregated amounts") which would have been distributed to the alternate
payee during that period if the Plan Administrator had determined that the
order was a qualified domestic relations order. If, during the 18-month
period commencing with the date on which the first payment would be required
to be made under the domestic relations order, the Plan Administrator
determines that the order is a qualified domestic relations order, the Plan
Administrator shall pay the segregated amounts (increased by any earnings or
gains or reduced by any losses thereon) to the appropriate alternate payee.
If, within such 18-month period, the Plan Administrator determines that the
order is not a qualified domestic relations order or there has been no
resolution as to whether such order is a qualified domestic relations order,
the Plan Administrator shall combine the segregated amounts (increased by
earnings or gains or reduced by losses thereon) with the participant's other
accounts and distribute such amounts in accordance with the remaining
provisions of this Plan to the participant or any other person who would have
been entitled to such amounts had the Plan Administrator not received the
domestic relations order. If such determination is made prior to the end of
such 18-month period, the Plan Administrator may delay any such distribution
until the end of such 18-month period if the Plan Administrator has notice
that the deficiencies in the order may be rectified. In addition, the Plan
Administrator shall honor a restraining order prohibiting the disposition of
a participant's benefits pending resolution of a dispute with respect to a
domestic relations order. Any determination that a domestic relations order
is a qualified domestic relations order which is made after the close of the
18-month period shall be applied prospectively only.
If a qualified domestic relations order provides that a
participant's benefit is to be divided and a portion is to be allocated to an
alternate payee, such portion will be treated as a separate account which
separately must satisfy the requirements of Code Section 401(a)(9) and may
not be aggregated with other separate accounts of the participant for the
purpose of satisfying the requirements of Code Section 401(a)(9).
Distribution from such separate account shall be made in a manner which
satisfies the requirements of Code Section 401(a)(9) and the regulations
promulgated thereunder.
The provisions of this Section 7.14, and any payments made or
actions taken hereunder by the Plan Administrator pursuant to such
provisions, shall be subject to regulations prescribed by (i) the Secretary
of Labor under Code Section 414(p) and Section 206(d)(3) of ERISA, and (ii)
the Secretary of the Treasury to coordinate the requirements of Code Sections
401(a)(13)(B) and 414(p) with other requirements applicable to qualified
pension, profit sharing and stock bonus plans.
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The provisions of this Section 7.14 shall be effective on January 1,
1985, except that in the case of a domestic relations order entered before
such date, the Plan Administrator shall treat such order as a qualified
domestic relations order if the Plan Administrator is paying benefits
pursuant to such order on January 1, 1985, and, at the discretion of the Plan
Administrator, may treat any other domestic relations order entered before
January 1, 1985, as a qualified domestic relations order even if the order
does not meet the requirements of this section.
7.15 DISTRIBUTIONS AFTER JANUARY 1, 1993. To the extent required
under Code Section 401(a)(31) and the regulations thereunder, this Section
7.15 applies to distributions made on or after January 1, 1993.
Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a distributee's election under this Section 7.15, a
distributee may elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee in a
direct rollover. Certain words in this Section 7.15 are defined as set forth
in Sections 7.15.1 through 7.15.4.
7.15.1 ELIGIBLE ROLLOVER DISTRIBUTION. An "eligible
rollover distribution" is any distribution of all or any portion of the
balance to the credit of the distributee, except that an eligible rollover
distribution does not include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently than annually)
made for the life (or life expectancy) of the distributee or the joint lives
(or joint life expectancies) of the distributee and the distributee's
designated beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under Section
401(a)(9) of the Code; and the portion of any distribution that is not
includible in gross income (determined without regard to the exclusion for
net unrealized appreciation with respect to employer securities).
7.15.2 ELIGIBLE RETIREMENT PLAN. An "eligible retirement plan"
is an individual retirement account described in Section 408(a) of the Code, an
individual retirement annuity described in Section 408(b) of the Code, an
annuity plan described in Section 403(a) of the Code, or a qualified trust
described in Section 401(a) of the Code, that accepts the distributee's eligible
rollover distribution. However, in the case of an eligible rollover distribution
to the surviving spouse, an eligible retirement plan is an individual retirement
account or individual retirement annuity.
7.15.3 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
Section 414(p) of the Code, are distributees with regard to the interest of
the spouse or former spouse.
7.15.4 DIRECT ROLLOVER. A "direct rollover" is a payment by
the Plan to the eligible retirement plan specified by the distributee.
ARTICLE 8.
PROVISIONS RELATING TO TOP-HEAVY PLAN
8.1 APPLICATION OF TOP-HEAVY PROVISIONS. Notwithstanding anything
hereinabove to the contrary, if the Plan is a top-heavy plan as determined
pursuant to Code Section 416 for any plan year beginning after December 31,
1983, then the Plan shall meet the requirements set forth in Sections 8.2
through 8.4 for any such plan year.
8.2 MINIMUM VESTING REQUIREMENTS. If a vesting schedule has been
elected in the Adoption Certificate which provides for full vesting prior to
completion of four years of service for vesting, a participant will have a
fully-vested interest in amounts contributed under the Plan by the Employer on
the earlier of any other date provided for full vesting elsewhere in the Plan
and completion of three years of service for vesting purposes. If a vesting
schedule has been elected in the Adoption Certificate which provides for vesting
over a period of four years of service or longer, a participant's vested
interest will be the greater of the vested interest under such schedule and the
vested interest determined in accordance with the following schedule:
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<TABLE>
<CAPTION>
Years of Service Percentage Of
Completed for Vesting Purposes Interest Vested
------------------------------ ---------------
<S> <C>
Less than 2 years 0%
2 years but less than 3 years 20%
3 years but less than 4 years 40%
4 years but less than 5 years 60%
5 years but less than 6 years 80%
6 years or more 100%
</TABLE>
If the Plan ceases to be top-heavy so that the schedule set forth hereinabove
is no longer applicable by the terms of this Article 8, such change from
top-heavy status shall be deemed to be an amendment to the vesting schedule
which is subject to the requirements of Section 9.1.3.
8.3 MINIMUM CONTRIBUTION REQUIREMENT. It is intended that the
Employer will meet the minimum benefit and contribution requirements of Code
Section 416(c) by providing a minimum benefit or contribution, as the case
may be, which complies with Code Section 416(c) under the plan identified in
the Adoption Certificate for such plan year for each participant who is a
nonkey employee of the Employer and who is entitled to a minimum benefit or
contribution for such year. If this Plan is the plan identified in the
Adoption Certificate, or if such minimum benefit or contribution is not so
provided under any other plan so identified for such plan year, then this
Plan will provide a minimum contribution and forfeiture allocation for such
plan year for each participant who is a nonkey employee of the Employer and
who is employed on the last day of such plan year by an Employer or Affiliate
in an amount equal to at least 3% (5% in the case of a participant in a
defined benefit plan) of such participant's compensation for such plan year.
Such 3% (5% in the case of a participant in a defined benefit plan) minimum
contribution allocation shall be increased to 4% (7-1/2% in the case of a
participant in a defined benefit plan) for any year in which the Employer
also maintains a defined benefit plan if necessary to avoid the application
of Code Section 416(h)(1), relating to special adjustments to the Code
Section 415 limits for top-heavy plans, if the adjusted limitations of Code
Section 416(h)(1) would otherwise be exceeded if such minimum contribution
were not so increased.
The minimum contribution and forfeiture allocation requirements set
forth hereinabove for this Plan for nonkey employees shall be reduced in the
following circumstances:
8.3.1 The percentage minimum contribution allocation
required hereunder shall in no event exceed the percentage contribution
allocation made for the key employee of the Employer or an Affiliate for whom
such percentage is the highest for the plan year after taking into account
contribution allocations under this Plan and other defined contribution plans
required to be included in an aggregation group with this Plan; provided,
however, that this Section 8.3.1 shall not apply if this Plan is required to
be included in an aggregation group and it enables a defined benefit plan
required to be included in such aggregation group to meet the requirements of
Code Section 401(a)(4) or 410; and
8.3.2 The minimum contribution allocation otherwise
required hereunder will be reduced to the extent that a minimum benefit or
minimum contribution allocation is provided for such nonkey employee under
another qualified plan maintained by the Employer or an Affiliate.
Salary Deferral Contributions, Cash Option Contributions, Matching
Contributions, and contributions made pursuant to Code Section 401(k) to any
other defined contribution plan required to be included in an aggregation
group with this Plan, shall be taken into account under this Section 8.3 for
purposes of determining the percentage contribution allocation made for key
employees of the Employer or an Affiliate, but such contributions shall not
be taken into account for purposes of meeting the minimum contribution and
forfeiture allocation requirements set forth above for plan years beginning
after December 31, 1988.
8.4 MAXIMUM COMPENSATION LIMITATION. For plan years beginning prior
to January 1, 1989, the annual compensation of each participant taken into
account under the Plan for such plan year shall not exceed the first $200,000
of such participant's compensation.
8.5 PROVISIONS NOT APPLICABLE TO CERTAIN EMPLOYEES. The minimum
vesting, minimum contribution and maximum compensation provisions of this
Article 8 shall not apply to any participant who is included in a unit of
employees covered by an agreement which the Secretary of Labor finds to be a
collective bargaining agreement between employee representatives and one or
more Employers if there is evidence that retirement benefits were the subject
of good-faith bargaining between such employee representatives and such
Employer or Employers. For purposes of this Section 8.5:
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8.5.1 The term "employee representative" does not include
any organization more than one-half of the members of which are employees who
are owners, officers or executives of their Employers; and
8.5.2 An agreement shall not be treated as a collective
bargaining agreement unless it is a bona fide agreement between bona fide
employee representatives and one or more Employers.
ARTICLE 9.
AMENDMENT AND TERMINATION
9.1 AMENDMENT BY DESIGNATED EMPLOYER. The designated Employer shall
have the right to amend the Plan at any time, to any extent that it considers
advisable, subject to the limitations set forth in Sections 9.1.1 through
9.1.3.
9.1.1 NO DIVERSION. No amendment shall be effective if it
shall attempt or purport to divert, or have the effect of diverting, any of
the funds of this Plan which have become subject to final allocation for the
benefit of participants or beneficiaries, or the income therefrom, for a use
or purpose other than for the exclusive benefit of participants and their
beneficiaries.
9.1.2 REDUCTION OF ACCRUED BENEFIT BY AMENDMENT. No
amendment shall be effective if it shall reduce a participant's account
balance or divest any participant of his or her accrued benefit or, except to
the extent provided in regulations prescribed by the Secretary of the
Treasury, would have the effect of eliminating an optional form of benefit,
within the meaning of Code Section 411(d)(6) and the regulations promulgated
thereunder, with respect to the accrued benefit of the participant determined
immediately prior to the later of the date such amendment is adopted and the
effective date of such amendment, unless such amendment shall have been
adopted with the consent of the Secretary of Labor pursuant to the applicable
provisions of ERISA, or in order to comply with the provisions of the Code
affecting the tax-qualified status of the Plan and the deductibility of
Employer contributions thereto or to comply with the provisions of any salary
or wage stabilization laws, regulations, orders or directives which may now
or hereafter be in force.
9.1.3 ELECTION OF AMENDED SCHEDULE IN CERTAIN
CIRCUMSTANCES. No amendment to the vesting schedule shall deprive a
participant of such participant's percentage vested interest as determined
immediately prior to the later of the date the amendment is adopted and the
effective date of such amendment under the Plan as it read without regard to
such amendment. In addition, if the vesting schedule of the Plan is amended,
then any participant who is an employee on the effective date of such
amendment and who has completed at least five years of service (reduced to
three years of service for plan years beginning after December 31, 1988),
whether or not consecutive and without regard to the break-in-service rules,
may elect to have his or her nonforfeitable percentage vested interest
computed under the Plan without regard to such amendment, unless under no
condition could the participant's nonforfeitable percentage vested interest
be less under the amended schedule. Such election shall only be available to
a participant who is a participant at the time the election is made, and the
election period shall commence on the date on which the amendment is adopted
and shall end on the latest of:
9.1.3.1 The sixtieth day after the date on which
the amendment is adopted;
9.1.3.2 The sixtieth day after the date on which
the amendment becomes effective; and
9.1.3.3 The sixtieth day after the date on which the
Plan Administrator gives the participant written notice of the amendment.
9.1.4 NOTICE TO FUNDING AGENT AND EMPLOYERS. Certified
copies of all amendments shall be furnished by the designated Employer to the
Funding Agent and to all other Employers maintaining the Plan, if any. An
amendment shall be deemed to be adopted by an Employer unless, within 30 days
after receipt of such certified copies, such Employer notifies the designated
Employer and the Funding Agent in writing that it does not elect to be bound
by such amendment. Notification by an Employer that it does not elect to be
bound by an amendment shall be deemed to constitute written notice by such
Employer that it is withdrawing from the Plan.
9.1.5 AMENDMENT OF AGREEMENT WITH FUNDING AGENT. Any
agreement with a Funding Agent relating to the Fund may be amended in whole
or in part at any time by the designated Employer with notice to the Funding
Agent.
9.1.6 EFFECT OF AMENDMENT. Unless otherwise provided under the
terms of the amendment or otherwise required by applicable provisions of the
Code, ERISA or the regulations promulgated thereunder, any amendment to the Plan
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shall not apply with respect to, nor affect the rights of, any participant
whose termination of employment occurs prior to the effective date of such
amendment.
9.2 TERMINATION. It is the expectation of each Employer maintaining
the Plan that the Plan and the payment of contributions hereunder shall
continue indefinitely, but the continuance of this Plan is not assumed as a
contractual obligation of any such Employer, and the designated Employer
reserves the exclusive right at any time to terminate this Plan. Termination
shall not occur until the designated Employer terminates the Plan or
contributions hereunder are completely discontinued by all of the Employers
maintaining the Plan, and mere failure of any Employer to make contributions
hereunder for any fiscal year shall not terminate the Plan.
9.3 WITHDRAWAL BY EMPLOYER.
9.3.1 NOTICE OF WITHDRAWAL. An Employer may withdraw from
the Plan at any time by giving written notice to the designated Employer and
the Funding Agent. An Employer shall be deemed to have given written notice
that it is withdrawing from the Plan if it gives written notice that it does
not elect to be bound by an amendment to the Plan as set forth in Section
9.1.4.
9.3.2 RIGHT OF WITHDRAWING EMPLOYER TO ADOPT SUCCESSOR
PLAN. A withdrawing Employer shall have 90 days following the date on which
the designated Employer receives written notice of withdrawal by such
withdrawing Employer to adopt a successor plan and appoint a funding agent to
receive the portion of the Fund attributable to such withdrawing Employer. In
the event that such withdrawing Employer adopts a successor plan and appoints
a funding agent to receive the portion of the Fund attributable to it, the
Funding Agent shall transfer such portion of the Fund to the funding agent
appointed by the withdrawing Employer in accordance with the written
instructions of such withdrawing Employer.
9.3.3 WITHDRAWAL TREATED AS TERMINATION OF THE PLAN WITH
RESPECT TO WITHDRAWING EMPLOYER. If an Employer withdraws from the Plan and
does not adopt a successor plan and appoint a funding agent within 90 days as
provided in Section 9.3.2, such withdrawing Employer shall be deemed to have
terminated the Plan with respect to it as of the ninety-first day following
the date on which the designated Employer receives such withdrawing
Employer's written notice of withdrawal.
ARTICLE 10.
MILITARY AND GOVERNMENT SERVICE
10.1 TERM IN THE SERVICE. Any employee or participant who enters the
service of the Armed Forces or the government of the United States shall be
presumed to be on a leave of absence with the consent of the Employer to the
extent required by the Military Selective Service Act of 1967 (reenacted as
the Viet Nam Era Veterans' Readjustment Assistance Act of 1974), as amended
from time to time (hereinafter called the "Military Service Act"), and such
absence shall not be adjudged a break in service provided the period of
military or government service does not exceed the period entitling such
employee to reemployment rights granted under the Military Service Act and
the employee reenters the employ of an Employer or Affiliate within a period
of 90 days after discharge or separation from military or government service
without intervening employment elsewhere. Such leave of absence shall
continue from the date of entry into such military or government service
until the earliest of the date that the period of such service exceeds the
period entitling such employee to reemployment rights granted under the
Military Service Act, the expiration of 90 days from the date of discharge or
separation, and such employee's return to the employ of an Employer or
Affiliate. However, during the period of such leave of absence, contributions
shall be made and amounts allocated on behalf of a participant only on
account of compensation actually paid during such period.
10.2 STATUTES AFFECTING PROVISIONS. The provisions of this Article
relating to leave of absence shall be interpreted in a manner consistent with
Section 9 of the Military Selective Service Act of 1967, reenacted as the
Viet Nam Era Veterans' Readjustment Assistance Act of 1974, and recodified at
38 U.S.C. Sections 2021-26 (Supp. V 1975), as amended from time to time. This
Article shall be construed to incorporate any subsequent amendments to such
Act and such amendments shall be included in rules adopted from time to time
by the designated Employer without further amendment hereto.
ARTICLE 11.
CERTAIN PROVISIONS RELATING TO FUND AND FUNDING AGENT
11.1 APPOINTMENT AND RESIGNATION OF FUNDING AGENT. The designated
Employer shall appoint one or more Funding Agents at any time. Any such Funding
Agent may resign at any time and the designated Employer may remove a Funding
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Agent at any time, subject, however, to the provisions of any agreement with
a Funding Agent. Upon the resignation or removal of a Funding Agent, the
designated Employer shall have the power to appoint a successor Funding
Agent. Resignation, disqualification, inability or removal of a Funding Agent
shall not terminate the Plan.
11.2 AGREEMENT WITH FUNDING AGENT. The designated Employer may enter
into any agreement with a Funding Agent not inconsistent with the provisions
of the Plan. In addition, the designated Employer shall from time to time
direct the Funding Agent in writing with respect to the funding policy of the
Plan.
11.3 COMMINGLING. The Fund or any part thereof may be commingled for
investment with funds of other plans, provided that appropriate records are
maintained to properly reflect the interest of the Plan in such commingled
fund.
11.4 RIGHTS OF EMPLOYEES TO FUND. No employee, participant,
beneficiary or other person shall have any right to or interest in any part
of the Fund, upon termination of employment or otherwise, except as and only
to the extent herein provided, regardless of the fact that an allocation has
been made to a participant's account.
11.5 DIVERSION OF FUND AND RETURN OF EMPLOYER CONTRIBUTIONS. Except
as hereinafter provided, at no time prior to the termination of the Plan
shall any part of the corpus or income of the Fund be used for or diverted to
purposes other than for the exclusive benefit of employees and their
beneficiaries and defraying reasonable expenses of administering the Plan and
Fund. Notwithstanding the foregoing, the Funding Agent shall return an
Employer's contribution in the following cases:
11.5.1 If a contribution or portion thereof is made by the
Employer by mistake of fact, the Funding Agent shall return to the Employer
that portion of the overpayment which is demanded by the Employer, provided
that such demand and return are effected within one year after the payment of
the contribution.
11.5.2 Contributions under this Plan are based on the
condition precedent that the Plan initially qualifies under Code Section 401.
In the event that this Plan receives an adverse determination with respect to
its initial qualification, at the request of the Employer, the Funding Agent
shall return such contributions within one year of such determination, but
only if the application for the determination is made by the time prescribed
by law for filing the Employer's federal income tax return for the taxable
year in which such Plan was adopted, or such later date as the Secretary of
the Treasury may prescribe. This provision is effective December 22, 1987.
11.5.3 If a contribution is conditioned upon the
deductibility of the contribution under Section 404 of the Internal Revenue
Code, then to the extent the deduction is disallowed, the Funding Agent shall
return to the Employer all or part of that portion of the Employer's
contribution which was disallowed upon demand therefor by the Employer,
provided that such demand and return are effected within one year after
disallowance of the deduction.
11.6 ERRORS IN PARTICIPANTS' ACCOUNTS. When any error, omission or
deficiency is discovered under the Plan, including but not limited to errors,
omissions and deficiencies relating to contributions made or to be made under
the Plan, the allocation or reallocation of any such contributions, the
vesting or distribution of a participant's interest under the Plan, or the
crediting or charging of Fund gains or losses to the accounts under the Plan,
the designated Employer may direct the Funding Agent to correct, to the
extent possible, such error, omission or deficiency by making such
adjustments, allocations or reallocations to and among the accounts under the
Plan as are appropriate or necessary. In addition, an Employer may make an
additional or alternative contribution to the Plan where appropriate or
necessary to correct any such error, omission or deficiency which occurred
during such year or any prior year, and any such contribution shall be
allocated under the Plan and shall vest in such manner so as to correct such
error, omission or deficiency.
ARTICLE 12.
ADMINISTRATION OF THE PLAN
12.1 ADMINISTRATION BY DESIGNATED EMPLOYER. Except as otherwise
provided herein, the Plan shall be administered by the designated Employer.
All determinations and decisions required or permitted to be made by the
designated Employer in connection with the administration of the Plan shall
be final and binding upon all persons who have, or in the future will have,
an interest under the Plan.
12.2 CERTAIN PROVISIONS RELATING TO ACCOUNTING FOR PARTICIPANTS'
INTERESTS IN THE FUND AND ADJUSTING ACCOUNTS.
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12.2.1 SUBDIVISION OF ACCOUNTS. The designated Employer
shall account separately for a participant's interest in the Fund which is
invested in (a) insurance purchased for such participant's benefit, if any,
pursuant to the provisions hereof, (b) any separate investment fund
established under the Plan (hereinafter referred to as the participant's
interest in a "separate investment fund"), (c) any segregated investment
account established for the participant under the Plan (hereinafter referred
to as the participant's interest in a "segregated investment account"), and
(d) the other assets of the Fund (hereinafter referred to as the
participant's interest in the "other assets of the Fund"). In addition, the
designated Employer may establish subaccounts for any other purpose it deems
to be necessary or desirable.
12.2.2 ADJUSTMENT OF ACCOUNTS ON VALUATION DATES. As of
each valuation date the designated Employer shall, in the order listed, take
the following steps:
12.2.2.1 ANNUAL VALUATION DATE.
12.2.2.1.1 Charge the accounts of each
participant who has received a distribution since the last valuation date
with any such distribution.
12.2.2.1.2 Adjust the accounts of all
participants (as they appear on the records of the designated Employer
immediately prior to such adjustment) so that the total of all participants'
interests in the other assets of the Fund equals the then fair market value
of the other assets of the Fund exclusive of any dividends or other income
derived since the last valuation date from insurance purchased for a
participant's benefit and exclusive of any interest or principal repayments
made on a participant loan since the last valuation date. The designated
Employer shall then adjust the accounts of all participants (as they appear
on the records of the designated Employer immediately prior to such
adjustment) so that the total of all participants' interests in each separate
investment fund and segregated investment account equals the then fair market
value of each such separate investment fund or segregated investment account,
as the case may be. Notwithstanding the foregoing, to the extent determined
under Section 7.1.4.2.2, income of the Fund shall be applied to restore the
unvested portion of participants' Employer Contribution Accounts previously
forfeited in lieu of allocation under this Section 12.2.2.1.2. Before
adjusting the accounts of the participants under this section, the designated
Employer shall subtract from the value of the Fund the following amounts
without regard to income, gains or losses thereon: an amount equal to the sum
of the Employer contributions to the Fund for the plan year which have not
been allocated to the participants' accounts prior to the annual valuation
date (and to the extent such unallocated contributions have not been
commingled with other assets of the Plan during the year, any earnings or
gains thereon if so elected in the Adoption Certificate) and unallocated
amounts credited to a suspense account established as a result of the
limitations on annual additions imposed by Code Section 415.
12.2.2.1.3 Credit any dividends or other
income derived since the last valuation date from insurance purchased for a
participant's benefit, to the extent any such income is not used to pay the
costs of such insurance or additional insurance, to such participant's
interest in the other assets of the Fund. Credit any interest or principal
repayments made on a participant loan since the last valuation date to such
participant's interest in the other assets of the Fund.
12.2.2.1.4 Allocate the Non-401(k)
Contributions, Cash Option Contributions, Salary Deferral Contributions,
401(k) Remedial Contributions, and Matching Contributions and forfeitures for
the plan year (and earnings and gains on any unallocated contribution
described in Section 12.2.2.1.2, if so elected in the Adoption Certificate)
among the participants' Non-401(k), 401(k) and Matching Contribution Accounts
in accordance with the provisions of the Plan governing the allocation of
contributions and forfeitures. For purposes hereof, if an adjustment is made
to a participant's compensation subsequent to the time that the Employer's
contribution is allocated among the participants, whether such adjustment is
made by the Internal Revenue Service (the "Service") or the Employer, or for
any other reason, and the result of such adjustment is to reduce the amount
which should have been allocated and credited to a participant, the amount of
the reduction shall be deemed to be a forfeiture in the year in which the
adjustment is made and shall not affect the allocation for the plan year in
which the contribution was actually made; provided, however, that if such
adjustment is made by the Service, and the Service and the Employer agree
that the adjustment should be handled in some other manner, the adjustment
shall be handled in the manner so agreed upon.
12.2.2.1.5 Allocate a participant's
Nondeductible Employee Contributions made since the last valuation date to
such participant's Nondeductible Employee Contribution Account and allocate
any rollover or transfer contributions made by or on behalf of a participant
which have not been commingled with the balance of the Fund on any prior
valuation date, plus any income or earnings thereon or less any losses
thereto, to such participant's Rollover/Transfer Account.
12.2.2.1.6 Charge any amounts credited
to a participant's accounts and credit such amounts to such separate
investment fund or funds or segregated investment accounts as the participant
may direct in accordance with the Plan provisions regarding the direction of
investments by participants.
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12.2.2.2 QUARTERLY AND DISCRETIONARY VALUATION
DATES. As of each quarterly valuation date and discretionary valuation date,
the designated Employer may, in the order listed, perform the functions set
forth in Sections 12.2.2.1.1, 12.2.2.1.2, 12.2.2.1.3, 12.2.2.1.4 (but only to
the extent of Salary Deferral Contributions accumulated since the preceding
valuation date), 12.2.2.1.5 and 12.2.2.1.6.
12.3 POWERS OF DESIGNATED EMPLOYER. Except as otherwise provided
herein, the designated Employer shall have such power and authority as shall
be necessary to carry out the purposes of the Plan, including, but not by way
of limitation, those powers and authority set forth in this Section 12.3.
12.3.1 DETERMINATIONS. The designated Employer shall
determine all questions relating to the eligibility of employees to become
participants in the Plan, the eligibility of participants and beneficiaries
to receive benefits and, except as otherwise provided in the Plan, the amount
and method of payment of benefits to which a participant or such
participant's beneficiaries become entitled, and determine the eligibility of
participants to share in the allocation of contributions and forfeitures and
make such allocations for each plan year.
12.3.2 PLAN INTERPRETATION AND DISPUTE RESOLUTION. The
designated Employer shall interpret the provisions of the Plan and decide any
disputes or questions which may arise with regard to the rights of employees,
participants, beneficiaries and their legal representatives under the terms
of the Plan.
12.3.3 RULE-MAKING. The designated Employer shall
establish, from time to time, rules and regulations and adopt forms for the
administration of the Plan and the transaction of its busineSections
12.3.4 ACCOUNTING DIRECTION. The designated Employer shall
direct the Funding Agent to create and maintain separate accounts for each
participant, to allocate to such accounts the contributions and forfeitures for
each plan year, and to adjust the accounts of all participants as of the
valuation dates.
12.3.5 FUND DISBURSEMENT AND INVESTMENT. The designated
Employer shall direct the Funding Agent with respect to the disbursement of
the Fund and appoint one or more parties that are registered as investment
advisers under the Investment Advisers Act of l940, or insurance companies or
banks which meet the requirements of Section 3(38) of ERISA, to serve as an
investment manager or managers to manage (with the power to acquire and
dispose of) any assets of the Fund. The designated Employer, and any other
named fiduciary appointed pursuant to the Plan to the extent powers and
duties relating to the investment of the Fund have been delegated to such
named fiduciary, shall have the authority to direct the Funding Agent as to
the investment and reinvestment of all or any part of the Fund.
12.3.6 ALLOCATION OF FIDUCIARY RESPONSIBILITIES. The
designated Employer shall allocate or establish a procedure for the
allocation of fiduciary responsibilities (other than trustee
responsibilities) among any of the named fiduciaries pursuant to Sections
405(c)(1) and (2) of ERISA.
12.3.7 UNALLOCATED KEY-PERSON INSURANCE. If the designated
Employer, in its sole discretion, deems it desirable, the designated Employer
may direct the Funding Agent to acquire and hold in the Fund an insurance
policy or policies on the life of any person when such person is considered
by the Employer to be a key employee and whose death, in the opinion of such
Employer, would adversely affect the continued operation of the business of
the Employer and its ability to make profits in such operation. Such
investment shall be an investment of the general fund and not of any
participant's segregated account alone.
12.3.8 ALLOCATED LIFE INSURANCE. If elected in the Adoption
Certificate and directed by a participant, the designated Employer may
authorize and direct the Funding Agent to purchase for such participant out
of such participant's accounts an insurance policy or policies upon such
participant's life. The rules relating to the purchase of life insurance
shall be equitable in application to all participants and such purchase shall
be subject to the following restrictions:
12.3.8.1 The designated Employer may not direct the
Funding Agent to purchase a life insurance policy providing for payment to any
beneficiary or payee other than the Fund. Any insurance issued on the life of a
participant shall constitute an investment of the account of such participant,
the premium shall be paid therefrom and the proceeds shall be considered a part
thereof. The cost each year of the life insurance protection (meaning the face
amount of the policy reduced by its cash surrender value) determined under
tables issued from time to time by the Internal Revenue Service (or, if lower,
the current published premium rates per $1,000 of insurance protection charged
by the issuing company for individual one-year term life insurance available to
all standard risks) shall be charged against the participant's accounts in the
following order: Nondeductible Employee Contribution Account, Rollover/Transfer
Account, Non-401(k) Contribution Account, Matching
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Contribution Account and 401(k) Contribution Account. The Funding Agent shall
be the applicant for each policy and title to each policy shall be in the
Funding Agent. A participant shall execute all documents required by the
issuing company in connection with issuance of a policy on such participant's
life.
12.3.8.2 Each policy shall provide that any
dividends or refunds payable thereon shall be applied to reduce the next
premium, except that any dividends or refunds payable upon death shall form
part of the death proceeds of such policy.
12.3.8.3 Insurance purchased for a participant's
account from amounts credited to his or her Non-401(k) Contribution Account,
Matching Contribution Account, 401(k) Contribution Account or
Rollover/Transfer Account shall be limited in accordance with the election in
the Adoption Certificate and as set forth below:
12.3.8.3.1 The aggregate premiums paid
for any life insurance other than ordinary life insurance (hereinafter
referred to as "term life insurance") in the case of any employee since
becoming a participant shall be less than one-fourth of the aggregate of the
Employer's contributions and forfeitures allocated to that employee's
Non-401(k), 401(k) and Matching Contribution Accounts since becoming a
participant plus amounts credited to the employee's Rollover/Transfer
Account. The aggregate premiums paid for ordinary life insurance in the case
of any employee since becoming a participant shall be less than one-half of
the aggregate of the Employer's contributions and forfeitures allocated to
that employee's Non-401(k), 401(k) and Matching Contribution Accounts since
becoming a participant plus amounts credited to the employee's
Rollover/Transfer Account. If insurance premiums are paid for both term life
insurance and ordinary life insurance, then the total of the aggregate
premiums paid for term life insurance plus one-half of the aggregate premiums
paid for ordinary life insurance shall be less than one-fourth of the
aggregate of the Employer's contributions and forfeitures allocated to the
employee's Non-401(k), 401(k) and Matching Contribution Accounts since
becoming a participant plus amounts credited to the employee's
Rollover/Transfer Account.
12.3.8.3.2 The maximum amount of life
insurance which may be purchased for a participant shall be the amount which
may be purchased (a) with funds contributed by the participant, and (b) with
funds which have been contributed by the Employer on behalf of the
participant and which have been accumulated for at least two years. More
specifically, the maximum amount which may be used for the payment of life
insurance premiums shall be the amount contributed by the participant plus
the lesser of the following: the full value of the participant's Non-401(k)
Contribution, 401(k) Contribution, Matching Contribution and
Rollover/Transfer Accounts as of the second annual valuation date prior
thereto, and the current value of the Non-401(k) Contribution, 401(k)
Contribution, Matching Contribution and Rollover/Transfer Accounts of the
participant less the aggregate amount of contributions and forfeitures
allocated to the participant's Non-401(k), 401(k), and Matching Contribution
Accounts on the two annual valuation dates coinciding with or immediately
preceding the date as of which the insurance is to be purchased. The
limitations on the purchase of life insurance set forth in this section shall
not be applicable to a participant who has been a participant under the Plan
for at least five years.
12.3.8.4 The entire value of any insurance policy
or policies issued on the life of a participant and in force and effect at
the date of termination of employment of such participant shall be reduced to
cash, which shall be distributed to such participant in accordance with the
applicable provisions and rules regarding distribution of benefits set forth
elsewhere in the Plan.
12.3.9 SALE OF INSURANCE CONTRACTS. The designated Employer
may, in its sole discretion, authorize and direct the Funding Agent to sell
an individual life insurance or other insurance contract or contracts
purchased for the benefit of a participant to any of the persons set forth in
Sections 12.3.9.1 through 12.3.9.4:
2.3.9.1 A participant under the Plan if the
participant is the insured under the contract;
12.3.9.2 A person who is a "relative" of such
participant within the meaning of ERISA or a "member of the family" within the
meaning of the applicable provisions of the Internal Revenue Code, or a brother
or sister of the insured participant (or a spouse of such brother or sister),
and is the beneficiary under the contract;
12.3.9.3 The Employer; or
12.3.9.4 Another employee benefit plan.
12.3.9.5 Such sale shall be permitted only if the
insurance contract would, but for the sale, be surrendered by the Plan; the
amount received by the Plan in consideration for the sale is at least equal
to the amount necessary to
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put the Plan in the same cash position as it would have been had it retained
the contract, surrendered it and made any distribution owing to the
participant of such participant's vested interest under the Plan; and with
respect to sales of the policy to parties other than the participant, the
participant insured under the policy is informed of the proposed sale and is
given the opportunity to purchase the contract from the Plan and delivers a
written document to the Plan stating that he or she elects not to purchase
the policy and consents to the sale by the Plan of such policy to the
Employer, relative or other plan.
12.3.9.6 No such sale shall be made to an
owner-employee as herein defined or shareholder-employee as defined in Code
Section 1379 as in effect prior to the enactment of the Subchapter S Revision
Act of 1982, to a relative of such owner-employee or shareholder-employee or
an Employer which is a proprietorship, partnership or S corporation having an
owner who is an owner-employee or shareholder-employee with respect to this
Plan, unless and to the extent any such transaction or such class of
transactions has been granted an exemption by the Secretary of Labor from the
prohibited transaction provisions of the Code and ERISA.
12.3.10 PURCHASE OF INSURANCE CONTRACTS. The designated
Employer may, in its sole discretion, authorize and direct the Funding Agent
to purchase or receive in transfer or exchange an individual life insurance
or other insurance contract from a participant on whose life such contract
was issued, or from the Employer, provided, that:
12.3.10.1 The Funding Agent pays from the Fund
assets no more than the lesser of the cash surrender value of the contract
and the value of the participant's account balance;
12.3.10.2 Such sale, transfer or exchange does not
involve any contract which is subject to a mortgage or similar lien which the
Plan assumes; and
12.3.10.3 The participant is not an
owner-employee or shareholder-employee described in Section 12.3.9.6 and the
Employer is not a proprietorship, partnership or S corporation having an
owner who is an owner-employee or shareholder-employee, unless and to the
extent any such transaction or such class of transactions has been granted an
exemption by the Secretary of Labor from the prohibited transaction
provisions of the Code and ERISA.
12.3.11 PARTICIPANT LOANS. If an election is made in the
Adoption Certificate to permit participant loans from the Plan, the
designated Employer may, in its sole discretion, authorize and direct the
Funding Agent to make a loan or loans to a participant, or his or her
beneficiary in the event of the participant's death (the "borrower"). Loans
to participants or their beneficiaries who are not "parties in interest"
shall be permitted only to the extent required by applicable law or otherwise
provided in the guidelines described in the following sentence. Any loans
under this Plan which are granted or renewed on or after the last day of the
first plan year beginning on or after January 1, 1989, shall be made pursuant
to written guidelines adopted by the designated Employer which are intended
to implement this Section 12.3.11 and which, among other things, include the
identity of the person or persons authorized to administer the participant
loan program, the procedure for applying for loans, the basis on which loans
are approved or denied, the limitations, if any, on the types and amount of
loans offered, the procedure under the program for determining a reasonable
rate of interest, the types of collateral which may secure a participant
loan, and the events constituting default and the steps that will be taken to
preserve Plan assets in the event of such default. Such guidelines shall be
consistent with the following rules:
12.3.11.1 A written request shall be filed by the
borrower with the designated Employer on a form prescribed by it. If the
borrower's death should occur prior to the time the amount requested is
actually disbursed to the borrower, the borrower's request for such a loan
shall be deemed cancelled and of no effect.
12.3.11.2 Upon application by the borrower, the
designated Employer may authorize a loan:
12.3.11.2.1 If the aggregate amount of
loans outstanding to a borrower, as determined immediately after the loan is
made, under this Plan and any other plans and trusts described under Code
Section 72(p)(4) maintained by the Employer or any Affiliate, will not exceed
the least of (a) $50,000, reduced by the excess, if any, of the highest
outstanding balance of loans from such plans during the one-year period
ending on the day before the date the loan is made over the outstanding
balance of loans from such plans on the date the loan is made; (b) with
respect to loans granted or renewed prior to October 19, 1989, 50% of the sum
of the present value of such borrower's nonforfeitable accrued benefit under
any such defined benefit plan(s) and the amount of such borrower's
nonforfeitable interest in his or her accounts under this Plan and any other
such defined contribution plan(s) (but not less than $10,000); and (c) with
respect to loans granted or renewed subsequent to October 18, 1989, 50% of
the amount of such borrower's nonforfeitable interest in such borrower's
accounts under this Plan; and
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12.3.11.2.2 With respect to any loan
made, renewed, extended, renegotiated or revised on or after August 19, 1985,
if the participant's spouse (if the borrower is the participant) consents in
writing to the assignment of the participant's beneficial interest hereunder
as security for repayment of such loan. Such spousal consent must be given
during the 90-day period ending on the date of such assignment, and must
comply with the requirements of Section 7.5.8.2, to the extent applicable,
including but not limited to the requirements that such spousal consent must
be in writing, must acknowledge the effect of the loan and, except as
otherwise provided in Section 7.5.8.2, must be witnessed by a notary public
or an officer, managing partner or the sole owner of the designated Employer
on behalf of the Plan. Notwithstanding the foregoing, the provisions of this
Section 12.3.11.2.2 shall apply only with respect to a participant to whom
the provisions of Sections 7.5.8 and 7.6.3 apply on the date of such
assignment, or if the written guidelines referred to in Section 12.3.11
provide for such spousal consent.
12.3.11.3 The designated Employer shall determine
the rate of interest to be paid, which shall be a reasonable rate of interest
within the meaning of Code Section 4975(d)(1), ERISA Section 408(b) and the
regulations thereunder.
12.3.11.4 The designated Employer shall determine
the term for repayment of the loan, which shall not exceed five years unless,
with respect to a loan made, renewed, extended, renegotiated or revised on or
after January 1, 1987, the loan is used to acquire any dwelling unit which
within a reasonable time is to be used (determined at the time the loan is
made) as the principal residence of the borrower.
12.3.11.5 With respect to any loan made, renewed,
extended, renegotiated or revised on or after January 1, 1987, except as
otherwise permitted in regulations prescribed by the Secretary of the
Treasury under Code Section 72(p), the loan shall be repaid in substantially
equal installments (not less frequently than quarterly) of principal and
interest over the term of the loan; provided, however, that nothing in this
Section 12.3.11.5 shall be construed as prohibiting either the repayment or
acceleration of such loan prior to the end of such term, or the use of a
variable interest rate.
12.3.11.6 No loan under Section 12.3.11 shall be
made to any borrower who is an owner-employee or shareholder-employee
described in Section 12.3.9.6, or a relative of any such owner-employee or
shareholder-employee, unless and to the extent any such loan or such class of
loans has been granted an exemption by the Secretary of Labor from the
prohibited transaction provisions of the Code and ERISA.
12.3.11.7 The loan shall at all times be
adequately secured. The designated Employer shall require that the borrower's
beneficial interest hereunder be assigned as security for repayment of the
loan and any interest accrued thereon; provided, however, that such
assignment shall be ineffective and void for any period of time during which
the loan fails to comply with the provisions of Code Section 4975(d)(1).
12.3.11.8 If any such outstanding loan or loans
are not paid as and when due, the designated Employer shall take all
reasonable steps to assure repayment. As a last resort, the amount of such
outstanding loan or loans, and interest accrued thereon, shall be deducted
from the value of such borrower's account upon the earliest of (i)
termination of the borrower's employment if employed by an Employer, (ii) the
occurrence of any other event giving rise to a distribution permitted or
required under the provisions of this Plan and applicable law, and (iii) the
later of the date on which the borrower is in default with respect to two
installment payments under Section 12.3.11.5 and the date which is 90 days
after the initial default; provided, however, that clause (iii) shall not
apply with respect to amounts attributable to elective contributions,
qualified nonelective contributions and/or qualified matching contributions,
within the meaning of Code Section 401(k) and the regulations promulgated
thereunder. In any event, no payment out of the Fund shall be made to any
borrower or to such borrower's estate, personal representative or beneficiary
for any reason, unless and until all unpaid loans to such borrower and
interest accrued thereon have been considered satisfied in full; provided,
however, that notwithstanding any other provisions of this Plan, the
designated Employer shall distribute the promissory note evidencing the
participant loan under any circumstances permitting a distribution hereunder
in full or partial satisfaction of such loan unless such loan is repaid at or
before the time of such distribution. All costs and expenses incurred by the
Plan, the Funding Agent or the designated Employer in attempting to collect
or enforce repayment of a loan which is in default shall be charged to such
borrower so as to increase such borrower's repayment obligation hereunder.
12.3.11.9 The value of any such loan for all
purposes hereof shall be considered to be the full unamortized principal
balance of such loan plus accrued interest thereon as of the applicable
valuation date.
12.3.11.10 None of the provisions set forth above
under Section 12.3.11 shall affect or require any change to the provisions of
any loan from the Plan to a borrower which (i) was made prior to the
effective date of the applicable provisions, and (ii) was not renewed,
extended, renegotiated or revised on or after such effective date.
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12.3.12 EMPLOYMENT OF AGENTS. The designated Employer may
employ and compensate accountants, brokers, attorneys or such other persons
as may be necessary or expedient to assist it in carrying out its powers and
duties. The designated Employer and its officers, directors and agents shall
be entitled to rely upon all certifications and reports made by an accountant
and all opinions given by an attorney, and the designated Employer and its
officers, directors and agents shall be fully protected with respect to any
action taken or omitted by them in good faith and in reliance upon any such
accountant or attorney.
12.3.13 CORRECTION OF ERRORS. The designated Employer shall
cause such equitable adjustments to be made as the designated Employer, in
its discretion, deems appropriate to correct for good-faith mathematical,
accounting or factual errors.
12.3.14 APPOINTMENT AND REMOVAL OF FUNDING AGENT. The
designated Employer shall appoint and remove the Funding Agent or Agents and
successor Funding Agents and determine the form and substance of each and
every trust agreement or agreement with a Funding Agent under which the Fund
is held.
12.3.15 CERTIFICATIONS. The designated Employer shall
certify in writing all determinations made.
12.3.16 ESTABLISHMENT OF SEPARATE FUND FOLLOWING MERGER OR
CONSOLIDATION. The designated Employer may authorize and direct the Funding
Agent to establish a separate fund to hold the assets of any plan which has
been merged or consolidated with this Plan or whose assets or liabilities
have been transferred to this Plan if the designated Employer determines, in
its discretion, that the immediate commingling of assets would be
inconsistent with the funding policy established under this Plan, is not in
the best interests of the participants of this Plan, could expose any
fiduciary of this Plan to additional liability, or if the sponsors of the
merged plans prior to such merger entered into an agreement providing for
such separate fund. Only those participants with an interest in the plan
which has merged or consolidated with this Plan or with respect to which
assets or liabilities have been transferred to this Plan shall have an
interest in such separate fund. Such separate fund shall be commingled with
the investments of the general fund of this Plan on the later of the date
provided in any agreement entered into between the sponsors of the plans
prior to their merger or consolidation and the date on which the designated
Employer, in its discretion, determines that the reasons for maintaining such
separate fund no longer exist. The separate fund shall bear a ratable portion
of the expenses of the Fund.
12.4 PARTICIPANT DIRECTION OF INVESTMENT OF ACCOUNTS.
12.4.1 SEPARATE INVESTMENT FUNDS. If authorized by the
designated Employer, and at the designated Employer's direction, the Funding
Agent shall establish two or more investment funds (hereinafter each such
fund being referred to as an "Investment Fund"). Each Investment Fund will
have a different investment objective. Each participant or beneficiary, as
the case may be, may file with the designated Employer a written election to
have such part or all of the undistributed amounts credited or to be credited
to such person's accounts invested in such Investment Funds in such
proportions as the participant or beneficiary, as the case may be, may from
time to time determine, subject to such rules as to the time of election, the
amendment of an election and the relative proportions which may be elected as
the designated Employer may provide. All such elections shall be effected as
of the valuation date next following the designated Employer's appropriate
and timely receipt of the participant's or beneficiary's written election.
Every election authorized by this Section 12.4.1 shall be submitted to the
designated Employer on such forms as the designated Employer may provide,
shall be in accordance with such rules and regulations as the designated
Employer may prescribe and, unless otherwise allowed by the designated
Employer, shall be filed at least 30 days prior to the valuation date on
which such transfer is to be effected. In the event that a participant does
not make an election pursuant to the provisions of this subsection, the
Funding Agent shall invest the amounts credited to a participant's accounts
in accordance with the other applicable provisions of the Plan. All income,
gains and losses of each such Investment Fund shall be credited solely to and
charged solely against such Investment Fund. Each Investment Fund shall bear
its share of any expenses of the Fund as determined from time to time by the
designated Employer.
12.4.2 SEGREGATION OF ACCOUNTS FOR PARTICIPANT LOANS. Upon
approval by the designated Employer of a loan pursuant to Section 12.3.11 and
at the direction of the borrower, the Funding Agent shall segregate the
amounts credited to the borrower's accounts in the amount of such loan or
loans. All such directions to segregate any portions of such borrower's
accounts shall be effective as of the annual valuation date, or such other
valuation date as may be established by the designated Employer pursuant to
this Plan, coincidental with or next following the effective date of the
loan. All interest, losses or expenses of or attributable to investment of
such segregated account in such loan or loans shall be credited or charged to
or against such account; provided, however, that interest and principal
repayments, after being credited to such segregated account of the borrower,
shall be charged against such account and credited to the accounts of the
borrower in the Fund for investment by the Funding Agent as provided herein.
Upon repayment in full of such loan, any amounts credited to the segregated
account of the borrower shall be credited to the accounts of the borrower in
the Fund and such amounts shall no longer be segregated by the Funding Agent.
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The direction of a borrower to segregate his or her
accounts for a loan shall be the sole act and responsibility of such
borrower, and any fiduciaries of the Plan who would otherwise be liable or
have any duty or potential liability with respect to the investment of such
funds shall be relieved of any such responsibility, duty or liability
pursuant to Section 404(c) of ERISA to the extent of the exercise of the
direction by the borrower.
12.4.3 SEGREGATION OF ACCOUNTS FOR PARTICIPANT DIRECTION
AND EXERCISE OF PARTICIPANT DIRECTION. If elected in the Adoption
Certificate, upon the adoption or amendment of this Plan or, in the absence
of such election, if authorized by the designated Employer at any other time,
at the designated Employer's direction the Funding Agent shall establish a
segregated account for a participant or beneficiary.
12.4.3.1 Each participant or beneficiary, as the
case may be, may file with the designated Employer a written direction to
have part or all of the undistributed amounts credited to his or her accounts
segregated and invested solely in accordance with his or her directions. At
any time prior to distribution of all amounts credited to such person's
accounts, the participant or beneficiary, as the case may be, may file with
the designated Employer a new written direction to change the portions of his
or her accounts which are so segregated.
12.4.3.2 Any participant or beneficiary, as the
case may be, who so directs the designated Employer to segregate any amounts
shall have exclusive authority, discretion and responsibility to direct the
investment of amounts held in such segregated account. Such participant or
beneficiary shall direct the Funding Agent to invest amounts held in such
segregated account in real or personal property of any kind and may direct
the Funding Agent to change the investments of such segregated account from
time to time; provided, however, that no amounts in such segregated account
shall be invested in any stocks, securities, real property or other assets to
the extent that the Funding Agent is prohibited from making such investments
under other provisions of the Plan, the Internal Revenue Code or ERISA; and,
provided further, that the Funding Agent may limit potential investments to
those which it may reasonably and practically administer.
12.4.3.3 All such directions to segregate any
portions of a participant's or beneficiary's accounts shall be effected only
as of the valuation date next following the designated Employer's receipt of
appropriate and timely directions from the participant or beneficiary, as the
case may be, unless the designated Employer establishes rules which allow
such directions to be effected at an earlier date. Unless otherwise allowed
by the designated Employer, all directions to segregate any portion of a
participant's or beneficiary's accounts shall be filed at least 30 days prior
to the valuation date on which such direction is to be effected. All
directions by a participant or beneficiary with respect to the investment of
amounts credited to a segregated account shall be effected by the Funding
Agent as soon as reasonably practicable following valuation of such account,
subject to the Funding Agent's ability to purchase, sell or convert such
investments or to otherwise comply with such directions.
12.4.3.4 All such directions to segregate shall
first be filed with the designated Employer on such forms as the designated
Employer may provide and shall be in accordance with such rules and
regulations as the designated Employer may prescribe.
12.4.3.5 All income, gains, losses or expenses of
or attributable to investments of a segregated account established hereunder
shall be credited or charged solely to or against such account. In addition,
any investment direction made with respect to such segregated account shall
be the sole act and responsibility of the participant or beneficiary, and any
fiduciaries of the Plan who would otherwise be responsible for or have any
duty or potential liability with respect to the investment of such funds
shall be relieved of any such responsibility, duty or liability pursuant to
Section 404(c) of ERISA. In the event that a participant or beneficiary does
not make a direction to segregate any portion of his or her accounts, then
the Funding Agent shall invest the amounts credited to such accounts in
accordance with the other applicable provisions of the Plan.
12.4.3.6 The participant or beneficiary, as the
case may be, may appoint an investment adviser to direct the investment of
the amounts credited to his or her segregated accounts and shall notify the
designated Employer in writing of such an appointment. The designated
Employer shall act in accordance with instructions of the participant or
beneficiary or the investment adviser. Any costs incurred as a result of the
selection of an investment adviser shall be paid directly by the participant
or beneficiary or, to the extent not directly paid, shall be paid by the
Funding Agent and charged against the segregated account of the participant
or beneficiary.
12.4.4 SEGREGATION OF ACCOUNTS SUBSEQUENT TO TERMINATION OF
EMPLOYMENT OR EARLIER DATE. After termination of employment or such earlier
date elected in the Adoption Certificate, the participant or his or her
beneficiary may file with the designated Employer a written election to have
all or part of the interest of the participant or beneficiary in the Fund
segregated and invested as a separate fund (hereinafter referred to as a
"Segregated Fund"). The designated Employer shall notify the Funding Agent of
such election and the Funding Agent shall comply with such election as of the
valuation date
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following its timely notification by the designated Employer of such
election. Said Segregated Fund shall be invested by the Funding Agent so as
to have a high degree of liquidity and a high degree of protection against
loss of principal. Without limiting the foregoing, the Funding Agent may
invest all or any part of the Segregated Fund in an individual savings
account, savings certificate or similar interest-bearing instrument. A
corporate Funding Agent is authorized to invest in such accounts,
certificates or other instruments issued in its banking capacity (if it is a
bank) or issued by an affiliate of the Funding Agent, and is also authorized
to invest the principal and income of a Segregated Fund through any
appropriate common or collective trust fund maintained by the Funding Agent
for the collective investment of funds held by it in a fiduciary capacity.
The amount invested in a savings account, savings certificate or similar
interest-bearing instrument may exceed the amount insured by the Federal
Deposit Insurance Corporation. Any income, gain or loss with respect to a
Segregated Fund or distribution from a Segregated Fund shall be separately
credited or charged, as the case may be, to such Segregated Fund, and the
Funding Agent shall account separately for each Segregated Fund. Each
Segregated Fund shall bear its share of any expenses of the Fund as
determined from time to time by the designated Employer.
12.4.5 SEGREGATION OF INSURANCE PROCEEDS. Upon the death of
a participant for whose account the Funding Agent holds an insurance policy
or policies on such participant's life, and upon the payment by the insurance
company to the Funding Agent of the proceeds of such policy or policies, such
proceeds shall be credited to such participant's Insurance Proceeds Account
and segregated and invested as a separate fund. The Funding Agent shall
establish subaccounts of such account and separately account for the proceeds
of such policy or policies as follows:
12.4.5.1 That portion of the insurance proceeds
equal to the difference between the face amounts of the insurance policies
under which the proceeds received hereunder are paid and the cash values
immediately prior to the participant's death of all such insurance policies
shall be credited to a separate subaccount;
12.4.5.2 That portion of the insurance proceeds
received hereunder equal to the cash values immediately prior to the
participant's death of all such insurance policies, less policy loans, if
any, shall be credited to a second subaccount.
In no event shall amounts held in the Insurance Proceeds
Account be commingled in any manner with the general assets of the Fund. Any
income or gain with respect to proceeds held in the foregoing subaccounts
shall be credited to a third subaccount. In addition, such third subaccount
shall be credited with any interest accrued and paid by an insurance company
on such proceeds between the date of a participant's death and the date such
proceeds are credited hereunder. Any interest, gain or loss with respect to
amounts held in the third subaccount shall be credited or charged, as the
case may be, to such third subaccount.
12.5 CLAIMS PROCEDURE. The designated Employer has established a
procedure for resolving any disputes or claims arising under the Plan. Unless
otherwise established by the designated Employer by resolution, the following
is the claims procedure under the Plan:
12.5.1 FILING AND DENIAL OF CLAIM. The participant or
beneficiary (hereinafter referred to for purposes of this section as the
"claimant") may file a written claim with the designated Employer requesting
a benefit under the Plan, or objecting to the determination of the benefits
payable hereunder, at any time prior to the expiration of 30 days subsequent
to the date payment of benefits is to commence or would commence if any
benefits were payable. If the designated Employer denies, in whole or in
part, any claim so filed, notice of such denial shall be furnished in writing
to the claimant within 90 days of the designated Employer's receipt of the
claim. The written denial shall state in a manner calculated to be understood
by the claimant:
12.5.1.1 The specific reasons for denial;
12.5.1.2 The specific references to applicable
Plan provisions upon which the denial is based;
12.5.1.3 A description of additional material or
information necessary, if any, for the claimant to perfect the claim and an
explanation of why such material or information is necessary; and
12.5.1.4 A description of the steps to be taken
if the claimant wishes to submit the claim for review.
12.5.2 REVIEW OF DENIAL. In the event a claim for benefits
is denied, in whole or in part, pursuant to Section 12.5.1 above, the
claimant or his or her authorized representative may request in writing,
within 60 days of the
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claimant's receipt of the designated Employer's denial, a review of such
denial. The claimant shall also be entitled to review any applicable Plan
documents and to submit any issues or comments concerning the claim and its
denial in writing to the designated Employer. The designated Employer must
provide to the claimant, within 60 days of receipt of a claimant's request
for review, a written decision of its disposition of the claim upon review;
provided, however, that if special circumstances (such as the need to hold a
hearing) require an extension of time for processing the review, such
decision shall be made within not more than 120 days of receipt of the
claimant's request for review and the designated Employer shall give the
claimant written notice of any such extension prior to the time of the
commencement of such extension. The designated Employer may hold a hearing
for the review of any claim if the claimant so requests in a written request
for review and if the designated Employer, in its sole discretion, determines
such a hearing is necessary due to the complexity of the issues involved or
the nature of the claim. The designated Employer's decision upon review shall
be written in a manner calculated to be understood by the claimant and shall
include specific reasons for the decision and specific references to the
applicable Plan provisions upon which the decision is based.
12.5.3 NOTICE PERIODS AND LEGAL ACTION. The designated
Employer shall inform the participants and beneficiaries of the Plan in
writing, in a timely fashion, of any time limits with respect to filing
claims, requests, denials, notices or decisions hereunder. If a participant
or beneficiary fails to give proper notice or otherwise comply with the rules
and procedures set forth in this section, such participant or beneficiary
shall be barred from any further legal action, including arbitration
proceedings, to contest any determination made under the Plan with respect to
benefits.
12.6 ACTION TAKEN BY DESIGNATED EMPLOYER OR EMPLOYER. All actions
which the designated Employer or an Employer, as the case may be, is
authorized or required to take pursuant to the provisions of the Plan shall,
if a corporation (or its equivalent), be taken by its Board of Directors (or
its equivalent) by resolution duly adopted by such Board, and if a
partnership or proprietorship, by the person or persons with authority to
authorize such actions under the instruments, customs, or applicable law
regulating the governance of such partnership or proprietorship.
12.7 DELEGATION BY DESIGNATED EMPLOYER AND OTHERS. Except for the
powers and duties hereunder relating to the determination of contributions to
the Plan (which are and shall at all times remain the responsibility of each
Employer maintaining the Plan), the termination and amendment of the Plan,
and the appointment and removal of and agreement with a Funding Agent, the
designated Employer may delegate or redelegate to one or more persons or to a
committee such powers and duties assigned to the designated Employer
hereunder as the designated Employer may from time to time deem advisable. In
addition, any person or committee may redelegate the powers and duties
expressly delegated. Any such person or committee to whom powers or duties
are delegated or redelegated shall be considered a named fiduciary with
respect to such powers and duties.
12.8 MEMBERSHIP AND OPERATION OF COMMITTEE. In the event a committee
is appointed by the designated Employer, then its activities shall be
governed by the following rules:
12.8.1 MEMBERSHIP OF COMMITTEE. The committee shall consist
of that number of members as shall be appointed from time to time by the
designated Employer or its delegate. Committee members shall hold office at
the pleasure of the designated Employer or its delegate.
12.8.2 OFFICERS. The committee shall choose from its
members a Chairman and a Secretary, each to serve in such capacity until he
or she resigns, is replaced by the committee or ceases to be a member of the
committee. The Secretary shall keep all records pertinent to the committee's
activities.
12.8.3 MEETINGS AND VOTING. Meetings shall be held from
time to time at such places as may be selected by the Chairman or by a
majority of the members of the committee. All questions to be decided and all
actions to be taken by the committee shall be determined by a majority of the
members at a meeting at which a quorum is present, or by a majority of all
members in writing signed by all members, whether or not voting in favor of
such determination. A majority of all members of the committee shall
constitute a quorum. The committee may authorize one or more of its members
to execute and deliver any receipt or other instrument on behalf of the
committee or to perform any ministerial function of the committee. A member
of the committee who is a participant shall not vote on any question relating
specifically to himself or herself and, for the purpose of such vote, shall
not be counted as a member of the committee. The decision of the committee
shall be conclusive and binding on all parties affected thereby.
12.8.4 BONDS, COMPENSATION AND EXPENSES. Unless otherwise
determined by the designated Employer, the members of the committee shall
serve without bond (except as otherwise required by law) and without
compensation for their services, except that such members shall be entitled
to reimbursement for reasonable expenses incurred and authorized by the
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committee. It is intended that all such expenses of the committee shall be
paid by the designated Employer, but if not so paid, shall be chargeable to
the Fund as an administrative expense.
12.9 NOTIFICATION AND CERTIFICATION BY DESIGNATED EMPLOYER, EMPLOYER
OR COMMITTEE. Whenever notice is to be given or a certification is to be made
by the designated Employer or an Employer, such notice or certification shall
be in writing and signed by a corporate officer, managing partner or the sole
proprietor of the designated Employer or the Employer, as the case may be.
Whenever notice is to be given or a certification is to be made by the
committee, such notice or certification shall be in writing and signed by a
member of the committee. The Funding Agent or any other person receiving such
notice or certification shall be entitled to rely on such notice or
certification so executed without further inquiry.
ARTICLE 13.
MISCELLANEOUS
13.1 RIGHT TO TERMINATE EMPLOYMENT. Nothing herein shall be
considered to give any employee the right to be retained in the employ of an
Employer, interfere with the right of an Employer to discharge any employee
at any time, give an Employer the right to require an employee to remain in
its employ or interfere with the employee's right to terminate employment at
any time.
13.2 LIMITATION ON LIABILITY OF DESIGNATED EMPLOYER, EMPLOYER,
COMMITTEE OR FUNDING AGENT. All benefits payable under the Plan shall be paid
or provided for solely from the Fund and only upon direction of the
designated Employer, and rights with respect thereto shall be enforceable
only against the Fund. Notwithstanding the foregoing, benefits may be
provided in whole or in part, at the direction of the designated Employer, by
application of the Fund to the purchase of an insurance policy or policies
or, in the case of a participant to whom the provisions of Sections 7.5.8 and
7.6.3 apply, an annuity or annuities. To the extent that benefits are
provided for and payable to a participant or beneficiary under any such
insurance policy or policies, or annuity or annuities, the sole
responsibility for such payments shall be that of the issuer thereof. The
designated Employer, Employer, committee or Funding Agent, or any of their
employees or agents, shall not be liable or responsible for or be considered
to have guaranteed the benefits hereunder.
13.3 UNEMPLOYMENT BENEFITS. Any benefits or payments received
hereunder by a participant in the event of retirement or termination of
employment shall be considered conclusively to have been received as benefit
payments from a fund, annuity or insurance contract provided by or through
the Employer within the meaning and for the purpose of any state unemployment
compensation statute adopted in compliance with the Federal Unemployment Tax
Act with respect to each of the weeks falling within the period during which
benefits are received (in the case of benefits payable in periodic
installments) or with respect to such number of weeks as would result from
dividing the lump-sum payment received by the maximum weekly benefit to which
the participant might otherwise be entitled under any such statute (in the
case of payment of a participant's entire interest in one sum).
13.4 CONSOLIDATION OR MERGER OF THE PLAN. In the event of merger,
consolidation or transfer of assets or liabilities between the Fund and any
other fund established under any qualified pension, profit sharing, savings,
stock bonus or thrift plan, each participant hereunder shall be entitled to a
benefit immediately after such merger, consolidation or transfer which is not
less than that which such participant would have been entitled to receive
immediately before such merger, consolidation or transfer. For purposes of
this section, such benefit shall be determined as if the respective plans had
been terminated. In addition, no such merger, consolidation or transfer shall
have the effect of eliminating an optional form of benefit, within the
meaning of Code Section 411(d)(6) and the regulations promulgated thereunder,
available to participants hereunder with respect to the accrued benefit of
the participant determined immediately prior to the date of such merger,
consolidation or transfer.
13.5 EFFECT OF CHANGE OF METHOD OF CREDITING SERVICE. If this Plan
is an amendment or restatement of a prior plan maintained by an Employer
which used an elapsed-time method of crediting service pursuant to Treas.
Reg. Sections 1.410(a)-7, the following rules shall apply with respect to an
employee of such Employer:
13.5.1 The employee shall receive credit, as of the later
of the date the plan is amended or restated and the effective date of the
amendment or restatement, for a number of years of service for all purposes
hereunder equal to the number of one-year periods of service credited to the
employee under the elapsed-time method of crediting service as of the
appropriate date; and
13.5.2 The employee shall receive credit, in the applicable
computation period which includes the appropriate date, for a number of hours
of service for service during that computation period prior to the
appropriate date equal
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to the product of ten hours of service times the number of days such employee
would be credited with at least one hour of service as determined under the
hour-of-service provisions of this Plan.
13.6 SERVICE OF PROCES. In any legal proceeding involving the Plan,
including arbitration, any corporate officer, managing partner or proprietor,
as the case may be, of the designated Employer shall be the designated
Employer's agent for service of process directed to the Plan.
13.7 PERSONS DEALING WITH DESIGNATED EMPLOYER, EMPLOYER, COMMITTEE
AND FUNDING AGENT. No person, corporate or individual, except an employee,
participant or beneficiary, who deals with the designated Employer, Employer,
committee or Funding Agent shall be required to take cognizance of the
provisions of the Plan, or be required to make inquiry as to the authority of
the designated Employer, Employer, committee or Funding Agent to do any act
which it purports to do hereunder; any such person shall be entitled to
conclusively assume that the designated Employer, Employer, committee or
Funding Agent is properly authorized to do any act which it purports to do
hereunder; and any such person shall be under no liability to anyone for any
act done hereunder pursuant to the written direction of the designated
Employer, Employer, committee or Funding Agent.
13.8 PLAN INTENDED TO QUALIFY UNDER SECTION 40L(A) OF INTERNAL
REVENUE CODE. Each Employer maintaining this Plan hereby declares its intent
to create and continue a Plan that qualifies under Section 401(a) of the
Internal Revenue Code. In the event of any ambiguity in the Plan, that
interpretation shall be adopted which most nearly fulfills such stated intent.
13.9 INDEMNIFICATION. To the extent permitted by law and
specifically provided in any agreement entered into with a Funding Agent,
investment manager or named fiduciary, the Employers maintaining this Plan
shall jointly and severally indemnify any such Funding Agent, investment
manager or named fiduciary designated therein. To the extent permitted by law
and in accordance with rules established by the designated Employer from time
to time, each Employer shall indemnify individual trustees, officers,
directors, partners or other managers, and employees of such Employer,
employees of the Plan, the members of any committee which is created, and
such others to whom the designated Employer or such Employer has delegated
administrative and fiduciary duties, except for persons and organizations
(and their employees) who render advice or service for a fee, against any and
all claims, losses, damages, expenses and liabilities arising from their
responsibilities in connection with the Plan and Fund, unless the same are
determined to be due to gross negligence or intentional misconduct.
13.10 TITLES. Titles at the beginning of Articles and sections are
for convenience of reference, shall not be considered a part of the Plan and
shall not influence its construction.
13.11 GOVERNING LAW. The provisions of this Plan shall be construed
and enforced in accordance with the laws of the state designated in the
Adoption Certificate, to the extent that such laws are not preempted by ERISA.
13.12 MATTERS SURVIVING AMENDMENT. If this Plan has been restated or
amended or is the surviving plan after a merger, consolidation or transfer of
assets or liabilities, any rule adopted for and any beneficiary designation
or other participant designation or election form filed under the Plan prior
to the restatement, amendment, merger, consolidation or transfer shall
continue in full force and effect to the extent not inconsistent with this
Plan and applicable law, until otherwise modified by the designated Employer.
* * * * * * * * *
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AMENDMENT NO. 1
TO
POLARIS INDUSTRIES L.P.
401(k) RETIREMENT/SAVINGS PLAN
The undersigned, acting pursuant to the provisions of Article 9 of
the Polaris Industries L.P. 401(k) Retirement/Savings Plan (the "Plan"),
hereby amends the Plan as set forth below, effective December 22, 1994,
unless otherwise specifically set forth herein.
1. The name of the sponsor/employer throughout the Plan is hereby
changed from Polaris Industries L.P. TO Polaris Industries Partners, L.P.
2. The name of the Plan is hereby changed FROM Polaris Industries
L.P. 401(k) Retirement/Savings Plan TO Polaris Industries Partners, L.P.
401(k) Retirement/Savings Plan in each instance in which it appears.
3. Item 1 of the Plan is hereby amended in its entirety to read as
follows:
1. DEFINITION OF EMPLOYER AND DESIGNATED EMPLOYER
[Section 2.2.2; Section 2.2.3]. The term "Employer"
includes the Employer executing this Adoption Certificate
and the following (i) predecessor employers, or (ii)
for-profit or nonprofit corporations, trusts, partnerships
or proprietorships which have adopted this Plan as
participating Employers in accordance with its terms:
a. Name: Polaris Marketing, Inc.
Address: 1225 Highway 169 North, Mpls., MN
55441--5978
EIN: 41-1798105
b. Name: _________________________________
Address: _________________________________
EIN: _________________________________
Attach separate exhibit identified as Exhibit A if the term
"Employer" includes more than two predecessors or
participating Employers.
4. Effective February 1, 1995, Item 20(b) of the Adoption
Certificate is amended in
1
<PAGE>
its entirety to read as follows:
b. Elects to make Matching Contribution only on
each participant's Salary Deferral
Contributions which do not exceed 5 % of
covered compensation.
5. The name of the Trust is hereby amended FROM Polaris Industries
L.P. 401(k) Retirement/Savings Trust TO Polaris Industries Partners, L.P.
401(k) Retirement/Savings Trust.
6. Except as amended herein, all provisions of the Plan will remain
in full force and effect.
IN WITNESS WHEREOF, the Employer has executed this document as of
this 23rd day of March, 1995.
In the Presence of: POLARIS INDUSTRIES PARTNERS, L.P.
By s/s Janet E. Klis By s/s Kenneth D. Larson
---------------------- -----------------------------
Its: President and Chief Operating Officer
--------------------------------------------
2
<PAGE>
RESOLUTIONS ADOPTED BY THE WRITTEN ACTION
THE BOARD OF DIRECTORS
OF
POLARIS INDUSTRIES INC.
EFFECTIVE JUNE 23, 1997
AMENDMENT NO. 2
TO
401(k) RETIREMENT/SAVINGS PLAN
WHEREAS, this Corporation previously adopted the above-named
qualified plan (hereinafter referred to as the "Plan"); and
WHEREAS, pursuant to the provisions of said Plan, the Corporation
has the right to amend the Plan at any time; and
WHEREAS, in accordance with Revenue Procedures 96-55 and 96-49, it
is deemed necessary and desirable for the Corporation to amend the Plan at
this time; and
WHEREAS, the following Amendment has been approved and authorized by
this Board of Directors;
NOW, THEREFORE, RESOLVED, that the Plan is hereby amended by
adoption of the following exhibits, effective as of the dates set forth
therein.
"MODEL AMENDMENTS
RESTRICTIONS ON AMOUNTS ATTRIBUTABLE TO CONTRIBUTIONS TO A PENSION PLAN
IN ACCORDANCE WITH REVENUE PROCEDURE 96-55, ARTICLE 7 OF THE MODEL
PROFIT SHARING PLAN OR THE MODEL OPTIONAL 401(k) PROFIT SHARING PLAN IS
AMENDED, EFFECTIVE AS OF THE LATEST OF (i) THE FIRST DAY OF THE FIRST PLAN
YEAR COMMENCING AFTER DECEMBER 12, 1994, (ii) MARCH 12, 1995, AND (iii) IF
THE PLAN IS ENTITLED TO SPECIAL RELIANCE UNDER REVENUE PROCEDURES 89-9, 89-13
OR 93-39, AS MODIFIED FROM TIME TO TIME, AND SUBJECT TO THE CONDITIONS OF
REVENUE RULING 94-76, THE FIRST DAY OF THE FIRST PLAN YEAR BEGINNING AFTER
THE EXPIRATION OF THE EXTENDED RELIANCE PERIOD PROVIDED FOR UNDER SUCH
REVENUE PROCEDURES, BY ADDING AT THE END THEREOF THE FOLLOWING SECTION 7.15
TO THE MODEL PROFIT SHARING PLAN OR SECTION 7.16 TO THE MODEL OPTIONAL 401(k)
PROFIT SHARING PLAN:
`7.15/7.16 RESTRICTIONS ON AMOUNTS ATTRIBUTABLE TO CONTRIBUTIONS TO
A PENSION PLAN. NOTWITHSTANDING ANY PROVISION OF THIS PLAN TO THE CONTRARY,
TO THE EXTENT THAT ANY OPTIONAL FORM OF BENEFIT UNDER THIS PLAN PERMITS A
DISTRIBUTION PRIOR TO THE EMPLOYEE'S RETIREMENT, DEATH, DISABILITY, OR
SEVERANCE FROM EMPLOYMENT, AND PRIOR TO PLAN TERMINATION, THE OPTIONAL FORM
OF BENEFIT IS NOT AVAILABLE WITH RESPECT TO BENEFITS ATTRIBUTABLE TO ASSETS
1
<PAGE>
(INCLUDING THE POST-TRANSFER EARNINGS THEREON) AND LIABILITIES THAT ARE
TRANSFERRED, WITHIN THE MEANING OF CODE SECTION 414(l), TO THIS PLAN FROM A
MONEY PURCHASE PENSION PLAN QUALIFIED UNDER CODE SECTION 401(a) (OTHER THAN
ANY PORTION OF THOSE ASSETS AND LIABILITIES ATTRIBUTABLE TO VOLUNTARY
EMPLOYEE CONTRIBUTIONS).'
AMENDMENT PROVIDING FOR COMPLIANCE WITH REQUIREMENTS OF THE
UNIFORMED SERVICES EMPLOYMENT AND REEMPLOYMENT RIGHTS ACT OF 1994
IN ACCORDANCE WITH REVENUE PROCEDURE 96-49, THE FOLLOWING SECTION 10.3
IS ADDED TO ARTICLE 10 OF THE PLAN, EFFECTIVE OCTOBER 13, 1996:
`10.3 CONTRIBUTIONS, BENEFITS AND SERVICE CREDIT. NOTWITHSTANDING ANY
PROVISION OF THIS PLAN TO THE CONTRARY, CONTRIBUTIONS, BENEFITS AND SERVICE
CREDIT WITH RESPECT TO QUALIFIED MILITARY SERVICE WILL BE PROVIDED IN ACCORDANCE
WITH CODE SECTION 414(u).'
IN ACCORDANCE WITH REVENUE PROCEDURE 96-49, THE FOLLOWING SECTION
12.3.11.11 IS ADDED TO ARTICLE 12 OF THE PLAN, EFFECTIVE OCTOBER 13, 1996:
`12.3.11.11 WITH RESPECT TO LOAN REPAYMENTS DURING PERIODS OF MILITARY
AND GOVERNMENT SERVICE OF THE BORROWER, LOAN REPAYMENTS WILL BE SUSPENDED UNDER
THIS PLAN AS PERMITTED UNDER CODE SECTION 414(u)(4).'"
2
<PAGE>
AMENDMENT NO. 3
TO
POLARIS INDUSTRIES PARTNERS, L.P.
401(K) RETIREMENT/SAVINGS PLAN
The undersigned, acting pursuant to the provisions of Article 9 of the
Polaris Industries Partners, L.P. 401(k) Retirement/Savings Plan (the "Plan"),
hereby amends the Plan as set forth below, effective January 1, 1997, unless
otherwise specifically set forth herein.
1. The name of the sponsor/employer throughout the Plan is hereby
changed from Polaris Industries Partners, L.P. TO Polaris Industries Inc., a
Delaware corporation.
2. The name of the Plan is hereby changed FROM Polaris Industries
Partners, L.P. 401(k) Retirement/Savings Plan TO Polaris Industries Inc. 401(k)
Retirement/Savings Plan in each instance in which it appears.
3. The name of the Trust is hereby amended FROM Polaris Industries
Partners, L.P. 401(k) Retirement/Savings Trust TO Polaris Industries Inc. 401(k)
Retirement/Savings Trust.
4. Except as amended herein, all provisions of the Plan will remain in
full force and effect.
IN WITNESS WHEREOF, the Employer has executed this document as of this
16th Day of December, 1997.
In the Presence of: POLARIS INDUSTRIES INC.
s/s Mary Zins By s/s Michael Malone
---------------------- -------------------------------------
Its: VP - Finance/CFO/Secretary
1
<PAGE>
AMENDMENT NO. 4
- --------------------------------------------------------------------------------
RESOLUTIONS ADOPTED BY BOARD OF DIRECTORS
OF
POLARIS INDUSTRIES INC.
- --------------------------------------------------------------------------------
AMENDMENT OF 401(k) RETIREMENT/SAVINGS PLAN
The Board discussed the participation in the 401(k) Retirement/Savings
Plan by its wholly-owned subsidiary, Polaris Sales Inc. After discussion and
upon motion duly made and seconded, the following resolutions were unanimously
adopted:
WHEREAS, Section 2.2.2 of Article 2 of the Polaris Industries Inc.
401(k) Retirement/ Savings Plan (the "401(k) Plan") provides that certain
corporations may, with the consent of the plan sponsor, Polaris Industries Inc.,
elect to participate in the 401(k) Plan by resolutions duly adopted by the Board
of Directors of such corporation; and
WHEREAS, Polaris Sales Inc. has elected by resolutions of its Board of
Directors to adopt the 401(k) Plan and become a designated employer as defined
thereunder, effective January 1, 1999;
NOW, THEREFORE, RESOLVED, that this corporation hereby consents to the
adoption of the Polaris Industries Inc. 401(k) Retirement/Savings Plan and the
Polaris Industries Inc. 401(k) Retirement/Savings Trust, effective as of January
1, 1999, by Polaris Sales, Inc. and that effective as of such date, Item 1 of
the Adoption Certificate is hereby amended to add Polaris Sales Inc. as a
Designated Employer.
RESOLVED, FURTHER, that this amendment shall be deemed to be Amendment
No. 4 to the Plan and shall be appended thereto, and that the officers of this
corporation be and they hereby are authorized and directed to cause a copy of
these resolutions to be served upon the trustee of said Plan and Trust and upon
such other persons or agencies as they shall deem necessary or advisable.
<PAGE>
AMENDMENT NO. 5
TO
POLARIS INDUSTRIES INC.
401(k) RETIREMENT/SAVINGS PLAN
The undersigned, acting pursuant to the provisions of Article 9 of the
Polaris Industries Inc. 401(k) Retirement/Savings Plan (the "Plan"), hereby
amends the Plan as set forth below, effective April 1, 1999, unless otherwise
specifically set forth herein.
1. The name of the Plan is hereby changed FROM Polaris Industries
Inc. 401(k) Retirement/Savings Plan TO Polaris 401(k) Retirement Savings Plan in
all instances in which it appears.
2. Items B(3) and (4) of the Adoption Certificate is hereby
changed in its entirety to read as follows:
/X/ 3. Corporation
S Corporation / / Yes /X/ No
/ / 4. Other form of organization
Describe:__________________________________
3. Item 3 of the Adoption Certificate is hereby amended in its
entirety to read as follows:
3. DEFINITION OF ELIGIBLE EMPLOYEE [Section 2.2.8].
The term "eligible employee" does not include the following
category(ies) of employees: (NONE)
4. Item 7 of the Adoption Certificate is hereby amended in its
entirety to read as follows:
7. ENTRY DATE [Section 2.3.3].
Elects optional entry date:
/ / a. As provided in the Plan;
/X/ b. With respect to exempt and nonexempt
salaried employees, the first
working day of the month following
employment;
1
<PAGE>
/X/ c. With respect to hourly employees,
the first pay period following the
completion of 480 hours of service;
and
/X/ d. With respect to part time and
seasonal employees, the first pay
period following the completion of
1,000 hours of service.
5. Section 2.3.4.3 of Article 2 of the Plan is hereby amended in
its entirety to read as follows:
2.3.4.3 The "DAILY VALUATION DATE," which is every business
day of the plan year. This Section 2.3.4.3 shall be effective
as of the date agreed to by the Funding Agent and the proper
officers of the designated Employer.
6 Section 2.4.3 of Article 2 of the Plan is hereby amended by
adding the following language to the end thereof:
Notwithstanding any other provisions of the Plan to the
contrary, for purposes of determining an employee's
"ELIGIBILITY" to become a participant under the Plan, an
employee shall enter the Plan and become a participant as
follows: (i) with respect to hourly employees, the date the
employee completes 480 hours of service; and (ii) with respect
to part time and seasonal employees, the date the employee
completes 1,000 hours of service. Such hours of service shall
be determined starting with the date the employee first
completes one hour of service with an Employer or Affiliate
and ending on the date such required number of hours are
completed; provided, however, that if an employee completes
one "year of service" as defined hereinabove, such employee
shall become a participant in the Plan on the first entry date
set forth in Section 2.3.3.
7. Item 10 of the Adoption Certificate is hereby amended in its
entirety to read as follows:
10. SERVICE [Section 2.4.1]. Service for eligibility and
vesting includes service with the following predecessor(s) of
the Employer or unrelated employer(s):
Polaris Industries, Inc. and Polaris Industries Partners, L.P.
8. Sections 7.1.1.2, 7.1.4.5.2, 7.5, 7.5.8.4 and 7.6.3.4 of Article 7
of the Fredrikson & Byron Model Optional 401(k) Profit Sharing Plan are hereby
amended in part by replacing "$3,500" with "$5,000."
9. Section 7.12 of the Fredrikson & Byron Model Optional 401(k) Profit
Sharing Plan is hereby amended to provide that hardship withdrawals are not
permitted from a participant's Matching Contribution Account.
2
<PAGE>
10. Item 17(a)(i) of the Adoption Certificate is hereby amended in
its entirety to read as follows:
17. PARTICIPATION [Section 3.1.2; Section 3.1.3;
Section 3.1.4].
a. Service required:
/X/ i. * months (not greater than 30 for
plan years beginning prior to
January 1, 1989, nor greater than 18
for plan years beginning after
December 31, 1988); with respect to
participation in Salary Deferral
Contributions and Matching
Contributions only, * months (not
greater than six months for plan
years beginning after December 31,
1988)
________________
*With respect to exempt and nonexempt salaried
employees, the first working day of the month
following employment; with respect to hourly
employees, the first pay period following the
completion of 480 hours of service; and with respect
to part time and seasonal employees, the first pay
period following the completion of 1,000 hours of
service.
11. Item 34 of the Adoption Certificate is hereby amended in its
entirety to read as follows:
N/A 34. INSURANCE AS INVESTMENT OF PARTICIPANT'S
ACCOUNTS [Section 12.3.8].
/ / Elects to permit the purchase of life
insurance as an investment of a
participant's accounts
The applicable limitations will be under:
/ / a. Section 12.3.8.3.1 (1/4-1/2 rule)
/ / b. Section 12.3.8.3.2
(accumulation/participation rule)
12. Section 12.2.2.2 of Article 12 of the Plan is hereby amended
in its entirety to read as follows:
12.2.2.2 QUARTERLY AND DAILY VALUATION DATES. As of each
quarterly valuation date and daily valuation date, the
designated Employer may, in the order listed, perform the
functions set forth in 12.2.2.1.1, 12.2.2.1.2, 12.2.2.1.3,
12.2.2.1.4 (but only to the extent of Salary Deferral
Contributions accumulated since the preceding valuation date),
12.2.2.1.5 and 12.2.2.1.6.
13. Section 12.3.3 of Article 12 of the Plan is hereby amended in
its entirety to read as follows:
3
<PAGE>
12.3.3 RULE-MAKING AND WRITTEN ELECTIONS. The designated
Employer shall establish, from time to time, rules and regulations for
the administration of the Plan and the transaction of its business.
Wherever this Plan requires a participant to file a written election,
the designated Employer shall, in its discretion, adopt such forms as
it deems appropriate or may permit such election to be made in any
other manner that corresponds with the current administration of the
Plan.
14. Item 35 of the Adoption Certificate is hereby amended in its
entirety to read as follows:
35. PARTICIPANT LOANS [Section 12.3.11].
/X/ Elects to permit participant loans
Except as amended herein, all provisions of the Plan will remain in
full force and effect.
IN WITNESS WHEREOF, the Employer has executed this document as of this
1st day of April, 1999.
In the Presence of: POLARIS INDUSTRIES INC.
/s/ Janet L. Bishop By /s/ Michael Malone
- -------------------------- ---------------------------------
Its VP - Finance/CFO/Secretary
------------------------------
4
<PAGE>
EXHIBIT 99.2
TRUST AGREEMENT
BETWEEN
-----------------------------------------------------------------------
POLARIS INDUSTRIES INC.
AND
FIDELITY MANAGEMENT TRUST COMPANY
-----------------------------------------------------------------------
POLARIS 401(K) RETIREMENT SAVINGS PLAN
TRUST
DATED AS OF APRIL 1, 1999
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
1 TRUST..................................................................2
2 EXCLUSIVE BENEFIT AND REVERSION OF SPONSOR CONTRIBUTIONS...............2
3 DISBURSEMENTS..........................................................2
(a) Administrator Directed Disbursements
(b) Participant Withdrawal Requests
(c) Limitations
4 INVESTMENT OF TRUST....................................................3
(a) Selection of Investment Options
(b) Available Investment Options
(c) Participant Direction
(d) Mutual Funds
(e) General Purpose Participant Loans
(f) Participant Loans for the Purchase of a Primary Residence
(g) Participation in Collective Investment Funds
(h) Reliance of Trustee on Directions
(i) Trustee Powers
5 RECORDKEEPING AND ADMINISTRATIVE SERVICES TO BE PERFORMED..............8
(a) General
(b) Accounts
(c) Inspection and Audit
(d) Effect of Plan Amendment
(e) Returns, Reports and Information
6 COMPENSATION AND EXPENSES..............................................9
7 DIRECTIONS AND INDEMNIFICATION.........................................10
(a) Identity of Administrator and Named Fiduciary
(b) Directions from Administrator
(c) Directions from Named Fiduciary
(d) Co-Fiduciary Liability
(e) Indemnification
(f) Survival
</TABLE>
-i-
2
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
8 RESIGNATION OR REMOVAL OF TRUSTEE......................................11
(a) Resignation
(b) Removal
9 SUCCESSOR TRUSTEE......................................................11
(a) Appointment
(b) Acceptance
(c) Corporate Action
10 TERMINATION............................................................12
11 RESIGNATION, REMOVAL, AND TERMINATION NOTICES..........................12
12 DURATION...............................................................12
13 AMENDMENT OR MODIFICATION..............................................12
14 ELECTRONIC SERVICES....................................................13
15 GENERAL................................................................14
(a) Performance by Trustee, its Agents or Affiliates
(b) Entire Agreement
(c) Waiver
(d) Successors and Assigns
(e) Partial Invalidity
(f) Section Headings
16 GOVERNING LAW..........................................................14
(a) Massachusetts Law Controls
(b) Trust Agreement Controls
</TABLE>
SCHEDULES
- ---------
"A" Administrative Services
"B" Fee Schedule
"C" Investment Options
"D" Administrator's Authorization Letter
"E" Named Fiduciary's Authorization Letter
"F" IRS Determination Letter
"G" Telephone Exchange Guidelines
"H" Operational Guidelines for Non-Fidelity Mutual Funds
-ii-
3
<PAGE>
TRUST AGREEMENT, dated as of the first day of April, 1999, between
POLARIS INDUSTRIES INC., a Delaware corporation, having an office at 1225
Highway 169 North, Minneapolis, MN 55441 (the "Sponsor"), and FIDELITY
MANAGEMENT TRUST COMPANY, a Massachusetts trust company, having an office at
82 Devonshire Street, Boston, Massachusetts 02109 (the "Trustee").
WITNESSETH:
WHEREAS, the Sponsor is the sponsor of the Polaris 401(k) Retirement
Savings Plan (the "Plan"); and
WHEREAS, the Sponsor wishes to establish a trust to hold and invest Plan
assets under the Plan for the exclusive benefit of participants in the Plan
and their beneficiaries; and
WHEREAS, as of the date of this Agreement set forth above, the Sponsor
also serves as the named fiduciary of the Plan (within the meaning of
section 402(a) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) (the "Named Fiduciary"); and
WHEREAS, the Trustee is willing to hold and invest the aforesaid Plan
assets in trust among several investment options selected by the Named
Fiduciary; and
WHEREAS, the Sponsor wishes to have the Trustee perform certain
ministerial recordkeeping and administrative functions under the Plan; and
WHEREAS, as of the date of this Agreement as set forth above, the
Sponsor serves as the administrator of the Plan (within the meaning of
section 3(16)(A) of ERISA) (the "Administrator"); and
<PAGE>
WHEREAS, the Trustee is willing to perform recordkeeping and
administrative services for the Plan if the services are purely ministerial
in nature and are provided within a framework of plan provisions, guidelines
and interpretations conveyed in writing to the Trustee by the Administrator.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements set forth below, the Sponsor and the Trustee
agree as follows:
SECTION 1. TRUST. The Sponsor hereby establishes the Polaris 401(k)
Retirement Savings Plan Trust (the "Trust") with the Trustee. The Trust
shall consist of an initial contribution of money or other property
acceptable to the Trustee in its sole discretion, made by the Sponsor or
transferred from a previous trustee under the Plan, such additional sums of
money and Sponsor Stock (hereinafter defined) as shall from time to time be
delivered to the Trustee under the Plan, all investments made therewith and
proceeds thereof, and all earnings and profits thereon, less the payments
that are made by the Trustee as provided herein. The Trustee hereby accepts
the Trust on the terms and conditions set forth in this Agreement. In
accepting this Trust, the Trustee shall be accountable for the assets
received by it, subject to the terms and conditions of this Agreement.
SECTION 2. EXCLUSIVE BENEFIT AND REVERSION OF SPONSOR CONTRIBUTIONS. Except
as provided under applicable law, no part of the Trust may be used for, or
diverted to, purposes other than the exclusive benefit of the participants in
the Plan or their beneficiaries or the reasonable expenses of Plan
administration.
SECTION 3. DISBURSEMENTS.
(a) ADMINISTRATOR-DIRECTED DISBURSEMENTS. The Trustee shall make
disbursements in the amounts and in the manner that the Administrator directs
from time to time in writing. The Trustee shall have no responsibility to
ascertain such direction's compliance with the terms of the Plan or of any
applicable law or the direction's effect for tax purposes or otherwise; nor
shall the Trustee have any responsibility to see to the application of any
disbursement.
(b) PARTICIPANT WITHDRAWAL REQUESTS. The Administrator hereby directs
that, pursuant to the Plan, a participant withdrawal request (in-service,
hardship, or full withdrawal) may be made by the participant by telephone, or
in such other manner as may be agreed to from time to time by the Sponsor and
Trustee, and the Trustee shall process such request only after the identity
of the participant is
2
<PAGE>
verified by use of a personal identification number ("PIN") and social
security number. The Trustee shall forward the withdrawal document to the
participant for execution and submission for approval to the Administrator.
The Administrator shall have the responsibility for approving the withdrawal
and instructing the Trustee to send the proceeds to the Administrator or to
the participant if so directed by the Administrator.
(c) LIMITATIONS. The Trustee shall not be required to make any
disbursement in excess of the net realizable value of the assets of the Trust
at the time of the disbursement. The Trustee shall make cash disbursements in
accordance with the applicable source and fund withdrawal hierarchy as
documented in the Plan Administrative Manual, unless the Administrator has
provided a written direction to the contrary.
SECTION 4. INVESTMENT OF TRUST.
(a) SELECTION OF INVESTMENT OPTIONS. The Trustee shall have no
responsibility for the selection of investment options under the Trust and
shall not render investment advice to any person in connection with the
selection of such options.
(b) AVAILABLE INVESTMENT OPTIONS. The Named Fiduciary shall direct the
Trustee as to the investment options in which the Trust shall be invested
during the period beginning on the date of the initial transfer of assets to
the Trust and ending on the date of the completion of the reconciliation of
participant records ("Recordkeeping Reconciliation Period"), and the
investment options which Plan participants may invest following the
Recordkeeping Reconciliation Period, subject to the following limitations.
The Named Fiduciary may determine to offer as investment options only: (i)
securities issued by the investment companies advised by Fidelity Management
& Research Company ("Fidelity Mutual Funds") and certain securities issued by
investment companies not advised by Fidelity Management & Research Company
("Non-Fidelity Mutual Funds") (collectively, "Mutual Funds"), (ii) equity
securities issued by the Sponsor or an affiliate which are publicly-traded
and which are "qualifying employer securities" within the meaning of section
407(d)(5) of ERISA ("Sponsor Stock"), (iii) notes evidencing loans to Plan
participants in accordance with the terms of the Plan, and (iv) collective
investment funds maintained by the Trustee for qualified plans.
The Trustee shall be considered a fiduciary with investment discretion
only with respect to Plan assets that are invested in collective investment
funds maintained by the Trustee for qualified plans.
3
<PAGE>
The investment options initially selected by the Named Fiduciary are
identified on Schedules "A" and "C" attached hereto. The Named Fiduciary may
add additional investment options with the consent of the Trustee and upon
mutual amendment of this Trust Agreement and the Schedules thereto to reflect
such additions.
(c) PARTICIPANT DIRECTION. As authorized under the Plan, each Plan
participant shall direct the Trustee in which investment option(s) to invest
the assets in the participant's individual accounts. Such directions may be
made by Plan participants by use of the telephone exchange system maintained
for such purposes by the Trustee or its agent, in accordance with written
Telephone Exchange Guidelines attached hereto as Schedule "G". In the event
that the Trustee fails to receive a proper direction, the assets shall be
invested in the investment option set forth for such purpose on Schedule "C",
until the Trustee receives a proper direction.
(d) MUTUAL FUNDS. The Named Fiduciary hereby acknowledges that it has
received from the Trustee a copy of the prospectus for each Fidelity Mutual
Fund selected by the Named Fiduciary as a Plan investment option or
short-term investment fund. All transactions involving Non-Fidelity Mutual
Funds shall be done in accordance with the Operational Guidelines attached
hereto as Schedule "H". Trust investments in Mutual Funds shall be subject
to the following limitations:
(i) EXECUTION OF PURCHASES AND SALES. Purchases and sales of
Mutual Funds (other than for exchanges) shall be made on the date on which
the Trustee receives from the Administrator in good order all information,
documentation and wire transfer of funds (if applicable) necessary to
accurately effect such transactions. Exchanges of Mutual Funds shall be
made in accordance with the Telephone Exchange Guidelines attached hereto as
Schedule "G".
(ii) VOTING. At the time of mailing of notice of each annual or
special stockholders' meeting of any Mutual Fund, the Trustee shall send a copy
of the notice and all proxy solicitation materials to each Plan participant who
has shares of the Mutual Fund credited to the participant's accounts, together
with a voting direction form for return to the Trustee or its designee. The
participant shall have the right to direct the Trustee as to the manner in which
the Trustee is to vote the shares credited to the participant's accounts (both
vested and unvested). The Trustee shall vote the
4
<PAGE>
shares as directed by the participant. The Trustee shall not vote shares for
which it has received no directions from the participant.
During the Recordkeeping Reconciliation Period, the Named Fiduciary
shall have the right to direct the Trustee as to the manner in which the
Trustee is to vote the shares of the Mutual Funds in the Trust. Following
the Recordkeeping Reconciliation Period the Named Fiduciary shall continue to
have the right to direct the Trustee as to the manner in which the Trustee is
to vote the Mutual Fund shares held in a short-term liquidity reserve for a
unitized investment option.
With respect to all rights other than the right to vote, the Trustee
shall follow the directions of the participant and if no such directions are
received, the directions of the Named Fiduciary. The Trustee shall have no
further duty to solicit directions from participants or the Named Fiduciary.
(e) GENERAL PURPOSE PARTICIPANT LOANS. The Administrator shall act as
the Trustee's agent for general purpose participant loan notes and as such
shall (i) separately account for repayments of such loans and clearly
identify such assets as Plan assets and (ii) collect and remit all principal
and interest payments to the Trustee. To originate a participant loan, the
Plan participant shall direct the Trustee as to the term and amount of the
loan to be made from the participant's individual account. Such directions
shall be made by Plan participants by use of the telephone exchange system
maintained for such purpose by the Trustee or its agent. The Trustee shall
determine, based on the current value of the participant's account on the
date of the request and any guidelines provided by the Sponsor, the amount
available for the loan. Based on the interest rate supplied by the Sponsor
in accordance with the terms of the Plan, the Trustee shall advise the
participant of such interest rate, as well as the installment payment
amounts. The Trustee shall distribute the Participant loan agreement and
truth-in-lending disclosure with the proceeds check to the participant. To
facilitate recordkeeping, the Trustee may destroy the original of any
promissory note made in connection with a loan to a participant under the
Plan, provided that the Trustee first creates a duplicate by a photographic
or optical scanning or other process yielding a reasonable facsimile of the
promissory note and the Plan participant's signature thereon, which duplicate
may be reduced or enlarged in size from the actual size of the original
promissory note.
(f) PARTICIPANT LOANS FOR THE PURCHASE OF A PRIMARY RESIDENCE. The
Administrator shall act as the Trustee's agent for participant loan notes for
the purchase of a primary residence and as such
5
<PAGE>
shall (i) separately account for repayments of such loans and clearly
identify such assets as Plan assets and (ii) collect and remit all principal
and interest payments to the Trustee. To originate a participant loan, the
Plan participant shall direct the Trustee as to the term and amount of the
loan to be made from the participant's individual account. Such directions
shall be made by Plan participants by use of the telephone exchange system
maintained for such purpose by the Trustee or its agent. The Trustee shall
determine, based on the current value of the participant's account on the
date of the request and any guidelines provided by the Sponsor, the amount
available for the loan. Based on the interest rate supplied by the Sponsor
in accordance with the terms of the Plan, the Trustee shall advise the
participant of such interest rate, as well as the installment payment
amounts. The Trustee shall forward the loan document to the participant for
execution and submission for processing to the Trustee. In all cases,
processing by the Trustee shall be made within thirty (30) days of the
participant's initial request (the origination date).
(g) PARTICIPATION IN COLLECTIVE INVESTMENT FUNDS. To the extent that
the Named Fiduciary selects as an investment option the Managed Income
Portfolio of the Fidelity Group Trust for Employee Benefit Plans (the "Group
Trust"), the Sponsor hereby (A) agrees to the terms of the Group Trust and
adopts said terms as a part of this Agreement and (B) acknowledges that it
has received from the Trustee a copy of the Group Trust, the Declaration of
Separate Fund for the Managed Income Portfolio of the Group Trust, and the
Circular for the Managed Income Portfolio.
(h) RELIANCE OF TRUSTEE ON DIRECTIONS.
(i) The Trustee shall not be liable for any loss, or by reason of
any breach, which arises from any participant's exercise or non-exercise of
rights under this Section 4 over the assets in the participant's accounts.
(ii) The Trustee shall not be liable for any loss, or by reason of
any breach, which arises from the Named Fiduciary's exercise or non-exercise
of rights under this Section 4, unless it was clear on their face that the
actions to be taken under the Named Fiduciary's directions were prohibited by
the fiduciary duty rules of section 404(a) of ERISA or were contrary to the
terms of the Plan or this Agreement.
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(i) TRUSTEE POWERS. The Trustee shall have the following powers and
authority:
(i) Subject to paragraphs (b) and (c) of this Section 4, to
sell, exchange, convey, transfer, or otherwise dispose of any property held
in the Trust, by private contract or at public auction. No person dealing
with the Trustee shall be bound to see to the application of the purchase
money or other property delivered to the Trustee or to inquire into the
validity, expediency, or propriety of any such sale or other disposition.
(ii) Subject to paragraphs (b) and (c) of this Section 4, to
invest in Investment Contracts and short term investments (including interest
bearing accounts with the Trustee or money market mutual funds advised by
affiliates of the Trustee) and in collective investment funds maintained by
the Trustee for qualified plans, in which case the provisions of each
collective investment fund in which the Trust is invested shall be deemed
adopted by the Sponsor and the provisions thereof incorporated as a part of
this Trust as long as the fund remains exempt from taxation under Sections
401(a) and 501(a) of the Internal Revenue Code of 1986 (the "CODE"), as
amended.
(iii) To cause any securities or other property held as part of
the Trust to be registered in the Trustee's own name, in the name of one or
more of its nominees, or in the Trustee's account with the Depository Trust
Company of New York and to hold any investments in bearer form, but the books
and records of the Trustee shall at all times show that all such investments
are part of the Trust.
(iv) To keep that portion of the Trust in cash or cash balances
as the Named Fiduciary or Administrator may, from time to time, deem to be in
the best interest of the Trust.
(v) To make, execute, acknowledge, and deliver any and all
documents of transfer or conveyance and to carry out the powers herein
granted.
(vi) To borrow funds from a bank not affiliated with the Trustee
in order to provide sufficient liquidity to process Plan transactions in a
timely fashion; provided that the cost of such borrowing shall be allocated
in a reasonable fashion to the investment fund(s) in need of liquidity.
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(vii) To settle, compromise, or submit to arbitration any claims,
debts, or damages due to or arising from the Trust; to commence or defend
suits or legal or administrative proceedings; to represent the Trust in all
suits and legal and administrative hearings; and to pay all reasonable
expenses arising from any such action, from the Trust if not paid by the
Sponsor.
(viii) To employ legal, accounting, clerical, and other assistance
as may be required in carrying out the provisions of this Agreement and to
pay their reasonable expenses and compensation from the Trust if not paid by
the Sponsor.
(ix) To invest all of any part of the assets of the Trust in any
collective investment trust or group trust which then provides for the
pooling of the assets of plans described in Section 401(a) and exempt from
tax under Section 501(a) of the Code, or any comparable provisions of any
future legislation that amends, supplements, or supersedes those sections,
provided that such collective investment trust or group trust is exempt from
tax under the Code or regulations or rulings issued by the Internal Revenue
Service; the provisions of the document governing such collective investment
trusts or group trusts, as it may be amended from time to time, shall govern
any investment therein and are hereby made a part of this Trust Agreement.
(x) To do all other acts although not specifically mentioned
herein, as the Trustee may deem necessary to carry out any of the foregoing
powers and the purposes of the Trust.
SECTION 5. RECORDKEEPING AND ADMINISTRATIVE SERVICES TO BE PERFORMED.
(a) GENERAL. The Trustee shall perform those recordkeeping and
administrative functions described in Schedule "A" attached hereto. These
recordkeeping and administrative functions shall be performed within the
framework of the Administrator's written directions regarding the Plan's
provisions, guidelines and interpretations.
(b) ACCOUNTS. The Trustee shall keep accurate accounts of all
investments, receipts, disbursements, and other transactions hereunder, and
shall report the value of the assets held in the Trust as of the last day of
each fiscal quarter of the Plan and, if not on the last day of a fiscal
quarter, the date on which the Trustee resigns or is removed as provided in
Section 8 of this Agreement or is terminated as provided in Section 10 (the
"Reporting Date"). Within thirty (30) days following each Reporting Date or
within sixty (60) days in the case of a Reporting Date caused by the
resignation or
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removal of the Trustee, or the termination of this Agreement, the Trustee
shall file with the Administrator a written account setting forth all
investments, receipts, disbursements, and other transactions effected by the
Trustee between the Reporting Date and the prior Reporting Date, and setting
forth the value of the Trust as of the Reporting Date. Except as otherwise
required under ERISA, upon the expiration of six (6) months from the date of
filing such account with the Administrator, the Trustee shall have no
liability or further accountability to anyone with respect to the propriety
of its acts or transactions shown in such account, except with respect to
such acts or transactions as to which the Sponsor shall within such six (6)
month period file with the Trustee written objections.
(c) INSPECTION AND AUDIT. All records generated by the Trustee in
accordance with paragraphs (a) and (b) shall be open to inspection and audit,
during the Trustee's regular business hours prior to the termination of this
Agreement, by the Administrator or any person designated by the
Administrator. Upon the resignation or removal of the Trustee or the
termination of this Agreement, the Trustee shall provide to the
Administrator, at no expense to the Sponsor, in the format regularly provided
to the Administrator, a statement of each participant's accounts as of the
resignation, removal, or termination, and the Trustee shall provide to the
Administrator or the Plan's new recordkeeper such further records as are
reasonable, at the Sponsor's expense.
(d) EFFECT OF PLAN AMENDMENT. A confirmation of the current qualified
status of the Plan is attached hereto as Schedule "F". The Trustee's
provision of the recordkeeping and administrative services set forth in this
Section 5 shall be conditioned on the Sponsor delivering to the Trustee a
copy of any amendment to the Plan as soon as administratively feasible
following the amendment's adoption, with, if requested, an IRS determination
letter or an opinion of counsel substantially in the form of Schedule "F"
covering such amendment, and on the Administrator providing the Trustee on a
timely basis with all the information the Administrator deems necessary for
the Trustee to perform the recordkeeping and administrative services and such
other information as the Trustee may reasonably request.
(e) RETURNS, REPORTS AND INFORMATION. The Administrator shall be
responsible for the preparation and filing of all returns, reports, and
information required of the Trust or Plan by law. The Trustee shall provide
the Administrator with such information as the Administrator may reasonably
request to make these filings. The Administrator shall also be responsible
for making any disclosures
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to Participants required by law, except such disclosure as may be required
under federal or state truth-in-lending laws with regard to Participant
loans, which shall be provided by the Trustee.
SECTION 6. COMPENSATION AND EXPENSES. Within thirty (30) days of receipt of
the Trustee's bill, which shall be computed and billed in accordance with
Schedule "B" attached hereto and made a part hereof, as amended from time to
time, the Sponsor shall send to the Trustee a payment in such amount or the
Sponsor may direct the Trustee to deduct such amount from participants'
accounts. All expenses of the Trustee relating directly to the acquisition
and disposition of investments constituting part of the Trust, and all taxes
of any kind whatsoever that may be levied or assessed under existing or
future laws upon or in respect of the Trust or the income thereof, shall be a
charge against and paid from the appropriate Plan participants' accounts.
SECTION 7. DIRECTIONS AND INDEMNIFICATION.
(a) IDENTITY OF ADMINISTRATOR AND NAMED FIDUCIARY. The Trustee shall
be fully protected in relying on the fact that the Named Fiduciary and the
Administrator under the Plan are the individuals or persons named as such
above or such other individuals or persons as the Sponsor may notify the
Trustee in writing.
(b) DIRECTIONS FROM ADMINISTRATOR. Whenever the Administrator provides
a direction to the Trustee, the Trustee shall not be liable for any loss, or
by reason of any breach, arising from the direction (i) if the direction is
contained in a writing (or is oral and immediately confirmed in a writing)
signed by any individual whose name and signature have been submitted (and
not withdrawn) in writing to the Trustee by the Administrator in the form
attached hereto as Schedule "D", and (ii) if the Trustee reasonably believes
the signature of the individual to be genuine, unless it is clear on the
direction's face that the actions to be taken under the direction would be
prohibited by the fiduciary duty rules of Section 404(a) of ERISA or would be
contrary to the terms of this Agreement. For purposes of this Section, such
direction may also be made via electronic data transfer ("EDT") in accordance
with procedures agreed to by the Administrator and the Trustee; provided,
however, that the Trustee shall be fully protected in relying on such
direction as if it were a direction made in writing by the Administrator.
(c) DIRECTIONS FROM NAMED FIDUCIARY. Whenever the Named Fiduciary or
Sponsor provides a direction to the Trustee, the Trustee shall not be liable for
any loss, or by reason of any
10
<PAGE>
breach, arising from the direction (i) if the direction is contained in a
writing (or is oral and immediately confirmed in a writing) signed by any
individual whose name and signature have been submitted (and not withdrawn)
in writing to the Trustee by the Named Fiduciary in the form attached hereto
as Schedule "E" and (ii) if the Trustee reasonably believes the signature of
the individual to be genuine, unless it is clear on the direction's face that
the actions to be taken under the direction would be prohibited by the
fiduciary duty rules of Section 404(a) of ERISA or would be contrary to the
terms of this Agreement. Such direction may also be made via EDT in
accordance with procedures agreed to by the Named Fiduciary and the Trustee;
provided, however, that the Trustee shall be fully protected in relying on
such direction as if it were a direction made in writing by the Named
Fiduciary.
(d) CO-FIDUCIARY LIABILITY. In any other case, the Trustee shall not
be liable for any loss, or by reason of any breach, arising from any act or
omission of another fiduciary under the Plan except as provided in section
405(a) of ERISA.
(e) INDEMNIFICATION. The Sponsor shall indemnify the Trustee against,
and hold the Trustee harmless from, any and all loss, damage, penalty,
liability, cost, and expense, including without limitation, reasonable
attorneys' fees and disbursements, that may be incurred by, imposed upon, or
asserted against the Trustee by reason of any claim, regulatory proceeding,
or litigation arising from any act done or omitted to be done by any
individual or person with respect to the Plan or Trust, excepting only any
and all loss, etc., arising solely from the Trustee's negligence or bad faith.
(f) SURVIVAL. The provisions of this Section 7 shall survive the
termination of this Agreement.
SECTION 8. RESIGNATION OR REMOVAL OF TRUSTEE.
(a) RESIGNATION. The Trustee may resign at any time upon sixty (60)
days' notice in writing to the Sponsor, unless a shorter period of notice is
agreed upon by the Sponsor.
(b) REMOVAL. The Sponsor may remove the Trustee at any time upon sixty
(60) days' notice in writing to the Trustee, unless a shorter period of
notice is agreed upon by the Trustee.
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SECTION 9. SUCCESSOR TRUSTEE.
(a) APPOINTMENT. If the office of Trustee becomes vacant for any
reason, the Sponsor may in writing appoint a successor trustee under this
Agreement. The successor trustee shall have all of the rights, powers,
privileges, obligations, duties, liabilities, and immunities granted to the
Trustee under this Agreement. The successor trustee and predecessor trustee
shall not be liable for the acts or omissions of the other with respect to
the Trust.
(b) ACCEPTANCE. When the successor trustee accepts its appointment
under this Agreement, title to and possession of the Trust assets shall
immediately vest in the successor trustee without any further action on the
part of the predecessor trustee. The predecessor trustee shall execute all
instruments and do all acts that reasonably may be necessary or reasonably
may be requested in writing by the Sponsor or the successor trustee to vest
title to all Trust assets in the successor trustee or to deliver all Trust
assets to the successor trustee.
(c) CORPORATE ACTION. Any successor of the Trustee or successor
trustee, through sale or transfer of the business or trust department of the
Trustee or successor trustee, or through reorganization, consolidation, or
merger, or any similar transaction, shall, upon consummation of the
transaction, become the successor trustee under this Agreement.
SECTION 10. TERMINATION. This Agreement may be terminated at any time by
the Sponsor upon sixty (60) days' notice in writing to the Trustee. On the
date of the termination of this Agreement, the Trustee shall forthwith
transfer and deliver to such individual or entity as the Sponsor shall
designate, all cash and assets then constituting the Trust. If, by the
termination date, the Sponsor has not notified the Trustee in writing as to
whom the assets and cash are to be transferred and delivered, the Trustee may
bring an appropriate action or proceeding for leave to deposit the assets and
cash in a court of competent jurisdiction. The Trustee shall be reimbursed
by the Sponsor for all costs and expenses of the action or proceeding
including, without limitation, reasonable attorneys' fees and disbursements.
SECTION 11. RESIGNATION, REMOVAL, AND TERMINATION NOTICES. All notices of
resignation, removal, or termination under this Agreement must be in writing and
mailed to the party to which the notice is being given by certified or
registered mail, return receipt requested, to the Sponsor c/o Mary Zins,
Corporate Human Resources Manager, Polaris Industries, 1225 Highway, 169 North,
Minneapolis, Minnesota 55441, and to the Trustee c/o John M. Kimpel, Fidelity
Investments, 82 Devonshire Street,
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<PAGE>
Boston, Massachusetts 02109, or to such other addresses as the parties have
notified each other of in the foregoing manner.
SECTION 12. DURATION. This Trust shall continue in effect without limit as
to time, subject, however, to the provisions of this Agreement relating to
amendment, modification, and termination thereof.
SECTION 13. AMENDMENT OR MODIFICATION. This Agreement may be amended or
modified at any time and from time to time only by an instrument executed by
both the Sponsor and the Trustee. Notwithstanding the foregoing, to reflect
increased operating costs the Trustee may once each calendar year amend
Schedule "B" without the Sponsor's consent upon seventy-five (75) days
written notice to the Sponsor.
SECTION 14. ELECTRONIC SERVICES.
(a) The Trustee may provide communications and services via electronic
medium ("Electronic Services"), including, but not limited to, Fidelity Plan
Sponsor WebStation, Client Intranet, Client e-mail, interactive software
products or any other information provided in an electronic format. The
Sponsor, its agents and employees agree to keep confidential and not publish,
copy, broadcast, retransmit, reproduce, commercially exploit or otherwise
redisseminate the data, information, software or services without the
Trustee's written consent.
(b) The Sponsor shall be responsible for installing and maintaining all
Electronic Services on its computer network and/or Intranet upon receipt in a
manner so that the information provided via the Electronic Service will
appear in the same form and content as it appears on the form of delivery,
and for any programming required to accomplish the installation. Materials
provided for Plan Sponsor's intranet web sites shall be installed by the
Sponsor and shall be clearly identified as originating from Fidelity. The
Sponsor shall promptly remove Electronic Services from its computer network
and/or Intranet, or replace the Electronic Service with an updated service
provided by the Trustee, upon written notification (including written
notification via facsimile) by the Trustee.
(c) All Electronic Services shall be provided to the Sponsor without
any express or implied legal warranties or acceptance of legal liability by
the Trustee relative to the use of material or Electronic Services by the
Sponsor. No rights are conveyed to any property, intellectual or tangible,
associated with the contents of the Electronic Services and related material.
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<PAGE>
(d) To the extent that any Electronic Services utilize Internet
services to transport data or communications, the Trustee will take, and Plan
Sponsor agrees to follow, reasonable security precautions; however, the
Trustee disclaims any liability for interception of any such data or
communications. The Trustee shall not be responsible for, and makes no
warranties regarding access, speed or availability of Internet or network
services. The Trustee shall not be responsible for any loss or damage
related to or resulting from any changes or modifications to the electronic
material after delivering it to the Plan Sponsor.
SECTION 15. GENERAL.
(a) PERFORMANCE BY TRUSTEE, ITS AGENTS OR AFFILIATES. The Sponsor
acknowledges and authorizes that the services to be provided under this
Agreement shall be provided by the Trustee, its agents or affiliates,
including Fidelity Investments Institutional Operations Company, Inc. or its
successor, and that certain of such services may be provided pursuant to one
or more other contractual agreements or relationships.
(b) ENTIRE AGREEMENT. This Agreement together with the schedules
attached hereto, which are hereby incorporated herein, contains all of the
terms agreed upon between the parties with respect to the subject matter
hereof.
(c) WAIVER. No waiver by either party of any failure or refusal to
comply with an obligation hereunder shall be deemed a waiver of any other or
subsequent failure or refusal to so comply.
(d) SUCCESSORS AND ASSIGNS. The stipulations in this Agreement shall
inure to the benefit of, and shall bind, the successors and assigns of the
respective parties.
(e) PARTIAL INVALIDITY. If any term or provision of this Agreement or
the application thereof to any person or circumstances shall, to any extent,
be invalid or unenforceable, the remainder of this Agreement, or the
application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby, and each term and provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
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<PAGE>
(f) SECTION HEADINGS. The headings of the various sections and
subsections of this Agreement have been inserted only for the purposes of
convenience and are not part of this Agreement and shall not be deemed in any
manner to modify, explain, expand or restrict any of the provisions of this
Agreement.
SECTION 16. GOVERNING LAW.
(a) MASSACHUSETTS LAW CONTROLS. This Agreement is being made in the
Commonwealth of Massachusetts, and the Trust shall be administered as a
Massachusetts trust. The validity, construction, effect, and administration
of this Agreement shall be governed by and interpreted in accordance with the
laws of the Commonwealth of Massachusetts, except to the extent those laws
are superseded under Section 514 of ERISA.
(b) TRUST AGREEMENT CONTROLS. This Agreement supersedes the "Polaris
Industries Inc. 401(k) Retirement/Savings Trust". The Trustee is not a party
to the Plan, and in the event of any conflict between the provisions of the
Plan and the provisions of this Agreement, the provisions of this Agreement
shall control.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
POLARIS INDUSTRIES INC.
Attest: /s/ Janet L. Bishop By: /s/ Michael Malone
-------------------------- --------------------------
Secretary
Name: Michael Malone
-----------------------
Title:
----------------------
Date: 3/29/99
----------------------
FIDELITY MANAGEMENT TRUST
COMPANY
Attest: /s/ Douglas O. Kant By: /s/ Carolyn Redden
------------------------- -------------------------
Assistant Clerk
Name: Carolyn Redden
-----------------------
Title: Vice President
----------------------
Date: 4/29/99
----------------------
16
<PAGE>
FIRST AMENDMENT TO TRUST AGREEMENT BETWEEN
FIDELITY MANAGEMENT TRUST COMPANY AND
POLARIS INDUSTRIES INC.
THIS FIRST AMENDMENT, dated as of the fifteenth day of May, 1999, by and
between Fidelity Management Trust Company (the "TRUSTEE") and Polaris
Industries, Inc. (the "SPONSOR");
WITNESSETH:
WHEREAS, the Trustee and the Sponsor heretofore entered into a Trust
Agreement dated April 1, 1999 with regard to the Polaris 401(k) Retirement
Savings Plan (the "PLAN"); and
WHEREAS, the Trustee and the Sponsor now desire to amend said Trust
Agreement as provided for in Section 13 thereof;
NOW THEREFORE, in consideration of the above premises, the Trustee and
the Sponsor hereby amend the Trust Agreement by:
(1) Amending Section 4(b) by adding subsection (v) as follows:
(v) equity securities issued by the Sponsor or an affiliate which are
publicly-traded and which are "qualifying employer securities" within
the meaning of section 407(d)(5) of ERISA ("SPONSOR STOCK"),
(2) Amending Section 4, INVESTMENT OF TRUST, by inserting a new subsection
(h), as follows, and relettering all subsequent sections accordingly:
(h) SPONSOR STOCK. Trust investments in Sponsor Stock shall be made
via the Polaris Stock Fund (the "STOCK FUND"). Investments in the
Stock Fund shall consist primarily of shares of Sponsor Stock. In
order to satisfy daily participant exchange or withdrawal requests for
transfers and payments, the Stock Fund shall also include cash or
short-term liquid investments in accordance with this paragraph. Such
holdings will include Fidelity Institutional Cash Portfolios: Money
Market Portfolio: Class I or such other Mutual Fund or commingled
money market pool as agreed to by the Sponsor and Trustee. The Named
Fiduciary shall, after consultation with the Trustee, establish and
communicate to the Trustee in writing a target percentage and drift
allowance for such short-term liquid investments. The Trustee shall
be responsible for ensuring that the actual cash held in the Stock
Fund falls within the agreed upon range over time. Each participant's
proportional interest in the Stock Fund shall be measured in units of
participation, rather than shares of Sponsor Stock. Such units shall
represent a proportionate interest in all of the assets of the Stock
Fund, which includes shares of Sponsor Stock, short-term investments
and at times, receivables for dividends and/or
<PAGE>
Sponsor Stock sold and payables for Sponsor Stock purchased. The
Trustee shall determine a daily net asset value ("NAV") for each
unit outstanding of the Stock Fund. Valuation of the Stock Fund
shall be based upon the 4:00 p.m. New York Stock Exchange ("NYSE")
closing price of the stock, or if unavailable, the latest available
price as reported by the principal national securities exchange on
which the Sponsor Stock is traded. The NAV shall be adjusted by
dividends paid on the shares of Sponsor Stock held by the Stock
Fund, gains or losses realized on sales of Sponsor Stock,
appreciation or depreciation in the market price of those shares
owned, and interest on the short-term investments held by the Stock
Fund, expenses that, pursuant to Sponsor direction, the Trustee
accrues from the Stock Fund, and commissions on purchases and sales
of Sponsor Stock. Investments in Sponsor Stock shall be subject to
the following limitations:
(i) ACQUISITION LIMIT. Pursuant to the Plan, the Trust may be
invested in Sponsor Stock to the extent necessary to comply with
investment directions in accordance with this Agreement.
(ii) FIDUCIARY DUTY OF NAMED FIDUCIARY. The Named Fiduciary
shall continually monitor the suitability under the fiduciary duty
rules of section 404(a)(1) of ERISA (as modified by section 404(a)(2)
of ERISA) of acquiring and holding Sponsor Stock. The Trustee shall
not be liable for any loss, or by reason of any breach, which arises
from the directions of the Named Fiduciary with respect to the
acquisition and holding of Sponsor Stock, unless it is clear on their
face that the actions to be taken under those directions would be
prohibited by the foregoing fiduciary duty rules or would be contrary
to the terms of this Agreement.
(iii) Purchase and sales of Sponsor Stock shall be made on the
open market as necessary to maintain the target cash percentage and
drift allowance for the Stock Fund, provided that:
(A) If the Trustee is unable to purchase or sell the total
number of shares required to be purchased or sold on such day as a
result of market conditions; or
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(B) If the Trustee is prohibited by the Securities and
Exchange Commission, the New York Stock Exchange, or any other
regulatory body from purchasing or selling any or all of the shares
required to be purchased or sold on such day, then the Trustee shall
purchase or sell such shares as soon as possible thereafter. The
Trustee may follow directions from the Administrator or Named
Fiduciary to deviate from the above purchase and sale procedures
provided that such direction is made in writing by the Administrator
or Named Fiduciary.
(iv) EXECUTION OF PURCHASES AND SALES. (A) Purchases and sales
of units in the Stock Fund (other than for exchanges) shall be made on
the date on which the Trustee receives from the Administrator in good
order all information, documentation, and wire transfers of funds (if
applicable), necessary to accurately effect such transactions.
Exchanges of units in the Stock Fund shall be made in accordance with
the Telephone Exchange Guidelines attached hereto as Schedule "G".
The Trustee may follow directions from the Administrator or Named
Fiduciary to deviate from the above purchase and sale procedures
provided that such direction is made in writing by the Administrator
or Named Fiduciary.
(B) PURCHASES AND SALES FROM OR TO SPONSOR. If directed by
the Sponsor in writing prior to the trading date, the Trustee may
purchase or sell Sponsor Stock from or to the Sponsor if the purchase
or sale is for adequate consideration (within the meaning of section
3(18) of ERISA) and no commission is charged. If Sponsor
contributions (employer) or contributions made by the Sponsor on
behalf of the participants (employee) under the Plan are to be
invested in Sponsor Stock, the Sponsor may transfer Sponsor Stock in
lieu of cash to the Trust. In either case, the number of shares to be
transferred will be determined by dividing the total amount of Sponsor
Stock to be purchased or sold by the 4:00 p.m. NYSE closing price of
the Sponsor Stock on the trading date.
(C) USE OF AN AFFILIATED BROKER. The Sponsor hereby directs
the Trustee to use Fidelity Capital Markets ("CAPITAL MARKETS") to
provide brokerage services in connection with any purchase or sale of
Sponsor Stock in accordance with directions from Plan participants.
Capital Markets shall execute such directions directly or through
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<PAGE>
its affiliate, National Financial Services Company ("NFSC"). The
provision of brokerage services shall be subject to the following:
(1) As consideration for such brokerage services, the
Sponsor agrees that Capital Markets shall be entitled to remuneration
under this direction provision in an amount of no more than three and
one-fifth cents ($.032) commission on each share of Sponsor Stock.
Any change in such remuneration may be made only by a signed agreement
between Sponsor and Trustee.
(2) The Trustee will provide the Sponsor with a
description of Capital Markets' brokerage placement practices and a
form by which the Sponsor may terminate this direction to use a broker
affiliated with the Trustee. The Trustee will provide the Sponsor
with this termination form annually, as well as quarterly and annual
reports which summarize all securities transaction-related charges
incurred by the Plan.
(3) Any successor organization of Capital Markets,
through reorganization, consolidation, merger or similar transactions,
shall, upon consummation of such transaction, become the successor
broker in accordance with the terms of this direction.
(4) The Trustee and Capital Markets shall continue to
rely on this direction provision until notified to the contrary. The
Sponsor reserves the right to terminate this direction upon written
notice to Capital Markets (or its successor) and the Trustee, in
accordance with Section 11 of this Agreement.
(v) SECURITIES LAW REPORTS. The Named Fiduciary shall be
responsible for filing all reports required under Federal or state
securities laws with respect to the Trust's ownership of Sponsor
Stock, including, without limitation, any reports required under
section 13 or 16 of the Securities Exchange Act of 1934, and shall
immediately notify the Trustee in writing of any requirement to stop
purchases or sales of Sponsor Stock pending the filing of any report.
The Trustee shall provide to the Named Fiduciary such information on
the Trust's ownership of Sponsor Stock as the Named Fiduciary may
reasonably request in order to comply with Federal or state securities
laws.
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<PAGE>
(vi) VOTING AND TENDER OFFERS. Notwithstanding any other
provision of this Agreement the provisions of this Section shall
govern the voting and tendering of Sponsor Stock. The Sponsor, after
consultation with the Trustee, shall provide and pay for all printing,
mailing, tabulation and other costs associated with the voting and
tendering of Sponsor Stock.
(A) VOTING.
(1) When the issuer of Sponsor Stock prepares for any
annual or special meeting, the Sponsor shall notify the Trustee at
least thirty (30) days in advance of the intended record date and
shall cause a copy of all proxy solicitation materials to be sent to
the Trustee. If requested by the Trustee, the Sponsor shall certify
to the Trustee that the aforementioned materials represents the same
information that is distributed to shareholders of Sponsor Stock.
Based on these materials the Trustee shall prepare a voting
instruction form and shall provide a copy of all proxy solicitation
materials to be sent to each Plan participant with an interest in
Sponsor Stock held in the Trust, together with the foregoing voting
instruction form to be returned to the Trustee or its designee. The
form shall show the proportional interest in the number of full and
fractional shares of Sponsor Stock credited to the participant's
accounts held in the Stock Fund.
(2) Each participant with an interest in the Stock
Fund shall have the right to direct the Trustee as to the manner in
which the Trustee is to vote (including not to vote) that number of
shares of Sponsor Stock reflecting such participant's proportional
interest in the Stock Fund (both vested and unvested). Directions
from a participant to the Trustee concerning the voting of Sponsor
Stock shall be communicated in writing, or by mailgram or similar
means as is agreed upon by the Trustee and the Sponsor. These
directions shall be held in confidence by the Trustee and shall not be
divulged to the Sponsor, or any officer or employee thereof, or any
other person except to the extent that the consequences of such
directions are reflected in reports regularly communicated to any such
persons in the ordinary course of the performance of the Trustee's
services hereunder. Upon its receipt of the directions, the
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Trustee shall vote the shares of Sponsor Stock reflecting the
participant's proportional interest in the Stock Fund as directed
by the participant. Except as otherwise required by law, the
Trustee shall not vote shares of Sponsor Stock reflecting a
participant's proportional interest in the Stock Fund for which it
has received no direction from the participant.
(3) The Trustee shall vote that number of shares of
Sponsor Stock not credited to participants' accounts in the same
proportion on each issue as it votes those shares credited to
participants' accounts for which it received voting directions from
participants.
(B) TENDER OFFERS.
(1) Upon commencement of a tender offer for any
securities held in the Trust that are Sponsor Stock, the Sponsor shall
timely notify the Trustee in advance of the intended tender date and
shall cause a copy of all materials to be sent to the Trustee. The
Sponsor shall certify to the Trustee that the aforementioned materials
represent the same information distributed to shareholders of Sponsor
Stock. Based on these materials and after consultation with the
Sponsor the Trustee shall prepare a tender instruction form and shall
provide a copy of all tender materials to be sent to each plan
participant, together with the foregoing tender instruction form, to
be returned to the Trustee or its designee. The tender instruction
form shall show the number of full and fractional shares of Sponsor
Stock that reflect the participants proportional interest in the Stock
Fund (both vested and unvested).
(2) Each participant shall have the right to direct
the Trustee to tender or not to tender some or all of the shares of
Sponsor Stock reflecting such participant's proportional interest in
the Stock Fund (both vested and unvested). Directions from a
participant to the Trustee concerning the tender of Sponsor Stock
shall be communicated in writing, or by mailgram or such similar means
as is agreed upon by the Trustee and the Sponsor. These directions
shall be held in confidence by the Trustee and shall not be divulged
to the Sponsor, or any officer or employee thereof, or any other
person except to the extent that the consequences of such directions
are reflected in
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reports regularly communicated to any such persons in the ordinary
course of the performance of the Trustee's services hereunder. The
Trustee shall tender or not tender shares of Sponsor Stock as
directed by the participant. Except as otherwise required by law,
the Trustee shall not tender shares of Sponsor Stock reflecting a
participant's proportional interest in the Stock Fund for which it
has received no direction from the participant.
(3) Except as otherwise required by law, the Trustee
shall tender that number of shares of Sponsor Stock not credited to
participants' accounts in the same proportion as the total number of
shares of Sponsor Stock credited to participants' accounts for which
it has received instructions from Participants.
(4) A participant who has directed the Trustee to
tender some or all of the shares of Sponsor Stock reflecting the
participant's proportional interest in the Stock Fund may, at any time
prior to the tender offer withdrawal date, direct the Trustee to
withdraw some or all of the tendered shares reflecting the
participant's proportional interest, and the Trustee shall withdraw
the directed number of shares from the tender offer prior to the
tender offer withdrawal deadline. Prior to the withdrawal deadline,
if any shares of Sponsor Stock not credited to participants' accounts
have been tendered, the Trustee shall redetermine the number of shares
of Sponsor Stock that would be tendered under Section 4(h)(v)(B)(3) if
the date of the foregoing withdrawal were the date of determination,
and withdraw from the tender offer the number of shares of Sponsor
Stock not credited to participants' accounts necessary to reduce the
amount of tendered Sponsor Stock not credited to participants'
accounts to the amount so redetermined. A participant shall not be
limited as to the number of directions to tender or withdraw that the
participant may give to the Trustee.
(5) A direction by a participant to the Trustee to
tender shares of Sponsor Stock reflecting the participant's
proportional interest in the Stock Fund shall not be considered a
written election under the Plan by the participant to withdraw, or
have distributed, any or all of his withdrawable shares. The Trustee
shall credit to each proportional interest of the participant from
which the tendered shares were taken the proceeds received by the
Trustee in exchange for the shares of Sponsor Stock tendered
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from that interest. Pending receipt of directions (through the
Administrator) from the participant or the Named Fiduciary, as
provided in the Plan, as to which of the remaining investment
options the proceeds should be invested in, the Trustee shall
invest the proceeds in the investment option described in Schedule
"C".
(vii) GENERAL. With respect to all rights other than the right
to vote, the right to tender, and the right to withdraw shares
previously tendered, in the case of Sponsor Stock credited to a
participant's proportional interest in the Stock Fund, the Trustee
shall follow the directions of the participant and if no such
directions are received, the directions of the Named Fiduciary. The
Trustee shall have no duty to solicit directions from participants.
With respect to all rights other than the right to vote and the right
to tender, in the case of Sponsor Stock not credited to participants'
accounts, the Trustee shall follow the directions of the Named
Fiduciary.
(viii) CONVERSION. All provisions in this Section 4(h) shall
also apply to any securities received as a result of a conversion of
Sponsor Stock.
(3) Amending the "investment options" portion of Schedules "A" and "C" by
adding the following option:
- Polaris Stock Fund
(4) Adding the following section to Schedule "B":
TRUSTEE FEE
- To the extent that assets are invested in Sponsor Stock, .10 % of
such assets in the Trust payable pro rata quarterly on the basis of
such assets as of the calendar quarter's last valuation date, but no
less than $10,000 nor more than $35,000 per year.
(5) Amending Schedule "G", TELEPHONE EXCHANGE GUIDELINES, by adding the
following sentence to the beginning of the EXCHANGE RESTRICTIONS
section:
Participants may not exchange into the Sponsor Stock Fund if such
exchange would would result in more than 25% of the participant's
account balance being invested in the Sponsor Stock Fund.
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IN WITNESS WHEREOF, the Trustee and the Sponsor have caused this First
Amendment to be executed by their duly authorized officers effective as of
the day and year first above written.
POLARIS INDUSTRIES INC. FIDELITY MANAGEMENT TRUST
COMPANY
BY: /s/ Michael Malone 5/21/99 BY: /s/ Carolyn Redden 6/8/99
----------------------------------- ---------------------------
Vice President - Finance, DATE VICE PRESIDENT DATE
CFO and Secretary
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SECOND AMENDMENT TO TRUST AGREEMENT BETWEEN
FIDELITY MANAGEMENT TRUST COMPANY AND
POLARIS INDUSTRIES INC.
THIS FIRST AMENDMENT, dated as of the first day of July, 1999, by and
between Fidelity Management Trust Company (the "TRUSTEE") and Polaris
Industries, Inc. (the "SPONSOR");
WITNESSETH:
WHEREAS, the Trustee and the Sponsor heretofore entered into a Trust
Agreement dated April 1, 1999 with regard to the Polaris 401(k) Retirement
Savings Plan (the "PLAN"); and
WHEREAS, the Trustee and the Sponsor now desire to amend said Trust
Agreement as provided for in Section 13 thereof;
NOW THEREFORE, in consideration of the above premises, the Trustee and the
Sponsor hereby amend the Trust Agreement by:
(1) Amending the "Return of Excess Contribution Fee" section of Schedule
"B" by replacing it in its entirety as follows:
Return of Excess Contribution Fee: $25.00 per participant, one-time
charge per calculation and check
generation with a maximum fee of
$5000.00 per year up to 300 checks
generated. For each additional
check generated in excess of the
first 300 per year, the $25.00 per
participant, one-time charge per
calculation and check generation
shall apply.
IN WITNESS WHEREOF, the Trustee and the Sponsor have caused this Second
Amendment to be executed by their duly authorized officers effective as of
the day and year first above written.
POLARIS INDUSTRIES INC. FIDELITY MANAGEMENT TRUST
COMPANY
BY: /s/ Michael Malone 6/24/99 BY: /s/ Carolyn Redden 7/7/99
----------------------------- -----------------------------
DATE VICE PRESIDENT DATE
