AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 19, 1997
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
SHARED TECHNOLOGIES CELLULAR, INC.
-----------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 06-1386411
- ------------------------------- ------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
100 GREAT MEADOW ROAD, WETHERSFIELD, CT 06109
---------------------------------------------
(Address of Principal Executive Offices)
SHARED TECHNOLOGIES CELLULAR, INC.
SAVINGS AND RETIREMENT PLAN, AS AMENDED
---------------------------------------
(Full Title of The Plan)
ANTHONY D. AUTORINO
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
SHARED TECHNOLOGIES CELLULAR, INC.
100 GREAT MEADOW ROAD
WETHERSFIELD, CT 06109
----------------------
(Name and Address of Agent For Service)
(800) 258-2400
-------------------------------------------------------------
(Telephone Number, Including Area Code, of Agent For Service)
Copies to:
MARIANNE GILLERAN, ESQ.
GADSBY & HANNAH LLP
225 FRANKLIN STREET
BOSTON, MASSACHUSETTS 02110
(617) 345-7000
CALCULATION OF REGISTRATION FEE
================================================================================
<TABLE>
<CAPTION>
- ------------------------ --------------------- ---------------------- ---------------------- ---------------------
<S> <C> <C> <C> <C>
Title of Securities to Proposed Maximum Proposed Maximum
be Registered Amount to be Offering Price Per Aggregate Offering Amount of
Registered(1) Share (2) Price Registration Fee
- ------------------------ --------------------- ---------------------- ---------------------- ---------------------
Common Stock, $.01 par 150,000 $ 5.34 $801,000 $242.73
value per share
- ------------------------ --------------------- ---------------------- ---------------------- ---------------------
</TABLE>
(1) Pursuant to Rule 416, there are also being registered such additional
shares of Common Stock as may become issuable pursuant to stock splits
or similar transactions.
(2) Estimated solely for the purpose of computing the registration fee
pursuant to Rule 457(h), based upon $5.34, the average of the high and
low prices of the registrant's Common Stock as reported by the National
Association of Securities Dealers Automated Quotation System for
September 16, 1997.
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The document(s) containing the information specified in Part I of Form
S-8 are not required to be filed with the Securities and Exchange Commission
(the "Commission") as part of this registration statement on Form S-8. Such
documents and the documents incorporated by reference in this registration
statement on Form S-8 pursuant to Item 3 of Part II hereof, as described below,
taken together, constitute a prospectus that meets the requirements of Section
10(a) of the Securities Act of 1933, as amended (the "Securities Act").
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents are incorporated by reference in this
registration statement:
(a) The Annual Report on Form 10-K for the fiscal year ended December
31, 1996 ("Fiscal 1996") filed by Shared Technologies Cellular, Inc. (the
"Company") pursuant to Section 13(a) of 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 Fiscal 1996; and
(c) The description of the Company's securities in the Company's
registration statements filed under the Exchange Act, including all amendments
and reports filed for the purpose of updating such description.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing of a
post-effective amendment which indicates that all securities offered in this
registration statement have been sold, or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
registration statement and to be a part hereof from the date of the filing of
such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
Company pursuant to the following provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
Delaware General Corporation Law, Section 102(b)(7), enables a
corporation in its original certificate of incorporation or an amendment thereto
validly approved by stockholders to eliminate or limit personal liability of
members of its Board of Directors for violations of a director's fiduciary duty
of care. However, the elimination or limitation shall not apply where there has
been a breach of the duty of loyalty, failure to act in good faith, engaging in
intentional misconduct or knowingly violating a law, paying a dividend or
approving a stock repurchase which is deemed illegal or obtaining an improper
personal benefit. Article EIGHTH of the Company's Restated Certificate of
Incorporation includes the following language:
A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director for any act or omission; provided,
however, that the foregoing shall not eliminate or limit the liability
of a director (i) for any breach of the director's duty of loyalty to
the Corporation or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct for a knowing
violation of law, (iii) under Section 174 of the [Delaware General
Corporation Law ("GCL")], or (iv) for any transaction from which the
Director derived an improper personal benefit. If the GCL is hereafter
amended to permit further elimination or limitation of the personal
liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent
permitted by the GCL as so amended. Any repeal or modification of this
Article EIGHT by the stockholders of the Corporation or otherwise shall
not apply to or have any effect on the liability or alleged liability
of any director of the Corporation for or with respect to any acts or
omission of such director occurring prior to such amendment or repeal.
Delaware General Corporation Law, Section 145, permits a corporation
organized under Delaware law to indemnify directors and officers with respect to
any matter in which the director or officer acted in good faith and in a manner
he reasonably believed to be not opposed to the best interests of the Company,
and, with respect to any criminal action, had reasonable cause to believe his
conduct was lawful. Article NINTH of the Company's Restated Certificate of
Incorporation includes the following language:
(a) The Corporation shall, to the fullest extent permitted by
Section 145 of the GCL, indemnify any person [who] was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right if the Corporation) against any and all
of the expenses (including attorney's fees), judgment, fines and amounts paid in
settlement actually or reasonably incurred by such person by reason of having
been an officer, director, employee or agent at the request of the Corporation,
any subsidiary of the Corporation or of any other corporation, partnership,
joint venture, trust or other enterprise for which any and all persons who acted
as officer, director, employee or agent at the request of the Corporation, if
such person acted in good faith and in a manner he reasonably believed to be in
[or] not opposed to the best interests of the Corporation, and, with respect to
any criminal was unlawful. The termination of any action, suit or proceeding by
judgment, order settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation, and with respect to any
criminal action or proceedings, had reasonably cause to believe that his conduct
was unlawful.
(b) The Corporation may indemnify any person who was or is a
party of is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent or another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if such person
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of the Corporation and except that no
indemnification shall be made in respect to any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent
of the Corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsection (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under subsection (a) and (b) of this
section (unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth in subsection (a) and (b)
of this section. Such determination shall be made (1) by the Board by a majority
vote of a quorum consisting of directors who were not parties to such action,
suit or proceeding, or (2) if such a quorum is not obtainable, or even if
obtainable a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an
officer or director in defending any civil, criminal administrative or
investigative action, suit or proceeding may be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director, or officer to repay such
amount if it shall ultimately be determined that such person is not entitled to
be indemnified by the Corporation as authorized in the section. Such expenses
(including attorneys' fees) incurred by other employees and agents may be so
paid upon such terms and conditions, if any, as the Board deems appropriate.
(f) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office.
(g) The Corporation shall have the power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against and incurred by such person in any such capacity, or arising
out of such person's status as such, whether or not the Corporation would have
the power to indemnify a person against such liability under this section.
(h) The indemnification and advancement of expenses provided
by, or granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs, executor
and administrator of such a person.
(i) If a claim for indemnification pursuant to this section is
not paid in full by the Corporation within thirty (30) days after a written
claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the
Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expenses of
prosecuting such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Corporation) that the claimant has
not met the applicable standard of conduct set forth in the GCL for the
Corporation to indemnify the claimant for the amount claimed, but the burden of
proving such defense shall be on the Corporation. Neither the failure of the
corporation (including its Board, independent legal counsel or stockholders) to
have made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he or she
has met the applicable standard of conduct set forth in the GCL, nor an actual
determination by the Corporation (including its Board, independent legal counsel
or stockholders) that the claimant has not met such applicable standard of
conduct.
The Company maintains a directors, officers and corporate liability
insurance policy in the amount of Ten Million Dollars ($10,000,000).
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
The following exhibits are filed as part of this registration
statement:
Exhibit
Number Description
- ------- -----------
4a Shared Technologies Cellular, Inc. Savings and Retirement Plan
(filed as Exhibit 10.15 to the Company's Annual Report on Form
10-K for the Fiscal Year ended December 31, 1996 and hereby
incorporated by reference).
4b Shared Technologies Cellular, Inc. Savings and Retirement Plan, as
amended, effective July 1, 1997.
4c Amended and Restated Certificate of Incorporation of the Company
(filed as Exhibit 3.1 to the Company's Registration Statement on
Form SB-2 dated December 8, 1994 and hereby incorporated by
reference).
4d Certificate of Amendment of Restated Certificate of Incorporation
of the Company.
4e Bylaws of the Company (filed as Exhibit 3.1 to the Company's
Registration Statement on Form SB-2 dated December 8, 1994 and
hereby incorporated by reference).
5 Opinion of Gadsby & Hannah LLP
23a Consent of Gadsby & Hannah LLP (contained in Opinion filed as
Exhibit 5)
23b Consent of Rothstein, Kass & Company, P.C.
24 Power of Attorney
The registrant has submitted the Company's Savings and Retirement Plan, as
amended, to the Internal Revenue Service ("IRS") in a timely manner, and will
make all changes required by the IRS in order to qualify such plan.
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 of 1933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement. 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 percent
change in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) to include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or furnished to
the Commission by the registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, 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; and
(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 of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, 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 of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Wethersfield, State of Connecticut, on September 19,
1997.
SHARED TECHNOLOGIES CELLULAR, INC.
By /s/ Anthony D. Autorino
-----------------------
Anthony D. Autorino,
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, 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/ Anthony D. Autorino Chairman, Chief Executive September 19, 1997
- ------------------------------------ Officer and Director
Anthony D. Autorino (Principal Executive Officer)
/s/ Thomas H. Decker Director September 19, 1997
- -------------------------------------
Thomas H. Decker
/s/ William A. DiBella Director September 19, 1997
- --------------------------------------
William A. DiBella
/s/ Vincent DiVincenzo Chief Financial Officer, September 19, 1997
- -------------------------------------- Treasurer and Director
Vincent DiVincenzo (Principal Financial and
Accounting Officer)
/s/ Ajit G. Hutheesing Director September 19, 1997
- --------------------------------------
Ajit G. Hutheesing
/s/ Craig A. Marlar Director September 19, 1997
- ---------------------------------------
Craig A. Marlar
/s/ Nicholas E. Sinacori Director September 19, 1997
- -------------------------------------
Nicholas E. Sinacori
</TABLE>
EXHIBIT 4b
----------
Plan #001
STANDARDIZED
ADOPTION AGREEMENT
PROTOTYPE CASH OR DEFERRED PROFIT-SHARING
PLAN AND TRUST
Sponsored by
PRUDENTIAL MUTUAL FUND MANAGEMENT, INC.
The Employer named below hereby establishes a Cash or Deferred Profit-Sharing
Plan for eligible Employees as provided in this Adoption Agreement and the
accompanying Basic Prototype Plan and Trust/Custodial Account, Basic Plan
Document #04.
1. EMPLOYER INFORMATION
NOTE: If multiple Employers are adopting the Plan, complete this
section based on the lead Employer. Additional Employers may
adopt this Plan by attaching executed signature pages to the
back of the Employer's Adoption Agreement.
(a) NAME AND ADDRESS:
SHARED TECHNOLOGIES CELLULAR, INC.
100 GREAT MEADOW ROAD
WETHERSFIELD, CT 06109
(b) TELEPHONE NUMBER: (860)258-2500
(c) TAX ID NUMBER: 06-1386411
(d) FORM OF BUSINESS:
[ ] (i) Sole Proprietor
[ ] (ii) Partnership
[ x ] (iii) Corporation
[ ] (iv) "S" Corporation (formerly known as Subchapter S)
[ ] (v) Other:
1
(e) NAME OF PLAN: SHARED TECHNOLOGIES CELLULAR, INC.
SAVINGS AND RETIREMENT PLAN
(f) THREE DIGIT PLAN NUMBER
FOR ANNUAL RETURN/REPORT: 001
2. EFFECTIVE DATE
(a) This is a new Plan having an effective date of ____________.
(b) This is an amended Plan.
(i) The effective date of the original Plan was April 1, 1996.
The effective date of the amended Plan is July 1, 1997.
NOTE: The effective date of the amended Plan for the Tax Reform Act of
1986 required changes is the first day of the 1987
Plan Year. Sections 7(f) and 12 herein shall be effective
as of the first day of the 1989 Plan Year. Any prior
amendments to the plan which were intended to have effect
after December 31, 1986 will continue to be in effect
only until the effective date of this amended and
restated plan.
3. DEFINITIONS
(a) "Compensation" Shall include all items as set forth in paragraph
1.12 of Basic Plan Document #04.
[ ] (i) For purposes of Discretionary Contributions,
Compensation shall include all amounts for the
Plan Year during which the Employee was eligible
to participate.
[x] (ii) For purposes of Discretionary Contributions,
Compensation will only include amounts for the
period during which the Employee was eligible to
participate.
(b) "Entry Date"
[ ] (i) The first day of the month coinciding with or
following the date on which an Employee meets
the eligibility requirements.
[ ] (ii) The earlier of the first day of the Plan Year or
the first day of the seventh month of the Plan
Year coinciding with or following the date on
which an Employee meets the eligibility
requirements.
[x] (iii) The first day of the Plan Year, or the first day
of the fourth month, or the first day of the
seventh month or the first day of the tenth
month, of the Plan Year coinciding with or
following the date on which an Employee meets
the eligibility requirements.
(c) "Hours of Service" Shall be determined on the basis of the method
selected below. Only
2
one method may be selected. The method selected shall be applied
to all Employees covered under the Plan as follows:
[x] (i) On the basis of actual hours for which an
Employee is paid or entitled to payment.
[ ] (ii) On the basis of days worked. An Employee shall
be credited with ten (10) Hours of Service if
under paragraph 1.41 of the Basic Plan Document
#04 such Employee would be credited with at
least one (1) Hour of Service during the day.
[ ] (iii) On the basis of weeks worked. An Employee shall
be credited with forty-five (45) Hours of
Service if under paragraph 1.41 of the Basic
Plan Document #04 such Employee would be
credited with at least one (1) Hour of Service
during the week.
(d) "Limitation Year" The Limitation Year shall be the Plan Year
unless another year is specified here:
(e) "Net Profit"
[x] (i) Not applicable (profits will not be required for
any contributions to the Plan).
[ ] (ii) As defined in paragraph 1.48 of the Basic Plan
Document #04.
(f) "Plan Year" The 12-consecutive month period commencing on January
1 and ending on December 31.
(g) "Qualified Early Retirement Age" For purposes of making
distributions under the provisions of a Qualified Domestic
Relations Order, the Plan's Qualified Early Retirement Age with
regard to the Participant against whom the order is entered [x]
shall [ ] shall not be the date the order is determined to be
qualified. If "shall" is elected, this will only allow payout to
the alternate payee(s).
(h) "Qualified Joint and Survivor Annuity" The safe-harbor provisions
of paragraph 8.7 of the Basic Plan Document #04 are applicable.
If the Plan is not safe-harbored under paragraph 8.7 of the Basic
Plan Document, the survivor annuity shall be 50% of the annuity
payable during the lives of the Participant and Spouse.
(i) "Taxable Wage Base"
[x] (i) Not Applicable - Plan is not integrated with
Social Security.
[ ] (ii) The maximum earnings considered wages for such
Plan Year under Code Section 3121(a).
[ ] (iii) ____% (not more than 100%) of the amount
considered wages for such Plan Year under Code
Section 3121(a).
3
[ ] (iv) $________, provided that such amount is not in
excess of the amount determined under paragraph
3(i)(ii) above.
NOTE: Using less than the maximum at (ii) may result in a change in the
allocation formula in Section 7.
(j) "Year of Service"
(i) For Eligibility Purposes: (Choose one)
[ ] (1) The 12-consecutive month period during which
an Employee is credited with (not more than
1,000) Hours of Service.
[x] (2) Elasped Time
If no answer is specified, the Hours of Service method
will be used.
(ii) For Allocation Accrual Purposes: The 12-consecutive month
period during which an Employee is credited with 501 (not
more than 1,000) Hours of Service. (For Plan Years
beginning in 1990 and thereafter, if a number greater
than 501 is specified, it will be deemed to be 501.)
(iii) For Vesting Purposes: (Choose one)
[x] (1) The 12-consecutive month period during
which an Employee is credited with 1000
(not more than 1,000) Hours of Service.
[ ] (2) Elasped Time
If no answer is specified, the Hours of Service method
will be used.
4. ELIGIBILITY REQUIREMENTS
(a) Service:
[ ] (i) The Plan shall have no service requirement.
[ ] (ii) The Plan shall cover only Employees having
completed at least one Year of Service.
[x] (iii) The plan shall cover only Employees having
completed at least three months (less than 12).
NOTE: If the eligibility period selected is less than one year,
an Employee will not be required to complete any
specified number of Hours of Service to receive
credit for such period.
(b) Age:
4
[ ] (i) The Plan shall have no minimum age requirement.
[x] (ii) The Plan shall cover only Employees having
attained age 21 (not more than age 21).
(c) Classification:
The Plan shall cover all Employees who have met the age and
service requirements with the following exceptions:
[ ] (i) No exceptions.
[x] (ii) The Plan shall exclude Employees included in a
unit of Employees covered by a collective
bargaining agreement between the Employer and
Employee Representatives, if retirement benefits
were the subject of good faith bargaining and if
two percent or less of the Employees who are
covered pursuant to that agreement are
professionals as defined in Regulations Section
1.410(b)-9. For this purpose, the term "Employee
Representative" does not include any
organization more than half of whose members are
Employees who are owners, officers, or
executives of the Employer.
[x] (iii) The Plan shall exclude Employees who are
nonresident aliens [within the meaning of Code
Section 7701(b)(1)(B)] and who receive no earned
income [within the meaning of Code Section
911(d)(2)] from the Employer which constitutes
income from sources within the United States
[within the meaning of Code Section 861(a)(3)].
(d) Employees on Effective Date:
[x] (i) Not Applicable. All Employees will be required
to satisfy both the age and Service requirements
specified above.
[ ] (ii) Employees employed on the Plan's Effective Date
do not have to satisfy the Service requirements
specified above.
[ ] (iii) Employees employed on the Plan's Effective Date
do not have to satisfy the age requirements
specified above.
5. RETIREMENT AGES
(a) Normal Retirement Age:
If the Employer imposes a requirement that Employees retire upon
reaching a specified age, the Normal Retirement Age selected
below may not exceed the Employer imposed mandatory retirement
age.
[x] (i) Normal Retirement Age shall be 65 (not to exceed
age 65).
5
[ ] (ii) Normal Retirement Age shall be the later of
attaining age (not to exceed age 65) or the (not
to exceed the 5th) anniversary of the first day
of the first Plan Year in which the Participant
commenced participation in the Plan.
(b) Early Retirement Age:
Early Retirement Age shall not be applicable unless the Employer
attached a form to this Adoption Agreement certifying that Early
Retirement Age is a benefit which has accrued under the
predecessor Plan which cannot be cut back under Code Section
411(d)(6).
6. EMPLOYEE CONTRIBUTIONS
[x] (a) Participants shall be permitted to make Elective
Deferrals in any amount from 1 % (not more than 2%) up to
15 % (not more than 20%) of their Compensation.
If (a) is applicable, Participants shall be permitted to
amend their Salary Savings Agreements to change the
contribution percentage in accordance with the procedures
established by the Plan Administrator.
[x] (b) Participants shall be permitted to make after tax
Voluntary Contributions.
NOTE: The Average Deferral Percentage Test will apply to contributions
under (a) above. The Average Contribution Percentage Test
will apply to contributions under (b) and may apply to
(a).
7. EMPLOYER CONTRIBUTIONS AND ALLOCATION THEREOF
NOTE: The Employer shall make contributions to the Plan in accordance
with the formula or formulas selected below. The
Employer's contribution shall be subject to the
limitations contained in Articles III and X. For this
purpose, a contribution for a Plan Year shall be limited
for the Limitation Year which ends with or within such
Plan Year. Also, the integrated allocation formulas below
are for Plan Years beginning in 1989 and later. The
Employer's allocation for earlier years shall be as
specified in its Plan prior to amendment for the Tax
Reform Act of 1986.
(a) Current or Accumulated Net Profits are required for:
[ ] (i) Matching Contributions.
[ ] (ii) Qualified Non-Elective Contributions.
[ ] (iii) Discretionary Contributions.
If no answer is specified, Current or Accumulated Net
Profits will not be required.
6
NOTE: Elective Deferrals can always be contributed regardless of
profits.
(b) Salary Savings Agreement:
The Employer shall contribute and allocate to each
Participant's account an amount equal to the amount
withheld from the Compensation of such Participant
pursuant to his or her Salary Savings Agreement.
An Employee who has terminated his or her election under
the Salary Savings Agreement other than for hardship
reasons may not make another Elective Deferral:
[ ] (i) until the first day of the next Plan Year.
[ ] (ii) until the first day of the next valuation
period.
[x] (iii) for a period of 3 month(s) (not to exceed
12 months).
If no option is specified, option (ii) will apply.
[x] (c) Matching Employer Contribution [See paragraphs (g), (h) and (i)]:
[ ] (i) PERCENTAGE MATCH: The Employer shall
contribute and allocate to each eligible
Participant's account an amount equal to
___% of the amount contributed and
allocated in accordance with paragraph
7(b) above. The Employer shall not match
Participant Elective Deferrals as provided
above in excess of $___ or in excess of
___% of the Participant's Compensation.
[x] (ii) DISCRETIONARY MATCH: The Employer shall
contribute and allocate to each eligible
Participant's account a percentage of the
Participant's Elective Deferral
contributed and allocated in accordance
with paragraph 7(b) above. The Employer
shall not match Participant Elective
Deferrals in excess of $___ or in excess
of ___% of the Participant's Compensation.
[ ] (iii) TIERED MATCH: The Employer shall
contribute and allocate to each
Participant's account an amount equal to
___% of the first ___% of the
Participant's Compensation, and ___% of
the next ___% of the Participant's
Compensation.
NOTE: Percentages specified in (iii) above may not increase as the
percentage of Participant's contribution increases.
[ ] (iv) FLAT DOLLAR MATCH: The Employer shall contribute
and allocate to each Participant's account $ if
the Participant defers at least 1% of
Compensation.
7
(v) Eligibility for Match: Matching contributions
will be made to [x] all Employees eligible to
participate [ ] only to non-Highly Compensated
Employees eligible to participate.
[x] (vi) Qualified Match: Employer Matching Contributions
will be treated as Qualified Matching
Contributions to the extent specified by the
Employer at the time the Matching Employer
Contributions are made.
(vii) Matching Contribution Computation Period: The
time period upon which matching contributions
will be based shall be:
[ ] (A) weekly
[ ] (B) bi-weekly
[ ] (C) semi-monthly
[x] (D) monthly
[ ] (E) quarterly
[ ] (F) semi-annually
[ ] (G) annually
[x] (d) Qualified Non-Elective Employer Contribution - [See paragraphs
(g), (h) and (i)] These contributions are fully vested when
contributed.
The Employer shall have the right to make an additional
discretionary contribution which shall be allocated to each
eligible Employee in proportion to his or her Compensation as a
percentage of the Compensation of all eligible Employees. This
part of the Employer's contribution and the allocation thereof
shall be unrelated to any Employee contributions made hereunder.
The amount of Qualified non-Elective Contributions taken into
account for purposes of meeting the ADP or ACP test requirements
is the amount necessary to meet both the ADP and ACP tests.
Qualified non-Elective Contributions will be made to only
non-Highly Compensated Employees eligible to participate.
[x] (e) Additional Employer Contribution Other Than Qualified
Non-Elective Contributions - Non-Integrated [See paragraphs (g),
(h) and (i)]
The Employer shall have the right to make an additional
discretionary contribution which shall be allocated to each
eligible Employee in proportion to his or her Compensation as a
percentage of the Compensation of all eligible Employees. This
part of the Employer's contribution and the allocation thereof
shall be unrelated to any Employee contributions made hereunder.
[ ] (f) Additional Employer Contribution - Integrated Allocation Formula
[See paragraphs (g), (h) and (i)]
8
The Employer's contribution for the Plan Year plus any
forfeitures (only if they are reallocated to Participants under
Section 9 herein), shall be allocated to the accounts of eligible
Participants as set forth in the Basic Plan Document #04 of
paragraph 5.3.
NOTE: Only one plan maintained by the Employer may be integrated with
Social Security.
(g) Allocation of Excess Amounts (Annual Additions)
Excess deferrals which result in an Excess Amount shall be
returned to the Participant. In the event that the allocation
formula of other contributions results in an Excess Amount, such
excess shall be:
[x] (i) placed in a suspense account accruing no gains
or losses for the benefit of the Participant.
NOTE: For every Limitation Year, or part thereof, that a suspense
account exists, the Employer will be subjected
to a ten-percent penalty on the monies held in
the suspense account.
[ ] (ii) reallocated as additional Employer contributions
to all other Participants to the extent that
they do not have any Excess Amount.
If no answer is specified, the suspense account
method will be used.
(h) Minimum Employer Contribution Under Top-Heavy Plans:
For any Plan Year during which the Plan is Top-Heavy, the sum of
the contributions and forfeitures as allocated to eligible
Employees under paragraphs 7(d), 7(e), 7(f) and 9 of this
Adoption Agreement shall not be less than the amount required
under paragraph 14.2 of the Basic Plan Document #04. Top-Heavy
minimums will be allocated to:
[x] (i) all eligible Participants.
[ ] (ii) only eligible non-Key Employees who are Participants.
(i) Return of Excess Contributions and/or Excess Aggregate
Contributions:
In the event that one or more Highly Compensated Employees is
subject to both the ADP and ACP tests and the sum of such tests
exceeds the Aggregate Limit, the limit will be satisfied by
reducing the ACP of the affected Highly Compensated Employees.
8. ALLOCATIONS TO TERMINATED EMPLOYEES
(a) For Plan Years beginning in 1990 and thereafter, the Employer
will allocate Employer related contributions to any Participant
who is credited with more than 500 Hours of Service or is
employed on the last day of the Plan Year without regard to the
number of Hours of Service.
9
The Employer will also allocate Employer related contributions to
any Participant who terminates during the Plan Year without
accruing the necessary Hours of Service if they terminate as a
result of:
[ ] (i) Retirement.
[ ] (ii) Disability.
[ ] (iii) Death.
[ ] (iv) Other termination.
(b) If applicable, for Plan Years beginning prior to 1990:
[ ] (i) For Plan Years beginning prior to 1990,
the Employer will not allocate Employer related
contributions to any Participant who terminates
employment during the Plan Year.
[ ] (ii) The Employer will allocate Employer related
contributions to Employees who terminate during
the Plan Year as a result of:
[ ] (1) retirement.
[ ] (2) Disability.
[ ] (3) death.
[ ] (4) other termination provided
that the Participant has
completed a Year of Service.
[ ] (5) other termination.
9. ALLOCATION OF FORFEITURES
NOTE: Subsections (a), (b) and (c) below apply to forfeitures of
amounts other than Excess Aggregate Contributions.
(a) Allocation Alternatives:
[ ] (i) Not Applicable. All contributions are always
fully vested.
[ ] (ii) Forfeitures shall be allocated to Participants
in the same manner as the Employer's
contribution.
[x] (iii) Forfeitures shall be applied to reduce the
Employer's contribution for such Plan Year.
[ ] (iv) Forfeitures shall be applied to offset
administrative expenses of the Plan. If
forfeitures exceed these expenses, (iii) above
shall apply.
10
(b) Date for Reallocation:
NOTE: If no distribution has been made to a former Participant,
sub-section (i) below will apply to such Participant even if the
Employer elects (ii) or (iii) below as its normal administrative
policy.
[ ] (i) Forfeitures shall be reallocated at the end of
the Plan Year during which the former
Participant incurs his or her fifth consecutive
one year Break In Service.
[x] (ii) Forfeitures will be reallocated immediately (as
of the next Valuation Date).
[ ] (iii) Forfeitures will be reallocated as of the end of
the Plan Year in which the Participant separates
from service.
[ ] (iv) Forfeitures shall be reallocated as of the end
of the Plan Year during which the former
Employee incurs his or her ___(1st, 2nd, 3rd, or
4th) consecutive one year Break In Service.
(c) Restoration of Forfeitures:
If amounts are forfeited prior to five consecutive 1-year Breaks
in Service, the Funds for restoration of account balances will be
obtained from the following resources in the order indicated
(fill in 1 and 2 in the following boxes to indicate order):
[1] (i) Current year's forfeitures.
[2] (ii) Additional Employer contribution.
If no answer is specified, the order will be (i) and (ii).
(d) Forfeitures of Excess Aggregate Contributions shall be:
[x] (i) Applied to reduce Employer contributions.
[ ] (ii) Allocated, after all other forfeitures under the
Plan, to the Matching Contribution account of
each non-Highly Compensated Participant who made
Elective Deferrals in the ratio which each such
Participant's Compensation for the Plan Year
bears to the total Compensation of all
Participants for such Plan Year. Such
forfeitures cannot be allocated to the account
of any Highly Compensated Employee.
Forfeitures of Excess Aggregate Contributions will be so applied
at the end of the Plan Year in which they occur.
10. CASH OPTION
[ ] (a) The Employer may permit a Participant to elect to defer
to the Plan, an amount
11
not to exceed ___% of any Employer paid cash bonus made
for such Participant for any year. A Participant must
file an election to defer such contribution at least
fifteen (15) days prior to the end of the Plan Year. If
the Employee fails to make such an election, the entire
Employer paid cash bonus to which the Participant would
be entitled shall be paid as cash and not to the Plan.
Amounts deferred under this section shall be treated for
all purposes as Elective Deferrals. Notwithstanding the
above, the election to defer must be made before the
bonus is made available to the Participants.
[x] (b) Not Applicable.
If no answer is specified, option (b) will apply.
11. LIMITATIONS ON ALLOCATIONS
[x] This is the only Plan the Employer maintains or ever maintained;
therefore, this section is not applicable.
[ ] The Employer does maintain or has maintained another Plan
(including a Welfare Benefit Fund or an individual medical
account [as defined in Code Section 415(l)(2)], under which
amounts are treated as Annual Additions) and has completed the
proper sections below.
Complete (a), (b) and (c) only if the Employer maintains or ever
maintained another qualified plan, including a Welfare Benefit Fund or an
individual medical account [as defined in Code Section 415(l)(2)], in
which any Participant in this Plan is (or was) a participant or could
possibly become a participant.
(a) If the Participant is covered under another qualified Defined
Contribution Plan maintained by the Employer, other than a Master
or Prototype Plan:
[ ] (i) the provisions of Article X of the Basic Plan
Document #04 will apply, as if the other plan
were a Master or Prototype Plan.
[ ] (ii) Attach provisions stating the method under which
the plans will limit total Annual Additions to
the Maximum Permissible Amount, and will
properly reduce any Excess Amounts, in a manner
that precludes Employer discretion.
If no answer is specified, option (i) will apply.
(b) If a Participant is or ever has been a participant in a Defined
Benefit Plan maintained by the Employer:
Attach provisions which will satisfy the 1.0 limitation of Code
Section 415(e). Such language must preclude Employer discretion.
The Employer must also specify the interest and mortality
assumptions used in determining Present Value in the Defined
Benefit Plan.
12
(c) The minimum contribution or benefit required under Code Section
416 relating to Top-Heavy Plans shall be satisfied by:
[ ] (i) this Plan.
[ ] (ii)
------------------------------------------------
(Name of other qualified plan of the Employer).
[ ] (iii) Attach provisions stating the method under which
the minimum contribution and benefit provisions
of Code Section 416 will be satisfied. If a
Defined Benefit Plan is or was maintained, an
attachment must be provided showing interest and
mortality assumptions used in the Top-Heavy
Ratio.
If no answer is specified, option (i) will apply.
12. VESTING
Contributions under paragraph 7(b), 7(c)(vi) and 7(d) are always fully
vested. Employer contributions shall be subject to the vesting table
selected by the Employer below. A Participant shall receive credit for a
Year of Service as specified at 3(j)(iii) of this Adoption Agreement.
(a) Vesting Schedules:
NOTE: The vesting schedules below only apply to a Participant who has at
least one Hour of Service during or after the 1989 Plan
Year. If applicable, Participants who separated from
Service prior to the 1989 Plan Year will remain under the
vesting schedule as in effect in the Plan prior to
amendment for the Tax Reform Act of 1986.
(i) Full and immediate vesting.
Years of Service
------------------
1 2 3 4 5 6 7
--- --- --- --- --- --- ---
(ii) % 100%
-----
(iii) 331/3% 662/3% 100%
----- -----
(iv) % 20% 40% 60% 80% 100%
-----
(v) % % 20% 40% 60% 80% 100%
----- -----
(vi) 10% 20% 30% 40% 60% 80% 100%
(vii) % % % % 100%
----- ----- ----- -----
(viii) % % % % % % 100%
----- ----- ----- ----- ----- -----
NOTE: The percentages selected for schedule (viii) may not be less for any
year than the percentages shown at schedule (v).
13
Contributions will vest as provided below:
Vesting
Option Selected Type Of Employer Contribution
--------------- -----------------------------
iii 7(c) Employer Match on Salary Savings
iii 7(e) or (f) Employer Discretionary
(b) Top-Heavy Vesting
For any Plan Year in which this Plan is Top-Heavy, the following
minimum vesting rules will apply:
(i) Schedules (v), (vi), and (viii) above will automatically
shift to schedule (iv).
(ii) Schedule (vii) above will automatically shift to schedule
(iii).
(c) Service disregarded for Vesting:
[x] (i) No service will be disregarded.
[ ] (ii) Service prior to the Effective Date of this Plan
or a predecessor plan shall be disregarded when
computing a Participant's vested and
nonforfeitable interest.
[ ] (iii) Service prior to a Participant having attained
age 18 shall be disregarded when computing a
Participant's vested and nonforfeitable
interest.
13. SERVICE WITH PREDECESSOR ORGANIZATION
For purposes of satisfying the Service requirements for eligibility, Hours
of Service shall include Service with the following predecessor
organization(s):
(These hours will also be used for vesting purposes.)
SHARED TECHNOLOGIES INC.
14. ROLLOVER/TRANSFER CONTRIBUTIONS
(a) Rollover Contributions, including Direct Rollovers, as described
at paragraph 1.69 of the Basic Plan Document #04, [x] shall [ ]
shall not be permitted to be made to the Plan. If permitted,
Employees [x] may [ ] may not make Rollover Contributions prior
to meeting the eligibility requirements for participation in the
Plan.
(b) Transfer Contributions, as described at paragraph 4.4 of the
Basic Plan Document #04 [x] shall [ ] shall not be permitted to
be made to the Plan. If permitted, Employees [x] may [ ] may not
Transfer Contributions prior to meeting the eligibility
requirements for
14
participation in the Plan.
NOTE: Even if available, the Employer may refuse to accept such
contributions if its Plan meets the safe-harbor rules of
paragraph 8.7 of the Basic Plan Document #04.
15. HARDSHIP WITHDRAWALS
Hardship withdrawals, as provided for in paragraph 6.9 of the Basic Plan
Document #04, [x] are [ ] are not permitted. If permitted, Hardship
withdrawals [x] shall [ ] shall not be limited to Elective Deferrals.
16. PARTICIPANT LOANS
Participant loans, as provided for in paragraph 13.8 of the Basic Plan
Document #04, [x] are [ ] are not permitted. If permitted, repayments of
principal and interest shall be repaid to the Participant's segregated
account.
17. INSURANCE POLICIES
The insurance provisions of paragraph 13.9 of the Basic Plan Document #04
[ ] shall [x] shall not be applicable.
18. INVESTMENT DIRECTION
[x] (a) Employer Investment Direction
The Employer investment direction provisions, as set
forth in Article XIII of the Basic Plan Document #04,
shall be applicable to the following:
[ ] (i) All monies
[ ] (ii) Employer Discretionary and Matching Monies
[ ] (iii) Employer Discretionary Monies excluding Matching
Monies
[x] (iv) Employer Matching Monies only.
[x] (b) Employee Investment Direction
Employee investment direction provisions, as set forth in
Article XIII of the Basic Plan Document #04, shall be
applicable to all monies not directed by Employer.
If no answer is specified, Employee Investment Direction will apply.
NOTE: Each of the mutual funds in which the Plan may invest carries
its own fees and expenses, which may include management
fees, Rule 12b-1 fees and/or other fees and expenses,
which are described in detail in each Fund's prospectus.
Employees who invest in one or more of these mutual funds
will, as shareholders of those mutual funds, bear their
pro-rata portion of each fund's fees and expenses and
15
may also pay a sales charge or contingent deferred sales
charge in connection with their purchase of fund shares.
Employer acknowledges that Prudential Securities
Incorporated (PSI) and Pruco Securities Corporation
(Prusec) may be deemed to benefit from advisory and other
fees paid to its affiliates in connection with the
management and operation of the mutual funds in which the
Employee may invest, from sales charges and contingent
deferred sales charges imposed as described in the
prospectus and from fees paid to The Prudential Insurance
Company of America in connection with the Guaranteed
Interest Account.
19. EARLY PAYMENT OPTION
(a) A Participant who has attained age 59-1/2 and who has not
separated from Service [x] may [ ] may not obtain a distribution
of his or her vested Employer contributions.
(b) A Participant who has attained the Plan's Normal Retirement Age
and who has not separated from Service [x] may [ ] may not
receive a distribution of his or her vested account balance.
NOTE: If the Participant has had the right to withdraw his or her
account balance in the past, this right may not be taken
away. Notwithstanding the above, to the contrary,
required minimum distributions will be paid. For timing
of distributions, see item 20 below.
20. DISTRIBUTION OPTIONS
(a) Timing of Distributions:
In cases of termination benefits shall be paid:
[ ] (i) As soon as administratively feasible following
the close of the Plan Year during which a
distribution is requested or is otherwise
payable.
[x] (ii) As soon as administratively feasible, following
the date on which a distribution is requested or
is otherwise payable.
[ ] (iii) Only after the Participant has achieved the
Plan's Normal Retirement Age, or Early
Retirement Age, if applicable.
If no answer is specified, option (ii) will
apply.
(b) Optional Forms of Payment:
[x] (i) Lump Sum.
[ ] (ii) Installment Payments.
[x] (iii) Other form(s)* as specified:
LUMP SUM IN-KIND
16
If no answer is specified, option (i) will apply.
*Annuities are only available in either a nonsafe-harbored Plan
which does not meet the provisions of paragraph 8.7 of Basic Plan
Document #04 or in a Plan which previously offered annuities as
an optional form of payment.
21. SPONSOR CONTACT
The Sponsor of this Prototype Plan is Prudential Mutual Fund Management,
Inc., One Seaport Plaza, New York, New York 10292. Any questions regarding
this Prototype Plan document may be directed to your Prudential
Representative. You may also call Prudential Mutual Fund Services at
(800)848-4015.
17
22. SIGNATURES
DUE TO THE SIGNIFICANT TAX RAMIFICATIONS, THE SPONSOR RECOMMENDS THAT
BEFORE YOU EXECUTE THIS ADOPTION AGREEMENT, YOU CONTACT YOUR ATTORNEY OR
TAX ADVISOR.
THE ADOPTING EMPLOYER UNDERSTANDS THAT THERE ARE FEES FOR EACH ACCOUNT
UNDER THE PLAN. THE BASIC PLAN DOCUMENT CONTAINS A PRE-DISPUTE ARBITRATION
CLAUSE FOUND IN ARTICLE XIII, SECTION 13.7 ARBITRATION.
(a) EMPLOYER:
Name and address of Employer if different than specified in
Section 1 above.
IF EMPLOYER INVESTMENT DIRECTION APPLICABLE, NAME(S) OF
INDIVIDUAL(S) AUTHORIZED TO ISSUE INVESTMENT AND ADMINISTRATIVE
INSTRUCTIONS TO THE PLAN SPONSOR OR AFFILIATE:
Anthony D. Autorino, Vincent DiVincenzo or Kenneth M. Dorros
This Adoption Agreement and the corresponding provisions of the
Plan and Trust Basic Plan Document #04 were adopted by the
Employer the 30th day of May, 1997.
Signed for the Employer by: Kenneth M. Dorros
-----------------------------------
Title: Vice President and General Counsel
-----------------------------------
Signature: /s/ Kenneth M. Dorros
-----------------------------------
THE EMPLOYER UNDERSTANDS THAT ITS FAILURE TO PROPERLY COMPLETE
THE ADOPTION AGREEMENT MAY RESULT IN DISQUALIFICATION OF ITS
PLAN.
Employer's Reliance: An Employer who maintains or has ever
maintained or who later adopts any Plan [including, after
December 31, 1985, a Welfare Benefit Fund, as defined in Section
419(e) of the Code, which provides post-retirement medical
benefits allocated to separate accounts for Key Employees, as
defined in Section 419A(d)(3)] or an individual medical account,
as defined in Code Section 415(l)(2) in addition to this Plan may
not rely on the opinion letter issued by the National Office of
the Internal Revenue Service as evidence that this Plan is
qualified under Section 401 of the Code. If the Employer who
adopts or maintains multiple Plans wishes to obtain reliance that
such Plan(s) are qualified, application for a determination
letter should be made to the appropriate Key District Director of
Internal Revenue. The Employer understands that its failure to
properly complete the Adoption Agreement may result in
disqualification of its plan.
18
The Employer may not rely on the opinion letter issued by the
National Office of the Internal Revenue Service as evidence that
this Plan is qualified under section 401 of the Code unless the
terms of the Plan, as herein adopted or amended, that pertain to
the requirements of Code Sections 401(a)(4), 401(a)(17), 401(l),
401(a)(5), 410(b) and 414(s), as amended by the Tax Reform Act of
1986, or later laws, (a) are made effective retroactively to the
first day of the first Plan Year beginning after December 31,
1988 (or such later date on which these requirements first become
effective with respect to this Plan); or (b) are made effective
no later than the first day on which the Employer is no longer
entitled, under regulations, to rely on a reasonable, good faith
interpretation of these requirements, and the prior provisions of
the Plan constitute such an interpretation.
This Adoption Agreement may only be used in conjunction with
Basic Plan Document #04.
[x] (b) TRUSTEE:
[ ] Prudential Bank & Trust Company
Two Concourse Parkway, Suite 500
Atlanta, GA 30328
NOTE: There is an annual trustee fee charged under the Plan
if Prudential Bank & Trust Company is appointed
as Trustee.
[x] The Trustee(s) will be the following individuals:
Anthony D. Autorino Kenneth M. Dorros
Vincent DiVincenzo
The assets of the Fund shall be invested in accordance with
paragraph 13.3 of the Basic Plan Document #04 as a Trust. As
such, the Employer's Plan as contained herein was accepted by the
Trustee the 30th day of May, 1997.
Signed for the Trustee by: /s/ Anthony D. Autorino /s/ Vincent DiVincenzo
------------------------ -----------------------
Signature Signature
/s/ Kenneth M. Dorros
------------------------ -----------------------
Signature Signature
19
(c) Prudential Mutual Fund Management, Inc.
The Employer's Agreement and the corresponding provisions of the
Plan and Trust Basic Plan Document #04 were accepted by
Prudential Mutual Fund Management, Inc. the 18th day of
September, 1997.
Signed for by: Sally Alagona
_____________________________________________
Title: Assistant Vice President
_____________________________________________
Signature: /s/ Sally Alagona
_____________________________________________
20
401(k) Plan Document
The PruArray Prototype Plan and
Trust and IRS Opinion Letters
[LOGO]
PruArray 401(k) Plan
401(k) Plan Document
THIS DOCUMENT IS COPYRIGHTED UNDER THE LAWS OF THE UNITED STATES. USE,
DUPLICATION OR REPRODUCTION, INCLUDING THE USE OF ELECTRONIC MEANS, IS
PROHIBITED BY LAW WITHOUT THE EXPRESS CONSENT OF THE AUTHOR.
CONTENTS
Paragraph Page
ARTICLE I -- DEFINITIONS
1.1 Actual Deferral Percentage 1
1.2 Adoption Agreement 1
1.3 Aggregate Limit The sum of: 1
1.4 Annual Additions 1
1.5 Annuity Starting Date 1
1.6 Applicable Calendar Year 1
1.7 Applicable Life Expectancy 2
1.8 Average Contribution Percentage (ACP) 2
1.9 Average Deferral Percentage (ADP) 2
1.10 Break In Service 2
1.11 Code 2
1.12 Compensation 2
1.13 Contribution Percentage 3
1.14 Defined Benefit Plan 4
1.15 Defined Benefit (Plan) Fraction 4
1.16 Defined Contribution Dollar Limitation 4
1.17 Defined Contribution Plan 4
1.18 Defined Contribution (Plan) Fraction 4
1.19 Designated Beneficiary 5
1.20 Disability 5
1.21 Distribution Calendar Year 5
1.22 Early Retirement Age 5
1.23 Earned Income 5
1.24 Effective Date 5
1.25 Election Period 5
1.26 Elective Deferral 5
1.27 Eligible Participant 6
1.28 Employee 6
1.29 Employer 6
1.30 Entry Date 6
1.31 Excess Aggregate Contributions 6
1.32 Excess Amount 6
1.33 Excess Contribution 6
1.34 Excess Elective Deferrals 6
1.35 Family Member 7
1.36 First Distribution Calendar Year 7
1.37 Fund 7
1.38 Hardship 7
1.39 Highest Average Compensation 7
1.40 Highly Compensated Employee 7
1.41 Hour Of Service 7
1.42 Key Employee 9
1.43 Leased Employee 9
1.44 Limitation Year 9
1.45 Master Or Prototype Plan 9
1.46 Matching Contribution 9
1.47 Maximum Permissible Amount 9
1.48 Net Profit 9
1.49 Normal Retirement Age 9
1.50 Owner-Employee 10
1.51 Paired Plans 10
1.52 Participant 10
1.53 Participant's Benefit 10
1.54 Permissive Aggregation Group 10
1.55 Plan 10
1.56 Plan Administrator 10
1.57 Year 10
1.58 Present Value 10
1.59 Projected Annual Benefit 10
1.60 Qualified Deferred Compensation Plan 10
1.61 Qualified Domestic Relations Order 11
1.62 Qualified Early Retirement Age 11
1.63 Qualified Joint And Survivor Annuity 11
1.64 Qualified Matching Contribution 11
1.65 Qualified Non-Elective Contributions 11
1.66 Qualified Voluntary Contribution 11
1.67 Required Aggregation Group 11
1.68 Required Beginning Date 11
1.69 Rollover Contribution 11
1.70 Salary Savings Agreement 12
1.71 Self-Employed Individual 12
1.72 Service 12
1.73 Service Company 12
1.74 Shareholder Employee 12
1.75 Simplified Employee Pension Plan 12
1.76 Sponsor 12
1.77 Spouse (Surviving Spouse) 12
1.78 Super Top-Heavy Plan 12
1.79 Taxable Wage Base 12
1.80 Top-Heavy Determination Date 12
1.81 Top-Heavy Plan 12
1.82 Top-Heavy Ratio 12
1.83 Top-Paid Group 13
1.84 Transfer Contribution 14
1.85 Trustee 14
1.86 Valuation Date 14
1.87 Vested Account Balance 14
1.88 Voluntary Contribution 14
1.89 Welfare Benefit Fund 14
1.90 Year Of Service 14
ARTICLE II -- ELIGIBILITY REQUIREMENTS
2.1 Participation 14
2.2 Change In Classification Of Employment 15
2.3 Computation Period 15
2.4 Employment Rights 15
2.5 Service With Controlled Groups 15
2.6 Owner-Employees 15
2.7 Leased Employees 16
2.8 Omission Of Eligible Employee 16
2.9 Inclusion Of Ineligible Employee 16
ARTICLE III -- EMPLOYER CONTRIBUTIONS
3.1 Amount 16
3.2 Expenses And Fees 16
3.3 Responsibility For Contributions 16
3.4 Return Of Contributions 16
3.5 Form Of Contribution 17
Paragraph Page
ARTICLE IV -- EMPLOYEE CONTRIBUTIONS
4.1 Voluntary Contributions 17
4.2 Qualified Voluntary Contributions 17
4.3 Rollover Contribution 17
4.4 Transfer Contribution 18
4.5 Employer Approval Of Transfer Contributions 18
4.6 Elective Deferrals 18
4.7 Direct Rollover Of Benefits 19
ARTICLE V -- PARTICIPANT ACCOUNTS
5.1 Separate Accounts 19
5.2 Adjustments To Participant Accounts 19
5.3 Allocating Employer Contributions 19
5.4 Allocating Investment Earnings And Losses 20
5.5 Participant Statements 21
ARTICLE VI -- RETIREMENT BENEFITS AND DISTRIBUTIONS
6.1 Normal Retirement Benefits 21
6.2 Early Retirement Benefits 21
6.3 Benefits On Termination Of Employment 21
6.4 Restrictions On Immediate Distributions 22
6.5 Normal Form Of Payment 23
6.6 Commencement Of Benefits 23
6.7 Claims Procedures 23
6.8 In-Service Withdrawals 24
6.9 Hardship Withdrawal 24
6.10 Order Of Withdrawals 25
ARTICLE VII -- DISTRIBUTION REQUIREMENTS
7.1 Joint And Survivor Annuity Requirements 25
7.2 Minimum Distribution Requirements 26
7.3 Limits On Distribution Periods 26
7.4 Required Distributions On Or After The Required
Beginning Date 26
7.5 Required Beginning Date 27
7.6 Transitional Rule 27
7.7 Designation Of Beneficiary For Death Benefit 28
7.8 Nonexistence Of Beneficiary 28
7.9 Distribution Beginning Before Death 28
7.10 Distribution Beginning After Death 28
7.11 Distribution Of Excess Elective Deferrals 29
7.12 Distributions of Excess Contributions 29
7.13 Distribution Of Excess Aggregate Contributions 30
ARTICLE VIII -- JOINT AND SURVIVOR ANNUITY REQUIREMENTS
8.1 Applicability Of Provisions 30
8.2 Payment Of Qualified Joint And Survivor Annuity 30
8.3 Payment Of Qualified Pre-Retirement Survivor Annuity 31
8.4 Qualified Election 31
8.5 Notice Requirements For Qualified Joint And Survivor
Annuity 31
8.6 Notice Requirements For Qualified Pre-Retirement
Survivor Annuity 31
8.7 Special Safe-Harbor Exception For Certain
Profit-Sharing Plans 32
8.8 Transitional Joint And Survivor Annuity Rules 32
8.9 Automatic Joint And Survivor Annuity And Early
Survivor Annuity 33
8.10 Annuity Contracts 33
ARTICLE IX -- VESTING
9.1 Employee Contributions 33
9.2 Employer Contributions 33
9.3 Computation Period 34
9.4 Requalification Prior To Five Consecutive One-Year
Breaks In Service 34
9.5 Requalification After Five Consecutive One-Year
Breaks In Service 34
9.6 Calculating Vested Interest 34
9.7 Forfeitures 34
9.8 Amendment Of Vesting Schedule 34
9.9 Service With Controlled Groups 35
ARTICLE X -- LIMITATIONS ON ALLOCATIONS AND ANTIDISCRIMINATION TESTING
10.1 Participation In This Plan Only 35
10.2 Disposition Of Excess Annual Additions 35
10.3 Participation In This Plan And Another Qualified
Master and Prototype Defined Contribution Plan,
Welfare Benefit Fund, Individual Medical Account
Or Simplified Employee Pension Plan Maintained
By The Employer 36
10.4 Disposition Of Excess Annual Additions Under Two Plans 36
10.5 Participation In This Plan And Another Defined
Contribution Plan Which Is Not A Qualified Master
Or Prototype Plan 37
10.6 Participation In This Plan And A Defined Benefit Plan 37
10.7 Average Deferral Percentage (ADP) Test 37
10.8 Special Rules Relating To Application Of ADP Test 37
10.9 Average Contribution Percentage (ACP) Test 38
10.10 Special Rules Relating To Application Of ACP Test 38
ARTICLE XI -- ADMINISTRATION
11.1 Plan Administrator 39
11.2 Trustee 40
11.3 Administrative Fees And Expenses 40
11.4 Duties And Indemnification 40
11.5 Special Provisions Concerning The Service Company 41
ARTICLE XII -- TRUST FUND
12.1 The Fund 42
12.2 Control Of Plan Assets 42
12.3 Exclusive Benefit Rules 42
12.4 Assignment And Alienation Of Benefits 42
12.5 Determination Of Qualified Domestic Relations Order (QDRO) 42
ARTICLE XIII -- INVESTMENTS
13.1 Fiduciary Standards 43
13.2 No Investment Discretion 43
13.3 Investment Directions 43
13.4 Permitted Investments 44
13.5 Shareholder Rights 44
13.6 Liquidation Of Assets 44
13.7 Arbitration 45
13.8 Participant Loans 45
13.9 Insurance Policies 47
ARTICLE XIV -- TOP-HEAVY PROVISIONS
14.1 Applicability Of Rules 48
14.2 Minimum Contribution 48
14.3 Minimum Vesting 48
14.4 Limitations On Allocations 49
ARTICLE XV -- AMENDMENT AND TERMINATION
15.1 Amendment By Sponsor 49
15.2 Amendment By Employer 49
15.3 Termination 49
15.4 Qualification Of Employer's Plan 49
15.5 Mergers And Consolidations 49
15.6 Resignation And Removal 50
15.7 Qualification Of Prototype 50
ARTICLE XVI -- GOVERNING LAW
ARTICLE I -- DEFINITIONS
1.1 Actual Deferral Percentage
The ratio (expressed as a percentage and calculated separately for each
Participant) of:
(a) the amount of Employer contributions [as defined at (c) and (d)]
actually paid over to the Fund on behalf of such Participant for the Plan
Year to
(b) the Participant's Compensation for such Plan Year. (Unless otherwise
specified by the Employer in the Adoption Agreement, Compensation will
include all amounts earned from the Employer and actually paid during the
Plan Year).
Employer contributions on behalf of any Participant shall include:
(c) any Elective Deferrals made pursuant to the Participant's deferral
election, including Excess Elective Deferrals, but excluding Elective
Deferrals that are either taken into account in the Contribution Percentage
test (provided the ADP test is satisfied both with and without exclusion of
these Elective Deferrals) or are returned as excess Annual Additions; and
(d) at the election of the Employer, Qualified Non-Elective Contributions
and Qualified Matching Contributions.
For purposes of computing Actual Deferral Percentages, an Employee who would be
a Participant but for the failure to make Elective Deferrals shall be treated as
a Participant on whose behalf no Elective Deferrals are made.
1.2 Adoption Agreement
The document attached to this Plan by which an Employer elects to establish a
qualified retirement plan and trust under the terms of this Prototype Plan and
Trust.
1.3 Aggregate Limit The sum of:
(a) 125 percent of the greater of the ADP of the Non-Highly Compensated
Employees for the Plan Year or the ACP of Non-Highly Compensated Employees
under the Plan subject to Code Section 401(m) for the Plan Year beginning
with or within the Plan Year of the cash or deferred arrangement as
described in Code Section 401(k) or Code Section 402(h)(1)(B), and
(b) the lesser of 200% or 2% plus the lesser of such ADP or ACP.
Alternatively, the aggregate limit can be determined by substituting "the lesser
of 200% or 2 percent plus" for "125% of" in (a) above, and substituting "125%
of" for "the lesser of 200% or 2% plus" in (b) above.
1.4 Annual Additions
The sum of the following amounts credited to a Participant's account for the
Limitation Year:
(a) Employer Contributions;
(b) Employee Contributions (under Article IV);
(c) Forfeitures;
(d) Amounts allocated after March 31, 1984, to an individual medical
account, as defined in Code Section 415(l)(2), which is part of a pension
or annuity plan maintained by the Employer (these amounts are treated as
Annual Additions to a Defined Contribution Plan, though they arise under a
Defined Benefit Plan); and
(e) Amounts derived from contributions paid or accrued after 1985, in
taxable years ending after 1985, which are either attributable to
post-retirement medical benefits allocated to the account of a Key
Employee, or to a Welfare Benefit Fund maintained by the Employer, are also
treated as Annual Additions to a Defined Contribution Plan. For purposes of
this paragraph, an Employee is a Key Employee if he or she meets the
requirements of paragraph 1.43 at any time during the Plan Year or any
preceding Plan Year. Welfare Benefit Fund is defined at paragraph 1.89.
(f) Allocations under a Simplified Employee Pension Plan.
Excess amounts applied in a Limitation Year to reduce Employer contributions
will be considered Annual Additions for such Limitation Year, pursuant to the
provisions of Article X.
1.5 Annuity Starting Date
The first day of the first period for which an amount is paid as an annuity or
in any other form.
1.6 Applicable Calendar Year
The First Distribution Calendar Year, and in the event of the recalculation of
life expectancy, such succeeding calendar year. If payments commence in
accordance with paragraph 7.4(e) before the Required
1
Beginning Date, the Applicable Calendar Year is the year such payments commence.
If distribution is in the form of an immediate annuity purchased after the
Participant's death with the Participant's remaining interest, the Applicable
Calendar Year is the year of purchase.
1.7 Applicable Life Expectancy
Used in determining the required minimum distribution. The life expectancy (or
joint and last survivor expectancy) calculated using the attained age of the
Participant (or Designated Beneficiary) as of the Participant's (or Designated
Beneficiary's) birthday in the Applicable Calendar Year reduced by one for each
calendar year which has elapsed since the date life expectancy was first
calculated. If life expectancy is being recalculated, the Applicable Life
Expectancy shall be the life expectancy as so recalculated. The life expectancy
of a non-Spouse Beneficiary may not be recalculated.
1.8 Average Contribution Percentage (ACP)
The average of the Contribution Percentages for each Highly Compensated Employee
and for each Non-Highly Compensated Employee.
1.9 Average Deferral Percentage (ADP)
The average of the Actual Deferral Percentages for each Highly Compensated
Employee and for each Non-Highly Compensated Employee.
1.10 Break In Service
If the Hour counting method has been chosen by the Employer in the Adoption
Agreement, a Break in Service is a 12-consecutive month period during which an
Employee fails to complete more than 500 Hours of Service. If the Elapsed Time
method has been chosen by the Employer in the Adoption Agreement, a Break in
Service is a period of severance of at least 12 consecutive months.
1.11 Code
The Internal Revenue Code of 1986, including any amendments.
1.12 Compensation
Unless otherwise specified by the Employer in the Adoption Agreement,
Compensation shall include all amounts earned from the Employer and actually
paid during the Plan Year.
(a) Code Section 3401(a) Wages. Compensation is defined as wages within the
meaning of Code Section 3401(a) for the purposes of Federal income tax
withholding at the source but determined without regard to any rules that
limit the remuneration included in wages based on the nature or location of
the employment or the services performed [such as the exception for
agricultural labor in Code Section 3401(a)(2)].
(b) Code Section 415 Compensation. For purposes of applying the limitations
of Article X and Top-Heavy minimums, the definition of Compensation shall
be Code Section 415 Compensation defined as follows: a Participant's Earned
Income, wages, salaries, and fees for professional services and other
amounts received (without regard to whether or not an amount is paid in
cash) for personal services actually rendered in the course of employment
with the Employer maintaining the Plan to the extent that the amounts are
includible in gross income [including, but not limited to, commissions paid
salesmen, compensation for services on the basis of a percentage of
profits, commissions on insurance premiums, tips, bonuses, fringe benefits
and reimbursements or other expense allowances under a nonaccountable plan
(as described in Regulation 1.62-2(c))], and excluding the following:
(1) Employer contributions to a plan of deferred compensation which are
not includible in the Employee's gross income for the taxable year in
which contributed, or Employer contributions under a Simplified
Employee Pension Plan or any distributions from a plan of deferred
compensation,
(2) Amounts realized from the exercise of a non-qualified stock option,
or when restricted stock (or property) held by the Employee either
becomes freely transferable or is no longer subject to a substantial
risk of forfeiture,
(3) Amounts realized from the sale, exchange or other disposition of
stock acquired under a qualified stock option; and
(4) Other amounts which received special tax benefits, or contributions
made by the Employer (whether or not under a Salary Reduction
Agreement) towards the purchase of an annuity described in Code Section
403(b) (whether or not the amounts are actually
2
excludaible from the gross income of the Employee).
For purposes of applying the limitations of Article X, Compensation for a
Limitation Year is the Compensation actually paid or made available during such
Limitation Year. Notwithstanding the preceding sentence, Compensation for a
Participant in a Defined Contribution Plan who is permanently and totally
disabled [as defined in Code Section 22(e)(3)] is the Compensation such
Participant would have received for the Limitation Year if the Participant had
been paid at the rate of Compensation paid immediately before becoming
permanently and totally disabled. Such imputed Compensation for the disabled
Participant may be taken into account only if the participant is not a Highly
Compensated Employee [as defined in Code Section 414(q)] and contributions made
on behalf of such Participant are nonforfeitable when made.
If the Employer fails to pick the determination period in the Adoption
Agreement, the Plan Year shall be used. Unless otherwise specified by the
Employer in the Adoption Agreement, Compensation shall be determined as provided
in Code Section 3401(a) (as defined in this paragraph 1.12(a)). In
nonstandardized Adoption Agreement 002, the Employer may choose to eliminate or
exclude categories of Compensation which do not violate the provisions of Code
Sections 401(a)(4), 414(s) the regulations thereunder and Revenue Procedure
89-65.
Beginning with 1989 Plan Years, the annual Compensation of each Participant
which may be taken into account for determining all benefits provided under the
Plan (including benefits under Article XIV) for any Plan Year shall not exceed
$200,000, as adjusted under Code Section 415(d). For Plan Years beginning on or
after January 1, 1994, the annual Compensation of each Participant taken into
account for determining all benefits provided under the Plan for any Plan Year
shall not exceed $150,000, as adjusted for increases in the cost-of-living in
accordance with Code Section 401(a)(17). The cost-of-living adjustment in effect
for a calendar year applies to any determination period beginning in such
calendar year.
In determining the Compensation of a Participant for purposes of this
limitation, the rules of Code Section 414(q)(6) shall apply, except in applying
such rules, the term "family" shall include only the spouse of the Participant
and any lineal descendants of the Participant who have not attained age 19
before the end of the Plan Year. If, as a result of the application of such
rules the adjusted annual Compensation limitation is exceeded, then (except for
purposes of determining the portion of Compensation up to the integration level
if this Plan provides for permitted disparity), the limitation shall be prorated
among the affected individuals in proportion to each such individual's
Compensation as determined under this section prior to the application of this
limitation.
If a Plan has a Plan Year that contains fewer than 12 Calendar Months, then the
annual compensation limit for that period is an amount equal to the annual
Compensation as adjusted for the calendar year in which the compensation period
begins, multiplied by a fraction the numerator of which is the number of full
months in the short determination period and the denominator of which is 12. If
compensation for any prior plan year is taken into account in determining an
employee's contributions or benefits for the current year, the compensation for
such prior year is subject to the applicable annual compensation limit in effect
for that prior year. For this purpose, for years beginning before January 1,
1990, the applicable annual compensation limit is $200,000.
Compensation shall not include deferred compensation other than contributions
through a salary reduction agreement to a cash or deferred plan under Code
Section 401(k), a Simplified Employee Pension Plan under Code Section
402(h)(1)(B), a cafeteria plan under Code Section 125 or a tax-deferred annuity
under Code Section 403(b). Unless elected otherwise by the Employer in the
Adoption Agreement, these deferred amounts will be considered as Compensation
for Plan purposes. These deferred amounts are not counted as Compensation for
purposes of Articles X and XIV except for Code Sections 401(k) and 401(m)
testing. When applicable to a Self-Employed Individual, Compensation shall mean
Earned Income.
1.13 Contribution Percentage
The ratio (expressed as a percentage and calculated separately for each
Participant) of:
(a) the Participant's Contribution Percentage Amounts [as defined at
(c)-(f)] for the Plan Year, to
(b) the Participant's Compensation for such Plan Year. Unless otherwise
specified by the Employer in the Adoption Agreement, Compensation will
3
include all amounts earned from the Employer and actually paid during the
Plan Year.
Contribution Percentage Amounts on behalf of any Participant shall include:
(c) the amount of Employee Voluntary Contributions, Matching Contributions,
and Qualified Matching Contributions (to the extent not taken into account
for purposes of the ADP test) made under the Plan on behalf of the
Participant for the Plan Year,
(d) forfeitures of Excess Aggregate Contributions or Matching Contributions
allocated to the Participant's account which shall be taken into account in
the year in which such forfeiture is allocated,
(e) at the election of the Employer, Qualified Non-Elective Contributions,
and
(f) the Employer also may elect to use Elective Deferrals in the
Contribution Percentage Amounts so long as the ADP test is met before the
Elective Deferrals are used in the ACP test and continues to be met
following the exclusion of those Elective Deferrals that are used to meet
the ACP test.
Contribution Percentage Amounts shall not include Matching Contributions,
whether or not Qualified, that are forfeited either to correct Excess Aggregate
Contributions, or because the contributions to which they relate are Excess
Deferrals, Excess Contributions, or Excess Aggregate Contributions.
1.14 Defined Benefit Plan
A Plan under which a Participant's benefit is determined by a formula contained
in the Plan and no individual accounts are maintained for Participants.
1.15 Defined Benefit (Plan) Fraction
A fraction, the numerator of which is the sum of the Participant's Projected
Annual Benefits under all the Defined Benefit Plans (whether or not terminated)
maintained by the Employer, and the denominator of which is the lesser of 125
percent of the dollar limitation determined for the Limitation Year under Code
Sections 415(b) and (d) or 140 percent of the Highest Average Compensation,
including any adjustments under Code Section 415(b).
Notwithstanding the above, if the Participant was a Participant as of the first
day of the first Limitation Year beginning after 1986, in one or more Defined
Benefit Plans maintained by the Employer which were in existence on May 6, 1986,
the denominator of this fraction will not be less than 125 percent of the sum of
the annual benefits under such plans which the Participant had accrued as of the
close of the last Limitation Year beginning before 1987, disregarding any
changes in the terms and conditions of the plan after May 5, 1986. The preceding
sentence applies only if the Defined Benefit Plans individually and in the
aggregate satisfied the requirements of Section 415 for all Limitation Years
beginning before 1987.
1.16 Defined Contribution Dollar Limitation
Thirty thousand dollars ($30,000) or, if greater, one-fourth of the defined
benefit dollar limitation set forth in Code Section 415(b)(1) as in effect for
the Limitation Year.
1.17 Defined Contribution Plan
A Plan under which individual accounts are maintained for each Participant to
which all contributions, forfeitures, investment income and gains or losses, and
expenses are credited or deducted. A Participant's benefit under such Plan is
based solely on the fair market value of his or her account balance.
1.18 Defined Contribution (Plan) Fraction
A Fraction, the numerator of which is the sum of the Annual Additions to the
Participant's account under all the Defined Contribution Plans (whether or not
terminated) maintained by the Employer for the current and all prior Limitation
Years (including the Annual Additions attributable to the Participant's
nondeductible Employee contributions to all Defined Benefit Plans, whether or
not terminated, maintained by the Employer, and the Annual Additions
attributable to all Welfare Benefit Funds, as defined in paragraph 1.89 and
individual medical accounts, as defined in Code Section 415(l)(2), maintained by
the Employer), and the denominator of which is the sum of the maximum aggregate
amounts for the current and all prior Limitation Years of service with the
Employer (regardless of whether a Defined Contribution Plan was maintained by
the Employer). The maximum aggregate amount in the Limitation Year is the lesser
of 125 percent of the dollar limitation determined under Code Sections 415(b)
and (d) in effect under Code Section 415(c)(1)(A) or 35 percent of the
Participant's Compensation for such year.
If the Employee was a Participant as of the end of the first day of the first
Limitation Year beginning after
4
1986, in one or more Defined Contribution Plans maintained by the Employer which
were in existence on May 6, 1986, the numerator of this fraction will be
adjusted if the sum of this fraction and the Defined Benefit Fraction would
otherwise exceed 1.0 under the terms of this Plan. Under the adjustment, an
amount equal to the product of (1) the excess of the sum of the fractions over
1.0 times (2) the denominator of this fraction will be permanently subtracted
from the numerator of this fraction. The adjustment is calculated using the
fractions as they would be computed as of the end of the last Limitation Year
beginning before 1987, and disregarding any changes in the terms and conditions
of the Plan made after May 6, 1986, but using the Section 415 limitation
applicable to the first Limitation Year beginning on or after January 1, 1987.
The Annual Addition for any Limitation Year beginning before 1987 shall not be
re-computed to treat all Employee Contributions as Annual Additions.
1.19 Designated Beneficiary
The individual who is designated as the beneficiary under the Plan in accordance
with Code Section 401(a)(9) and the regulations thereunder.
1.20 Disability
An illness or injury of a potentially permanent nature, expected to last for a
continuous period of not less than 12 months, certified by a physician selected
by or satisfactory to the Employer, which prevents the Employee from engaging in
any occupation for wage or profit for which the Employee is reasonably fitted by
training, education or experience.
1.21 Distribution Calendar Year
A calendar year for which a minimum distribution is required.
1.22 Early Retirement Age
The age set by the Employer in the Adoption Agreement (but not less than 55),
which is the earliest age at which a Participant may retire and receive his or
her benefits under the Plan.
1.23 Earned Income
Net earnings from self-employment in the trade or business with respect to which
the Plan is established, determined without regard to items not included in
gross income and the deductions allocable to such items, provided that personal
services of the individual are a material income-producing factor. Earned income
shall be reduced by contributions made by an Employer to a qualified plan to the
extent deductible under Code Section 404. For tax years beginning after 1989,
net earnings shall be determined, taking into account the deduction for one-half
of self-employment taxes allowed to the Employer under Code Section 164(f) to
the extent deductible.
1.24 Effective Date
The date on which the Employer's retirement plan or amendment to such plan
becomes effective. Unless otherwise specified in the Adoption Agreement, the
effective date shall be the first day of the Plan Year during which the Adoption
Agreement is executed by the Employer. For amendments reflecting statutory and
regulatory changes post Tax Reform Act of 1986, the Effective Date will be the
date upon which such amendment is first administratively applied.
1.25 Election Period
The period which begins on the first day of the Plan Year in which the
Participant attains age 35 and ends on the date of the Participant's death. If a
Participant separates from service prior to the first day of the Plan Year in
which age 35 is attained, the Election Period shall begin on the date of
separation, with respect to the account balance as of the date of separation.
1.26 Elective Deferral
Employer contributions made to the Plan at the election of the Participant, in
lieu of cash Compensation. Elective Deferrals shall also include contributions
made pursuant to a Salary Savings Agreement or other deferral mechanism, such as
a cash option contribution. With respect to any taxable year, a Participant's
Elective Deferral is the sum of all Employer contributions made on behalf of
such Participant pursuant to an election to defer under any qualified cash or
deferred arrangement as described in Code Section 401(k), any simplified
employee pension cash or deferred arrangement as described in Code Section
402(h)(1)(B), any eligible deferred compensation plan under Code Section 457,
any plan as described under Code Section 501(c)(18), and any Employer
contributions made on the behalf of a Participant for the purchase of an annuity
contract under Code Section 403(b) pursuant to a Salary Savings Agreement.
Elective Deferrals shall not
5
include any deferrals properly distributed as Excess Annual Additions.
1.27 Eligible Participant
Any Employee who is eligible to make a Voluntary Contribution, or an Elective
Deferral (if the Employer takes such contributions into account in the
calculation of the Contribution Percentage), or to receive a Matching
Contribution (including forfeitures) or a Qualified Matching Contribution. If a
Voluntary Contribution or Elective Deferral is required as a condition of
participation in the Plan, any Employee who would be a Participant in the Plan
if such Employee made such a contribution shall be treated as an Eligible
Participant even though no Voluntary Contributions or Elective Deferrals are
made.
1.28 Employee
Any person employed by the Employer (including Self-Employed Individuals and
partners), all Employees of a member of an affiliated service group [as defined
in Code Section 414(m)], Employees of a controlled group of corporations [as
defined in Code Section 414(b)], all Employees of any incorporated or
unincorporated trade or business which is under common control [as defined in
Code Section 414(c)], leased Employees [as defined in Code Section 414(n)] and
any Employee required to be aggregated by Code Section 414(o). All such
Employees shall be treated as employed by a single Employer.
1.29 Employer
The Self-Employed Individual, partnership, corporation or other organization
which adopts this Plan, including any firm that succeeds the Employer and adopts
this Plan. For purposes of Article X, Limitations on Allocations, Employer shall
mean the Employer that adopts this Plan, and all members of a controlled group
of corporations [as defined in Code Section 414(b) as modified by Code Section
415(h)], all commonly controlled trades or businesses [as defined in Code
Section 414(c) as modified by Code Section 415(h)] or affiliated service groups
[as defined in Code Section 414(m)] of which the adopting Employer is a part,
and any other entity required to be aggregated with the Employer pursuant to
regulations under Code Section 414(o).
1.30 Entry Date
The date on which an Employee commences participation in the Plan as determined
by the Employer in the Adoption Agreement. Unless the Employer specifies
otherwise in the Adoption Agreement, entry into the Plan shall be on the first
day of the Plan Year or the first day of the seventh month of the Plan Year
coinciding with or following the date on which an Employee meets the eligibility
requirements.
1.31 Excess Aggregate Contributions
The excess, with respect to any Plan Year, of:
(a) the aggregate Contribution Percentage Amounts taken into account in
computing the numerator of the Contribution Percentage actually made on
behalf of Highly Compensated Employees for such Plan Year, over
(b) the maximum Contribution Percentage Amounts permitted by the ACP test
(determined by reducing contributions made on behalf of Highly Compensated
Employees in order of their Contribution Percentages beginning with the
highest of such percentages).
Such determination shall be made after first determining Excess Elective
Deferrals pursuant to paragraph 1.34 and then determining Excess Contributions
pursuant to paragraph 1.33.
1.32 Excess Amount
The excess of the Participant's Annual Additions for the Limitation Year over
the Maximum Permissible Amount.
1.33 Excess Contribution
With respect to any Plan Year, the excess of:
(a) the aggregate amount of Employer contributions actually taken into
account in computing the ADP of Highly Compensated Employees for such Plan
Year, over
(b) the maximum amount of such contributions permitted by the ADP test
(determined by reducing contributions made on behalf of Highly Compensated
Employees in order of the ADPs, beginning with the highest of such
percentages).
1.34 Excess Elective Deferrals
Those Elective Deferrals that are includible in a Participant's gross income
under Code Section 402(g) to the extent such Participant's Elective Deferrals
for a taxable year exceed the dollar limitation under such Code Section. Excess
Elective Deferrals shall be treated as Annual Additions under the Plan, unless
6
such amounts are distributed no later than the first April 15 following the
close of the Participant's taxable year.
1.35 Family Member
The Employee's Spouse, any lineal descendants and ascendants and the Spouse of
such lineal descendants and ascendants.
1.36 First Distribution Calendar Year
For distributions beginning before the Participant's death, the First
Distribution Calendar Year is the calendar year immediately preceding the
calendar year which contains the Participant's Required Beginning Date. For
distributions beginning after the Participant's death, the First Distribution
Calendar Year is the calendar year in which distributions are required to begin
pursuant to paragraph 7.10.
1.37 Fund
All contributions received by the Trustee under this Plan and Trust, investments
thereof and earnings and appreciation thereon.
1.38 Hardship
An immediate and heavy financial need of the Employee where such Employee lacks
other available resources.
1.39 Highest Average Compensation
The average Compensation for the three consecutive Years of Service with the
Employer that produces the highest average. A Year of Service with the Employer
is the 12-consecutive month period defined in the Adoption Agreement.
1.40 Highly Compensated Employee
Any Employee who performs service for the Employer during the determination year
and who, during the immediate prior year:
(a) received Compensation from the Employer in excess of $75,000 [as
adjusted pursuant to Code Section 415(d)]; or
(b) received Compensation from the Employer in excess of $50,000 [as
adjusted pursuant to Code Section 415(d)] and was a member of the Top-Paid
Group for such year; or
(c) was an officer of the Employer and received Compensation during such
year that is greater than 50 percent of the dollar limitation in effect
under Code Section 415(b)(1)(A).
Notwithstanding (a), (b) and (c), an Employee who was not Highly Compensated
during the preceding Plan Year shall not be treated as a Highly Compensated
Employee with respect to the current Plan Year, unless such Employee is a member
of the 100 Employees paid the greatest Compensation during the year for which
such determination is being made.
(d) Employees who are five percent (5%) Owners at any time during the
immediate prior year or determination year.
Highly Compensated Employee includes Highly Compensated active Employees and
Highly Compensated former Employees.
1.41 Hour Of Service
(a) Hour Counting Method:
(1) Each hour for which an Employee is paid, or entitled to payment,
for the performance of duties for the Employer. These hours shall be
credited to the Employee for the computation period in which the duties
are performed; and
(2) Each hour for which an Employee is paid, or entitled to payment, by
the Employer on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or leave of absence. No
more than 501 Hours of Service shall be credited under this paragraph
for any single continuous period (whether or not such period occurs in
a single computation period). Hours under this paragraph shall be
calculated and credited pursuant to Section 2530.200b-2 of the
Departmentof Labor Regulations which are incorporated herein by this
reference; and
(3) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer. The same Hours
of Service shall not be credited both under paragraph (a) or paragraph
(b), as the case may be, and under this paragraph (c). These hours
shall be credited to the Employee for the computation period or periods
to which the award or agreement pertains rather than the computation
period in which the award, agreement or payment is made.
7
(4) Hours of Service shall be credited for employment with the Employer
and with other members of an affiliated service group [as defined in
Code Section 414(m)], a controlled group of corporations [as defined in
Code Section 414(b)], or a group of trades or businesses under common
control [as defined in Code Section 414(c)] of which the adopting
Employer is a member, and any other entity required to be aggregated
with the Employer pursuant to Code Section 414(o) and the regulations
thereunder. Hours of Service shall also be credited for any individual
considered an Employee for purposes of this Plan under Code Section
414(n) or Code Section 414(o) and the regulations thereunder.
(5) Solely for purposes of determining whether a Break in Service, as
defined in paragraph 1.10, for participation and vesting purposes has
occurred in a computation period, an individual who is absent from work
for maternity or paternity reasons shall receive credit for the Hours
of Service which would otherwise have been credited to such individual
but for such absence, or in any case in which such hours cannot be
determined, 8 Hours of Service per day of such absence. For purposes of
this paragraph, an absence from work for maternity or paternity reasons
means an absence by reason of the pregnancy of the individual, by
reason of a birth of a child of the individual, by reason of the
placement of a child with the individual in connection with the
adoption of such child by such individual, or for purposes of caring
for such child for a period beginning immediately following such birth
or placement. The Hours of Service credited under this paragraph shall
be credited in the computation period in which the absence begins if
the crediting is necessary to prevent a Break in Service in that
period, or in all other cases, in the following computation period. No
more than 501 hours will be credited under this paragraph.
(6) Unless specified otherwise in the Adoption Agreement, the Hours of
Service Method shall be used. Also, unless specified otherwise in the
Adoption Agreement, Hours of Service shall be determined on the basis
of actual hours for which an Employee is paid or entitled to payment.
(b) Elapsed Time Method:
(1) For purposes of this section, Hour of Service shall mean each hour
for which an Employee is paid or entitled to payment for the
performance of duties for the Employer.
(2) Break In Service is a period of severance of at least 12
consecutive months.
(3) Period of severance is a continuous period of time during which the
Employee is not employed by the Employer. Such period begins on the
date the Employee retires, quits or is discharged, or if earlier, the
12 month anniversary of the date on which the Employee was otherwise
first absent from service.
(4) In the case of an individual who is absent from work for maternity
or paternity reasons, the 12-consecutive-month period beginning on the
first anniversary of the first date of such absence shall not
constitute a Break In Service. For purposes of this paragraph, an
absence from work for maternity or paternity reasons means an absence
(i) by reason of the pregnancy of the individual, (ii) by reason of the
birth of a child of the individual, (iii) by reason of the placement of
a child with the individual in connection with the adoption of such
child by such individual, or (iv) for purposes of caring for such child
for a period beginning immediately following such birth or placement.
(5) Each Employee will share in Employer contributions for the period
beginning on the date the Employee commences participation under the
plan and ending on the date on which such Employee severs employment
with the Employer or is no longer a member of an eligible class of
Employees.
(6) If the Employer is a member of an affiliated service group (under
section 414(m)), a controlled group of corporations (under section
414(b)), a group of trades or businesses under common control (under
section 414(c)) or any other entity required to be aggregated with the
Employer pursuant to section 414(o), service will be credited for any
employment for any period of time for any other member of such group.
Service will also be credited for any individual required under section
414(n)
8
or section (414)(o) to be considered an Employee of any Employer
aggregated under section 414(b), (c), or (m).
1.42 Key Employee
Any Employee or former Employee (and the beneficiaries of such employee) who at
any time during the determination period was an officer of the Employer if such
individual's annual compensation exceeds 50% of the dollar limitation under Code
Section 415(b)(1)(A) (the defined benefit maximum annual benefit), an owner (or
considered an owner under Code Section 318) of one of the ten largest interests
in the employer if such individual's compensation exceeds 100% of the dollar
limitation under Code Section 415(c)(1)(A), a 5% owner of the Employer, or a 1%
owner of the Employer who has an annual compensation of more than $150,000. For
purposes of determining who is a Key Employee, annual compensation shall mean
Compensation as defined for Article X, but including amounts deferred through a
salary reduction agreement to a cash or deferred plan under Code Section 401(k),
a Simplified Employee Pension Plan under Code Section 408(k), a cafeteria plan
under Code Section 125 or a tax-deferred annuity under Code Section 403(b). The
determination period is the Plan Year containing the Determination Date and the
four preceding Plan Years. The determination of who is a Key Employee will be
made in accordance with Code Section 416(i)(1) and the regulations thereunder.
1.43 Leased Employee
Any person (other than an Employee of the recipient) who, pursuant to an
agreement between the recipient and any other person ("leasing organization"),
has performed services for the recipient [or for the recipient and related
persons determined in accordance with Code Section 414(n)(6)] on a substantially
full-time basis for a period of at least one year, and such services are of a
type historically performed by Employees in the business field of the recipient
Employer.
1.44 Limitation Year
The Plan Year as designated by the Employer in the Adoption Agreement for
purposes of determining the maximum Annual Addition to a Participant's account.
All qualified plans maintained by the Employer must use the same Limitation
Year. If the Limitation Year is amended to a different 12-consecutive-month
period, the new Limitation Year must begin on a date within the Limitation Year
in which the amendment is made.
1.45 Master Or Prototype Plan
A plan, the form of which is the subject of a favorable opinion letter from the
Internal Revenue Service.
1.46 Matching Contribution
An Employer contribution made to this or any other defined contribution plan on
behalf of a Participant on account of an Employee Voluntary Contribution made by
such Participant, or on account of a Participant's Elective Deferral, under a
Plan maintained by the Employer.
1.47 Maximum Permissible Amount
The maximum Annual Addition that may be contributed or allocated to a
Participant's account under the plan for any Limitation Year shall not exceed
the lesser of:
(a) the Defined Contribution Dollar Limitation, or
(b) 25% of the Participant's Compensation for the Limitation Year.
The compensation limitation referred to in (b) shall not apply to any
contribution for medical benefits [within the meaning of Code Section 401(h) or
Code Section 419A(f)(2)] which is otherwise treated as an Annual Addition under
Code Section 415(l)(1) or 419(d)(2). If a short Limitation Year is created
because of an amendment changing the Limitation Year to a different
12-consecutive month period, the Maximum Permissible Amount will not exceed the
Defined Contribution Dollar Limitation multiplied by the following fraction:
Number of months in the short Limitation Year divided by 12.
1.48 Net Profit
The current and accumulated operating earnings of the Employer before Federal
and State income taxes, excluding nonrecurring or unusual items of income, and
before contributions to this and any other qualified plan of the Employer.
Unless otherwise specified in the Adoption Agreement, profits will not be
required for Profit-Sharing contributions to the Plan.
1.49 Normal Retirement Age
The age, set by the Employer in the Adoption Agreement, at which a Participant
may retire and receive his or her benefits under the Plan. Unless
9
otherwise specified in the Adoption Agreement, the Normal Retirement Age shall
be 65.
1.50 Owner-Employee
A sole proprietor, or a partner owning more than 10% of either the capital or
profits interest of the partnership.
1.51 Paired Plans
Two or more Plans maintained by the Sponsor designed so that a single or any
combination of Plans adopted by an Employer will meet the antidiscrimination
rules, the contribution and benefit limitations, and the Top-Heavy provisions of
the Code.
1.52 Participant
Any Employee who has met the eligibility requirements and is participating in
the Plan.
1.53 Participant's Benefit
The account balance as of the last Valuation Date in the calendar year
immediately preceding the Distribution Calendar Year (valuation calendar year)
increased by the amount of any contributions or forfeitures allocated to the
account balance as of the dates in the valuation calendar year after the
Valuation Date and decreased by distributions made in the valuation calendar
year after the Valuation Date. A special exception exists for the second
distribution Calendar Year. For purposes of this paragraph, if any portion of
the minimum distribution for the First Distribution Calendar Year is made in the
second Distribution Calendar Year on or before the
Required Beginning Date, the amount of the minimum distribution made in the
second distribution calendar year shall be treated as if it had been made in the
immediately preceding Distribution Calendar Year.
1.54 Permissive Aggregation Group
Used for Top-Heavy testing purposes, it is the Required Aggregation Group of
plans plus any other plan or plans of the Employer which, when considered as a
group with the Required Aggregation Group, would continue to satisfy the
requirements of Code Sections 401(a)(4) and 410.
1.55 Plan
The Employer's retirement plan as embodied herein and in the Adoption Agreement.
1.56 Plan Administrator
The Employer.
1.57 Year
The 12-consecutive month period designated by the Employer in the Adoption
Agreement. If no such period is designated, the Plan Year shall be the
Employer's taxable year.
1.58 Present Value
Used for Top-Heavy test and determination purposes, when determining the Present
Value of accrued benefits, with respect to any Defined Benefit Plan maintained
by the Employer, interest and mortality rates shall be determined in accordance
with the provisions of the respective plan. If applicable, interest and
mortality assumptions will be specified in Section 11 of the Adoption Agreement.
1.59 Projected Annual Benefit
Used to test the maximum benefit which may be obtained from a combination of
retirement plans, it is the annual retirement benefit (adjusted to an actuarial
equivalent straight life annuity if such benefit is expressed in a form other
than a straight life annuity or Qualified Joint and Survivor Annuity) to which
the Participant would be entitled under the terms of a Defined Benefit Plan or
plans, assuming:
(a) the Participant will continue employment until Normal Retirement Age
under the plan (or current age, if later), and
(b) the Participant's Compensation for the current Limitation Year and all
other relevant factors used to determine benefits under the plan will
remain constant for all future Limitation Years.
1.60 Qualified Deferred Compensation Plan
Any pension, profit-sharing, stock bonus, or other plan which meets the
requirements of Code Section 401 and includes a trust exempt from tax under Code
Section 501(a) or any annuity plan described in Code Section 403(a).
An Eligible Retirement Plan is an individual retirement account (IRA) as
described in section 408(a) of the Code, an individual retirement annuity (IRA)
as described in section 408(b) of the Code, an
10
annuity plan as described in section 403(a) of the Code, or a qualified trust as
described in section 401(a) of the Code, which accepts Eligible Rollover
Distributions. However, in the case of an Eligible Rollover Distribution to a
surviving Spouse, an Eligible Retirement Plan is an individual retirement
account or individual retirement annuity.
1.61 Qualified Domestic Relations Order
A QDRO is a signed Domestic Relations Order issued by a State Court which
creates, recognizes or assigns to an alternate payee(s) the right to receive all
or part of a Participant's Plan benefit and which meets the requirements of Code
Section 414(p). An alternate payee is a Spouse, former Spouse, child, or other
dependent who is treated as a beneficiary under the Plan as a result of the
QDRO.
1.62 Qualified Early Retirement Age
For purposes of paragraph 8.9, Qualified Early Retirement Age is the latest of:
(a) the earliest date, under the Plan, on which the Participant may elect
to receive retirement benefits, or
(b) the first day of the 120th month beginning before the Participant
reaches Normal Retirement Age, or
(c) the date the Participant begins participation.
1.63 Qualified Joint And Survivor Annuity
An immediate annuity for the life of the Participant with a survivor annuity for
the life of the Participant's Spouse which is at least one-half of but not more
than the amount of the annuity payable during the joint lives of the Participant
and the Participant's Spouse. The exact amount of the Survivor Annuity is to be
specified by the Employer in the Adoption Agreement. If not designated by the
Employer, the Survivor Annuity will be 1/2 of the amount paid to the Participant
during his or her lifetime. The Qualified Joint and Survivor Annuity will be the
amount of benefit which can be provided by the Participant's Vested Account
Balance.
1.64 Qualified Matching Contribution
Matching Contributions which when made are subject to the distribution and
nonforfeitability requirements under Code Section 401(k).
1.65 Qualified Non-Elective Contributions
Contributions (other than Matching Contributions or Qualified Matching
Contributions) made by the Employer and allocated to Participants' accounts that
the Participants may not elect to receive in cash until distributed from the
Plan; that are nonforfeitable when made; and that are distributable only in
accordance with the distribution provisions that are applicable to Elective
Deferrals and Qualified Matching Contributions.
1.66 Qualified Voluntary Contribution
A tax-deductible voluntary Employee contribution. These contributions may no
longer be made to the Plan.
1.67 Required Aggregation Group
Used for Top-Heavy testing purposes, it consists of:
(a) each qualified plan of the Employer in which at least one Key Employee
participates or participated at any time during the determination period
(regardless of whether the plan has terminated), and
(b) any other qualified plan of the Employer which enables a plan described
in (a) to meet the requirements of Code Sections 401(a)(4) or 410.
1.68 Required Beginning Date
The date on which a Participant is required to take his or her first minimum
distribution under the Plan. The rules are set forth at paragraph 7.5.
1.69 Rollover Contribution
A contribution made by a Participant of an amount distributed to such
Participant from another Qualified Deferred Compensation Plan in accordance with
Code Sections 402(a)(5), (6), and (7). An Eligible Rollover Distribution is any
distribution of all or any portion of the balance to the credit of the
Participant except that an Eligible Rollover Distribution does not include:
(a) 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 Participant or the joint lives (or joint life
expectancies) of the Participant and the Participant's Designated
Beneficiary, or for a specified period of ten years or more;
(b) any distribution to the extent such distribution is required under
section 401(a)(9) of the Code; and
11
(c) 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).
A Direct Rollover is a payment by the plan to the Eligible Retirement Plan
specified by the Participant.
1.70 Salary Savings Agreement
An agreement between the Employer and a participating Employee where the
Employee authorizes the Employer to withhold a specified percentage of his or
her Compensation for deposit to the Plan on behalf of such Employee.
1.71 Self-Employed Individual
An individual who has Earned Income for the taxable year from the trade or
business for which the Plan is established including an individual who would
have had Earned Income but for the fact that the trade or business had no Net
Profit for the taxable year.
1.72 Service
The period of current or prior employment with the Employer. If the Employer
maintains a plan of a predecessor employer, Service for such predecessor shall
be treated as Service for the Employer.
1.73 Service Company
Prudential Mutual Fund Services, Inc., or its successor serving from time to
time.
1.74 Shareholder Employee
An Employee or Officer who owns [or is considered as owning within the meaning
of Code Section 318(a)(1)], on any day during the taxable year of an electing
small business corporation (S Corporation), more than 5% of such corporation's
outstanding stock.
1.75 Simplified Employee Pension Plan
An individual retirement account which meets the requirements of Code Section
408(k), and to which the Employer makes contributions pursuant to a written
formula. These plans are considered for contribution limitation and Top-Heavy
testing purposes.
1.76 Sponsor
Shall be Prudential Mutual Fund Management, Inc.
1.77 Spouse (Surviving Spouse)
The Spouse or Surviving Spouse of the Participant, provided that a former Spouse
will be treated as the Spouse or Surviving Spouse and a current Spouse will not
be treated as the Spouse or Surviving Spouse to the extent provided under a
Qualified Domestic Relations Order as described in Code Section 414(p).
1.78 Super Top-Heavy Plan
A Plan described at paragraph 1.81 under which the Top-Heavy Ratio [as defined
at paragraph 1.82] exceeds 90%.
1.79 Taxable Wage Base
For plans with an allocation formula which takes into account the Employer's
contribution under the Federal Insurance Contributions Act (FICA), the
contribution and benefit base in effect under Section 230, of the Social
Security Act, at the beginning of the Plan Year, or the amount elected by the
Employer in the Adoption Agreement.
1.80 Top-Heavy Determination Date
For any Plan Year subsequent to the first Plan Year, the last day of the
preceding Plan Year. For the first Plan Year of the Plan, the last day of that
year.
1.81 Top-Heavy Plan
For any Plan Year beginning after 1983, the Employer's Plan is top-heavy if any
of the following conditions exist:
(a) If the Top-Heavy Ratio for the Employer's Plan exceeds 60% and this
Plan is not part of any required Aggregation Group or Permissive
Aggregation Group of Plans.
(b) If the Employer's plan is a part of a Required Aggregation Group of
plans but not part of a Permissive Aggregation Group and the Top-Heavy
Ratio for the group of plans exceeds 60%.
(c) If the Employer's plan is a part of a Required Aggregation Group and
part of a Permissive Aggregation Group of plans and the Top-Heavy Ratio for
the Permissive Aggregation Group exceeds 60%.
1.82 Top-Heavy Ratio
(a) If the Employer maintains one or more Defined Contribution plans
(including any Simplified Employee Pension Plan) and the Employer has not
maintained any Defined Benefit Plan which during the 5-year period ending
on the Determination Date(s) has or has had accrued
12
benefits, the Top-Heavy Ratio for this Plan alone, or for the Required or
Permissive Aggregation Group as appropriate, is a fraction,
(1) the numerator of which is the sum of the account balances of all
Key Employees as of the Determination Date(s) [including any part of
any account balance distributed in the 5-year period ending on the
Determination Date(s)], and
(2) the denominator of which is the sum of all account balances
[including any part of any account balance distributed in the 5-year
period ending on the Determination Date(s)], both computed in
accordance with Code Section 416 and the regulations thereunder.
Both the numerator and denominator of the Top-Heavy Ratio are increased to
reflect any contribution not actually made as of the Determination Date, but
which is required to be taken into account on that date under Code Section 416
and the regulations thereunder.
(b) If the Employer maintains one or more Defined Contribution Plans
(including any Simplified Employee Pension Plan) and the Employer maintains
or has maintained one or more Defined Benefit Plans which during the 5-year
period ending on the Determination Date(s) has or has had any accrued
benefits, the Top-Heavy Ratio for any Required or Permissive Aggregation
Group as appropriate is a fraction, the numerator of which is the sum of
account balances under the aggregated Defined Contribution Plan or Plans
for all Key Employees, determined in accordance with (a) above, and the
Present Value of accrued benefits under the aggregated Defined Benefit Plan
or Plans for all Key Employees as of the Determination Date(s), and the
denominator of which is the sum of the account balances under the
aggregated Defined Contribution Plan or Plans for all Participants,
determined in accordance with (a) above, and the Present Value of accrued
benefits under the Defined Benefit Plan or Plans for all Participants as of
the Determination Date(s), all determined in accordance with Code Section
416 and the regulations thereunder. The accrued benefits under a Defined
Benefit Plan in both the numerator and denominator of the Top-Heavy Ratio
are increased for any distribution of an accrued benefit made in the 5-year
period ending on the Determination Date.
(c) For purposes of (a) and (b) above, the value of account balances and
the Present Value of accrued benefits will be determined as of the most
recent Valuation Date that falls within or ends with the 12-month period
ending on the Determination Date, except as provided in Code Section 416
and the regulations thereunder for the first and second plan years of a
Defined Benefit Plan. The account balances and accrued benefits of a
participant (1) who is not a Key Employee but who was a Key Employee in a
prior year, or (2) who has not been credited with at least one hour of
service with any Employer maintaining the Plan at any time during the
5-year period ending on the Determination Date, will be disregarded. The
calculation of the Top-Heavy Ratio, and the extent to which distributions,
rollovers, and transfers are taken into account will be made in accordance
with Code Section 416 and the regulations thereunder. Qualified Voluntary
Employee Contributions will not be taken into account for purposes of
computing the Top-Heavy Ratio. When aggregating plans the value of account
balances and accrued benefits will be calculated with reference to the
Determination Dates that fall within the same calendar year. The accrued
benefit of a Participant other than a Key Employee shall be determined
under (1) the method, if any, that uniformly applies for accrual purposes
under all Defined Benefit Plans maintained by the Employer, or (2) if there
is no such method, as if such benefit accrued not more rapidly than the
slowest accrual rate permitted under the fractional rule of Code Section
411(b)(1)(C).
1.83 Top-Paid Group
The group consisting of the top 20% of Employees when ranked on the basis of
Compensation paid during such year. For purposes of determining the number of
Employees in the group (but not who is in it), the following Employees shall be
excluded:
(a) Employees who have not completed 6 months of Service.
(b) Employees who normally work less than 17-1/2 hours per week.
(c) Employees who normally do not work more than 6 months during any year.
13
(d) Employees who have not attained age 21.
(e) Employees included in a collective bargaining unit, covered by an
agreement between employee representatives and the Employer, where
retirement benefits were the subject of good faith bargaining and provided
that 90% or more of the Employer's Employees are covered by the agreement.
(f) Employees who are nonresident aliens and who receive no earned income
which constitutes income from sources within the United States.
1.84 Transfer Contribution
A non-taxable transfer of a Participant's benefit directly from a Qualified
Deferred Compensation Plan to this Plan.
1.85 Trustee
The individual(s) or institution appointed by the Employer in the Adoption
Agreement.
1.86 Valuation Date
The last business day of each Plan Year or such other date consistent with the
operational cycle of the Service Company, as agreed to by the Employer and the
Service Company on which Participant accounts are revalued in accordance with
Article V hereof. For Top-Heavy purposes, the date selected by the Employer as
of which the Top-Heavy Ratio is calculated.
The value of mutual funds and other marketable investments shall be determined
using the most recent price quoted on a national securities exchange or over the
counter market. The value of investments for which there is no market shall be
determined in the sole judgement of the Employer or issuer and neither the
Trustee nor Service Company shall have responsibility with respect to the
valuation of such assets.
1.87 Vested Account Balance
The aggregate value of the Participant's Vested Account Balances derived from
Employer and Employee contributions (including Rollovers), whether vested before
or upon death, including the proceeds of insurance contracts, if any, on the
Participant's life. The provisions of Article VIII shall apply to a Participant
who is vested in amounts attributable to Employer contributions, Employee
contributions (or both) at the time of death or distribution.
1.88 Voluntary Contribution
An Employee contribution made to the Plan by or on behalf of a Participant that
is included in the Participant's gross income in the year in which made and that
is maintained under a separate account to which earnings and losses are
allocated.
1.89 Welfare Benefit Fund
Any fund that is part of a plan of the Employer, or has the effect of a plan,
through which the Employer provides welfare benefits to Employees or their
beneficiaries. For these purposes, Welfare Benefits means any benefit other than
those with respect to which Code Section 83(h) (relating to transfers of
property in connection with the performance of services), Code Section 404
(relating to deductions for contributions to an Employee's trust or annuity and
Compensation under a deferred payment plan), Code Section 404A (relating to
certain foreign deferred compensation plans) apply. A "Fund" is any social club,
voluntary employee benefit association, supplemental unemployment benefit trust
or qualified group legal service organization described in Code Section
501(c)(7), (9), (17) or (20); any trust, corporation, or other organization not
exempt from income tax, or to the extent provided in regulations, any account
held for an Employer by any person.
1.90 Year Of Service
If the Hour counting method has been chosen by the Employer in the Adoption
Agreement, a Year Of Service is a 12-consecutive month period during which an
Employee is credited with not less than 1,000 (or such lesser number as
specified by the Employer in the Adoption Agreement) Hours of Service. If the
Elapsed Time Method has been chosen by the Employer in the Adoption Agreement,
an Employee will receive credit for the aggregate of all time period(s)
commencing with the Employee's first day of employment or reemployment and
ending on the date a Break In Service begins. The first day of employment or
reemployment is the first day the Employee performs an Hour of Service. An
Employee will also receive credit for any period of severance of less than 12
consecutive months. Fractional periods of a year will be expressed in terms of
days.
ARTICLE II -- ELIGIBILITY REQUIREMENTS
2.1 Participation
14
Unless otherwise specified in the Adoption Agreement, the Plan shall cover all
Employees having completed at least one Year of Service and who have attained
age 21. Employees who meet the eligibility requirements in the Adoption
Agreement on the Effective Date of the Plan shall become Participants as of the
Effective Date of the Plan. Unless stated to the contrary in the Adoption
Agreement, all Employees employed on the Effective Date of the Plan may
participate, even if they have not satisfied the Plan's specified eligibility
requirements. Other Employees shall become Participants on the Entry Date
coinciding with or immediately following the date on which they meet the
eligibility requirements. The Employee must satisfy the eligibility requirements
specified in the Adoption Agreement and be employed on the Entry Date to become
a Participant in the Plan. In the event an Employee who is not a member of the
eligible class of Employees becomes a member of the eligible class, such
Employee shall participate immediately if such Employee has satisfied the
minimum age and service requirements and would have previously become a
Participant had he or she been in the eligible class. A former Participant shall
again become a Participant upon returning to the employ of the Employer. For
this purpose, Participant's Compensation and Service shall be considered from
date of rehire.
2.2 Change In Classification Of Employment
If a Participant is transferred to an ineligible class of Employees, or is
otherwise reclassified as an ineligible Employee, any contribution or allocation
of forfeitures which would otherwise be made for him hereunder for the Plan Year
of such transfer or reclassification shall be made. No contribution or
allocation of forfeitures for or by him shall be made, however, for any
subsequent Plan Year prior to the Plan Year in which he again becomes a
Participant.
2.3 Computation Period
To determine Years of Service and Breaks in Service for purposes of eligibility,
the 12-consecutive month period shall commence on the date on which an Employee
first performs an Hour of Service for the Employer and each anniversary thereof,
such that the succeeding 12-consecutive month period commences with the
employee's first anniversary of employment and so on. If, however, the period so
specified is one year or less, the succeeding 12-consecutive month period shall
commence on the first day of the Plan Year prior to the anniversary of the date
they first performed an Hour of Service regardless of whether the Employee is
entitled to be credited with 1,000 (or such lesser number as specified by the
Employer in the Adoption Agreement) Hours of Service during their first
employment year.
2.4 Employment Rights
Participation in the Plan shall not confer upon a Participant any employment
rights, nor shall it interfere with the Employer's right to terminate the
employment of any Employee at any time.
2.5 Service With Controlled Groups
All Years of Service with other members of a controlled group of corporations
[as defined in Code Section 414(b)], trades or businesses under common control
[as defined in Code Section 414(c)], or members of an affiliated service group
[as defined in Code Section 414(m)] shall be credited for purposes of
determining an Employee's eligibility to participate.
2.6 Owner-Employees
If this Plan provides contributions or benefits for one or more Owner-Employees
who control both the business for which this Plan is established and one or more
other trades or businesses, this Plan and the Plan established for other trades
or businesses must, when looked at as a single Plan, satisfy Code Sections
401(a) and (d) for the Employees of this and all other trades or businesses.
If the Plan provides contributions or benefits for one or more Owner-Employees
who control one or more other trades or businesses, the Employees of the other
trades or businesses must be included in a Plan which satisfies Code Sections
401(a) and (d) and which provides contributions and benefits not less favorable
than provided for Owner-Employees under this Plan.
If an individual is covered as an Owner-Employee under the plans of two or more
trades or businesses which are not controlled, and the individual controls a
trade or business, then the contributions or benefits of the Employees under the
plan of the trades or businesses which are controlled must be as favorable as
those provided for him or her under the most favorable plan of the trade or
business which is not controlled.
For purposes of the preceding sentences, an Owner-Employee, or two or more
Owner-Employees, will be considered to control a trade or business if the
Owner-Employee, or two or more Owner-Employees together:
15
(a) own the entire interest in an unincorporated trade or business, or
(b) in the case of a partnership, own more than 50% of either the capital
interest or the profits interest in the partnership.
For purposes of the preceding sentence, an Owner-Employee, or two or more
Owner-Employees shall be treated as owning any interest in a partnership which
is owned, directly or indirectly, by a partnership which such Owner-Employee, or
such two or more Owner-Employees, are considered to control within the meaning
of the preceding sentence.
2.7 Leased Employees
Any leased Employee shall be treated as an Employee of the recipient Employer;
however, contributions or benefits provided by the leasing organization which
are attributable to services performed for the recipient Employer shall be
treated as provided by the recipient Employer. A leased Employee shall not be
considered an Employee of the recipient if such Employee is covered by a money
purchase pension plan providing:
(a) a non-integrated Employer contribution rate of at least 10% of
Compensation, [as defined in Code Section 415(c)(3) but including amounts
contributed by the Employer pursuant to a salary reduction agreement, which
are excludable from the Employee's gross income under a cafeteria plan
covered by Code Section 125, a cash or deferred profit-sharing plan under
Section 401(k) of the Code, a Simplified Employee Pension Plan under Code
Section 402(h)(1)(B ) and a tax-sheltered annuity under Code Section
403(b)],
(b) immediate participation, and
(c) full and immediate vesting.
This exclusion is only available if Leased Employees do not constitute more than
twenty percent (20%) of the recipients non-highly compensated work force.
2.8 Omission Of Eligible Employee
If, in any Plan Year, any Employee who should be included as a Participant in
the Plan is erroneously omitted and discovery of such omission is not made until
after a contribution for the year has been made, the omitted Employee shall be
included in the next valuation. The Employer shall make any additional
contribution with respect to the omitted Employee that may be deemed necessary.
Such contribution shall be made regardless of whether it is deductible in whole
or in part in any taxable year under applicable provisions of the Code. The
Employee shall receive credit under the terms of the Plan for any period during
which he should have been included as a Participant.
2.9 Inclusion Of Ineligible Employee
If in any Plan Year, any person who should not have been included as a
Participant in the Plan is erroneously included and discovery of such incorrect
inclusion is not made until after a contribution for the year has been made, the
Employer shall not be entitled to recover the contribution made with respect to
the ineligible person regardless of whether or not a deduction is allowable with
respect to such contribution. In such event, the amount contributed with respect
to the ineligible person shall be removed from the ineligible Employee's Account
and treated as a forfeiture.
ARTICLE III -- EMPLOYER CONTRIBUTIONS
3.1 Amount
The Employer intends to make periodic contributions to the Plan in accordance
with the formula or formulas selected in the Adoption Agreement. However, the
Employer's contribution for any Plan Year shall be subject to the limitations on
allocations contained in Article X.
3.2 Expenses And Fees
The Employer shall also be authorized to reimburse the Fund for all expenses and
fees incurred in the administration of the Plan or Trust and paid out of the
assets of the Fund. Such expenses shall include, but shall not be limited to,
fees for professional services, printing and postage. Commissions may not be
reimbursed.
3.3 Responsibility For Contributions
The Trustee shall not be required to determine if the Employer has made a
contribution or if the amount contributed is in accordance with the Adoption
Agreement or the Code. The Employer shall have sole responsibility in this
regard. The Trustee shall be accountable solely for contributions actually
received by it, within the limits of Article XI.
3.4 Return Of Contributions
16
Contributions made to the Fund by the Employer shall be irrevocable except as
provided below:
(a) Any contribution forwarded to the Trustee because of a mistake of fact,
provided that the contribution is returned to the Employer within one year
of the contribution.
(b) In the event that the Commissioner of Internal Revenue determines that
the Plan is not initially qualified under the Internal Revenue Code, any
contribution made incident to that initial qualification by the Employer
must be returned to the Employer within one year after the date the initial
qualification is denied, but only if the application for the qualification
is made by the time prescribed by law for filing the Employer's return for
the taxable year in which the Plan is adopted, or such later date as the
Secretary of the Treasury may prescribe.
(c) Contributions forwarded to the Trustee are presumed to be deductible
and are conditioned on their deductibility. Contributions which are
determined to not be deductible will be returned to the Employer.
3.5 Form Of Contribution
Except as contemplated in paragraphs 4.3 and 4.4, no contribution shall be made
in property other than United States currency or such other property as is
acceptable to the Service Company.
ARTICLE IV -- EMPLOYEE CONTRIBUTIONS
4.1 Voluntary Contributions
Unless otherwise specified in the Adoption Agreement, an Employee may not make
Voluntary Contributions to the Plan established hereunder. If permitted, they
will be made in a uniform and nondiscriminatory manner. Such contributions are
subject to the limitations on Annual Additions and are subject to
antidiscrimination testing.
4.2 Qualified Voluntary Contributions
A Participant may no longer make Qualified Voluntary Contributions to the Plan.
Amounts already contributed may not remain in the Trust Fund. The Participant
must withdraw the Qualified Voluntary Contribution amounts already contributed
by making a written application to the Plan Administrator.
4.3 Rollover Contribution
Unless provided otherwise in the Adoption Agreement, a Participant and an
Employee in an eligible class of Employees who has not met the eligibility
requirements for participation in the Plan may make a Rollover Contribution to
any Defined Contribution Plan established hereunder of all or any part of an
amount distributed or distributable to him or her from a Qualified Deferred
Compensation Plan provided:
(a) the amount distributed to the Participant is deposited in the Plan no
later than the sixtieth day after such distribution was received by the
Participant,
(b) the amount distributed is not one of a series of substantially equal
periodic payments made for the life (or life expectancy) of the Participant
or the joint lives (or joint life expectancies) of the Participant and the
Participant's Designated Beneficiary, or for a specified period of ten
years or more;
(c) the amount distributed is not required under section 401(a)(9) of the
Code;
(d) if the amount distributed included property such property is rolled
over, or if sold the proceeds of such property may be rolled over,
(e) the amount distributed is not includible in gross income (determined
without regard to the exclusion for net unrealized appreciation with
respect to employer securities).
In addition, if the Adoption Agreement allows Rollover Contributions, the Plan
will also accept any Eligible Rollover Distribution (as defined at paragraph
1.69) directly to the Plan.
Rollover Contributions, which relate to distributions prior to January 1, 1993,
must be made in accordance with paragraphs (a) through (e) and additionally meet
the requirements of paragraph (f):
(f) the distribution from the Qualified Deferred Compensation Plan
constituted the Participant's entire interest in such Plan and was
distributed within one taxable year to the Participant:
(1) on account of separation from Service, a Plan termination, or in
the case of a profit-sharing or stock bonus plan, a complete
discontinuance of contributions under such
17
plan within the meaning of Section 402(a)(6)(A) of the Code, or
(2) in one or more distributions which constitute a qualified lump sum
distribution within the meaning of Code Section 402(e)(4)(A),
determined without reference to subparagraphs (B) and (H),
Such Rollover Contribution may also be made through an Individual Retirement
Account qualified under Code Section 408 where the IRA was used as a conduit
from the Qualified Deferred Compensation Plan, the Rollover Contribution is made
in accordance with the rules provided under paragraph (a) through (e) and the
Rollover Contribution does not include any regular IRA contributions, or
earnings thereon, which the Participant may have made to the IRA. Rollover
Contributions which relate to distributions prior to January 1, 1993, may be
made through an IRA in accordance with paragraphs (a) through (f) and additional
requirements as provided in the previous sentence. The Trustee shall not be held
responsible for determining the tax-free status of any Rollover Contribution
made under this Plan.
4.4 Transfer Contribution
Unless provided otherwise in the Adoption Agreement, a Participant and an
Employee in an eligible class of Employees who has not met the eligibility
requirements for participation in the Plan, may, subject to the provisions of
paragraph 4.5, also arrange for the direct transfer of his or her benefit from a
Qualified Deferred Compensation Plan to this Plan. For accounting and record
keeping purposes, Transfer Contributions shall be identical to Rollover
Contributions.
In the event the Employer accepts a Transfer Contribution from a Plan in which
the Employee was directing the investments of his or her account, the Employer
may continue to permit the Employee to direct his or her investments in
accordance with paragraph 13.7 with respect only to such Transfer Contribution.
Notwithstanding the above, the Employer may refuse to accept such Transfer
Contributions.
Notwithstanding anything to the contrary, if a Participant changes
classification of employment between eligible and ineligible classes, then the
Employer may transfer said Participant's account balance between the appropriate
plans maintained by the Employer, so long as such transfer will not result in an
illegal cut back in benefits in violation of Code Section 411(d)(6).
4.5 Employer Approval Of Transfer Contributions
The Employer maintaining a Safe-Harbor Profit-Sharing Plan in accordance with
the provisions of paragraph 8.7, acting in a nondiscriminatory manner, may in
its sole discretion refuse to allow Transfer Contributions to its profit-sharing
plan, if such contributions are directly or indirectly being transferred from a
defined benefit plan, a money purchase pension plan (including a target benefit
plan), a stock bonus plan, or another profit-sharing plan which would otherwise
provide for a life annuity form of payment to the Participant.
4.6 Elective Deferrals
A Participant may enter into a Salary Savings Agreement with the Employer
authorizing the Employer to withhold a portion of such Participant's
Compensation not to exceed $7,000 per calendar year as adjusted under Code
Section 415(d) or, if lesser, the percentage of Compensation specified in the
Adoption Agreement and to deposit such amount to the Plan. No Participant shall
be permitted to have Elective Deferrals made under this Plan or any other
qualified plan maintained by the Employer, during any taxable year, in excess of
the dollar limitation contained in Code Section 402(g) in effect at the
beginning of such taxable year. Thus, the $7,000 limit may be reduced if a
Participant contributes pre-tax contributions to qualified plans of this or
other Employers. Any such contribution shall be credited to the Employee's
Salary Savings Account. Unless otherwise specified in the Adoption Agreement, a
Participant may amend his or her Salary Savings Agreement to increase, decrease
or terminate the percentage upon 30 days written notice to the Employer. If a
Participant terminates his or her agreement, such Participant shall not be
permitted to put a new Salary Savings Agreement into effect until the first pay
period in the next Plan Year, unless otherwise stated in the Adoption Agreement.
The Employer may also amend or terminate said agreement on written notice to the
Participant. If a Participant has not authorized the Employer to withhold at the
maximum rate and desires to increase the total withheld for a Plan Year, such
Participant may authorize the Employer upon 30 days notice to withhold a
supplemental amount up to 100% of his or her Compensation for one or more pay
periods. In
18
no event may the sum of the amounts withheld under the Salary Savings Agreement
plus the supplemental withholding exceed 25% of a Participant's Compensation for
a Plan Year. Elective Deferrals shall be deposited in the Trust no later than
the date described in Section 2510.3-102 of the Department of Labor Regulations.
4.7 Direct Rollover Of Benefits
Notwithstanding any provision of the plan to the contrary that would otherwise
limit a Participant's election under this Paragraph, for distributions made on
or after January 1, 1993, a Participant 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 Participant in a Direct Rollover. Any portion of a distribution which is not
paid directly to an Eligible Retirement Plan shall be distributed to the
Participant. For purposes of this Paragraph, a Surviving Spouse or a spouse or
former spouse who is an alternate payee under a Qualified Domestic Relations
Order as defined in section 414(p) of the Code, will be permitted to elect to
have any Eligible Rollover Distribution paid directly to an individual
retirement account (IRA), an individual retirement annuity (IRA), or another
qualified retirement Plan.
The plan provisions otherwise applicable to distributions continue to apply to
Rollover and Transfer Contributions.
ARTICLE V -- PARTICIPANT ACCOUNTS
5.1 Separate Accounts
The Employer shall establish a separate bookkeeping account for each Participant
showing the total value of his or her interest in the Fund. Each Participant's
account shall be separated for bookkeeping purposes into the following
sub-accounts:
(a) Employer contributions.
(1) Matching Contributions.
(2) Qualified Matching Contributions.
(3) Qualified Non-Elective Contributions.
(4) Discretionary Contributions.
(5) Elective Deferrals.
(b) Voluntary Contributions (and additional amounts including required
contributions and, if applicable, either repayments of loans previously
defaulted on and treated as "deemed distributions" on which a tax report
has been issued, and amounts paid out upon a separation from service which
have been included in income and which are repaid after being re-hired by
the Employer).
(c) Transfer Contributions.
(d) Rollover Contributions.
5.2 Adjustments To Participant Accounts
As of each Valuation Date of the Plan, the Employer shall add to each account:
(a) the Participant's share of the Employer's contribution and forfeitures
as determined in the Adoption Agreement,
(b) any Elective Deferrals, Voluntary, Rollover or Transfer Contributions
made by the Participant,
(c) any repayment of amounts previously paid out to a Participant upon a
separation from Service and repaid by the Participant since the last
Valuation Date, and
(d) the Participant's proportionate share of any investment earnings and
increase in the fair market value of the Fund since the last Valuation
Date, as determined at paragraph 5.4.
The Employer shall deduct from each account:
(e) any withdrawals or payments made from the Participant's account since
the last Valuation Date, and
(f) the Participant's proportionate share of any decrease in the fair
market value of the Fund since the last Valuation Date, as determined at
paragraph 5.4.
5.3 Allocating Employer Contributions
The Employer's contribution shall be allocated to Participants in accordance
with the allocation formula selected by the Employer in the Adoption Agreement,
and the minimum contribution and allocation requirements for Top-Heavy Plans.
Unless otherwise specified in the Adoption Agreement, the Plan will not be
integrated with Social Security. Beginning with the 1990 Plan Year and
thereafter, for plans on Standardized Adoption Agreement 001, Participants who
are credited with more than 500 Hours of Service or are employed on the last day
of the Plan Year must receive a full allocation of Employer contributions. In
Nonstandardized
19
Adoption Agreement 002, Employer contributions shall be allocated to the
accounts of Participants employed by the Employer on the last day of the Plan
Year unless indicated otherwise in the Adoption Agreement. In the case of a
non-Top-Heavy, Nonstandardized Plan, Participants must also have completed a
Year of Service unless otherwise specified in the Adoption Agreement. For
Nonstandardized Adoption Agreement 002, the Employer may only apply the last day
of the Plan Year and Year of Service requirements if the Plan satisfies the
requirements of Code Sections 401(a)(26) and 410(b) and the regulations
thereunder including the exception for 401(k) plans. If, when applying the last
day and Year of Service requirements, the Plan fails to satisfy the
aforementioned requirements, additional Participants will be eligible to receive
an allocation of Employer Contributions until the requirements are satisfied.
Participants who are credited with a Year of Service, but not employed at Plan
Year end, are the first category of additional Participants eligible to receive
an allocation. If the requirements are still not satisfied, Participants
credited with more than 500 Hours of Service and employed at Plan Year end are
the next category of Participants eligible to receive an allocation. Finally, if
necessary to satisfy the said requirements, any Participant credited with more
than 500 Hours of Service will be eligible for an allocation of Employer
Contributions. The Service requirement is not applicable with respect to any
Plan Year during which the Employer's Plan is Top-Heavy.
In the event the Employer selects an integrated allocation formula, the
Employer's contribution will be allocated in accordance with the following
method unless otherwise specified in the Adoption Agreement:
(a) First, to the extent contributions and forfeitures are sufficient, all
Participants will receive an allocation equal to 3% of their Compensation.
(b) Next, any remaining Employer Contributions and forfeitures will be
allocated to Participants who have Compensation in excess of the Taxable
Wage Base (excess Compensation). Each such Participant will receive an
allocation in the ratio that his or her excess compensation bears to the
excess Compensation of all Participants. Participants may only receive an
allocation of 3% of excess Compensation.
(c) Next, any remaining Employer contributions and forfeitures will be
allocated to all Participants in the ratio that their Compensation plus
excess Compensation bears to the total Compensation plus excess
Compensation of all Participants. Participants may only receive an
allocation of up to 2.7% of their Compensation plus excess Compensation,
under this allocation method. If the Taxable Wage Base as defined in
Section 3 of the Adoption Agreement is less than the maximum, but more than
the greater of $10,000 or 20% of the maximum, then the 2.7% must be
reduced. If the amount specified is greater than 80% but less than 100% of
the maximum Taxable Wage Base, the 2.7% must be reduced to 2.4%. If the
amount specified is greater than the greater of $10,000 or 20% of the
maximum Taxable Wage Base, but not more than 80%, 2.7% must be reduced to
1.3%.
(d) Next, any remaining Employer contributions and forfeitures will be
allocated to all Participants (whether or not they received an allocation
under the preceding paragraphs) in the ratio that each Participant's
Compensation bears to all Participants' Compensation.
If the Plan is not Top-Heavy, subparagraphs (a) and (b) above may be disregarded
and 5.7%, 5.4% or 4.3% may be substituted for 2.7%, 2.4% or 1.3% where it
appears in (c) above.
5.4 Allocating Investment Earnings And Losses
A Participant's share of investment earnings and any increase or decrease in the
fair market value of the Fund shall be based on the proportionate value of all
active accounts (other than accounts with segregated investments) as of the last
Valuation Date less withdrawals since the last Valuation Date. If applicable,
segregated accounts may be allocated earnings, up through the date of
segregation, under the above method, at the Plan Administrator's discretion. If
Employer and/or Employee contributions are made monthly, quarterly, or on some
other systematic basis, the adjusted value of such accounts for allocation of
investment income and gains or losses shall include one-half the contributions
for such period. If Employer and/or Employee contributions are not made on a
systematic basis, it is assumed that they are made at the end of the valuation
period and therefore will not receive an allocation of investment earnings and
gains or losses for such period. Notwithstanding the above, if
20
contributions are made on a nonsystematic basis, at the Plan Administrator's
discretion, such contributions will be credited with an allocation of the actual
investment earnings and gains and losses from the actual date of deposit of each
such contribution until the end of the period. In no event shall this election
of allocating gains and losses be used to discriminate. Finally, the Plan
Administrator may elect to disregard nonsystematic contributions made during the
year, altogether, and allocate earnings exclusively on the basis of all active
accounts (other than accounts with segregated investments) as of the last
Valuation Date less withdrawals since the last Valuation Date, or, if
applicable, take into consideration any systematic contributions, as provided
above. Accounts with segregated investments shall receive only the income or
loss on such segregated investments.
5.5 Participant Statements
The Employer shall periodically (not less often than annually), prepare a
statement for each Participant showing the additions to and subtractions from
his or her account since the last such statement and the fair market value of
his or her account as of the date for which the statement is prepared.
ARTICLE VI -- RETIREMENT BENEFITS AND DISTRIBUTIONS
6.1 Normal Retirement Benefits
A Participant shall be entitled to receive the balance held in his or her
account from Employer contributions upon attaining Normal Retirement Age or at
such earlier dates as the provisions of this Article VI may allow. If the
Participant elects to continue working past his or her Normal Retirement Age, he
or she will continue as an active Plan Participant and no distribution shall be
made to such Participant until his or her actual retirement date unless the
employer elects otherwise in the Adoption Agreement, or a minimum distribution
is required by law. Settlement shall be made in the normal form, or if elected,
in one of the optional forms of payment provided below.
6.2 Early Retirement Benefits
If the Employer so provides in the Adoption Agreement, an Early Retirement
Benefit will be available to individuals who meet the age and Service
requirements. An individual who meets the Early Retirement Age requirements and
separates from Service, will become fully vested, regardless of any vesting
schedule which otherwise might apply. If a Participant separates from Service
before satisfying the age requirements, but after having satisfied the Service
requirement, the Participant will be entitled to elect an Early Retirement
benefit upon satisfaction of the age requirement.
6.3 Benefits On Termination Of Employment
(a) If a Participant terminates employment prior to Normal Retirement Age,
such Participant shall be entitled to receive the vested balance held in
his or her account payable at Normal Retirement Age in the normal form, or
if elected, in one of the optional forms of payment provided hereunder. If
applicable, the Early Retirement Benefit provisions may be elected.
Notwithstanding the preceding sentence, a former Participant may, if
allowed in the Adoption Agreement, make application to the Employer
requesting early payment of any deferred vested and nonforfeitable benefit
due.
(b) If a Participant terminates employment, and the value of that
Participant's vested account balance derived from Employer and Employee
contributions is not greater than $3,500, the Participant may receive a
lump sum distribution of the value of the entire vested portion of such
account balance and the non-vested portion will be treated as a forfeiture.
The Employer shall continue to follow their consistent policy, as may be
established, regarding immediate cash-outs of Vested Account Balances of
$3,500 or less. For purposes of this Article, if the value of a
Participant's Vested Account Balance is zero, the Participant shall be
deemed to have received a distribution of such Vested Account Balance
immediately following termination. Likewise, if the Participant is
reemployed prior to incurring 5 consecutive 1-year Breaks In Service they
will be deemed to have immediately repaid such distribution. For Plan Years
beginning prior to 1989, a Participant's Vested Account Balance shall not
include Qualified Voluntary Contributions. Notwithstanding the above, if
the Employer maintains or has maintained a policy of not distributing any
amounts until the Participant's Normal Retirement Age, the Employer can
continue to uniformly apply such policy.
(c) If a Participant terminates employment with a Vested Account Balance
derived from Employer
21
and Employee contributions in excess of $3,500, and elects (with his or her
Spouse's consent, if required) to receive 100% of the value of his or her
Vested Account Balance in a lump sum, the non-vested portion will be
treated as a forfeiture. The Participant (and his or her Spouse, if
required) must consent to any distribution, when the Vested Account Balance
described above exceeds $3,500 or if at the time of any prior distribution
it exceeded $3,500. For purposes of this paragraph, for Plan Years
beginning prior to 1989, a Participant's Vested Account Balance shall not
include Qualified Voluntary Contributions.
(d) Distribution of less than 100% of the Participant's Vested Account
Balance shall be permitted upon termination of employment.
(e) If a Participant who is not 100% vested receives or is deemed to
receive a distribution pursuant to this paragraph and resumes employment
covered under this Plan, the Participant shall have the right to repay to
the Plan the full amount of the distribution attributable to Employer
contributions on or before the earlier of the date that the Participant
incurs 5 consecutive 1-year Breaks in Service following the date of
distribution or five years after the first date on which the Participant is
subsequently reemployed. In such event, the Participant's account shall be
restored to the value thereof at the time the distribution was made and may
further be increased by the Plan's income and investment gains and/or
losses on the undistributed amount from the date of distribution to the
date of repayment.
(f) A Participant shall also have the option, to postpone payment of his or
her Plan benefits until the first day of April following the calendar year
in which he or she attains age 70-1/2. Any balance of a Participant's
account resulting from his or her Employee contributions not previously
withdrawn, if any, may be withdrawn by the Participant immediately
following separation from Service.
(g) If a Participant ceases to be an active Employee as a result of a
Disability as defined at paragraph 1.21, such Participant shall be able to
make an application for a disability retirement benefit payment. The
Participant's account balance will be deemed "immediately distributable" as
set forth in paragraph 6.4, and will be fully vested pursuant to paragraph
9.2.
6.4 Restrictions On Immediate Distributions
(a) An account balance is immediately distributable if any part of the
account balance could be distributed to the Participant (or Surviving
Spouse) before the Participant attains (or would have attained if not
deceased) the later of the Normal Retirement Age or age 62.
(b) If the value of a Participant's vested account balance derived from
Employer and Employee Contributions exceeds (or at the time of any prior
distribution exceeded) $3,500, and the account balance is immediately
distributable, the Participant and his or her Spouse (or where either the
Participant or the Spouse has died, the survivor) must consent to any
distribution of such account balance. The consent of the Participant and
the Spouse shall be obtained in writing within the 90-day period ending on
the annuity starting date, which is the first day of the first period for
which an amount is paid as an annuity or any other form. The Plan
Administrator shall notify the Participant and the Participant's Spouse of
the right to defer any distribution until the Participant's account balance
is no longer immediately distributable. Such notification shall include a
general description of the material features, and an explanation of the
relative values of, the optional forms of benefit available under the plan
in a manner that would satisfy the notice requirements of Code Section
417(a)(3), and shall be provided no less than 30 days and no more than 90
days prior to the annuity starting date.
(c) Notwithstanding the foregoing, only the Participant need consent to the
commencement of a distribution in the form of a qualified Joint and
Survivor Annuity while the account balance is immediately distributable.
Furthermore, if payment in the form of a Qualified Joint and Survivor
Annuity is not required with respect to the Participant pursuant to
paragraph 8.7 of the Plan, only the Participant need consent to the
distribution of an account balance that is immediately distributable.
Neither the consent of the Participant nor the Participant's Spouse shall
be required to the extent that a distribution is required to satisfy Code
Section 401(a)(9) or Code Section 415. In addition, upon termination of
this Plan if the Plan does not offer an annuity option
22
(purchased from a commercial provider), the Participant's account balance
may, without the Participant's consent, be distributed to the Participant
or transferred to another Defined Contribution Plan [other than an employee
stock ownership plan as defined in Code Section 4975(e)(7)] within the same
controlled group.
(d) For purposes of determining the applicability of the foregoing consent
requirements to distributions made before the first day of the first Plan
Year beginning after 1988, the Participant's vested account balance shall
not include amounts attributable to Qualified Voluntary Contributions.
(e) If a distribution is one to which Code Section 401(a)(11) and 417 do
not apply, such distribution may commence less than 30 days after the
notice required under Section 1.411(a)-11(c) of the Income Tax Regulations
is given, provided that:
(1) the Plan Administrator clearly informs the Participant that the
Participant has a right to a period of at least 30 days after receiving
the notice to consider the decision of whether or not to elect a
distribution (and, if applicable, a particular distribution option),
and
(2) the Participant, after receiving the notice, affirmatively elects a
distribution.
6.5 Normal Form Of Payment
The normal form of payment for a profit- sharing plan satisfying the
requirements of paragraph 8.7 hereof shall be a lump sum with no option for
annuity payments. For all other plans, the normal form of payment hereunder
shall be a Qualified Joint and Survivor Annuity as provided under Article VIII.
A Participant whose vested account balance derived from Employer and Employee
contributions exceeds $3,500, or if at the time of any prior distribution it
exceeded $3,500, shall (with the consent of his or her Spouse) have the right to
receive his or her benefit in a lump sum or in monthly, quarterly, semi-annual
or annual payments from the Fund over any period not extending beyond the life
expectancy of the Participant and his or her Beneficiary. For purposes of this
paragraph, for Plan Years prior to 1989, a Participant's Vested Account Balance
shall not include Qualified Voluntary Contributions. The normal form of payment
shall be automatic, unless the Participant files a written request with the
Employer prior to the date on which the benefit is automatically payable,
electing a lump sum or installment payment option. No amendment to the Plan may
eliminate one of the optional distribution forms listed above.
6.6 Commencement Of Benefits
(a) Unless the Participant elects otherwise, distribution of benefits will
begin no later than the 60th day after the close of the Plan Year in which
the latest of the following events occurs:
(1) the Participant attains age 65 (or normal retirement age if
earlier),
(2) the 10th anniversary of the year in which the Participant commenced
participation in the Plan, or
(3) the Participant terminates Service with the Employer.
(b) Notwithstanding the foregoing, the failure of a Participant and Spouse
(if necessary) to consent to a distribution while a benefit is immediately
distributable, within the meaning of paragraph 6.4 hereof, shall be deemed
an election to defer commencement of payment of any benefit sufficient to
satisfy this paragraph.
6.7 Claims Procedures
Upon retirement, death, or other severance of employment, the Participant or his
or her representative may make application to the Employer requesting payment of
benefits due and the manner of payment. If no application for benefits is made,
the Employer shall automatically pay any vested benefit due hereunder in the
normal form at the time prescribed at paragraph 6.4. If an application for
benefits is made, the Employer shall accept, reject, or modify such request and
shall notify the Participant in writing setting forth the response of the
Employer and in the case of a denial or modification the Employer shall:
(a) state the specific reason or reasons for the denial,
(b) provide specific reference to pertinent Plan provisions on which the
denial is based,
(c) provide a description of any additional material or information
necessary for the Participant or his representative to perfect the claim
and an explanation of why such material or information is necessary, and
23
(d) explain the Plan's claim review procedure as contained in this Plan.
In the event the request is rejected or modified, the Participant or his or her
representative may within 60 days following receipt by the Participant or
representative of such rejection or modification, submit a written request for
review by the Employer of its initial decision. Within 60 days following such
request for review, the Employer shall render its final decision in writing to
the Participant or representative stating specific reasons for such decision. If
the Participant or representative is not satisfied with the Employer's final
decision, the Participant or representative can institute an action in a federal
court of competent jurisdiction; for this purpose, process would be served on
the Employer.
6.8 In-Service Withdrawals
An Employee may withdraw all or any part of the fair market value of his or her
Voluntary Contributions, Qualified Voluntary Contributions, Rollover
Contributions, upon written request to the Employer. Transfer Contributions,
which originate from a Plan meeting the safe-harbor provisions of paragraph 8.7,
may also be withdrawn, by an Employee, upon written request to the Employer.
Transfer Contributions not meeting the safe-harbor provisions may only be
withdrawn upon retirement, death, disability, termination or termination of the
Plan, and will be subject to Spousal consent requirements contained in Code
Sections 411(a)(11) and 417. No such withdrawals are permitted from a money
purchase plan until the participant reaches Normal Retirement Age. Such request
shall include the Employee's address, social security number, birthdate, and
amount of the withdrawal. If at the time a distribution of Qualified Voluntary
Contributions is received the Participant has not attained age 59-1/2 and is not
disabled, as defined at Code Section 22(e)(3), the Participant will be subject
to a federal income tax penalty, unless the distribution is rolled over to a
qualified plan or individual retirement plan within 60 days of the date of
distribution. A Participant may withdraw all or any part of the fair market
value of his or her pre-1987 Voluntary Contributions with or without withdrawing
the earnings attributable thereto. Post-1986 Voluntary Contributions may only be
withdrawn along with a portion of the earnings thereon. The amount of the
earnings to be withdrawn is determined by using the formula: DA [1-(V / V+E)],
where DA is the distribution amount, V is the amount of Voluntary Contributions
and V+E is the amount of Voluntary Contributions plus the earnings attributable
thereto. A Participant withdrawing his or her other contributions prior to
attaining age 59-1/2, will be subject to a federal tax penalty to the extent
that the withdrawn amounts are includible in income. Any Participant in a
profit-sharing plan may, if permitted by the Employer in the Adoption Agreement,
withdraw all or any part of the fair market value of any of such vested
contributions, plus the investment earnings thereon, after attaining age 59-1/2
without separating from Service. Such Employer contributions may not have been
used to satisfy the antidiscrimination test of Code Section 401(k). Such
distributions shall not be eligible for redeposit to the Fund. A withdrawal
under this paragraph shall not prohibit such Participant from sharing in any
future Employer Contribution he or she would otherwise be eligible to share in.
A request to withdraw amounts pursuant to this paragraph must if applicable, be
consented to by the Participant's Spouse. The consent shall comply with the
requirements of paragraph 6.4 relating to immediate distributions.
6.9 Hardship Withdrawal
Unless otherwise specified by the Employer in the Adoption Agreement, a
Participant may not request a Hardship withdrawal prior to attaining age 59-1/2.
If permitted and the Participant has not attained age 59-1/2, the Participant
may be subject to a federal income tax penalty. Such request shall be in writing
to the Employer who shall have sole authority to authorize a hardship
withdrawal, pursuant to the rules below. Hardship withdrawals may include
Elective Deferrals regardless of when contributed and any earnings accrued and
credited thereon as of the last day of the Plan Year ending before July 1, 1989
and Employer related contributions including but not limited to Employer
Matching Contributions, plus the investment earnings thereon to the extent
vested. Qualified Matching Contributions, Qualified Non-Elective Contributions
and Elective Deferrals reclassified as Voluntary Contributions plus the
investment earnings thereon are only available for hardship withdrawal prior to
age 59-1/2 to the extent that they were credited to the Participant's Account as
of the last day of the Plan Year ending prior to July 1, 1989. The Plan
Administrator may limit withdrawals to Elective Deferrals and the earnings
thereon as stipulated above. Hardship withdrawals
24
are subject to the Spousal consent requirements contained in Code Sections
401(a)(11) and 417. Only the following reasons are valid to obtain hardship
withdrawal:
(a) medical expenses [within the meaning of Code Section 213(d)], incurred
or necessary for the medical care of the Participant, his or her Spouse,
children and other dependents,
(b) purchase (excluding mortgage payments) of the principal residence for
the Participant,
(c) payment of tuition and related educational expenses for the next twelve
(12) months of post-secondary education for the Participant, his or her
Spouse, children or other dependents, or
(d) the need to prevent eviction of the Employee from or a foreclosure on
the mortgage of, the Employee's principal residence.
Furthermore, the following conditions must be met in order for a withdrawal to
be authorized:
(e) the Participant has obtained all distributions, other than hardship
distributions, and all nontaxable loans under all plans maintained by the
Employer,
(f) all plans maintained by the Employer, other than flexible benefit plans
under Code Section 125 providing for current benefits, provide that the
Employee's Elective Deferrals and Voluntary Contributions will be suspended
for twelve months after the receipt of the Hardship distribution,
(g) the distribution is not in excess of the amount of the immediate and
heavy financial need [(a) through (d) above], including amounts necessary
to pay any federal, state or local income tax or penalties reasonably
anticipated to result from the distribution, and
(h) all plans maintained by the Employer provide that an Employee may not
make Elective Deferrals for the Employee's taxable year immediately
following the taxable year of the hardship distribution in excess of the
applicable limit under Code Section 402(g) for such taxable year, less the
amount of such Employee's pre-tax contributions for the taxable year of the
hardship distribution.
If a distribution is made at a time when a Participant has a nonforfeitable
right to less than 100% of the account balance derived from Employer
contributions and the Participant may increase the nonforfeitable percentage in
the account:
(i) A separate account will be established for the Participant's interest
in the Plan as of the time of the distribution, and
(j) At any relevant time the Participant's nonforfeitable portion of the
separate account will be equal to an amount ("X") determined by the
formula:
X = P [AB + (R * D)] - (R * D)
For purposes of applying the formula: "P" is the nonforfeitable percentage at
the relevant time, "AB" is the account balance at the relevant time, "D" is the
amount of the distribution and "R" is the ratio of the account balance at the
relevant time to the account balance after distribution.
6.10 Order Of Withdrawals
Unless the Participant directs otherwise, withdrawals shall be made:
(a) First, from amounts attributable to Voluntary Contributions;
(b) Second, from amounts attributable to Rollover Contributions;
(c) Third, from amounts attributable to Transfer Contributions;
(d) Fourth, from amounts attributable to Elective Deferrals;
(e) Fifth, from amounts attributable to Qualified Non-Elective
Contributions;
(f) Sixth, from amounts attributable to Qualified Matching Contributions;
(g) Seventh, from amounts attributable to vested matching Contributions;
and
(h) Eighth, from amounts attributable to vested Discretionary
Contributions.
ARTICLE VII -- DISTRIBUTION REQUIREMENTS
7.1 Joint And Survivor Annuity Requirements
All distributions made under the terms of this Plan must comply with the
provisions of Article VIII including, if applicable, the safe harbor provisions
thereunder.
25
7.2 Minimum Distribution Requirements
All distributions required under this Article shall be determined and made in
accordance with the minimum distribution requirements of Code Section 401(a)(9)
and the regulations thereunder, including the minimum distribution incidental
benefit rules found at Regulations Section 1.401(a)(9)-2. The entire interest of
a Participant must be distributed or begin to be distributed no later than the
Participant's Required Beginning Date. Life expectancy and joint and last
survivor life expectancy are computed by using the expected return multiples
found in Tables V and VI of Regulations Section 1.72-9.
In determining required distributions under the Plan, Participants and/or their
Spouse (Surviving Spouse) shall have the right to have their life expectancy
recalculated annually. Whether the Participant only or both the Participant and
Spouse's lives shall be recalculated shall be determined by the Participant.
7.3 Limits On Distribution Periods
As of the First Distribution Calendar Year, distributions if not made in a
single-sum, may only be made over one of the following periods (or a combination
thereof):
(a) the life of the Participant,
(b) the life of the Participant and a Designated Beneficiary,
(c) a period certain not extending beyond the life expectancy of the
participant, or
(d) a period certain not extending beyond the joint and last survivor
expectancy of the Participant and a designated beneficiary.
7.4 Required Distributions On Or After The Required Beginning Date
(a) If a participant's benefit is to be distributed over (1) a period not
extending beyond the life expectancy of the Participant or the joint life
and last survivor expectancy of the Participant and the Participant's
Designated Beneficiary or (2) a period not extending beyond the life
expectancy of the Designated Beneficiary, the amount required to be
distributed for each calendar year, beginning with distributions for the
First Distribution Calendar Year, must at least equal the quotient obtained
by dividing the Participant's benefit by the Applicable Life Expectancy.
(b) For calendar years beginning before 1989, if the Participant's Spouse
is not the Designated Beneficiary, the method of distribution selected must
have assured that at least 50% of the Present Value of the amount available
for distribution was to be paid within the life expectancy of the
Participant.
(c) For calendar years beginning after 1988, the amount to be distributed
each year, beginning with distributions for the First Distribution Calendar
Year shall not be less than the quotient obtained by dividing the
Participant's benefit by the lesser of (1) the Applicable Life Expectancy
or (2) if the Participant's Spouse is not the Designated Beneficiary, the
applicable divisor determined from the table set forth in Q&A-4 of
Regulations Section 1.401(a)(9)-2. Distributions after the death of the
Participant shall be distributed using the Applicable Life Expectancy as
the relevant divisor without regard to Regulations Section 1.401(a)(9)-2.
(d) The minimum distribution required for the Participant's First
Distribution Calendar Year must be made on or before the Participant's
Required Beginning Date. The minimum distribution for other calendar years,
including the minimum distribution for the Distribution Calendar Year in
which the Participant's Required Beginning Date occurs, must be made on or
before December 31 of that Distribution Calendar Year.
(e) If the Participant's benefit is distributed in the form of an annuity
purchased from an insurance company, distributions thereunder shall be made
in accordance with the requirements of Code Section 401(a)(9) and the
Regulations thereunder.
(f) For purposes of determining the amount of the required distribution for
each Distribution Calendar Year, the account balance to be used is the
account balance determined as of the last valuation preceding the
Distribution Calendar Year. This balance will be increased by the amount of
any contributions or forfeitures allocated to the account balance after the
valuation date in such preceding calendar year. Such balance will also be
decreased by distributions made after the Valuation Date in such preceding
Calendar Year.
(g) For purposes of subparagraph 7.4(f), if any portion of the minimum
distribution for the First
26
Distribution Calendar Year is made in the second Distribution Calendar Year
on or before the Required Beginning Date, the amount of the minimum
distribution made in the second Distribution Calendar Year shall be treated
as if it had been made in the immediately preceding Distribution Calendar
Year.
7.5 Required Beginning Date
(a) General Rule. The Required Beginning Date of a Participant is the first
day of April of the calendar year following the calendar year in which the
Participant attains age 70-1/2.
(b) Transitional Rules. The Required Beginning Date of a Participant who
attains age 70-1/2 before 1988, shall be determined in accordance with (1)
or (2) below:
(1) Non-5-percent owners. The Required Beginning Date of a Participant
who is not a 5-percent owner is the first day of April of the calendar
year following the calendar year in which the later of retirement or
attainment of age 70-1/2 occurs. In the case of a Participant who is
not a 5-percent owner who attains age 70-1/2 during 1988 and who has
not retired as of January 1, 1989, the Required Beginning Date is April
1, 1990.
(2) 5-percent owners. The Required Beginning Date of a Participant who
is a 5-percent owner during any year beginning after 1979, is the first
day of April following the later of:
(i) the calendar year in which the Participant attains age 70-1/2,
or
(ii) the earlier of the calendar year with or within which ends
the plan year in which the Participant becomes a 5-percent owner,
or the calendar year in which the Participant retires.
(c) A Participant is treated as a 5-percent owner for purposes of this
Paragraph if such Participant is a 5-percent owner as defined in Code
Section 416(i) (determined in accordance with Code Section 416 but without
regard to whether the Plan is Top-Heavy) at any time during the Plan Year
ending with or within the calendar year in which such Owner attains age
66-1/2 or any subsequent Plan Year.
(d) Once distributions have begun to a 5-percent owner under this
paragraph, they must continue to be distributed, even if the Participant
ceases to be a 5-percent owner in a subsequent year.
7.6 Transitional Rule
(a) Notwithstanding the other requirements of this Article and subject to
the requirements of Article VIII, Joint and Survivor Annuity Requirements,
distribution on behalf of any Employee, including a 5-percent owner, may be
made in accordance with all of the following requirements (regardless of
when such distribution commences):
(1) The distribution by the Trust is one which would not have
disqualified such Trust under Code Section 401(a)(9) as in effect prior
to amendment by the Deficit Reduction Act of 1984.
(2) The distribution is in accordance with a method of distribution
designated by the Employee whose interest in the Trust is being
distributed or, if the Employee is deceased, by a beneficiary of such
Employee.
(3) Such designation was in writing, was signed by the Employee or the
beneficiary, and was made before 1984.
(4) The Employee had accrued a benefit under the Plan as of December
31, 1983.
(5) The method of distribution designated by the Employee or the
beneficiary specifies the time at which distribution will commence, the
period over which distributions will be made, and in the case of any
distribution upon the Employee's death, the beneficiaries of the
Employee listed in order of priority.
(b) A distribution upon death will not be covered by this transitional rule
unless the information in the designation contains the required information
described above with respect to the distributions to be made upon the death
of the Employee.
(c) For any distribution which commences before 1984, but continues after
1983, the Employee or the beneficiary, to whom such distribution is being
made, will be presumed to have designated the method of distribution under
which the distribution is being made if the method of distribution was
specified in writing and the
27
distribution satisfies the requirements in subparagraphs (a)(1) and (5)
above.
(d) If a designation is revoked, any subsequent distribution must satisfy
the requirements of Code Section 401(a)(9) and the regulations thereunder.
If a designation is revoked subsequent to the date distributions are
required to begin, the Trust must distribute by the end of the calendar
year following the calendar year in which the revocation occurs the total
amount not yet distributed which would have been required to have been
distributed to satisfy Code Section 401(a)(9) and the regulations
thereunder, but for the section 242(b)(2) election of the Tax Equity and
Fiscal Responsibility Act of 1982. For calendar years beginning after 1988,
such distributions must meet the minimum distribution incidental benefit
requirements in section 1.401(a)(9)-2 of the Income Tax Regulations. Any
changes in the designation will be considered to be a revocation of the
designation. However, the mere substitution or addition of another
beneficiary (one not named in the designation) under the designation will
not be considered to be a revocation of the designation, so long as such
substitution or addition does not alter the period over which distributions
are to be made under the designation, directly or indirectly (for example,
by altering the relevant measuring life). In the case in which an amount is
transferred or rolled over from one plan to another plan, the rules in Q&A
J-2 and Q&A J-3 of the regulations shall apply.
7.7 Designation Of Beneficiary For Death Benefit
Each Participant shall file a written designation of beneficiary with the
Employer upon qualifying for participation in this Plan. Such designation shall
remain in force until revoked by the Participant by filing a new beneficiary
form with the Employer. The Participant may elect to have a portion of his or
her account balance invested in an insurance contract. If an insurance contract
is purchased under the Plan, the Trustee must be named as Beneficiary under the
terms of the contract. However, the Participant shall designate a Beneficiary to
receive the proceeds of the contract after settlement is received by the
Trustee. Under a profit-sharing plan satisfying the requirements of paragraph
8.7, the Designated Beneficiary shall be the Participant's Surviving Spouse, if
any, unless such Spouse properly consents otherwise.
7.8 Nonexistence Of Beneficiary
Any portion of the amount payable hereunder which is not disposed of because of
the Participant's or former Participant's failure to designate a beneficiary, or
because all of the Designated Beneficiaries predeceased the Participant, shall
be paid to his or her Spouse. If the Participant had no Spouse at the time of
death, payment shall be made to the personal representative of his or her estate
in a lump sum.
7.9 Distribution Beginning Before Death
If the Participant dies after distribution of his or her interest has begun, the
remaining portion of such interest will continue to be distributed at least as
rapidly as under the method of distribution being used prior to the
Participant's death.
7.10 Distribution Beginning After Death
If the Participant dies before distribution of his or her interest begins,
distribution of the Participant's entire interest shall be completed by December
31 of the calendar year containing the fifth anniversary of the Participant's
death except to the extent that an election is made to receive distributions in
accordance with (a) or (b) below:
(a) If any portion of the Participant's interest is payable to a Designated
Beneficiary, distributions may be made over the life or over a period
certain not greater than the life expectancy of the Designated Beneficiary
commencing on or before December 31 of the calendar year immediately
following the calendar year in which the Participant died;
(b) If the Designated Beneficiary is the Participant's surviving Spouse,
the date distributions are required to begin in accordance with (a) above
shall not be earlier than the later of (1) December 31 of the calendar year
immediately following the calendar year in which the participant died or
(2) December 31 of the calendar year in which the Participant would have
attained age 70-1/2.
If the Participant has not made an election pursuant to this paragraph 7.10 by
the time of his or her death, the Participant's Designated Beneficiary must
elect the method of distribution no later than the earlier of (1) December 31 of
the calendar year in which distributions would be required to begin under this
28
section, or (2) December 31 of the calendar year which contains the fifth
anniversary of the date of death of the participant. If the Participant has no
Designated Beneficiary, or if the Designated Beneficiary does not elect a method
of distribution, then distribution of the Participant's entire interest must be
completed by December 31 of the calendar year containing the fifth anniversary
of the Participant's death.
For purposes of this paragraph if the Surviving Spouse dies after the
Participant, but before payments to such Spouse begin, the provisions of this
paragraph with the exception of paragraph (b) therein, shall be applied as if
the Surviving Spouse were the Participant. For the purposes of this paragraph
and paragraph 7.9, distribution of a Participant's interest is considered to
begin on the Participant's Required Beginning Date (or, if the preceding
sentence is applicable, the date distribution is required to begin to the
Surviving Spouse). If distribution in the form of an annuity described in
paragraph 7.4(e) irrevocably commences to the Participant before the Required
Beginning Date, the date distribution is considered to begin is the date
distribution actually commences.
For purposes of paragraph 7.9 and this paragraph, if an amount is payable to
either a minor or an individual who has been declared incompetent, the benefits
shall be paid to the legally appointed guardian for the benefit of said minor or
incompetent individual, unless the court which appointed the guardian has
ordered otherwise.
7.11 Distribution Of Excess Elective Deferrals
(a) Notwithstanding any other provision of the Plan, Excess Elective
Deferrals plus any income and minus any loss allocable thereto, shall be
distributed no later than April 15, 1988, and each April 15 thereafter, to
Participants to whose accounts Excess Elective Deferrals were allocated for
the preceding taxable year, and who claim Excess Elective Deferrals for
such taxable year. Excess Elective Deferrals shall be treated as Annual
Additions under the plan, unless such amounts are distributed no later than
the first April 15th following the close of the Participant's taxable year.
A Participant is deemed to notify the Plan Administrator of any Excess
Elective Deferrals that arise by taking into account only those Elective
Deferrals made to this Plan and any other plans of this Employer.
(b) Furthermore, a Participant who participates in another plan allowing
Elective Deferrals may assign to this Plan any Excess Elective Deferrals
made during a taxable year of the Participant, by notifying the Plan
Administrator of the amount of the Excess Elective Deferrals to be
assigned. The Participant's claim shall be in writing; shall be submitted
to the Plan Administrator not later than March 1 of each year; shall
specify the amount of the Participant's Excess Elective Deferrals for the
preceding taxable year; and shall be accompanied by the Participant's
written statement that if such amounts are not distributed, such Excess
Elective Deferrals, when added to amounts deferred under other plans or
arrangements described in Code Sections 401(k), 408(k) [Simplified Employee
Pensions], or 403(b) [annuity programs for public schools and charitable
organizations] will exceed the $7,000 limit as adjusted under Code Section
415(d) imposed on the Participant by Code Section 402(g) for the year in
which the deferral occurred.
(c) Excess Elective Deferrals shall be adjusted for any income or loss up
to the end of the taxable year, during which such excess was deferred.
Income or loss will be calculated under the method used to calculate
investment earnings and losses elsewhere in the Plan or any other
reasonable method. Whichever method is selected shall be used for all
Participants and for all corrective distributions made from the Plan for
the Plan Year.
(d) If the Participant receives a return of his or her Elective Deferrals,
the amount of such contributions which are returned must be brought into
the Employee's taxable income.
7.12 Distributions of Excess Contributions
(a) Notwithstanding any other provision of this Plan, Excess Contributions,
plus any income and minus any loss allocable thereto, shall be distributed
no later than the last day of each Plan Year to Participants to whose
accounts such Excess Contributions were allocated for the preceding Plan
Year. If such excess amounts are distributed more than 2-1/2 months after
the last day of the Plan Year in which such excess amounts arose, a ten
(10) percent excise tax will be imposed on the Employer maintaining the
Plan with respect to such amounts. Such distributions shall be made to
Highly Compensated Employees
29
on the basis of the respective portions of the Excess Contributions
attributable to each of such Employees. Excess Contributions of
Participants who are subject to the Family Member aggregation rules of Code
Section 414(q)(6) shall be allocated among the Family Members in proportion
to the Elective Deferrals (and amounts treated as Elective Deferrals) of
each Family Member that is combined to determine the Average Deferral
Percentage.
(b) Excess Contributions (including the amounts recharacterized) shall be
treated as Annual Additions under the Plan.
(c) Excess Contributions shall be adjusted for any income or loss up to the
end of the Plan Year. Income or loss will be calculated under the method
used to calculate investment earnings and losses elsewhere in the Plan.
(d) Excess Contributions shall be distributed from the Participant's
Elective Deferral account and Qualified Matching Contribution account (if
applicable) in proportion to the Participant's Elective Deferrals and
Qualified Matching Contributions (to the extent used in the ADP test) for
the Plan Year. Excess Contributions shall be distributed from the
Participant's Qualified Non-Elective Contribution account only to the
extent that such Excess Contributions exceed the balance in the
Participant's Elective Deferral account and Qualified Matching Contribution
account.
7.13 Distribution Of Excess Aggregate Contributions
(a) Notwithstanding any other provision of this Plan, Excess Aggregate
Contributions, plus any income and minus any loss allocable thereto, shall
be forfeited, if forfeitable, or if not forfeitable, distributed no later
than the last day of each Plan Year to Participants to whose accounts such
Excess Aggregate Contributions were allocated for the preceding Plan Year.
Excess Aggregate Contributions shall be allocated to Participants who are
subject to the Family Member aggregation rules of Code Section 414(q)(6) in
the manner prescribed by the regulations.
If such Excess Aggregate Contributions are distributed more than 2-1/2
months after the last day of the Plan Year in which such excess amounts
arose, a ten (10) percent excise tax will be imposed on the Employer
maintaining the Plan with respect to those amounts. Excess Aggregate
Contributions shall be treated as Annual Additions under the plan.
(b) Excess Aggregate Contributions shall be adjusted for any income or loss
up to the end of the Plan Year. The income or loss allocable to Excess
Aggregate Contributions is the sum of income or loss for the Plan Year
allocable to the Participant's Voluntary Contribution account, Matching
Contribution account (if any, and if all amounts therein are not used in
the ADP test) and, if applicable, Qualified Non-Elective Contribution
account and Elective Deferral account. Income or loss will be calculated
under the method used to calculate investment earnings and losses elsewhere
in the Plan.
(c) Forfeitures of Excess Aggregate Contributions may either be reallocated
to the accounts of non-Highly Compensated Employees or applied to reduce
Employer contributions, as elected by the employer in the Adoption
Agreement.
(d) Excess Aggregate Contributions shall be forfeited if such amount is not
vested. If vested, such excess shall be distributed in the following order:
(i) First, from the Participant's Voluntary Contribution account;
(ii) Second, from the Participant's Matching Contribution account;
and
(iii) Third, from the Participant's Qualified Matching
Contribution account (if applicable).
ARTICLE VIII -- JOINT AND SURVIVOR ANNUITY REQUIREMENTS
8.1 Applicability Of Provisions
The provisions of this Article shall apply to any Participant who is credited
with at least one Hour of Service with the Employer on or after August 23, 1984
and such other Participants as provided in paragraph 8.8.
8.2 Payment Of Qualified Joint And Survivor Annuity
Unless an optional form of benefit is selected pursuant to a Qualified Election
within the 90-day period ending on the Annuity Starting Date, a
30
married Participant's Vested Account Balance will be paid in the form of a
Qualified Joint and Survivor Annuity and an unmarried Participant's Vested
Account Balance will be paid in the form of a life annuity. The Participant may
elect to have such annuity distributed upon attainment of the Early Retirement
Age under the Plan.
8.3 Payment Of Qualified Pre-Retirement Survivor Annuity
Unless an optional form of benefit has been selected within the Election Period
pursuant to a Qualified Election, if a Participant dies before benefits have
commenced then the Participant's vested account balance shall be paid in the
form of an annuity for the life of the Surviving Spouse. The Surviving Spouse
may elect to have such annuity distributed within a reasonable period after the
Participant's death.
A Participant who does not meet the age 35 requirement set forth in the Election
Period as of the end of any current Plan Year may make a special qualified
election to waive the qualified Pre-retirement Survivor Annuity for the period
beginning on the date of such election and ending on the first day of the Plan
Year in which the Participant will attain age 35. Such election shall not be
valid unless the Participant receives a written explanation of the Qualified
Pre-retirement Survivor Annuity in such terms as are comparable to the
explanation required under paragraph 8.5. Qualified Pre-retirement Survivor
Annuity coverage will be automatically reinstated as of the first day of the
Plan Year in which the Participant attains age 35. Any new waiver on or after
such date shall be subject to the full requirements of this Article.
8.4 Qualified Election
A Qualified Election is an election to either waive a Qualified Joint and
Survivor Annuity or a qualified pre-retirement survivor annuity. Any such
election shall not be effective unless:
(a) the Participant's Spouse consents in writing to the election;
(b) the election designates a specific beneficiary, including any class of
beneficiaries or any contingent beneficiaries, which may not be changed
without spousal consent (or the Spouse expressly permits designations by
the Participant without any further spousal consent);
(c) the Spouse's consent acknowledges the effect of the election; and
(d) the Spouse's consent is witnessed by a Plan representative or notary
public.
Additionally, a Participant's waiver of the Qualified Joint and Survivor Annuity
shall not be effective unless the election designates a form of benefit payment
which may not be changed without spousal consent (or the Spouse expressly
permits designations by the Participant without any further spousal consent). If
it is established to the satisfaction of the Plan Administrator that there is no
Spouse or that the Spouse cannot be located, a waiver will be deemed a Qualified
Election. Any consent by a Spouse obtained under this provision (or
establishment that the consent of a Spouse may not be obtained) shall be
effective only with respect to such Spouse. A consent that permits designations
by the Participant without any requirement of further consent by such Spouse
must acknowledge that the Spouse has the right to limit consent to a specific
beneficiary, and a specific form of benefit where applicable, and that the
Spouse voluntarily elects to relinquish either or both of such rights. A
revocation of a prior waiver may be made by a Participant without the consent of
the Spouse at any time before the commencement of benefits. The number of
revocations shall not be limited. No consent obtained under this provision shall
be valid unless the Participant has received notice as provided in paragraphs
8.5 and 8.6 below.
8.5 Notice Requirements For Qualified Joint And Survivor Annuity
In the case of a Qualified Joint and Survivor Annuity, the Plan Administrator
shall, no less than 30 days and no more than 90 days prior to the Annuity
Starting date, provide each Participant a written explanation of:
(a) the terms and conditions of a Qualified Joint and Survivor Annuity;
(b) the Participant's right to make and the effect of an election to waive
the Qualified Joint and Survivor Annuity form of benefit;
(c) the rights of a Participant's Spouse; and
(d) the right to make, and the effect of, a revocation of a previous
election to waive the Qualified Joint and Survivor Annuity.
8.6 Notice Requirements For Qualified Pre-Retirement Survivor Annuity
31
In the case of a qualified pre-retirement survivor annuity as described in
paragraph 8.3, the Plan Administrator shall provide each Participant within the
applicable period for such Participant a written explanation of the qualified
pre-retirement survivor annuity in such terms and in such manner as would be
comparable to the explanation provided for meeting the requirements of paragraph
8.5 applicable to a Qualified Joint and Survivor Annuity. The applicable period
for a Participant is whichever of the following periods ends last:
(a) the period beginning with the first day of the Plan Year in which the
Participant attains age 32 and ending with the close of the Plan Year
preceding the Plan Year in which the Participant attains age 35;
(b) a reasonable period ending after the individual becomes a Participant;
(c) a reasonable period ending after this Article first applies to the
Participant. Notwithstanding the foregoing, notice must be provided within
a reasonable period ending after separation from Service in the case of a
Participant who separates from Service before attaining age 35.
For purposes of applying the preceding paragraph, a reasonable period ending
after the events described in (b) and (c) is the end of the two-year period
beginning one-year prior to the date the applicable event occurs, and ending
one-year after that date. In the case of a Participant who separates from
Service before the Plan Year in which age 35 is attained, notice shall be
provided within the two-year period beginning one year prior to separation and
ending one year after separation. If such a Participant subsequently returns to
employment with the Employer, the applicable period for such Participant shall
be re-determined.
8.7 Special Safe-Harbor Exception For Certain Profit-Sharing Plans
(a) This paragraph shall apply to a Participant in a profit-sharing plan,
and to any distribution, made on or after the first day of the first plan
year beginning after 1988, from or under a separate account attributable
solely to Qualified Voluntary contributions, as maintained on behalf of a
Participant in a money purchase pension plan, (including a target benefit
plan) if the following conditions are satisfied:
(1) the Participant does not or cannot elect payments in the form of a
life annuity; and
(2) on the death of a Participant, the Participant's Vested Account
Balance will be paid to the Participant's Surviving Spouse, but if
there is no Surviving Spouse, or if the Surviving Spouse has consented
in a manner conforming to a Qualified Election, then to the
Participant's Designated Beneficiary.
The Surviving Spouse may elect to have distribution of the Vested Account
Balance commence within the 90-day period following the date of the
Participant's death. The account balance shall be adjusted for gains or losses
occurring after the Participant's death in accordance with the provisions of the
Plan governing the adjustment of account balances for other types of
distributions. These safe-harbor rules shall not be operative with respect to a
Participant in a profit-sharing plan if that plan is a direct or indirect
transferee of a Defined Benefit Plan, money purchase plan, a target benefit
plan, stock bonus plan, or profit-sharing plan which is subject to the survivor
annuity requirements of Code Section 401(a)(11) and Code Section 417, and would
therefore have a Qualified Joint and Survivor Annuity as its normal form of
benefit.
(b) The Participant may waive the spousal death benefit described in this
paragraph at any time provided that no such waiver shall be effective
unless it satisfies the conditions (described in paragraph 8.4) that would
apply to the Participant's waiver of the Qualified Pre-Retirement Survivor
Annuity.
(c) If this paragraph 8.7 is operative, then all other provisions of this
Article other than paragraph 8.8 are inoperative.
8.8 Transitional Joint And Survivor Annuity Rules
Special transition rules apply to Participants who were not receiving benefits
on August 23, 1984.
(a) Any living Participant not receiving benefits on August 23, 1984, who
would otherwise not receive the benefits prescribed by the previous
paragraphs of this Article, must be given the opportunity to elect to have
the prior paragraphs of this Article apply if such Participant is credited
with at least one Hour of Service under this Plan or a predecessor Plan in
a Plan Year beginning on or after January 1, 1976 and such Participant had
at least 10 Years of Service for vesting purposes when he or she separated
from Service.
32
(b) Any living Participant not receiving benefits on August 23, 1984, who
was credited with at least one Hour of Service under this Plan or a
predecessor Plan on or after September 2, 1974, and who is not otherwise
credited with any Service in a Plan Year beginning on or after January 1,
1976, must be given the opportunity to have his or her benefits paid in
accordance with paragraph 8.9.
(c) The respective opportunities to elect [as described in (a) and (b)
above] must be afforded to the appropriate Participants during the period
commencing on August 23, 1984 and ending on the date benefits would
otherwise commence to said Participants.
8.9 Automatic Joint And Survivor Annuity And Early Survivor Annuity
Any Participant who has elected pursuant to paragraph 8.8(b) and any Participant
who does not elect under paragraph 8.8(a) or who meets the requirements of
paragraph 8.8(a), except that such Participant does not have at least 10 years
of vesting Service when he or she separates from Service, shall have his or her
benefits distributed in accordance with all of the following requirements if
benefits would have been payable in the form of a life annuity.
(a) Automatic Joint and Survivor Annuity. If benefits in the form of a life
annuity become payable to a married Participant who:
(1) begins to receive payments under the Plan on or after Normal
Retirement Age, or
(2) dies on or after Normal Retirement Age while still working for the
Employer, or
(3) begins to receive payments on or after the Qualified Early
Retirement Age, or
(4) separates from Service on or after attaining Normal Retirement (or
the Qualified Early Retirement Age) and after satisfying the
eligibility requirements for the payment of benefits under the Plan and
thereafter dies before beginning to receive such benefits, then such
benefits will be received under this Plan in the form of a Qualified
Joint and Survivor Annuity, unless the Participant has elected
otherwise during the Election Period. The Election Period must begin at
least 6 months before the Participant attains Qualified Early
Retirement Age and end not more than 90 days before the commencement of
benefits. Any election will be in writing and may be changed by the
Participant at any time.
(b) Election of Early Survivor Annuity. A Participant who is employed after
attaining the Qualified Early Retirement Age will be given the opportunity
to elect, during the Election Period, to have a survivor annuity payable on
death. If the Participant elects the survivor annuity, payments under such
annuity must not be less than the payments which would have been made to
the Spouse under the Qualified Joint and Survivor Annuity if the
Participant had retired on the day before his or her death. Any election
under this provision will be in writing and may be changed by the
Participant at any time. The Election Period begins on the later of:
(1) the 90th day before the Participant attains the Qualified Early
Retirement Age, or
(2) the date on which participation begins, and ends on the date the
Participant terminates employment.
8.10 Annuity Contracts
Any annuity contract distributed under this Plan must be nontransferable. The
terms of any annuity contract purchased and distributed by the Plan to a
Participant or Spouse shall comply with the requirements of this Plan.
ARTICLE IX -- VESTING
9.1 Employee Contributions
A Participant shall always have a 100% vested and nonforfeitable interest in his
or her Elective Deferrals, Voluntary Contributions, Qualified Voluntary
Contributions, Rollover Contributions, and Transfer Contributions plus the
earnings thereon. No forfeiture of Employer related contributions (including any
minimum contributions made under paragraph 14.2) will occur solely as a result
of an Employee's withdrawal of any Employee contributions.
9.2 Employer Contributions
A Participant shall acquire a vested and nonforfeitable interest in his or her
account attributable to Employer contributions in accordance with the table
selected in the Adoption Agreement, provided that if a Participant is not
already fully vested, he or she
33
shall become so upon attaining Normal Retirement Age, Early Retirement Age, on
death prior to normal retirement, on retirement due to Disability, or on
termination of the Plan. If no table is selected in the Adoption Agreement, an
Employee shall acquire a vested and nonforfeitable interest in his or her
account attributable to Employer contributions in accordance with the following
percentages: 20% after 2 Years Of Service, 20% additional for each of the
following Years Of Service, reaching 100% after 6 Years Of Service with the
Employer.
9.3 Computation Period
The computation period for purposes of determining Years of Service and Breaks
in Service for purposes of computing a Participant's nonforfeitable right to his
or her account balance derived from Employer contributions shall be the Plan
Year. In the event a former Participant with no vested interest in his or her
Employer contribution account requalifies for participation in the Plan after
incurring a Break in Service, such Participant shall be credited for vesting
with all pre-break and post-break Service.
9.4 Requalification Prior To Five Consecutive One-Year Breaks In Service
The account balance of such Participant shall consist of any undistributed
amount in his or her account as of the date of re-employment plus any future
contributions added to such account plus the investment earnings on the account.
The vested account balance of such Participant shall be determined by
multiplying the Participant's account balance (adjusted to include any
distribution or redeposit made under paragraph 6.3) by such Participant's vested
percentage. All Service of the Participant, both prior to and following the
break, shall be counted when computing the Participant's vested percentage.
9.5 Requalification After Five Consecutive One-Year Breaks In Service
If such Participant is not fully vested upon re-employment, a new account shall
be established for such Participant to separate his or her deferred vested and
nonforfeitable account, if any, from the account to which new allocations will
be made. The Participant's deferred account to the extent remaining shall be
fully vested and shall continue to share in earnings and losses of the Fund.
When computing the Participant's vested portion of the new account, all
pre-break and post-break Service shall be counted. However, notwithstanding this
provision, no such former Participant who has had five consecutive one-year
Breaks in Service shall acquire a larger vested and nonforfeitable interest in
his or her prior account balance as a result of requalification hereunder.
9.6 Calculating Vested Interest
A Participant's vested and nonforfeitable interest shall be calculated by
multiplying the fair market value of his or her account attributable to Employer
contributions on the Valuation Date preceding distribution by the decimal
equivalent of the vested percentage as of his or her termination date. The
amount attributable to Employer contributions for purposes of the calculation
includes amounts previously paid out pursuant to paragraph 6.3 and not repaid if
the non-vested portion has not been forfeited. The Participant's vested and
nonforfeitable interest, once calculated above, shall be reduced to reflect
those amounts previously paid out to the Participant and not repaid by the
Participant. The Participant's vested and nonforfeitable interest so determined
shall continue to share in the investment earnings and any increase or decrease
in the fair market value of the Fund up to the Valuation Date preceding or
coinciding with payment.
9.7 Forfeitures
Any balance in the account of a Participant who has separated from Service to
which he or she is not entitled under the foregoing provisions, shall be
forfeited and applied as provided in the Adoption Agreement. A forfeiture may
only occur if the Participant has received a distribution from the Plan or if
the Participant has incurred five consecutive 1-year Breaks in Service.
Furthermore, a Highly Compensated Employee's Matching Contributions may be
forfeited, even if vested, if the contributions to which they relate are Excess
Deferrals, Excess Contributions or Excess Aggregate Contributions.
9.8 Amendment Of Vesting Schedule
No amendment to the Plan shall have the effect of decreasing a Participant's
vested interest determined without regard to such amendment as of the later of
the date such amendment is adopted or the date it becomes effective. Further, if
the vesting schedule of the Plan is amended, or the Plan is amended in any way
that directly or indirectly affects the computation of any Participant's
nonforfeitable percentage or if the Plan is deemed amended by an automatic
change to or from a Top-Heavy vesting schedule, each Participant
34
with at least three Years of Service with the Employer may elect, within a
reasonable period after the adoption of the amendment, to have his or her
nonforfeitable percentage computed under the Plan without regard to such
amendment. For Participants who do not have at least one Hour of Service in any
Plan Year beginning after 1988, the preceding sentence shall be applied by
substituting "Five Years of Service" for "Three Years of Service" where such
language appears. The period during which the election may be made shall
commence with the date the amendment is adopted and shall end on the later of:
(a) 60 days after the amendment is adopted;
(b) 60 days after the amendment becomes effective; or
(c) 60 days after the Participant is issued written notice of the amendment
by the Employer or the Trustee. If the Trustee is asked to so notify, the
Fund will be charged for the costs thereof.
No amendment to the Plan shall be effective to the extent that it has the effect
of decreasing a Participant's accrued benefit. Notwithstanding the preceding
sentence, a Participant's account balance may be reduced to the extent permitted
under section 412(c)(8) of the Code (relating to financial hardships). For
purposes of this paragraph, a Plan amendment which has the effect of decreasing
a Participant's account balance or eliminating an optional form of benefit, with
respect to benefits attributable to service before the amendment, shall be
treated as reducing an accrued benefit.
9.9 Service With Controlled Groups
All Years of Service with other members of a controlled group of corporations
[as defined in Code Section 414(b)], trades or businesses under common control
[as defined in Code Section 414(c)], or members of an affiliated service group
[as defined in Code Section 414(m)] shall be considered for purposes of
determining a Participant's nonforfeitable percentage.
ARTICLE X -- LIMITATIONS ON ALLOCATIONS AND ANTIDISCRIMINATION TESTING
10.1 Participation In This Plan Only
If the Participant does not participate in and has never participated in another
qualified plan, a Welfare Benefit Fund (as defined in paragraph 1.89) or an
individual medical account, as defined in Code Section 415(l)(2), or a
Simplified Employee Pension Plan, as defined in Code Section 408(k), maintained
by the adopting Employer, which provides an Annual Addition as defined in
paragraph 1.4, the amount of Annual Additions which may be credited to the
Participant's account for any Limitation Year will not exceed the lesser of the
Maximum Permissible Amount or any other limitation contained in this Plan. If
the Employer contribution that would otherwise be contributed or allocated to
the Participant's account would cause the Annual Additions for the Limitation
Year to exceed the Maximum Permissible Amount, the amount contributed or
allocated will be reduced so that the Annual Additions for the Limitation Year
will equal the Maximum Permissible Amount. Prior to determining the
Participant's actual Compensation for the Limitation Year, the Employer may
determine the Maximum Permissible Amount for a Participant on the basis of a
reasonable estimate of the Participant's Compensation for the Limitation Year,
uniformly determined for all Participants similarly situated. As soon as is
administratively feasible after the end of the Limitation Year, the Maximum
Permissible Amount for the Limitation Year will be determined on the basis of
the Participant's actual Compensation for the Limitation Year.
10.2 Disposition Of Excess Annual Additions
If, pursuant to paragraph 10.1 or as a result of the allocation of forfeitures,
there is an Excess Amount, the excess will be disposed of under one of the
following methods as determined in the Adoption Agreement. If no election is
made in the Adoption Agreement then method "(a)" below shall apply.
(a) Suspense Account Method
(1) Any Elective Deferrals and nondeductible Employee Voluntary
Contributions, to the extent they would reduce the Excess Amount, will
be returned to the Participant;
(2) If after the application of paragraph (1) an Excess Amount still
exists, and the Participant is covered by the Plan at the end of the
Limitation Year, the Excess Amount in the Participant's account will be
used to reduce Employer contributions (including any allocation of
forfeitures) for such Participant
35
in the next Limitation Year, and each succeeding Limitation Year if
necessary;
(3) If after the application of paragraph (1) an Excess Amount still
exists, and the Participant is not covered by the Plan at the end of
the Limitation Year, the Excess Amount will be held unallocated in a
suspense account. The suspense account will be applied to reduce future
Employer contributions (including allocation of any forfeitures) for
all remaining Participants in the next Limitation Year, and each
succeeding Limitation Year if necessary;
(4) If a suspense account is in existence at any time during the
Limitation Year pursuant to this paragraph, it will not participate in
the allocation of investment gains and losses. If a suspense account is
in existence at any time during a particular Limitation Year, all
amounts in the suspense account must be allocated and reallocated to
Participants' accounts before any Employer contributions or any
Employee Contributions may be made to the Plan for that Limitation
Year. Excess amounts may not be distributed to Participants or former
Participants.
(b) Spillover Method
(1) Any Elective Deferrals and nondeductible Employee Voluntary
Contributions, to the extent they would reduce the Excess Amount, will
be returned to the Participant.
(2) Any Excess Amount which would be allocated to the account of an
individual Participant under the Plan's allocation formula will be
reallocated to other Participants in the same manner as other Employer
contributions. No such reallocation shall be made to the extent that it
will result in an Excess Amount being created in such Participant's own
account.
(3) To the extent that amounts cannot be reallocated under (1) above,
the suspense account provisions of (a) above will apply.
10.3 Participation In This Plan And Another Qualified Master and Prototype
Defined Contribution Plan, Welfare Benefit Fund, Individual Medical Account Or
Simplified Employee Pension Plan Maintained By The Employer
The Annual Additions which may be credited to a Participant's account under this
Plan for any Limitation Year will not exceed the Maximum Permissible Amount
reduced by the Annual Additions credited to a Participant's account under the
other qualified Master or Prototype Defined Contribution Plans, Welfare Benefit
Funds, and individual medical accounts as defined in Code Section 415(l)(2), or
Simplified Employee Pension Plan, maintained by the Employer, which provide an
Annual Addition as defined in paragraph 1.4 for the same Limitation Year. If the
Annual Additions, with respect to the Participant under other Defined
Contribution Plans and Welfare Benefit Funds maintained by the Employer, are
less than the Maximum Permissible Amount and the Employer contribution that
would otherwise be contributed or allocated to the Participant's account under
this Plan would cause the Annual Additions for the Limitation Year to exceed
this limitation, the amount contributed or allocated will be reduced so that the
Annual Additions under all such plans and funds for the Limitation Year will
equal the Maximum Permissible Amount. If the Annual Additions with respect to
the Participant under such other Defined Contribution Plans and Welfare Benefit
Funds in the aggregate are equal to or greater than the Maximum Permissible
Amount, no amount will be contributed or allocated to the Participant's account
under this Plan for the Limitation Year. Prior to determining the Participant's
actual Compensation for the Limitation Year, the Employer may determine the
Maximum Permissible Amount for a Participant in the manner described in
paragraph 10.1. As soon as administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for the Limitation Year will be
determined on the basis of the Participant's actual Compensation for the
Limitation Year.
10.4 Disposition Of Excess Annual Additions Under Two Plans
If, pursuant to paragraph 10.3 or as a result of forfeitures, a Participant's
Annual Additions under this Plan and such other plans would result in an Excess
Amount for a Limitation Year, the Excess Amount will be deemed to consist of the
Annual Additions last allocated except that Annual Additions attributable to a
Simplified Employee Pension Plan will be deemed to have been allocated first,
followed by Annual Additions attributable to a Welfare Benefit Fund or
Individual Medical Account as defined in
36
Code Section 415(l)(2) regardless of the actual allocation date. If an Excess
Amount was allocated to a Participant on an allocation date of this Plan which
coincides with an allocation date of another plan, the Excess Amount attributed
to this Plan will be the product of:
(a) the total Excess Amount allocated as of such date, times
(b) the ratio of:
(1) the Annual Additions allocated to the Participant for the
Limitation Year as of such date under the Plan, to
(2) the total Annual Additions allocated to the Participant for the
Limitation Year as of such date under this and all the other qualified
Master or Prototype Defined Contribution Plans.
Any Excess Amount attributed to this Plan will be disposed of in the manner
described in paragraph 10.2.
10.5 Participation In This Plan And Another Defined Contribution Plan Which
Is Not A Qualified Master Or Prototype Plan
If the Participant is covered under another qualified Defined Contribution Plan
maintained by the Employer which is not a qualified Master or Prototype Plan,
Annual Additions which may be credited to the Participant's account under this
Plan for any Limitation Year will be limited in accordance with paragraphs 10.3
and 10.4 as though the other plan were a Master or Prototype Plan, unless the
Employer provides other limitations in the Adoption Agreement.
10.6 Participation In This Plan And A Defined Benefit Plan
If the Employer maintains, or at any time maintained, a qualified Defined
Benefit Plan covering any Participant in this Plan, the sum of the Participant's
Defined Benefit Plan Fraction and Defined Contribution Plan Fraction will not
exceed 1.0 in any Limitation Year. For any Plan Year during which the Plan is
Top-Heavy, the Defined Benefit and Defined Contribution Plan Fractions shall be
calculated in accordance with Code Section 416(h). The Annual Additions which
may be credited to the Participant's account under this Plan for any Limitation
Year will be limited in accordance with the provisions set forth in the Adoption
Agreement.
10.7 Average Deferral Percentage (ADP) Test
With respect to any Plan Year, the Average Deferral Percentage for Participants
who are Highly Compensated Employees and the Average Deferral Percentage for
Participants who are non-Highly Compensated Employees must satisfy one of the
following tests:
(a) Basic Test - The Average Deferral Percentage for Participants who are
Highly Compensated Employees for the Plan Year is not more than 1.25 times
the Average Deferral Percentage for Participants who are non-Highly
Compensated Employees for the same Plan Year, or
(b) Alternative Test - The Average Deferral Percentage for Participants who
are Highly Compensated Employees for the Plan Year does not exceed the
Average Deferral Percentage for Participants who are non-Highly Compensated
Employees for the same Plan Year by more than 2 percentage points provided
that the Average Deferral Percentage for Participants who are Highly
Compensated Employees is not more than 2.0 times the Average Deferral
Percentage for Participants who are non-Highly Compensated Employees.
10.8 Special Rules Relating To Application Of ADP Test
(a) The Actual Deferral Percentage for any Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible to have Elective
Deferrals (and Qualified Non-Elective Contributions or Qualified Matching
Contributions, or both, if treated as Elective Deferrals for purposes of
the ADP test) allocated to his or her accounts under two or more
arrangements described in Code Section 401(k), that are maintained by the
Employer, shall be determined as if such Elective Deferrals (and, if
applicable, such Qualified Non-Elective Contributions or Qualified Matching
Contributions, or both) were made under a single arrangement. If a Highly
Compensated Employee participates in two or more cash or deferred
arrangements that have different Plan Years, all cash or deferred
arrangements ending with or within the same calendar year shall be treated
as a single arrangement.
(b) In the event that this Plan satisfies the requirements of Code Sections
401(k), 401(a)(4),
37
or 410(b), only if aggregated with one or more other plans, or if one or
more other plans satisfy the requirements of such Code Sections only if
aggregated with this Plan, then this Section shall be applied by
determining the Actual Deferral Percentage of Employees as if all such
plans were a single plan. For Plan Years beginning after 1989, plans may be
aggregated in order to satisfy Code Section 401(k) only if they have the
same Plan Year.
(c) For purposes of determining the Actual Deferral Percentage of a
Participant who is a 5-percent owner or one of the ten most highly-paid
Highly Compensated Employees, the Elective Deferrals (and Qualified
Non-Elective Contributions or Qualified Matching Contributions, or both, if
treated as Elective Deferrals for purposes of the ADP test) and
Compensation of such Participant shall include the Elective Deferrals (and,
if applicable, Qualified Non-Elective Contributions and Qualified Matching
Contributions, or both) for the Plan Year of Family Members as defined in
paragraph 1.36 of this Plan. Family Members, with respect to such Highly
Compensated Employees, shall be disregarded as separate Employees in
determining the ADP both for Participants who are non-Highly Compensated
Employees and for Participants who are Highly Compensated Employees. In the
event of repeal of the family aggregation rules under Code Section
414(q)(6), all applications of such rules under this Plan will cease as of
the effective date of such repeal.
(d) For purposes of determining the ADP test, Elective Deferrals, Qualified
Non-Elective Contributions and Qualified Matching Contributions must be
made before the last day of the twelve-month period immediately following
the Plan Year to which contributions relate.
(e) The Employer shall maintain records sufficient to demonstrate
satisfaction of the ADP test and the amount of Qualified Non-Elective
Contributions or Qualified Matching Contributions, or both, used in such
test.
(f) The determination and treatment of the Actual Deferral Percentage
amounts of any Participant shall satisfy such other requirements as may be
prescribed by the Secretary of the Treasury.
10.9 Average Contribution Percentage (ACP) Test
If the Employer makes Matching Contributions or if the Plan allows Employees to
make Voluntary Contributions the Plan must meet additional nondiscrimination
requirements provided under Code Section 401(m). If Employee Contributions
(including any Elective Deferrals recharacterized as Voluntary Contributions)
are made pursuant to this Plan, then in addition to the ADP test referenced in
paragraph 10.7, the Average Contribution Percentage test is also applicable. The
Average Contribution Percentage for Participants who are Highly Compensated
Employees for each Plan Year and the Average Contribution Percentage for
Participants who are Non-Highly Compensated Employees for the same Plan Year
must satisfy one of the following tests:
(a) Basic Test - The Average Contribution Percentage for Participants who
are Highly Compensated Employees for the Plan Year shall not exceed the
Average Contribution Percentage for Participants who are non-Highly
Compensated Employees for the same Plan Year multiplied by 1.25; or
(b) Alternative Test - The ACP for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the Average Contribution
Percentage for Participants who are non-Highly Compensated Employees for
the same Plan Year multiplied by two (2), provided that the Average
Contribution Percentage for Participants who are Highly Compensated
Employees does not exceed the Average Contribution Percentage for
Participants who are non-Highly Compensated Employees by more than two (2)
percentage points.
10.10 Special Rules Relating To Application Of ACP Test
(a) If one or more Highly Compensated Employees participate in both a cash
or deferred arrangement and a plan subject to the ACP test maintained by
the Employer and the sum of the ADP and ACP of those Highly Compensated
Employees subject to either or both tests exceeds the Aggregate Limit, then
the ADP or ACP of those Highly Compensated Employees who also participate
in a cash or deferred arrangement will be reduced (beginning with such
Highly
38
Compensated Employee whose ADP or ACP is the highest) as set forth in the
Adoption Agreement so that the limit is not exceeded. The amount by which
each Highly Compensated Employee's Contribution Percentage Amounts is
reduced shall be treated as an Excess Aggregate Contribution. The ADP and
ACP of the Highly Compensated Employees are determined after any
corrections required to meet the ADP and ACP tests. Multiple use does not
occur if both the ADP and ACP of the Highly Compensated Employees does not
exceed 1.25 multiplied by the ADP and ACP of the non-Highly Compensated
Employees.
(b) For purposes of this Article, the Contribution Percentage for any
Participant who is a Highly Compensated Employee and who is eligible to
have Contribution Percentage Amounts allocated to his or her account under
two or more plans described in Code Section 401(a), or arrangements
described in Code Section 401(k) that are maintained by the Employer, shall
be determined as if the total of such Contribution Percentage Amounts was
made under each Plan. If a Highly Compensated Employee participates in two
or more cash or deferred arrangements that have different plan years, all
cash or deferred arrangements ending with or within the same calendar year
shall be treated as a single arrangement.
(c) In the event that this Plan satisfies the requirements of Code Sections
401(a)(4), 401(m), or 410(b) only if aggregated with one or more other
plans, or if one or more other plans satisfy the requirements of such Code
Sections only if aggregated with this Plan, then this Section shall be
applied by determining the Contribution Percentage of Employees as if all
such plans were a single plan. For plan years beginning after 1989, plans
may be aggregated in order to satisfy Code Section 401(m) only if the
aggregated plans have the same Plan Year.
(d) For purposes of determining the Contribution percentage of a
Participant who is a five-percent owner or one of the ten most highly-paid,
Highly Compensated Employees, the Contribution Percentage Amounts and
Compensation of such Participant shall include the Contribution Percentage
Amounts and Compensation for the Plan Year of Family Members as defined in
Paragraph 1.36 of this Plan. Family Members, with respect to Highly
Compensated Employees, shall be disregarded as separate Employees in
determining the Contribution Percentage both for Participants who are
non-Highly Compensated Employees and for Participants who are Highly
Compensated Employees. In the event of repeal of the family aggregation
rules under Code Section 414(q)(6), all applications of such rules under
this Plan will cease as of the effective date of such repeal.
(e) For purposes of determining the Contribution Percentage test, Employee
Contributions are considered to have been made in the Plan Year in which
contributed to the trust. Matching Contributions and Qualified Non-Elective
Contributions will be considered made for a Plan Year if made no later than
the end of the twelve-month period beginning on the day after the close of
the Plan Year.
(f) The Employer shall maintain records sufficient to demonstrate
satisfaction of the ACP test and the amount of Qualified Non-Elective
Contributions or Qualified Matching Contributions, or both, used in such
test.
(g) The determination and treatment of the Contribution Percentage of any
Participant shall satisfy such other requirements as may be prescribed by
the Secretary of the Treasury.
(h) Qualified Matching Contributions and Qualified Non-Elective
Contributions used to satisfy the ADP test may not be used to satisfy the
ACP test.
ARTICLE XI -- ADMINISTRATION
11.1 Plan Administrator
The Employer shall be the named fiduciary and Plan Administrator. These duties
shall include:
(a) appointing the Plan's attorney, accountant, actuary, or any other party
needed to administer the Plan,
(b) directing the Trustee with respect to payments from the Fund,
(c) communicating with Employees regarding their participation and benefits
under the Plan, including the administration of all claims procedures,
39
(d) filing any returns and reports with the Internal Revenue Service,
Department of Labor, or any other governmental agency,
(e) reviewing and approving any financial reports, investment reviews, or
other reports prepared by any party appointed by the Employer under
paragraph (a),
(f) establishing a funding policy and investment objectives consistent with
the purposes of the Plan and the Employee Retirement Income Security Act of
1974, and
(g) construing and resolving any question of Plan interpretation. The Plan
Administrator's interpretation of Plan provisions including eligibility and
benefits under the Plan is final, and unless it can be shown to be
arbitrary and capricious will not be subject to "de novo" review.
11.2 Trustee
The Trustee shall only be responsible for maintaining the trust account(s) in
accordance with applicable laws on behalf of the Employer. The Trustee's duties
shall include:
(a) receiving contributions under the terms of the Plan, but not
determining the amount or enforcing the payment thereof,
(b) making distributions from the Fund in accordance with written
instructions received from an authorized representative of the Employer,
and
(c) keeping accurate and detailed records of all contributions, receipts,
investments, distributions, disbursements and all other transactions with
respect to each account (in the case of Employee Investment Direction) or
the Fund (in the case of Employer Investment Direction). Periodically (not
less than annually), the Trustee shall provide a transcript of all activity
in the account or in the Fund (which may consist of regularly issued
statements from the Service Company). In the case of Employee Investment
Direction, each such transcript will be provided to the Participant. In the
case of Employer Investment Direction, each such transcript will be
provided to the Employer. Each such transcript shall be the sole accounting
required of the Trustee. Unless the Participant or Employer files a written
objection to the transcript within 60 days following the date it is
furnished, he shall be deemed to have consented to the accounting, and the
Trustee and Service Company shall be forever released and discharged from
all liability and accountability to anyone with respect to its acts,
transactions, duties, obligations or responsibilities as shown in, or
reflected by the transcript.
(d) employing such agents, attorneys or other professionals as the Trustee
may deem necessary or advisable in the performance of its duties.
The Trustee's duties shall be limited to those described above. The Employer
shall be responsible for any other administrative duties required under the Plan
or by applicable law.
11.3 Administrative Fees And Expenses
All reasonable costs, charges and expenses incurred by the Trustee and Service
Company in connection with the administration of the Fund and all reasonable
costs, charges and expenses incurred by the Plan Administrator in connection
with the administration of the Plan (including fees for legal services rendered
to the Trustee and Service Company or Plan Administrator) may be paid by the
Employer, but if not paid by the Employer when due, shall be paid from the Fund.
Such reasonable compensation to the Trustee and Service Company as may be agreed
upon from time to time between the Employer and the Trustee and Service Company
and such reasonable compensation to the Plan Administrator as may be agreed upon
from time to time between the Employer and Plan Administrator and the
compensation of the Service Company in accordance with its fee schedule as in
effect at the applicable time, may be paid by the Employer, but if not paid by
the Employer when due shall be paid by the Fund. The Trustee and Service Company
shall have the right to liquidate trust assets to cover its fees.
Notwithstanding the foregoing, no compensation other than reimbursement for
expenses shall be paid to a Plan Administrator who is the Employer or a
full-time Employee of the Employer. In the event any part of the Trust becomes
subject to tax, all taxes incurred will be paid from the Fund unless the Plan
Administrator advises the Trustee not to pay such tax.
11.4 Duties And Indemnification
(a) The Trustee shall have the authority and discretion to manage and
govern the Fund to the extent provided in this instrument, but does not
guarantee the Fund in any manner against investment loss or depreciation in
asset value, or
40
guarantee the adequacy of the Fund to meet and discharge all or any
liabilities of the Plan.
(b) The Trustee shall not be liable for the making, retention or sale of
any investment or reinvestment made by it, as herein provided, or for any
loss to, or diminution of the Fund, or for any other loss or damage which
may result from the discharge of its duties hereunder except to the extent
it is judicially determined that the Trustee has failed to exercise the
care, skill, prudence and diligence under the circumstances then prevailing
that a prudent person acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise of a like character with
like aims.
(c) The Employer warrants that all directions issued to the Trustee by it
or the Plan Administrator will be in accordance with the terms of the Plan
and not contrary to the provisions of the Employee Retirement Income
Security Act of 1974 and regulations issued thereunder.
(d) The Trustee shall not be answerable for any action taken pursuant to
any direction, consent, certificate, or other paper or document on the
belief that the same is genuine and signed by the proper person. All
directions by the Employer, Participant or the Plan Administrator shall be
given in a manner and form prescribed by the Trustee and approved by the
Service Company. The Employer shall deliver to the Trustee certificates
evidencing the individual or individuals authorized to act as set forth in
the Adoption Agreement or as the Employer may subsequently inform the
Trustee in writing and shall deliver to the Trustee specimens of their
signatures.
(e) The duties and obligations of the Trustee shall be limited to those
expressly imposed upon it by this instrument or subsequently agreed upon by
the parties. Responsibility for administrative duties required under the
Plan or applicable law not expressly imposed upon or agreed to by the
Trustee shall rest solely with the Employer.
(f) The Trustee shall be indemnified and saved harmless by the Employer
from and against any and all liability to which the Trustee may be
subjected, including all expenses reasonably incurred in its defense, for
any action or failure to act resulting from compliance with the
instructions of the Employer, the employees or agents of the Employer, the
Plan Administrator, or any other fiduciary to the Plan, and for any
liability arising from the actions or non-actions of any predecessor
Trustee or fiduciary or other fiduciaries of the Plan.
(g) The Trustee shall not be responsible in any way for the application of
any payments it is directed to make or for the adequacy of the Fund to meet
and discharge any and all liabilities under the Plan.
(h) With respect to non-mutual fund investments, the Trustee in
administering the Trust Fund is authorized and empowered to exercise
generally, any of the powers which a trustee might customarily exercise in
connection with investments held by the Trust Fund and to do all other acts
that the Trustee may deem necessary or proper to carry out any of the
powers and duties set forth in this Article XI.
11.5 Special Provisions Concerning The Service Company
(a) To the full extent permitted under ERISA, the Code, any other
applicable federal or state law, the regulations, rules and interpretations
thereunder, and subject to any written instrument executed by the Trustee
and the Service Company allocating responsibilities between them, all
ministerial functions assigned to the Trustee under the Plan shall be
delegated to the Service Company. All instructions required to be given to
the Trustee under the Plan will be effective if given to the Service
Company in the manner prescribed by the Service Company. To the extent the
Service Company is performing a function assigned to the Trustee under the
Plan, the Service Company shall have the benefit of all of the limitations
of the scope of the Trustee's duties and liabilities, all rights of
indemnification granted to the Trustee and all other protections of any
nature afforded the Trustee under the Plan.
(b) It is understood and agreed that while the Service Company will perform
certain ministerial duties (such as custodial, reporting, recording, and
bookkeeping functions) with respect to Plan assets, such duties do not
involve the exercise of any discretionary authority or other authority to
manage or control Plan assets.
41
(c) With respect to any transaction which the Service Company is directed
to engage in, the Employer, the Trustee, the Named Investment Fiduciary and
the person directing the transaction shall be responsible for making sure
that the transaction does not violate any applicable provision of law or
disqualify the Plan under the Code, and the Service Company shall have no
responsibility therefor.
(d) The Employer and, where the Service Company is following the directions
or instructions of a Participant, the Trustee, Plan Administrator or the
Named Investment Fiduciary, such Participant, the Trustee, Plan
Administrator or the Named Investment Fiduciary (as the case may be) shall
at all times fully indemnify and save harmless the Service Company from any
liability which may arise in connection with this Plan, except liability
arising from the gross negligence or willful misconduct of the Service
Company. For purposes of this Section 11.5, "liability" shall include,
without limitation, taxes, expenses, claims, damages, actions, suits,
attorneys' fees, expenses of litigation or preparation for threatened
litigation, and any other charges. The Service Company shall be liable for
its own gross negligence or willful misconduct in the performance of the
duties expressly assumed by it under the Plan.
ARTICLE XII -- TRUST FUND
12.1 The Fund
The Fund shall consist of all contributions made under Article III and Article
IV of the Plan and the investment thereof and earnings thereon. All
contributions and the earnings thereon less payments made under the terms of the
Plan, shall constitute the Fund. The Fund shall be administered as provided in
this document.
12.2 Control Of Plan Assets
The assets of the Fund or evidence of ownership shall be held by the Trustee
under the terms of the Plan and Trust. If the assets represent amounts
transferred from another trustee under a former plan, the Trustee named
hereunder shall not be responsible for the propriety of any investment under the
former plan.
12.3 Exclusive Benefit Rules
No part of the Fund shall be used for, or diverted to, purposes other than for
the exclusive benefit of Participants, former Participants with a vested
interest, and the beneficiary or beneficiaries of deceased Participants having a
vested interest in the Fund at death.
12.4 Assignment And Alienation Of Benefits
No right or claim to, or interest in, any part of the Fund, or any payment from
the Fund, shall be assignable, transferable, or subject to sale, mortgage,
pledge, hypothecation, commutation, anticipation, garnishment, attachment,
execution, or levy of any kind. The Trustee shall not recognize any attempt to
assign, transfer, sell, mortgage, pledge, hypothecate, commute, or anticipate
the same, except to the extent required by law. The preceding sentences shall
also apply to the creation, assignment, or recognition of a right to any benefit
payable with respect to a Participant pursuant to a domestic relations order,
unless such order is determined to be a qualified domestic relations order, as
defined in Code Section 414(p), or any domestic relations order entered before
January 1, 1985 which the Plan attorney and Plan Administrator deem to be
qualified.
12.5 Determination Of Qualified Domestic Relations Order (QDRO)
A Domestic Relations Order shall specifically state all of the following in
order to be deemed a Qualified Domestic Relations Order ("QDRO"):
(a) The name and last known mailing address (if any) of the Participant and
of each alternate payee covered by the QDRO. However, if the QDRO does not
specify the current mailing address of the alternate payee, but the Plan
Administrator has independent knowledge of that address, the QDRO will
still be valid.
(b) The dollar amount or percentage of the Participant's benefit to be paid
by the Plan to each alternate payee, or the manner in which the amount or
percentage will be determined.
(c) The number of payments or period for which the order applies.
(d) The specific plan (by name) to which the Domestic Relations Order
applies.
The Domestic Relations Order shall not be deemed a QDRO if it requires the Plan
to provide:
42
(e) any type or form of benefit, or any option not already provided for in
the Plan;
(f) increased benefits, or benefits in excess of the Participant's vested
rights;
(g) payment of a benefit earlier than allowed by the Plan's earliest
retirement provisions or in the case of a profit-sharing plan, prior to the
allowability of in-service withdrawals, or
(h) payment of benefits to an alternate payee which are required to be paid
to another alternate payee under another QDRO.
Promptly, upon receipt of a Domestic Relations Order ("Order") which may or may
not be "Qualified", the Plan Administrator shall notify the Participant and any
alternate payee(s) named in the Order of such receipt, and include a copy of
this paragraph 12.5. The Plan Administrator shall then forward the Order to the
Plan's legal counsel for an opinion as to whether or not the Order is in fact
"Qualified" as defined in Code Section 414(p). Within a reasonable time after
receipt of the Order, not to exceed 60 days, the Plan's legal counsel shall make
a determination as to its "Qualified" status and the Participant and any
alternate payee(s) shall be promptly notified in writing of the determination.
If the "Qualified" status of the Order is in question, there will be a delay in
any payout to any payee including the Participant, until the status is resolved.
In such event, the Plan Administrator shall segregate the amount that would have
been payable to the alternate payee(s) if the Order had been deemed a QDRO. If
the Order is not Qualified, or the status is not resolved (for example, it has
been sent back to the Court for clarification or modification) within 18 months
beginning with the date the first payment would have to be made under the Order,
the Plan Administrator shall pay the segregated amounts plus interest to the
person(s) who would have been entitled to the benefits had there been no Order.
If a determination as to the Qualified status of the Order is made after the
18-month period described above, then the Order shall only be applied on a
prospective basis. If the Order is determined to be a QDRO, the Participant and
alternate payee(s) shall again be notified promptly after such determination.
Once an Order is deemed a QDRO, the Plan Administrator shall pay to the
alternate payee(s) all the amounts due under the QDRO, including segregated
amounts plus interest which may have accrued during a dispute as to the Order's
qualification.
Unless specified otherwise in the Adoption Agreement, the earliest retirement
age with regard to the Participant against whom the order is entered shall be
the date the order is determined to be qualified. This will only allow payouts
to alternate payee(s) and not the Participant.
ARTICLE XIII -- INVESTMENTS
13.1 Fiduciary Standards
The Trustee shall invest and reinvest income in the same Fund in accordance with
the investment objectives established by the Employer, provided that:
(a) such investments are prudent under the Employee Retirement Income
Security Act of 1974 and the regulations promulgated thereunder,
(b) such investments are sufficiently diversified or otherwise insured or
guaranteed to minimize the risk of large losses, and
(c) such investments are similar to those which would be purchased by
another professional money manager for a like plan with similar investment
objectives.
13.2 No Investment Discretion
The Plan Sponsor and the Trustee shall have no discretion to direct any
investments of the Trust and are authorized solely to make and hold investments
only as directed pursuant to Section 13.3.
13.3 Investment Directions
(a) Responsibility for directing the Trustee with respect to the investment
of the Trust Fund shall be allocated to the Employer, or a named fiduciary
appointed by the Employer for that purpose (the "Named Investment
Fiduciary"), the Participants, or any investment manager (an "Investment
Manager"), who meets the requirements of Section 3(38) of the Employee
Retirement Income Security Act of 1974 (ERISA) appointed by the Named
Investment Fiduciary, all as provided in the Plan (including the Adoption
Agreement). To the extent investment responsibility is allocated to the
Participant, the Designated Beneficiary of a deceased Participant shall
discharge the responsibility subsequent to the Participant's death and any
reference to the Participant in any provision of the Plan pertaining to
investment directions shall
43
in such event be construed as a reference to the Designated Beneficiary.
(b) Investment directions shall be given in a manner and form prescribed by
the Trustee and shall be subject to such limitations, including limitations
as to the frequency with which any standing investment instructions may be
changed and funds may be moved among investment choices, as the Employer or
other Named Investment Fiduciary shall prescribe. If Investment
responsibility is allocated to Participants, to the extent permitted by the
Trustee, investment directions may be given directly to the Service Company
in a manner and form prescribed by the Service Company.
(c) Cash for which no investments are directed shall be automatically
invested in such investment or investments as the Employer or other Named
Investment Fiduciary shall select from the investments the Service Company
makes available for that purpose unless and until the person responsible
for giving directions directs otherwise. Such automatic investment shall be
made at regular intervals and pursuant to procedures provided by the
Service Company (which procedures may, without limitation, provide for more
frequent intervals only if reinvested balances exceed a stated amount).
Absent a contrary direction in accordance with the preceding provisions of
Section 13.2 the Service Company is hereby directed to make such automatic
investments.
Notwithstanding other provisions of the Plan to the contrary, if another
qualified plan is amended and restated in the form of this Plan, the Employer or
the named investment fiduciary shall have the power to prescribe rules regarding
the investment of the assets held under the other qualified plan until such time
as any resulting reconciliation of Participant Accounts is completed and the
assets may be reinvested in investments permitted under Section 13.4 of the
Plan.
13.4 Permitted Investments
Except as Section 13.9 may apply, all amounts held in the Trust Fund under the
Plan shall be invested in mutual fund shares and annuities which are offered
through the Service Company, and such other investments as shall be accepted in
writing by the Service Company for availability under the Plan.
All dividends, including capital gain dividends, paid by any mutual fund shall
be reinvested in full and fractional shares of the mutual fund paying the
dividend in the manner specified in the prospectus of the mutual fund, and such
dividends shall be credited to the Trust Fund.
Each of the mutual funds in which the Plan may invest carries its own fees and
expenses, which may include management fees, Rule 12b-1 fees and/or other fees
and expenses, which are described in detail in each fund's prospectus.
Participants who invest in these mutual funds will, as shareholders of those
funds, bear their prorata portion of each fund's fees and expenses. Employer
acknowledges that Prudential Mutual Fund Distributors (PMFD) and Prudential
Securities Incorporated (PSI) may act as distributor of each fund's shares and
that PSI, PMFD and Pruco Securities Corporation (Prusec) are subsidiaries of The
Prudential Insurance Company of America (Prudential) (through which the
Guaranteed Interest Account is offered) and are each affiliated with the Funds
as described in each fund's prospectus. Employer acknowledges that Prudential,
PMFD, PSI and Prusec are not fiduciaries to the Plan, have no obligation to the
Plan or the Participants and are acting solely in their own interest. Employer
further acknowledges that Prudential, PMFD, PSI and Prusec may be deemed to
benefit from advisory and other fees paid to it or its affiliates in connection
with the management and operation of the mutual funds in which the Participants
may invest, from sales charges and contingent deferred sales charges imposed as
described in the prospectus and from fees paid to The Prudential Insurance
Company of America in connection with the Guaranteed Interest Account. 13.5
Shareholder Rights
The Trustee shall exercise any rights of a shareholder (including voting rights)
with respect to any securities held, but only in accordance with the
instructions of the Participant or the Designated Beneficiary of a deceased
Participant subject to and except as permitted by any applicable rules of the
Securities and Exchange Commission and any national securities exchange.
13.6 Liquidation Of Assets
If the Trustee must liquidate assets in order to make distributions, transfer
assets, or pay fees, expenses or taxes assessed against all or a part of the
Fund, and the Trustee is not instructed as to the liquidation of such assets,
assets will be liquidated in accordance with the
44
rules and procedures customarily followed by the Service Company, which rules
shall be formulated in a manner to eliminate the potential for exercise of
discretion by the Service Company in the liquidation of assets and shall be
applied consistently with respect to all similarly situated plans in the form of
the Prototype Plan; provided that if a contribution is being made to an affected
subaccount as of the date the Trustee would otherwise be liquidating assets
pursuant to this section, the Trustee may withdraw the necessary amount of cash
and invest the remainder of the contribution in investments in the same
proportion as would have resulted had the withdrawal not been made. The Trustee
is expressly authorized to liquidate assets in order to satisfy the Trust Fund's
obligation to pay the Trustee's compensation if such compensation is not paid on
a timely basis.
13.7 Arbitration
This Plan requires that certain controversies be arbitrated as provided below.
In this regard it is to be noted that:
(a) Arbitration is final and binding on the parties.
(b) The parties are waiving their right to seek remedies in court including
the right to jury trial.
(c) Pre-arbitration discovery is generally more limited than and different
from court proceedings.
(d) The arbitrator's award is not required to include factual findings or
legal reasoning and any party's right to appeal or to seek modification of
rulings by the arbitrators is strictly limited.
(e) The panel of arbitrators will typically include a minority of
arbitrators who were or are affiliated with the securities industry.
Unless the following procedure for the resolution of controversies is not
enforceable under ERISA, any controversy arising out of or relating to the Plan,
or with respect to transactions of any kind executed by, through or with the
Service Company or otherwise pertaining to the Plan shall be settled by
arbitration. The arbitration may be before either the National Association of
Securities Dealers, Inc. (NASD) or the New York Stock Exchange, Inc., as
Employer/Employee, as the case may be, may elect and shall be governed by the
laws of the State of New York. If Employer/Employee does not make the above
election by registered mail addressed to PSI at its main office within 5
business days after demand by PSI that Employer/Employee make such election,
then PSI shall have the right to elect the arbitration tribunal of its choice.
Notice preliminary to, in conjunction with or incident to arbitration, may be
sent to Employer/Employee by mail and personal service is hereby waived.
Judgment upon any award rendered by the arbitrators may be entered in any court
having jurisdiction thereof, without notice to Employer/Employee.
No person shall bring a putative or certified class action to arbitration, nor
seek to enforce any pre-dispute arbitration agreement against any person who has
initiated in court a putative class action; or who is a member of a putative
class who has not opted out of the class with respect to any claims encompassed
by the putative class action until: (i) the class certification is denied; or
(ii) the class is decertified; or (iii) the customer is excluded from the class
by the court. Such forbearance to enforce an agreement to arbitrate shall not
constitute a waiver of any rights under this agreement except to the extent
stated herein.
13.8 Participant Loans
Unless otherwise specified in the Adoption Agreement, Participant Loans will not
be permitted. If permitted by the Adoption Agreement, a Participant may make
application to the Employer requesting a loan from the Fund. Loans shall be made
available to all Participants on a reasonably equivalent basis and shall not be
made available to highly compensated employees who are Participants in amounts
greater than made available to all other Participants. The Employer will
administer all Participant Loans unless the Trustee otherwise agrees in writing
to accept these duties. Loan administration duties shall include, but are not
limited to: approving or disapproving loan applications from Participants, loan
origination and closing, providing proper disclosures to Participant borrowers
under applicable federal and state lending laws, notifying Participant borrowers
of default, and collecting current and past due payments on such loans. The
Employer will notify the Trustee of any loan to be made from the Fund. The
Trustee will reflect the amount of each such loan and its repayments on records
of the Fund. Any loan granted hereunder shall be made subject to the following
rules:
(a) No loan when aggregated with any outstanding Participant loan(s), shall
exceed the lesser of (i) $50,000 reduced by the excess, if any,
45
of the highest outstanding balance of loans during the one year period
ending on the day before the loan is made, over the outstanding balance of
loans from the Plan on the date the loan is made or (ii) one-half of the
fair market value of a Participant's vested account balance built up from
Employer Contributions, Voluntary Contributions, and Rollover
Contributions. For the purpose of the above limitation, all loans from all
plans of the Employer and other members of a group of employers described
in Code Sections 414(b), 414(c), and 414(m) are aggregated. An assignment
or pledge of any portion of the Participant's interest in the Plan and a
loan, pledge, or assignment with respect to any insurance contract
purchased under the Plan, will be treated as a loan under this paragraph.
(b) All applications must be made on forms provided by the Employer and
must be signed by the Participant.
(c) Any loan granted hereunder shall bear interest at a rate reasonable at
the time of application, considering the purpose of the loan and the rate
being charged by representative commercial banks in the local area for a
similar loan unless the Employer sets forth a different method for
determining loan interest rates in its loan procedures. The loan agreement
shall also provide that the payment of principal and interest be amortized
in level payments not less frequently than quarterly.
(d) The term of such loan shall not exceed five years except in the case of
a loan for the purpose of acquiring any house, apartment, condominium, or
mobile home (not used on a transient basis) which is used or is to be used
within a reasonable time as the principal residence of the Participant. The
term of such loan shall be determined by the Employer considering the
maturity dates quoted by representative commercial banks in the local area
for a similar loan.
(e) The principal and interest paid by a Participant on his or her loan
shall be credited to the Fund in the same manner as for any other Plan
investment. Loans will be treated as segregated investments of the
individual Participants.
(f) If a Participant's loan application is approved by the Employer, such
Participant shall be required to sign a note, loan agreement, and
assignment of one-half of his or her interest in the Fund as collateral for
the loan. The Participant, except in the case of a profit-sharing plan
satisfying the requirements of paragraph 8.7, must obtain the consent of
his or her Spouse, if any, within the 90 day period before the time his or
her account balance is used as security for the loan. A new consent is
required if the account balance is used for any renegotiation, extension,
renewal or other revision of the loan, including an increase in the amount
thereof. The consent must be written, must acknowledge the effect of the
loan, and must be witnessed by a plan representative or notary public. Such
consent shall thereafter be binding with respect to the consenting Spouse
or any subsequent Spouse.
(g) If a valid Spousal consent has been obtained, then, notwithstanding any
other provision of this Plan, the portion of the Participant's vested
account balance used as a security interest held by the Plan by reason of a
loan outstanding to the Participant shall be taken into account for
purposes of determining the amount of the account balance payable at the
time of death or distribution, but only if the reduction is used as
repayment of the loan. If less than 100% of the Participant's vested
account balance (determined without regard to the preceding sentence) is
payable to the surviving Spouse, then the account balance shall be adjusted
by first reducing the vested account balance by the amount of the security
used as repayment of the loan, and then determining the benefit payable to
the Surviving Spouse.
(h) (h) The Employer may also require additional collateral in order to
adequately secure the loan.
(i) (i) A Participant's loan shall immediately become due and payable if
such Participant terminates employment for any reason or fails to make a
principal and/or interest payment as provided in the loan agreement. If
such Participant terminates employment, the Employer shall immediately
request payment of principal and interest on the loan. If the Participant
refuses payment following termination, the Employer shall reduce the
Participant's vested account balance by the remaining principal and
interest on his or her loan. If the Participant's vested account balance is
46
less than the amount due, the Employer shall take whatever steps are
necessary to collect the balance due directly from the Participant.
However, no foreclosure on the Participant's note or attachment of the
Participant's account balance will occur until a distributable event occurs
in the Plan.
(j) No loans will be made to Owner-Employees (as defined in paragraph 1.50)
or Shareholder-Employees (as defined in paragraph 1.74), unless an
exemption from the prohibited transactions rules is first obtained from the
Department of Labor.
(k) If a Participant requests a loan, the funds to be loaned will be taken
from the subaccount or subaccounts specified by the Participant or, in the
absence of such a specification, form the subaccounts in the order
specified in Section 6.10 pertaining to withdrawals. If specific assets of
the Trust Fund are allocable to individual Participants' Accounts, such
assets equal in value to the amount of the loan shall be sold at the
direction of the Participant to provide the funds to be loaned.
13.9 Insurance Policies
Unless otherwise specified in the Adoption Agreement, the insurance provisions
of this Section 13.9 shall not be applicable. If agreed upon by the Trustee and
approved by the Employer in the Adoption Agreement, Employees may elect the
purchase of life insurance policies under the Plan. If elected, the maximum
annual premium for a whole life policy shall not exceed 50% of the aggregate
cumulative Employer contributions allocated to the account of a Participant.
Whole life policies are policies with both nondecreasing death benefits and
nonincreasing premiums. The maximum annual premium for term contracts or
universal life policies and all other policies which are not whole life shall
not exceed 25% of aggregate Employer contributions allocated to the account of a
Participant. The maximum annual premiums for a Participant with both a whole
life and a term contract or universal life policies shall be limited to one-half
of the whole life premiums plus the term premium but shall not exceed 25% of the
aggregate Employer contributions allocated to the account of a Participant. It
may also be elected to have policies purchased on behalf of a Participant's
spouse, their dependents, or any individual in whom the Participant has an
insurable interest. If any policy is maintained on the joint lives of a
Participant and another individual, it may not be maintained under the Plan
should the other individual predecease the Participant. Any policies purchased
under this Plan shall be held subject to the following rules:
(a) The Trustee shall be applicant and owner of any policies issued.
(b) All policies or contracts purchased shall be endorsed as
nontransferable, and must provide that proceeds will be payable to the
Trustee; however, the Trustee shall be required to pay over all proceeds of
the contracts to the Participant's Designated Beneficiary in accordance
with the distribution provisions of this Plan. Under no circumstances shall
the Trust retain any part of the proceeds.
(c) Each Participant shall be entitled to designate a beneficiary under the
terms of any contract issued; however, such designation will be given to
the Trustee which must be the named beneficiary on any policy. Such
designation shall remain in force, until revoked by the Participant, by
filing a new beneficiary form with the Trustee. A Participant's Spouse will
be the Designated Beneficiary of the proceeds in all circumstances unless a
Qualified Election has been made in accordance with paragraph 8.4. The
beneficiary of a deceased Participant shall receive, in addition to the
proceeds of the Participant's policy or policies, the amount credited to
such Participant's investment account.
(d) A Participant who is uninsurable or insurable at substandard rates, may
elect to receive a reduced amount of insurance, if available, or may waive
the purchase of any insurance.
(e) At the discretion of the Participant, any dividends or credits earned
on a life insurance contract shall, either be allocated to the
Participant's account in the Fund, applied in reduction of any premiums
thereon, or, if no premiums are due, applied to increase the proceeds of
the life insurance contract.
(f) If Employer contributions are inadequate to pay all premiums on all
insurance policies, the Trustee may, at the option of the Employer, utilize
other amounts remaining in each Participant's account to pay the premiums
on his or her respective policy or policies, allow the
47
policies to lapse, reduce the policies to a level at which they may be
maintained, or borrow against the policies on a prorated basis, provided
that the borrowing does not discriminate in favor of the policies on the
lives of Officers, Shareholders, and highly compensated Employees.
(g) On retirement or termination of employment of a Participant, the
Employer shall direct the Trustee to cash surrender the Participant's
policy and credit the proceeds to his or her account for distribution under
the terms of the Plan. However, before so doing, the Trustee shall first
offer to distribute the policy to the Participant as a part of the benefit
distribution. If a Participant on whose life an insurance policy is held
under the Plan does not make a timely direction regarding the policy under
this Section (g), the Participant shall be deemed to have directed that the
policy be converted into cash to be distributed in the manner in which the
balance of the Participant's Account is to be distributed. All
distributions resulting from the application of this paragraph shall be
subject to the Joint and Survivor Annuity Rules of Article VIII, if
applicable.
(h) The Employer shall be solely responsible to see that these insurance
provisions are administered properly and that if there is any conflict
between the provisions of this Plan and any insurance contracts issued that
the terms of this Plan will control.
ARTICLE XIV -- TOP-HEAVY PROVISIONS
14.1 Applicability Of Rules
If the Plan is or becomes Top-Heavy in any Plan Year beginning after 1983, the
provisions of this Article will supersede any conflicting provisions in the Plan
or Adoption Agreement.
14.2 Minimum Contribution
Notwithstanding any other provision in the Employer's Plan, for any Plan Year in
which the Plan is Top-Heavy or Super Top-Heavy, the aggregate Employer
contributions and forfeitures allocated on behalf of any Participant (without
regard to any Social Security contribution) under this Plan and any other
Defined Contribution Plan of the Employer shall be lesser of 3% of such
Participant's Compensation or the largest percentage of Employer contributions
and forfeitures, as a percentage of the Key Employee's annual Compensation
allocated on behalf of any Key Employee for that year.
Each Participant who is employed by the Employer on the last day of the Plan
Year shall be entitled to receive an allocation of the Employer's minimum
contribution for such Plan Year. The minimum allocation applies even though
under other Plan provisions the Participant would not otherwise be entitled to
receive an allocation, or would have received a lesser allocation for the year
because the Participant fails to make Mandatory Contributions to the Plan, the
Participant's Compensation is less than a stated amount, or the Participant
fails to complete 1,000 Hours of Service (or such lesser number designated by
the Employer in the Adoption Agreement) during the Plan Year. A Paired
profit-sharing plan designated to provide the minimum Top-Heavy contribution
must do so regardless of profits. An Employer may make the minimum Top-Heavy
contribution available to all Participants or just non-Key Employees.
For purposes of computing the minimum allocation, Compensation shall mean
Compensation as defined in the second paragraph of paragraph 1.12 of the Plan.
The Top-Heavy minimum contribution does not apply to any Participant to the
extent the Participant is covered under any other plan(s) of the Employer and
the Employer has provided in Section 11 of the Adoption Agreement that the
minimum allocation or benefit requirements applicable to Top-Heavy Plans will be
met in the other plan(s).
If a Key Employee makes an Elective Deferral or has an allocation of Matching
Contributions made to his or her account, a Top-Heavy minimum will be required
for non-Key Employees who are Participants, however, neither Elective Deferrals
by nor Matching Contributions to non-Key Employees may be taken into account for
purposes of satisfying the top-heavy Minimum Contribution requirement.
14.3 Minimum Vesting
For any Plan Year in which this Plan is Top-Heavy, the minimum vesting schedule
elected by the Employer in the Adoption Agreement will automatically apply to
the Plan. If the vesting schedule selected by the Employer in the Adoption
Agreement is less liberal than the allowable schedule, the schedule will
automatically be modified. If the vesting schedule under the Employer's Plan
shifts in
48
or out of the Top-Heavy schedule for any Plan Year, such shift is an amendment
to the vesting schedule and the election in paragraph 9.8 of the Plan applies.
The minimum vesting schedule applies to all accrued benefits within the meaning
of Code Section 411(a)(7) except those attributable to Employee contributions,
including benefits accrued before the effective date of Code Section 416 and
benefits accrued before the Plan became Top-Heavy. Further, no reduction in
vested benefits may occur in the event the Plan's status as Top-Heavy changes
for any Plan Year. However, this paragraph does not apply to the account
balances of any Employee who does not have an Hour of Service after the Plan
initially becomes Top-Heavy and such Employee's account balance attributable to
Employer contributions and forfeitures will be determined without regard to this
paragraph.
14.4 Limitations On Allocations
In any Plan Year in which the Top-Heavy Ratio exceeds 90% (i.e., the Plan
becomes Super Top-Heavy), the denominators of the Defined Benefit Fraction (as
defined in paragraph 1.15) and Defined Contribution Fraction (as defined in
paragraph 1.18) shall be computed using 100% of the dollar limitation instead of
125%.
ARTICLE XV -- AMENDMENT AND TERMINATION
15.1 Amendment By Sponsor
The Sponsor may amend any or all provisions of this Plan and Trust at any time
without obtaining the approval or consent of any Employer which has adopted this
Plan and Trust provided that no amendment shall authorize or permit any part of
the corpus or income of the Fund to be used for or diverted to purposes other
than for the exclusive benefit of Participants and their beneficiaries, or
eliminate an optional form of distribution. In the case of a mass-submitted
plan, the mass-submitter shall amend the Plan on behalf of the Sponsor.
15.2 Amendment By Employer
The Employer may amend any option in the Adoption Agreement, and may include
language as permitted in the Adoption Agreement,
(a) to satisfy Code Section 415, or
(b) to avoid duplication of minimums under Code Section 416, because of the
required aggregation of multiple plans.
The Employer may add certain model amendments published by the Internal Revenue
Service which specifically provide that their adoption will not cause the Plan
to be treated as an individually designed plan for which the Employer must
obtain a separate determination letter.
If the Employer amends the Plan and Trust other than as provided above, the
Employer's Plan shall no longer participate in this Prototype Plan and will be
considered an individually designed plan.
15.3 Termination
Employers shall have the right to terminate their Plans upon 60 days notice in
writing to the Trustee. If the Plan is terminated, partially terminated, or if
there is a complete discontinuance of contributions under a profit-sharing plan
maintained by the Employer, all amounts credited to the accounts of Participants
shall vest and become nonforfeitable. In the event of a partial termination,
only those who are affected by such partial termination shall be fully vested.
In the event of termination, the Employer shall direct the Trustee with respect
to the distribution of accounts to or for the exclusive benefit of Participants
or their beneficiaries. The Trustee shall dispose of the Fund in accordance with
the written directions of the Plan Administrator, provided that no liquidation
of assets and payment of benefits, (or provision therefor), shall actually be
made by the Trustee until after it is established by the Employer in a manner
satisfactory to the Trustee, that the applicable requirements, if any, of ERISA
and the Internal Revenue Code governing the termination of employee benefit
plans, have been or are being, complied with, or that appropriate
authorizations, waivers, exemptions, or variances have been, or are being
obtained.
15.4 Qualification Of Employer's Plan
If the adopting Employer fails to attain or retain Internal Revenue Service
qualification, such Employer's Plan shall no longer participate in this
Prototype Plan and will be considered an individually designed plan.
15.5 Mergers And Consolidations
(a) In the case of any merger or consolidation of the Employer's Plan with,
or transfer of assets or
49
liabilities of the Employer's Plan to, any other plan, Participants in the
Employer's Plan shall be entitled to receive benefits immediately after the
merger, consolidation, or transfer which are equal to or greater than the
benefits they would have been entitled to receive immediately before the
merger, consolidation, or transfer if the Plan had then terminated.
(b) Any corporation into which the Trustee or any successor trustee may be
merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Trustee or any successor
trustee may be a party, or any corporation to which all or substantially
all the trust business of the Trustee or any successor trustee may be
transferred, shall be the successor of such Trustee without the filing of
any instrument or performance of any further act, before any court.
15.6 Resignation And Removal
The Trustee may resign by written notice to the Employer which shall be
effective 60 days after delivery. The Employer may discontinue its participation
in this Prototype Plan and Trust effective upon 60 days written notice to the
Sponsor. In such event the Employer shall, prior to the effective date thereof,
amend the Plan to eliminate any reference to this Prototype Plan and Trust and
appoint a successor trustee or arrange for another funding agent. The Trustee
shall deliver the Fund to its successor on the effective date of the resignation
or removal, or as soon thereafter as practicable, provided that this shall not
waive any lien the Trustee may have upon the Fund for its compensation or
expenses. If the Employer fails to amend the Plan and appoint a successor
trustee, or other funding agent within the said 60 days, or such longer period
as the Trustee may specify in writing, the Plan shall be deemed individually
designed and the Employer shall be deemed the successor trustee. The Employer
must then obtain its own determination letter.
15.7 Qualification Of Prototype
The Sponsor intends that this Prototype Plan will meet the requirements of the
Code as a qualified Prototype Retirement Plan and Trust. Should the Commissioner
of Internal Revenue or any delegate of the Commissioner at any time determine
that the Plan and Trust fails to meet the requirements of the Code, the Sponsor
will amend the Plan and Trust to maintain its qualified status.
ARTICLE XVI -- GOVERNING LAW
Construction, validity and administration of the Prototype Plan and Trust, and
any Employer Plan and Trust as embodied in the Prototype document and
accompanying Adoption Agreement, shall be governed by Federal law to the extent
applicable and to the extent not applicable by the laws of the
State/Commonwealth in which the principal office of the Sponsor is located.
50
<TABLE>
<S> <C>
Internal Revenue Service Department of the Treasury
Plan Description: Prototype Non-standardized Profit Sharing Plan with CODA Washington, DC20224
FFN: 50296321903-001 Case: 9400380 EIN: 13-3408212
BPD: 03 Plan: 001 Letter Serial No: D256803b Person to Contact: Mr. Dua
PRUDENTIAL MUTUAL FUND MANAGEMENT INC. Telephone Number: (202) 622-8380
1 SEAPORT PLAZA Refer Reply to: CP:E:EP:Q:3
NEW YORK, NY 10292 Date: 03/11/94
</TABLE>
Dear Applicant:
In our opinion, the amendment to the form of the plan identified above does not
in and of itself adversely affect the plan's acceptability under Section 401 of
the Internal Revenue Code. This opinion relates only to the amendment to the
form of the plan. It is not an opinion as to the acceptability of any other
amendment or of the form of the plan as a whole, or as to the effect of other
Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
Our opinion on the acceptability of the form of the plan is not a ruling or
determination as to whether an employer's plan qualifies under code section
401(a). An employer who adopts this plan will be considered to have a plan
qualified under Code section 401(a) provided all the terms of the plan are
followed, and the eligibility requirements and contribution or benefit
provisions are not more favorable for highly compensated employees than for
other employees. Except as stated below, the Key District Director will not
issue a determination letter with regard to this plan.
Our opinion does not apply to the form of the plan for purposes of Code section
401(a)(16) if: (1) an employer ever main-tained another qualified plan for one
or more employees who are covered by this plan, other than a specified paired
within the meaning of Section 7 of Rev. Proc. 89-9, 1989-1 C.B. 780: or (2)
after December 31, 1985, the employer maintains a welfare benefit fund defined
in Code Section 419(e), which provides post retirement medical benefits
allocated to separate accounts for key employees as defined in Code section
419A(d)(3).
An employer that has adopted a standardized plan may not rely on this opinion
letter with respect to: (1) whether any amendment or series of amendments to the
plan satisfies the nondiscrimination requirements of section. 1.401(a)(4)-5(a)
of the regulations, except with respect to the plan amendments granting past
service that meet the safe harbor described in section 1.401(a)(4)-5(a)(5) and
are not part of a pattern of amendments that significantly discriminates in
favor of a highly compensated employees; or (2) whether the plan satisfies the
effective availability requirement of section 1.401(a)(4)-4(c) of the
regulations with respect to any benefits, right or feature.
An employer that has adopted a standardized plan as an amendment to a plan other
than a standardized plan may not rely on this opinion letter with respect to
whether a benefit, right or other feature that is prospectively eliminated
satisfies the current availability requirements of section 1.401(a)-4 of the
regulations.
51
Prudential Mutural Fund Management Inc
FFN:50296321903-001
Page 2
The employer may request a determination (1) as to whether the plan, considered
with all related qualified plans and, if appropriate, welfare benefit funds,
satisfies the requirements of Code section 401(a)(16) as to limitations on
benefits and contributions in Code section 415; (2) regarding the
nondiscriminatory effect of grants of past service; and (3) with respect to
whether a prospectively eliminated benefit, right or feature satisfies the
current availability requirements.
Our opinion does not apply to the form of the plan for purposes of section
401(a) of the code unless the terms of the plan, as adopted or amended, that
pertain to the requirements of sections 401(a)(4), 401(a)(5), 401(a)(17),
401(l), 401(b) and 401(s) of the Code, as amended by the Tax Reform Act of 1986
or subsequent legislation, (a) are made effective retroactively to the first day
of the first plan year beginning after December 31, 1988 (or such other date on
which these requirements first became effective with respect to this plan); or
(b) are made effective no later than the first day on which the employer is no
longer entitled, under regulations, to rely on a reasonable, good faith
interpretation of these requirements, and the prior provisions of the plan
constitute such an interpretation.
This letter with respect to the amendment to the form of the plan does no affect
the applicability to the plan of the continued, interim and extended reliance
provisions of section 13 and 17.03 of Rev. Proc. 89-9, 1989-1 C.B. 780 The
applicability of such provisions may be determined by reference to the initial
opinion letter issued with respect to the plan.
If you, the sponsoring organization, have any questions concerning the IRS
processing of this case, please call the above telephone number. This number is
only for use of the sponsoring organization. Individual participants and/or
adopting employers with questions concerning the plan should contact the
sponsoring organization. The plan's adoption agreement must include the
sponsoring organization's address and telephone number for inquiries by adopting
employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial Number
and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely yours,
/s/
------------------------------------------
Chief Employee Plans Qualifications Branch
52
<TABLE>
<S> <C>
Internal Revenue Service Department of the Treasury
Plan Description: Prototype Non-standardized Profit Sharing Plan with CODA Washington, DC20224
FFN: 50396321903-002 Case: 9400381 EIN: 13-3408212
BPD: 03 Plan: 002 Letter Serial No: D356804b Person to Contact: Mr. Dua
PRUDENTIAL MUTUAL FUND MANAGEMENT INC. Telephone Number: (202) 622-8380
1 SEAPORT PLAZA Refer Reply to: CP:E:EP:Q:3
NEW YORK, NY 10292 Date: 03/11/94
</TABLE>
Dear Applicant:
In our opinion, the amendment to the form of the plan identified above does not
in and of itself adversely affect the plan's acceptability under Section 401 of
the Internal Revenue Code. This opinion relates only to the amendment to the
form of the plan. It is not an opinion as to the acceptability of any other
amendment or of the form of the plan as a whole, or as to the effect of other
Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
An employer who adopts the amended form of the plan after the date of the
amendment should apply for a determination letter by filing an application with
the Key District Director of the Internal Revenue on Form 5307, Short Form
Application for Determination for Employee Benefit Plan.
This letter with respect to the amendment to the form of the plan does not
affect the applicability to the plan of the continued, interim and extended
reliance provisions of sections 13 and 17.03 of Rev. Proc. 89-9, 1989-1 C.B.
780. The applicability of such provisions may be determined by reference to the
initial opinion letter issued with respect to the plan.
If you, the Sponsoring organization, have any questions concerning the IRS
processing of this case, please call the above telephone number. This number is
only for use of the sponsoring organization. Individual participants and./or
adopting employers with questions concerning the plan should contact the
sponsoring organization. The plan's adoption agreement must include the
sponsoring organization's address and telephone number for inquiries by adopting
employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial Number
and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely yours,
/s/
------------------------------------------
Chief Employees Plan Qualifications Branch
53
PA.FD.001.0597-G
EXHIBIT 4d
CERTIFICATE OF AMENDMENT
OF RESTATED CERTIFICATE OF INCORPORATION
OF
SHARED TECHNOLOGIES CELLULAR, INC.
It is hereby certified that:
FIRST: The name of the corporation (the "Corporation") is:
SHARED TECHNOLOGIES CELLULAR, INC.
SECOND: The Restated Certificate of Incorporation of the Corporation is
hereby amended by striking out the first paragraph of Article Fourth thereof and
by substituting in lieu of said paragraph of the following new paragraph:
"The total number of shares of stock which the Corporation
shall have authority to issue is 25,000,000 shares, of which 5,000,000
shall be Preferred Stock with a par value of $.01 per share and
20,000,000 shares shall be Common Stock with a par value of $.01 per
share."
THIRD: The Restated Certificate of Incorporation of the Corporation is
hereby amended by cancelling the series of Preferred Stock known as Series A
Convertible Preferred Stock created pursuant to the terms of the Certificate of
Designations, Preferences and Rights dated December 29, 1995 and filed with the
Secretary of State of Delaware on December 28, 1995 (the "Certificate of
Designations"), all such issued and outstanding shares of Series A Convertible
Preferred Stock having been converted to Common Stock, and there being no
issuable shares remaining thereunder.
FOURTH: The amendments of the Restated Certificate of Incorporation
herein certified have been duly adopted in accordance with the provisions of
Sections 141(f), 228 and 242 of the General Corporations Law of the State of
Delaware. Prompt written notice of the adoption of such amendments herein
certified has been given to those stockholders who have not consented in writing
thereto, pursuant to and as provided in Section 228 of the General Corporation
Law of the State of Delaware.
Signed and attested to on September 17, 1996.
/s/ Anthony D. Autorino
------------------------------------------
Anthony D. Autorino, Chairman of the Board
Attest:
/s/ Kenneth M. Dorros
----------------------------
Kenneth M. Dorros, Secretary
EXHIBIT 5
-----------
Gadsby & Hannah LLP
225 Franklin Street
Boston MA 02110
September 19, 1997
Board of Directors
Shared Technologies Cellular, Inc.
100 Great Meadow Road
Wethersfield, CT 06109
Gentlemen:
You have requested our opinion, as counsel to Shared Technologies
Cellular, Inc. (the "Company"), with respect to certain matters in connection
with a proposed offering of 150,000 shares of the Company's Common Stock, $.01
par value (the "Shares"), by the Company, pursuant to the Company's Savings and
Retirement Plan, as amended (the "Plan"). The offering is to be made pursuant to
a Registration Statement on Form S-8 to be filed with the Securities and
Exchange Commission on or about September 19, 1997 (the "Registration
Statement").
In rendering this opinion, we have reviewed, among other documents, the
Plan documents, the Company's Restated Certificate of Incorporation, the
Company's Amended and Restated Bylaws, and the proceedings of the Company's
stockholders and Board of Directors relating to the authorization and issuance
of the Shares. We have also considered such statutes, rules and regulations as
we have deemed relevant for the purposes hereof.
Based on the foregoing, it is our opinion that:
1. The Company is duly incorporated, validly existing and in good
standing under the laws of the State of Delaware.
2. The Shares to be sold by the Company, when issued and sold pursuant to
the Plan, will be validly authorized, legally issued, fully paid and
non-assessable.
We hereby consent to the filing of this opinion letter as Exhibit 5 to the
Registration Statement.
Very truly yours,
/s/ Gadsby & Hannah LLP
-----------------------
Gadsby & Hannah LLP
EXHIBIT 23b
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 March 11, 1997
included in the Annual Report on Form 10-K of Shared Technologies Cellular, Inc.
(the "Company") for the year ended December 31, 1996.
/s/ ROTHSTEIN, KASS & COMPANY, P.C.
-----------------------------------
ROTHSTEIN, KASS & COMPANY, P.C.
Roseland, New Jersey
September 18, 1997
Exhibit 24
----------
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of Anthony D. Autorino and Vincent
DiVincenzo, individually, his attorneys-in-fact, with the power of substitution,
for him in any and all capacities, to sign any and all amendments to this
Registration Statement (including post-effective amendments), and to file the
same, with exhibits thereto and other documents in connection therewith, with
the Securities and Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their respective substitutes, may do or cause to be
done by virtue hereof.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Anthony D. Autorino Chairman, Chief Executive September 19, 1997
- ------------------------------------ Officer and Director
Anthony D. Autorino (Principal Executive Officer)
/s/ Thomas H. Decker Director September 19, 1997
- -------------------------------------
Thomas H. Decker
/s/ William A. DiBella Director September 19, 1997
- -------------------------------------
William A. DiBella
/s/ Vincent DiVincenzo Chief Financial Officer, September 19, 1997
- ------------------------------------- Treasurer and Director
Vincent DiVincenzo (Principal Financial and
Accounting Officer)
/s/ Ajit G. Hutheesing Director September 19, 1997
- --------------------------------------
Ajit G. Hutheesing
/s/ Craig A. Marlar Director September 19, 1997
- ---------------------------------------
Craig A. Marlar
/s/ Nicholas E. Sinacori Director September 19, 1997
- -------------------------------------
Nicholas E. Sinacori
</TABLE>
