HORIZONS TECHNOLOGY, INC. RETIREMENT PLAN
RETIREMENT PLAN
TABLE OF CONTENTS
ARTICLE SUBJECT MATTER AND SECTION NUMBERS PAGE
EXHIBIT A ADOPTION AGREEMENT -- Plan Specifications, A-1
Specific Definitions and Elections
ESTABLISHMENT AND PREUMINARY MATTERS
1.01. Purpose I-1
1.02. Compliance with the Law I-1
1.03. Type of Plan I-1
1.04. Adoption Agreement I-1
II DEFINITIONS II-1
III PARTICIPATION AND ENTRY DATE
3.01. Initial Eligibility III-1
3.02. Latest Date for Participation III-1
3.04. Procedure for and Effect of Admission III-1
3.05. Reemployment Before Break in Service III-2
3.06. Break in Service III-2
3.07 Employees Who Lose or Gain Eligible Status III-3
3.08. Predecessor Employer III-3
3.09. Owner-Employees III-4
IV EMPLOYER CONTRIBUTIONS
4.01. Employer Contributions Under a Cash IV-1
or Deferred Arrangement Pursuant to
Code Section 401(k)
4.02. Salary Reduction Contributions IV-1
4.03. Employer Matching Contributions IV-2
4.04. Employer Nonelective Contributions IV-2
4.05. Elective Deferrals and Distribution IV-3
of Excess Elective Deferrals
4.06. Actual Deferral Percentage Test IV-3
4.07. Qualified Employer Matching Contributions IV-5
and Actual Contribution Percentage Test
4.08. Distribution of Excess Contributions IV-6
4.09. Forfeiture and Vesting of Matching IV-6
Contributions
4.10. Distribution of Excess Aggregate IV-7
Contributions
4.11. Qualified Employer Nonelective IV-7
Contributions
4.12. Nonforfeitability and Vesting IV-7
4.13. Distribution Requirements IV-7
ARTICLE SUBJECT MATTER AND SECTION NUMBERS PAGE
4.14. Payment of Nonelective Contributions IV-8
4.15. Exclusive Benefit; Refund of Contribution IV-8
4.16. Types of Contributions IV-9
4.17. Omission of Eligible Employee IV-9
4.18. Inclusion of Ineligible Employee IV-9
V LIMITATIONS ON BENEFITS
5.01. (a) Annual Additions Limitations V-1
(b) Limitations Under Combination of Plans V-1
(c) Excess Annual Additions V-2
5.02. Definition of Compensation for Purposes V-2
of Section 415 of the Code
VI ALLOCATION OF CONTRIBUTIONS AND FORFEITURES
6.01. Employer Contributions VI-1
6.02. Forfeitures VI-1
VII CONTRIBUTIONS BY PARTICIPANTS AND ROLLOVER CONTRIBUTIONS
7.01. Mandatory Contributions VII-1
7.02. Voluntary Employee Contributions VII-1
7.03. Rollover Contributions VII-1
VIII VESTING AND TERMINATION OF EMPLOYMENT
8.01. Vesting of Interests VIII-1
8.02. Employer Contribution Accounts VIII-1
8.03. Application of Forfeitures VIII-1
8.04. "Cash Outs" VIII-1
8.05. Restoration of Accrued Benefit VIII-2
Upon Repayment of Distribution and
Nonduplication of Benefits
8.06. Certain Employers; Service Included in VIII-3
Determination of Nonforfeitable Percentage
8.07. Special Early Retirement Rule VIII-3
8.08. Effect of Breaks in Service VIII-3
8.09. Crediting of Years of Service VIII-4
8.10. Accrued Benefit Rules VIII-4
8.11. Amendment of Vesting Schedule VIII-4
IX DEATH BENEFIT
9.01. Preretirement Death Benefit IX-1
9.02. Postretirement Death Benefit IX-1
9.03. Action to Be Taken on Death IX-1
ARTICLE SUBJECT MATTER AND SECTION NUMBERS PAGE
9.04. Exception for Certain Death Benefits IX-1
9.05. Designation of Beneficiary end Form of IX-1
Benefit Payment
9.06. Deferred Payment of Death Benefit IX-3
9.07. Voluntary Accounts IX-3
RETIREMENT BENEFITS AND DISABILITY BENEFITS
10.01. Normal Retirement Benefit X-1
10.02. Early Retirement Benefit X-1
10.03. Deferred Retirement Benefit X-1
10.04. Disability Benefit X-1
METHOD AND TIMING OF BENEFIT DISTRIBUTIONS
11.01. Method of Distribution of Vested Benefits XI-1
11.02. Joint and Survivor Annuity and XI-3
Preretirement Survivor Annuity Requirements
11.03. Special Rule XI-7
11.04. Latest Date for Distribution of Benefits XI-7
11.05. Receipt or Acquittance XI-7
11.06. Direct Rollover Under Code XI-8
Section 401(a)(31)
XII ASSOCIATED COMPANIES
12.01. Definitions of Terms XII-1
12.02. Service with Associated Companies XII-1
12.03. Eligibility of Associated Companies XII-1
12.04. Eligibility Requirement for Employee XII-2
Participation
12.05. Employees Employed by Two or XII-2
More Employers
12.06. Employee Transferred from One Employer XII-2
to Another Employer
12.07. Contributions of Each Employer XII-2
12.08. Vesting of Interests XII-2
XIII ADMINISTRATION OF FUNDS
13.01. Investment of Assets XIII-1
13.02. Valuations XIII-1
13.03. Crediting of Contributions XIII-1
13.04. Crediting of Investment Results XIII-1
13.05. Investments in Life Insurance XIII-2
13.06. Loans to Participants XIII-3
ARTICLE SUBJECT MATTER AND SECTION NUMBERS PAGE
XIV ALLOCATIONS OF AUTHORITY AND RESPONSIBILITIES
14.01. Authority and Responsibilities of XIV-1
Employer
14.02. Authority and Responsibilities of the Plan XIV-1
Administrator
14.03. Authority and Responsibilities of XIV-1
the Trustee
14.04. Limitations on Obligations of XIV-1
Named Fiduciaries
XV CLAIMS PROCEDURE
15.01. Applications for Benefits XV-1
15.02. Appeals of Denied Claims for Benefits XV-1
15.03. Appointment of the Named Appeals Fiduciary XV-2
XVI THE PLAN ADMINISTRATOR
16.01. Administration by Plan Administrator XVI-1
16.02. Control of Plan by Plan Administrator XVI-1
16.03. Authority and Responsibility of the XVI-1
Plan Administrator
16.04. Reporting and Disclosure XVI-2
16.05. Construction of the Plan XVI-2
16.06. Engagement of Assistants and Advisors XVI-2
16.07 Investment of the Trust Fund XVI-3
16.08 Directed Investments by Plan Administrator XVI-3
16.09. Prohibited Transactions XVI-3
16.10. Investment in Savings Accounts and XVI-3
Trust Funds
16.11. Disqualified Persons XVI-4
16.12. Participant Directed Accounts XVI-4
16.13. Bonding XVI-5
16.14. Indemnification of the Plan Administrator XVI-5
16.15. Minutes of Plan Administrator XVI-5
16.16. Compensation of the Plan Administrator XVI-5
XVII AMENDMENT, TERMINATION, MERGER AND CONSOLIDATION
17.01 Amendment XVII-1
17.02 Plan Termination XVII-1
17.03 Complete Discontinuance of XVII-2
Employer Contributions
17.04 Suspension of Employer Contributions XVII-2
17.05 Mergers and Consolidations of Plans XVII-2
XVIII MISCELLANEOUS PROVISIONS
18.01. Nonalienation of Benefits XVIII-1
18.02. No Contract of Employment XVIII-1
18.03. Severability of Provisions XVIII-1
18.04. Insurance Companies XVIII-2
ARTICLE SUBJECT MATTER AND SECTION NUMBERS PAGE
18.05 Transfers To and From Other XVIII-2
Qualified Plans
18.06 Separate Trust Agreement XVIII-2
18.07 Heirs, Assigns end Personal XVIII-2
Representatives Headings and Captions
18.08 Headings and Captions XVIII-2
18.09 Gender and Number XVIII-3
18.10 Controlling Law XVIII-3
18.11 Title to Assets XVIII-3
18.12 Payments to Minors, etc. XVIII-3
18.13 Benefits of Persons Who Cannot XVIII-3
Be Located Mechanical Reproduction
18.14 Mechanical Reproduction XVIII-3
18.15 Discrepancies XVIII-3
XIX AFFILIATED SERVICE GROUP
19.01 Definitions XIX-1
19.02 Limitation on Benefits and Contributions XIX-1
19.03 Multiple Integrated Plans of Members XIX-2
19.04 Control XIX-2
XX ADDITIONAL REQUIREMENTS FOR TOP-HEAVY PLANS
20.01 Generally XX-1
20.02 Top-Heavy Determination: XX-1
Aggregation of Related Employers
20.03 Top-Heavy Determination: Key Employee XX-1
20.04 Top-Heavy Determination: Non-Key Employee XX-2
20.05 Top-Heavy Determination: Disregarded XX-2
Employee
20.06 Top-Heavy Determination: Beneficiary XX-2
20.07 Top-Heavy Ratio: Defined Contribution Plan XX-3
20.08 Top-Heavy Ratio: Defined Benefit Plan XX-3
20.09 Top-Heavy Ratio: Aggregation Group XX-4
20.10 Top-Heavy Ratio: Top-Heavy Group XX-5
20.11 Top-Heavy Ratio: Distributions; Rollover XX-5
Contributions
20.12 Top-Heavy Ratio: Determination Date XX-6
20.13 Limit on Includible Compensation XX-6
20.14 Top-Heavy Vesting XX-6
20.15 Minimum Benefits Under a Top-Heavy Plan XX-7
20.16 Minimum Benefit: Defined Benefit Plan XX-7
20.17 Minimum Contribution: Defined Contribution XX-8
Plan
20.18 Coordination Where Employer Has XX-9
Two or More Plans
20.19 Commencement of Benefits to XX-9
Key Employees
20.20 Modified Aggregate Limit on XX-9
Contributions and Benefits
EXHIBIT A
ADOPTION AGREEMENT
PLAN SPECIFICATIONS. SPECIFIC DEFINITIONS AND ELECTIONS
A.01. Name. The name of this Plan, as amended and restated,
shall be the HORIZONS TECHNOLOGY, INC., RETIREMENT PLAN.
A.02. Plan Year. The Plan Year shall be the twelve-month period
commencing January 1 and ending December 31 each year.
A.03 Employer. Employer shall be HORIZONS TECHNOLOGY, INC., a
Delaware corporation, or any successor corporation. Employer's
Fiscal Year ends January 31. The Employer, represented by a
Retirement and Benefit Plans Committee composed of members
appointed by the Employer to act on its behalf, shall serve as
Plan Administrator in accordance with Article XVI of the Plan.
A.04 Effective Date. The original Effective Date of this Plan is
January 1, 1984. The Effective Date of this amendment and
restatement of the Plan, except for those provisions for which
other effective dates are specifically designated in the Plan,
shall be January 1, 1987.
A.05 Entry Date. The Entry Date as to each Employee is as follows:
(1) From the original Effective Date of the Plan until October
20, 1987: The later of the Employee's Employment
Commencement Date or the date on which the Employee
attains age twenty-one (21).
(2) From October 20, 1987, through December 31, 1989: The
later of the first day of the fourth (4th) pay period
following the Employee's Employment Commencement Date or
the date on which the Employee attains age twenty-one
(21).
(3) From the first day of the first pay period commencing on
or after January 1, 1990, through December 31, 1990: The
later of the first day of the first pay period beginning
after the Employee's Employment Commencement Date or the
date on which the Employee attains age twenty-one (21).
(4) From January 1, 1991: (i) The Employee's Employment
Commencement Date, if the Employee has attained age
twenty-one (21) on or before his Employment Commencement
Date; or (ii) If
A-1
the Employee has not attained age twenty-one (21) as of
his Employment Commencement Date, the first day of the
Plan Year (or the Employee's Employment Commencement Date
within the Plan Year, if later) during which the Employee
attains age twenty-one (21).
A.06. Compensation. For Plan Years through the Plan Year ending
December 31, 1992, Compensation for purposes of this Plan shall
mean all compensation which constitutes wages subject to tax as
reported on Form W-2 (as defined in Code Section 3401(a)),
including bonuses, commissions, overtime and other taxable
remuneration, before reductions on account of any withholding,
such as income taxes, Social Security taxes and insurance
premiums.
For the Plan Year commencing January 1, 1993, and ending
December 31, 1993, Compensation shall mean all compensation
which constitutes wages subject to tax as reported on Form W-2
(as defined in Code t3401 (a)), including bonuses,
"non-recoverable draws" paid to sales personnel employed by the
Company, overtime and other taxable remuneration, before
reductions on account of any withholding, such as income taxes,
Social Security taxes and insurance premiums, with the
exception of commissions and "recoverable draws" paid to sales
personnel employed by the Company, which shall be excluded from
Compensation taken into account under this Plan. For purposes
of this definition of Compensation, the terms "non-recoverable
draws" and "recoverable draws" shall mean payments made to
sales personnel in advance of actual earnings as specifically
explained in the Horizons Technology, Inc., Sales Commission
Plan communicated to all affected employees. For any
self-employed individual covered under the Plan, Compensation
shall mean "Earned Income" as defined in Section 2.11 of the
Plan. Compensation shall not include deferred compensation,
stock options and other distributions which receive special
Federal income tax benefits, with the exception that, except
for purposes of Code Section 415, the portion of an Employee's
Compensation that is deferred pursuant to a salary reduction
election under the Elective Deferral provisions of Article IV
of this Plan shall be considered Compensation, and, effective
September 1, 1989, amounts contributed by the Employer to a
Flexible Benefit Plan, pursuant to a salary reduction
agreement, which are not includible in the gross income of the
Employee under Section 125 of the Code shall be considered
Compensation.
For Plan Years commencing January 1, 1994, and thereafter,
Compensation shall mean all compensation which constitutes
wages subject to tax as reported on Form W-2 (as defined in
Code Section 3401 (a)), including bonuses, overtime,
commissions paid to Employees whose Base Annual Compensation
does not exceed $50,000 and other taxable remuneration,
A-2
before reductions on account of any withholding, such as income
taxes, Social Security taxes and insurance premiums, but
specifically excluding from Compensation commissions paid to
Employees whose Base Annual Compensation exceeds $50,000 and
any "recoverable draws" paid to sales personnel employed by the
Company. For purposes of this definition of Compensation, the
term "recoverable draws" shall mean payments made to sales
personnel in advance of actual earnings as specifically
explained in the Horizons Technology, Inc., Sales Commission
Plan communicated to ell affected employees. For any
self-employed individual covered under the Plan, Compensation
shall mean "Earned Income" as defined in 12.11 of the Plan.
Compensation shall not include deferred compensation, stock
options and other distributions which receive special Federal
income tax benefits, with the exception that, except for
purposes of Code Section 415, the portion of an Employee's
Compensation that is deferred pursuant to salary reduction
election under the Elective Deferral provisions of Article IV
of this Plan shall be considered Compensation, and, effective
September 1, 1989, amounts contributed by the Employer to a
Flexible Benefit Plan, pursuant to salary reduction agreement,
which are not includible in the gross income of the Employee
under Section 125 of the Code shall be considered Compensation.
For Plan Years beginning after December 31, 1988, the annual
Compensation of each Participant taken into account under the
Plan for any Plan Year shall not exceed $200,000, as adjusted
by the Secretary of the Treasury at the same time and in the
same manner as under Code Section 415(d), except that the
dollar increase in effect on January 1 of any calendar year is
effective for years beginning in such calendar year, and the
first adjustment to the $200,000 limitation is effected on
January 1, 1990. if the Plan determines Compensation on a
period of time that contains fewer than 12 calendar months,
then the annual Compensation limit is the amount equal to the
annual Compensation limit for the calendar year in which the
Compensation period begins multiplied by the ratio obtained by
dividing the number of full months in the period by 12. In
determining the Compensation of a Participant for purposes of
this limitation, the rules of Code Section 401 (a)(17) and
414(q)(6) shall apply, and for purposes of applying the
$200,000 limit on the Compensation of a Highly Compensated
Employee, the family unit of such Employee will be treated as a
single Highly Compensated Employee with $200,000 in
Compensation. The $200,000 limit will be allocated among
members of the family unit in proportion to each member's
Compensation (except for purposes of determining Compensation
below the Plan's integration Level, if applicable). For
purposes of this Section, a family unit is defined as the
Highly Compensated Employee, his or her spouse and lineal
descendants under age 19 at the end of the Plan Year.
In addition to other applicable limitations set forth in the
Plan, and notwithstanding any other provision of the Plan to
the contrary, for Plan Years beginning on or after January 1,
1994, the annual Compensation
A-3
of each Employee taken into account under the Plan shall not
exceed the OBRA "93 annual compensation limit. The OBRA "93
annual compensation limit is $150,000, as adjusted by the
Commissioner for increases in the cost of living in accordance
with Section 401(a)(17)(B) of the Internal Revenue Code. The
cost-of-living adjustment in effect for a calendar year applies
to any period, not exceeding 12 months, over which Compensation
is determined (determination period) beginning in such calendar
year. If a determination period consists of fewer than 12
months, the OBRA "93 annual compensation limit will be
multiplied by a fraction, the numerator of which is the number
of months in the determination period, and the denominator of
which is 12.
For plan years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under Section 401
(a)(17) of the Code shall mean the OBRA "93 annual compensation
limit set forth in this provision.
If Compensation for any prior determination period is taken
into account in determining an Employee's benefits accruing in
the current Plan Year. the Compensation for that prior
determination period is subject to the OBRA "93 annual
compensation limit in effect for that prior determination
period. For this purpose, for determination periods beginning
before the first day of the first Plan Year beginning on or
after January 1. 1994. the OBRA "93 annual compensation limit
is $150.000.
For Limitation Years beginning after December 31, 1991,
Compensation shall include only those amounts actually paid or
made available to an Employee and shall not include accrued
Compensation.
A.07. Normal Retirement Age or Date. A Participant's Normal Retirement
Age or Normal Retirement Date shall mean the date on which he
attains age sixty-five (65).
A.08. EarlyRetirement Data. A Participant's Early Retirement Date shall
be the first day of the month following his separation from
service with the Employer after he has attained age Fifty-Five
(55) and has completed six (6) Years of Service with the
Employer, but prior to his attainment of Normal Retirement Age
under the Plan.
A.09. Eligibility for Participation. An eligible Employee employed prior
to October 20, 1987, shall participate in this Plan on the
later of the date on which he attains age twenty-one (21) or
his Employment Commencement Date. Effective from October 20,
1987, through December 31, 1989, an eligible Employee shall
participate in this Plan on the later of the date on which he
attains age twenty-one (21) or the first day of the fourth
(4th) pay period following the Employee's Employment
Commencement Date. Effective the first day of the first pay
period beginning on or after January 1, 1990, through December
31, 1990, an eligible Employee shall participate in this Plan
on the later of the date on which he attains age
A-4
twenty-one (21) or the first day of the first pay period
following his Employment Commencement Date. Effective January
1, 1991, an eligible Employee shall participate in this Plan as
of his Employment Commencement Date if he has then attained age
twenty-one (21), or, if he has not attained age twenty-one
(21), he shall participate as of the first day of the Plan Year
(or his Employment Commencement Date, if later) during which he
attains age twenty-one (21).
In addition to the ineligible Employees designated in Section
3.01 (c) of the Plan, temporary Employees, whether full-time or
part-time, shall be ineligible to participate in this Plan. A
"temporary Employee," for purposes hereof, shall be defined as
an Employee hired to fill a position for which the period of
employment, predetermined at date of hire, is limited to a
period not to exceed six (6) months, at the conclusion of which
such Employee's employment with the Employer is terminated. A
temporary Employee whose status is changed as a result of a
transfer to a permanent position, whether full-time or
pert-time, shall be eligible to participate in this Plan upon
satisfaction of the eligibility requirements set forth above
with his Employment Commencement Date being the date of his
change in status.
All persons becoming "Leased Employees" of the Employer for
purposes of coverage under the Plan pursuant to the provisions
of Code Section 414(n) and proposed or final regulations
thereunder on or before December 31, 1990, shall continue to
participate in the Plan in accordance with Section A.09 and
2.20 of the Plan. All persons becoming "Leased Employees" of
the Employer for purposes of coverage under the Plan pursuant
to the provisions of Code t414(n) and proposed or final
regulations thereunder on or after the first day of the Plan
Year commencing January 1, 1991, shall be ineligible and shall
be excluded from participation in the Plan.
A Former Participant shall be eligible to participate
immediately upon his Reemployment Commencement Date.
A Former Participant is defined as a Participant who has
terminated his employment with the Employer and has received a
distribution of the vested portion of his accrued benefits
under the Plan.
A.10. Employer Contributions and Allocation. Employer Contributions shall
be made as follows:
(a) Salary Reduction Contributions shall be permitted in the
amount of twelve percent (12%) of s Participant's total
base annual Compensation for Participants whose base
annual Compensation is under $50,000 or eight percent (8%)
of a Participant's total base annual Compensation for
Participants whose base annual Compensation is $50,000 or
more, and such Contributions shall be made by the
Employer, pursuant to the provisions of Article IV of the
Plan, for each payroll period in accordance
A-5
with a Salary Reduction Agreement form signed by the
Participant, Notwithstanding any provisions of Article IV
to the contrary, an election by a Participant of a Salary
Reduction Amount, once made, shall continue in effect
until changed by the Participant, except as noted below,
and the Participant may increase, decrease or revoke such
election during any payroll period to take effect with the
succeeding payroll period by giving reasonable prior
written notice to the Plan Administrator. All
contributions made on behalf of a Participant under a
Salary Reduction Agreement shall at nil times be fully
vested and nonforfeitable. As specified in Section 4.02 of
the Plan, Salary Reduction Contributions may be limited
end Salary Reduction Agreements may be amended or revoked
by the Employer with respect to any Participant or group
of Participants to ensure compliance with Section t401 (k)
and 415 of the Code.
(b) From the original Effective Date of the Plan through the
first payroll period to end on or after January 1, 1990,
the Employer shall make a Matching Contribution in the
amount of fifty percent (50%) of a Participant's Salary
Reduction Contribution during each payroll period for
which s Salary Reduction Agreement is in effect; provided,
however, that such 50% Matching Contribution shall not
apply to any Salary Reduction Contribution elected by the
Participant in excess of 5% of his Compensation (8% of his
Compensation effective with the payroll period commencing
January 2, 1988).
Effective on the first day of the first payroll period to
begin on or after January 1, 1990, through the first
payroll period to end on or after January 1, 1993, the
Employer shall make Matching Contributions during each
payroll period for which a Salary Reduction Agreement is
in effect as follows:
(1) For a Participant who elects to make a Salary
Reduction Contribution in any amount less then three
percent (3%) of his Compensation, the Employer shall
make a Matching Contribution of fifty percent (50%)
of the Participant's Salary Reduction Contribution.
(2) For a Participant who elects to make a Salary
Reduction Contribution of at least three percent (3%)
up to a maximum of four percent (4%) of his
Compensation, the Employer shall make a Matching
Contribution of one hundred percent (100%) of the
Participant's Salary Reduction Contribution.
(3) Employer Matching Contributions shall not apply to
any Salary Reduction Contribution elected by a
Participant in excess of 4% of his Compensation.
Effective on the first day of the first payroll period to
begin on or after January 1, 1993, and thereafter, the
Employer shall make Matching
A-6
Contributions during each payroll period for which a
Salary Reduction Agreement is in effect as follows:
(1) For a Participant who elects to make a Salary
Reduction Contribution in any amount less than three
percent (3%) of his or her Compensation, the Employer
shall make a Matching Contribution of fifty percent
(50%) of the Participant's Salary Reduction
Contribution.
(2) For a Participant who elects to make a Salary
Reduction Contribution of et least 3% of his or her
Compensation, the Employer shall make s Matching
Contribution of one hundred percent (100%) of the
Participant's Salary Reduction Contribution for the
first 3% of Compensation.
(3) No Employer Matching Contributions shall be made on
any Salary Reduction Contribution elected by a
Participant in excess of three percent (3%) of his or
her Compensation.
All Matching Contributions made on behalf of a Participant
shall vest in accordance with the vesting schedule set
forth in IA.11 of this Adoption Agreement. Such Matching
Contributions shall be allocated to the respective
Employer Matching Contribution Account of the Participant
on whose behalf the contribution was made. Adjustments in
the amount of the Matching Contribution shall be made to
reflect any change made by the Participant in his Salary
Reduction Agreement to take effect for the succeeding
payroll period.
(c) For any Plan Year, the Employer may, in its sole
discretion, make Nonelective Contributions to the Plan in
accordance with Section 4.04. Such Contributions, if any,
shall be allocated in accordance with Section 6.01 among
the Employer Nonelective Contribution Accounts of Active
Participants in the proportion each such Active
Participant's Compensation bears to the total Compensation
of all Active Participants for the Plan Year. Employer
Nonelective Contribution Accounts shall vest in accordance
with the vesting schedule set forth in Section A.11 of
this Adoption Agreement.
(d) In addition, the Employer may, in its sole discretion,
elect to make certain other Qualified Nonelective
Contributions as defined in Section 2.48 or Qualified
Matching Contributions as defined in Section 2.47 which
shall be fully vested and nonforfeitable, and such
nonforfeitable Contributions and accrued earnings thereon
shall be maintained as separate, fully vested Qualified
Employer Nonelective Contribution Accounts and Qualified
Employer Matching Contribution Accounts for the respective
Participants receiving an allocation of such
Contributions; provided, however, that in no event shall
any allocation be discriminatory in favor of Highly
Compensated Employees. Notwithstanding anything in the
Plan or in this Adoption
A-7
Agreement to the contrary, Qualified Employer Nonelective
Contributions utilized in satisfying the ADP tests shall
be treated in the same manner as Salary Reduction
Contributions for purposes of the Participant loan
provisions and earmarking provisions contained in the Plan
and in the Adoption Agreement.
A.11. Vesting of Participants Interest. Subject to the limitations
set forth in Article VIII of the Plan, if the employment of any
Participant is terminated for any cause other than Death,
Disability or Normal Retirement. the Participant shall have a
nonforfeitable, vested right to his Accrued Benefit derived
from Employer Matching Contributions and Employer Nonelective
Contributions, if any. The percentage of such vested and
nonforfeitable interest shall be determined in accordance with
the following schedule:
For all Plan Years from the original Effective Date of the Plan
through the Plan Year ending December 31, 1989:
Years of Credited Service Percentage
------------------------- ----------
Less than 2 years None
2 years but fewer than 3 20%
3 years but fewer than 4 40%
4 years but fewer than 5 60%
5 years but fewer than 6 80%
6 years or more 100%
For the Plan Year commencing January 1, 1990, and thereafter:
Years of Credited Service Percentage
------------------------- ----------
Less than 1 year None
1 year but fewer than 2 10%
2 years but fewer than 3 20%
3 years but fewer than 4 40%
4 years but fewer than 5 60%
5 years but fewer than 6 80%
6 years or more 100%
All of a Participant's Years of Service with The Employer shall
be taken into account for Credited Years of Service for vesting
purposes except as follows:
(a) Years of Service with the Employer during any period prior
To January 1, 1983, shall not be taken into account.
(b) Years of Service prior to age 18 shall not be taken into
account.
A-8
(c) Effective January 1, 1985, in the case of a Participant
who has 5 or more consecutive 1-year Breaks in Service,
the Participant's pre-break service will count in vesting
of the Employer-derived Accrued Benefit only if either:
(i) such Participant has any nonforfeitable interest in
the Accrued Benefit attributable to Employer
Contributions et the time of separation from service;
or
(ii) upon returning to service the number of consecutive
1-year Breaks in Service is less than the number of
Years of Service.
(d) Service during any Vesting Computation Period in which the
Participant fails to complete a Year of Service, whether
or not a Break in Service occurs during such period, shall
not be taken into account.
Application of Forfeitures, The nonvested portion of a
Participant's Employer Matching Contribution Account end
Employer Nonelective Contribution Account shall be
forfeited at the time he receives a distribution of his
vested interest in such Accounts, and the forfeiture shall
be reallocated as of the last day of the Plan Year during
which the distribution is made. If a Participant has no
vested interest in his Employer Matching Contribution
Account or Employer Nonelective Contribution Account at
the time of his separation from service, the entire
balance of the Account shall be forfeited and reallocated
as of the last day of the Plan Year during which the
separation from service occurs.
A.12. Timing of Distributions. This Plan does elect the "Cash Out" and
restoration provisions set forth in Article VIII of the Plan.
Distributions to Participants of their vested and
nonforfeitable interests in their Salary Reduction Contribution
Accounts, Employer Matching Contribution Accounts, Employer
Nonelective Contribution Accounts, Qualified Employer Matching
Contribution Accounts and Qualified Employer Nonelective
Contribution Accounts for reasons other than Death, Disability
or Normal Retirement shall be made as follows:
(1) Amounts deferred by the Participant as elective
contributions under a Salary Reduction Agreement (Salary
Reduction Contributions), Qualified Employer Matching
Contributions and Qualified Employer Nonelective
Contributions, including accrued earnings thereon, may be
distributed to the Participant as soon as administratively
feasible following the Participant's separation from
service with the Employer if so requested by the
Participant, but in no event will such amounts be
distributed later than the amounts distributed pursuant to
subparagraph (2) below.
A-9
(2) Amounts allocated to the account(s) of a Participant as
Employer Matching Contributions and Employer Nonelective
Contributions which are nonforfeitable under the vesting
schedule(s) set forth in A.11, including accrued earnings
thereon, shall be distributed to the Participant as soon
as administratively feasible following the end of the Plan
Year during which the Participant separated from service
with the Employer if so requested by the Participant.
A.13. Employee Voluntary Contributions end Rollover Contributions.
No Employee Voluntary Contributions of any kind will be
permitted under this Plan. Rollover Contributions and certain
transfers of assets will be permitted in accordance with the
provisions of Article VII of the Plan.
A.14. Participant Directed Accounts and Participant Loans. Participants
may "earmark" the investment of the assets in their Salary
Reduction Contribution Accounts and Qualified Employer
Nonelective Contribution Accounts, if any, among the various
optional forms of investment available under the Plan and Trust
pursuant to the provisions of Section 16.12 of the Plan. All
Participant loans made under Section 13.06 of the Plan shall be
earmarked investments and shall be maintained as segregated,
earmarked accounts of the respective Participants, subject to
the provisions of Section 16.12. Notwithstanding anything to
the contrary in Section 13.06, all Participant loans shall be
made only from the Participant's Salary Reduction Contribution
Account and/or the Participant's Qualified Employer Nonelective
Contribution Account, and the amount of such outstanding loans
in the aggregate shall be limited to the lesser of 50% of the
Participant's fully vested accrued benefits under the Plan or
the entire balance in the Participant's combined nonforfeitable
Salary Reduction Contribution Account and Qualified Employer
Nonelective Contribution Account. All loans shall be made in
accordance with the separate document attached to the Plan and
made a part thereof entitled "Participant Loan Procedures," as
it may be amended from time to time.
A.15. Crediting of Service. This Plan does not utilize the Elapsed Time
Method of crediting service.
A.16. Trustee. The Trustee of the Trust created under this amended and
restated Plan shall be LINCOLN TRUST COMPANY.
A.17. Right to Amend or Change Elections. The elections made under this
Adoption Agreement may be changed by the Employer from time to
time by a written instrument signed by the Employer and
accepted by the Trustee. No amendment shall deprive any
Participant of any vested interest hereunder (unless required
in order to qualify under Section 401 (a) of the Code) or
increase the duties of the Trustee, except with its written
consent.
A-10
THE PLAN TO WHICH THIS ADOPTION AGREEMENT IS AN EXHIBIT IS HEREBY
INCORPORATED AND MADE A PART HEREOF.
The undersigned, as Plan Administrator, agrees to serve as the Named
Fiduciary, possessing the authority to control and menage The operation and
administration of the Plan and to discharge its duties with respect to the Plan
as described therein.
Date:______________________________
"EMPLOYER" and "PLAN ADMINISTRATOR"
HORIZONS TECHNOLOGY, INC., a Delaware
corporation
By:__________________________________
XXXXX X. XXXXXX
By:__________________________________
X. XXXXXXX XXXXX
By:__________________________________
XXXX X. XXXXXXX
By:__________________________________
XXXXXX X. XXXXXXXX, XX.
By:__________________________________
XXXXXXX X. XxxXXXX
APPROVED AS TO FORM:
XXXXXXXX X. XXXXXXXXX LAW CORPORATION
By:__________________________________
Xxxxxxxx X. Xxxxxxxxx
Attorney for Employer
A-11
ARTICLE I
ESTABLISHMENT AND PRELIMINARY MATTERS
1.01. Purpose, The purpose of this Plan is to provide additional
incentive and retirement and disability security for eligible Employees.
1.02. Compliance with the Law. This Plan is being adopted, together
with the corresponding Trust, to meet the requirements of the Internal Revenue
Code of 1986, as from time to time amended, (the "Code") and those requirements
of the Employee Retirement Income Security Act of 1974 ("ERISA") which may be
applicable to the Plan Years involved. All language of the Plan and Trust shall
be interpreted, wherever possible, to comply with the provisions of said Code
and Act and all rules and regulations thereunder. This Plan shall be amended
from time to time as may be necessary to conform to the requirements of the Code
and Act, and such amendments shall relate back to their required dates. This
Plan, together with any amendments thereto, is intended to meet the requirements
of the Tax Equity and Fiscal Responsibility Act of 1982 ("TEFRA"), the Deficit
Reduction Act of 1984 ("DEFRA"), the Retirement Equity Act of 1984 ("REA") and
the Tax Reform Act of 1986 ("TRA "86"), together with corresponding regulations,
and it shall be amended from time to time as may be necessary to conform to the
requirements of same and subsequent litigation.
1.03. Type of Plan. Although the Employer may contribute to this Plan
in its discretion, irrespective of whether it has net profits for Plan Years
beginning after December 31, 1985, this Plan is intended to be a profit sharing
plan for all purposes under the Code. In addition, this Plan includes a
qualified cash or deferred arrangement as provided for under Section 401 (k) of
the Code end regulations thereunder.
1.04. Adoption Agreement. The executed Adoption Agreement (Exhibit A
hereto) and any amendments thereto are incorporated and made a part of this Plan
by this reference.
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ARTICLE II
As used in this instrument, the following words end phrases shall have
the following meanings, unless a different meaning is clearly required by the
context:
2.01. "Account" or "Accrued Benefit" means the entire interest of a
Participant in the Trust Fund. A Participant's interest in the Trust Fund shall
consist of his Salary Reduction Contribution Account, Employer Matching
Contribution Account, Employer Nonelective Contribution Account, Qualified
Employer Matching Contribution Account and Qualified Employer Nonelective
Contribution Account. A Participant's Accrued Benefit at any time shall be
determined as of the last valuation of the Trust Fund coinciding with or
occurring before the date when the Accrued Benefits valued.
2.02. "Act" means the Employee Retirement Income Security Act of 1974
(ERISA) and shall include any amendments thereto.
2.03. "Active Participant" means, as of an Anniversary Date, a
Participant who has completed a Year of Service within the Plan Year preceding
such date and is employed on the last day of such Plan Year, except as otherwise
provided in Section 6.01.
2.04. "Adoption Agreement" means Exhibit A, which constitutes an
integral part of the Plan and in which the Employer elects certain options
available in the Plan and names the parties to the Plan and Trust Agreement.
2.05. "Age" means the chronological age attained by the Participant at
his most recent birthday or as of such other date of reference as is set forth
in the Plan.
2.06. "Age Discrimination in Employment Act" means the Act of December
6, 1967, P.L. 90-202, 81 Stat. 602, 29 U.S.C., 1964 Ed., Supplement IV, Chapter
14, Sections 621-634, effective June 12, 1968, as amended by P.L. 93-259,
effective May 1, 1974, as amended by the Age Discrimination in Employment Act
Amendments of 1978, and as further amended from time to time (herein referred to
as the "Age Discrimination Act").
2.07. "Anniversary Date" means the last day in each Plan Year.
2.08. "Beneficiary" means and refers to such person or persons or legal
entity as may be designated by a Participant or as provided in Article IX.
Wherever the rights of Participants are stated or limited herein, such
provisions shall also apply to their beneficiaries.
2.09. "Board of Directors" means the duly elected board of directors of
the Employer if the Employer is a corporation, or the sole proprietor of the
Employer if the Employer is a sole proprietorship.
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2.10. "Break in Service" or "One-Year Break in service" means the
failure by a Participant or Employee to complete more than five hundred (500)
Hours of Service during any applicable computation period. Any Break in Service
shall be effective on the last day of the applicable computation period in which
it occurs. A Break in Service shall not be deemed to have occurred because of a
Participant's failure to complete more than 500 Hours of Service during the
applicable computation period occurring in part during his first twelve-month
period of service. A Break in Service shall not be deemed to have occurred
during any period of Excused Absence if the Employee returns to the service of
the Employer within the time permitted pursuant to the provisions of this Plan
setting forth circumstances of an Excused Absence. A Break in Service shall not
be deemed to have occurred merely because an Employee fails to complete mere
than five hundred (500) Hours of Service during an applicable computation period
solely because of his or her retirement or death during such applicable
computation period.
For Plan Years commencing on or after January 1, 1985, solely for
purposes of determining whether a Break in Service has occurred in a
compensation period for purposes of participation and vesting, an individual who
is absent from work for maternity or paternity reasons (pregnancy, childbirth,
adoption or child-caring immediately after birth or adoption) shall receive
credit for the Hours of Service which would otherwise have been credited to such
individual but for such absence. The Hours of Service credited under this
paragraph shall be credited (i) in the computation period in which the absence
begins if the crediting is necessary to prevent a Break in Service in that
period, or (ii) in all other cases, in the succeeding computation period.
The above shall apply unless the Elapsed Time Method of crediting
service is elected in the Adoption Agreement, in which case Periods of Service
and Periods of Severance, as defined below in this Article II, shall apply.
2.11. "Compensation" means those items of remuneration selected in the
Adoption Agreement. Compensation with respect to an Employee who is a
Self-Employed Individual means Earned Income. "Earned Income" means net earnings
from self-employment in the trade or business with respect to which the Plan is
established, for which personal services of the individual are a material
income-producing factor, as defined in Code Section 401 (c)(2). Net earnings
will be determined without regard to items not included in gross income and the
deductions allocable to such items and reduced by the Employer's contribution to
a qualified plan to the extent deductible under Code Section 404. Net earnings
shall be determined with regard to the deduction allowed to the Employer by
Section 164(f) of the Code for taxable years beginning after December 31, 1989.
2.12. "Contract" means any annuity, retirement income or endowment
contract, or insurance policy or contract providing benefits under this Plan.
2.13. "Controlled Group" means a group as provided for in Code Section
Section 414(b) and 414(c), as modified by Code Section 415 where applicable.
2.14. "Credited Service" means the period of a Participant's Years of
Service considered in determining the Participant's nonforfeitable percentage in
the benefits accrued
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under this Plan. This will include all Years of Service as set forth in the
Adoption Agreement and Article VIII of the Plan.
2.15. "Deferred Retirement Data" means the date of a Participant's
retirement after his or her Normal Retirement Date.
2.16. "Defined Benefit Plan" means all types of retirement plans other
than Defined Contribution Plans.
2.17. "Defined Contribution Plan" means a Plan which provides for an
individual account for each Participant end for benefits based solely on the
amount contributed to the Participant's account, and any income, expenses, gains
end losses, and any forfeitures of accounts of other Participants, which may be
allocated to such Participant's account.
2.18. "Disability" means a physical or mental condition arising after
an Employee has become a Participant which totally and permanently prevents the
Participant from engaging in any occupation or employment for remuneration or
profit, except for the purpose of rehabilitation not incompatible with a finding
of total and permanent disability. The determination as to whether a Participant
is totally and permanently disabled shall be made by the Plan Administrator
after consideration of the following: (i) medical evidence by a licensed
physician designated by the Plan Administrator, (ii) information as to whether
the Participant is eligible for disability benefits under any long-term
disability plan sponsored by the Employer but administered by an independent
third party, and (iii) information as to whether the Participant is eligible for
total and permanent disability benefits under the Social Security Act in effect
at the date oft disability. Total and permanent Disability shall exclude
disabilities arising from:
(a) Chronic or excessive use of intoxicants, drugs or narcotics; or
(b) Intentionally self-inflicted injury or intentionally
self-induced sickness; or
(c) An unlawful act or enterprise on the part of the Participant;
or
(d) Military service where the Participant is eligible to receive a
government-sponsored military disability pension.
The above rules with respect to a "Disability" shall be
uniformly and consistently applied to all employees in similar circumstances.
2.19. "Effective Date" means the effective date of this Plan and shall
be the date designated as such in the Adoption Agreement.
2.20. "Employee" means any employee of the Employer maintaining the
Plan or any employee of any other employer required to be aggregated with such
Employer under Section 414(b), (c), (m) or (o) of the Code. The term "Employee"
shall also include any Leased Employee deemed to be an Employee of the Employer
described in the preceding sentence
II-3
as provided in Section 1414(n) or (o) of the Code. For purposes hereof,
"Employee" shall include the following:
(a) An "Owner-Employee" who is a sole proprietor or an
individual who owns mere than 10% of either the capital interest or the profits
interest of the Employer and who receives income for personal service from the
Employer;
(b) A "Self-Employed Individual" who is an individual
described in Code Section 401 (c)(1) who has Earned Income for the taxable year
from the trade or business for which the Plan is established or who would have
compensation but for the fact that the Employer had no profits for the taxable
year; and
(c) A "Leased Employee" who is 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 1414(n)(6)) on a substantially full-time basis for a period of at
least one (1) year and such services are of a type historically performed by
employees in the business field of the recipient employer. After December 31,
1986, in determining services performed, all service performed for the
recipient, whether as a common law employee or as a Leased Employee, including
creditable service prior to the existence of an employee leasing agreement,
shall be taken into account. Contributions or benefits provided a Leased
Employee by the leasing organization which are attributable to services
performed for the recipient employer shall be treated as provided by the
recipient employer.
With respect to services performed after December 31, 1986, a
Leased Employee shall not be considered an Employee of the recipient if: (i)
such employee is covered by a money purchase pension plan providing (A) a
nonintegrated employer contribution rate of at least 10% of compensation, as
defined in Code t415(c)(3), but including amounts contributed by the employer
pursuant to a salary reduction agreement which are excludable from the
employee's gross income under Code Section 125, 402(a)(8), 402(h) or 403(b), (B)
immediate participation and (C) full and immediate vesting, and (ii) Leased
Employees do not constitute more than 20% of the recipient's non-highly
compensated work force.
2.21. "Employer" means any organization which has adopted or which
adopts this Plan and Trust.
2.22. "Employer Nonelective Contribution Account" means so much of a
Participant's Accrued Benefit as is attributable to Employer nonelective
contributions, reallocated forfeitures and the earnings and realized and
unrealized gains and losses of the Trust Fund generated by such Employer
nonelective contributions and reallocated forfeitures.
2.23. "Employer Matching Contribution Account" means so much of a
Participant's Accrued Benefit as is attributable to Employer Matching
Contributions, reallocated forfeitures of Employer Matching Contributions and
the earnings and realized and unrealized gains and losses of the Trust Fund
generated by such Employer Matching Contributions and reallocated forfeitures of
Employer Matching Contributions.
II-4
2.24. "Employment Commencement Date" means the date on which the
Employee first performs an Hour of Service for the Employer.
2.25. "Entry Date" means the date(s) specified in the Adoption
Agreement on which eligible Employees commence participation in the Plan.
2.26. "ERISA" means the Employee Retirement income Security Act of
1974, and shall include any amendments thereto.
2.27. "Excused Absence" or "Leave of Absence" means any of the
following:
(a) Absence on leave granted by the Employer for any cause for
the period stated in such leave, or, if no period is stated, then for six (6)
months and any extensions that the Employer may grant in writing. For purposes
of this subsection, the Employer shall give equal treatment to all Employees in
similar circumstances.
(b) Absence in any circumstance so long as the Employee
continues to receive his regular compensation from the Employer.
(c) Absence in the armed forces of the United States or
government service in time of war or national emergency.
(d) Absence by reason of illness or disability until such time
as the employment relationship between Employee and Employer is severed.
An absence shall cease to be an "Excused Absence" or a "Leave
of Absence" and shall be deemed to be a Break in Service as of the later of (1)
or (2):
(1) If the Employee fails to return to the service of
the Employer
(A) within five (5) days of expiration of any
Leave of Absence referred to in subsection (a) of this section,
(B) at such time as the payment of regular
compensation is discontinued as referred to in subsection (b) of this section,
(C) within six (6) months after the
Employee's discharge or release from active duty, or, if the Employee does not
return to service with the Employer within the said six-month period by reason
of a disability incurred while in the armed forces, if he returns to service
with the Employer upon the termination of such disability as evidenced by
release from confinement in a military or veterans hospital, or
(D) upon recovery from illness or disability;
or
(2) The first day of the first Plan Year in which the
Employee fails to complete more than five hundred (500) Hours of Service.
II-5
The Employer shall be the sole judge of whether or not
recovery from illness or disability has occurred for this purpose.
2.28. "Fund" or "Trust Fund" means all of the assets of the Plan held
by the Trustee (or any nominee thereof) at any time under the Trust Agreement,
2.29. "Highly Compensated Employee" includes both Highly Compensated
Active Employees end Highly Compensated Former Employees. A Highly Compensated
Active Employee means any Employee who performs services for the Employer during
the determination year end who, during the look-back year: (i) received
compensation from the Employer in excess of 075,000 (as adjusted pursuant to
Code Section 415(d)); (ii) 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 (iii) was an officer of the Employer and
received compensation during such year that is greater than 50% of the dollar
limitation in effect under Code Section 415(b)(1 )(A). The term "Highly
Compensated Employee" also includes: (i) Employees who are both described in the
preceding sentence if the term "determination year" is substituted for the term
"look-back year" end who are among one of the 100 Employees who received the
highest compensation from the Employer during the determination year; and (ii)
Employees who are 5% owners at any time during the look-xxxx year or
determination year.
If no officer has satisfied the compensation requirement of (iii) above
during either a determination year or look-back year, the highest paid officer
for such year shall be treated as a Highly Compensated Employee.
For this purposes, the determination year shall be the Plan Year. The
look-back year shall be the 12-month period immediately preceding the
determination year.
A Highly Compensated Former Employee means any Employee who has
separated from service (or was deemed to have separated) prior to the
determination year, performs no services for the Employer during the
determination year and was a Highly Compensated Active Employee for either the
separation year or any determination year ending on or after the Employee's 55th
birthday.
If an Employee is, during a determination year or look-back year, a
family member of either a 5% owner who is an Active or Former Employee or a
Highly Compensated Employee who is one of the 10 highest compensated Employees
during such year, then the family member and the 5% owner or top 10 highly
compensated Employee shall be aggregated in accordance with Code Section 414(q).
In such case, the family member and 5% owner or top 10 highly compensated
Employee shall be treated as a single Highly Compensated Employee receiving such
compensation and Plan contributions or benefits equal to the sum of such
compensation and contributions or benefits of the family member and 5% owner or
top 10 highly compensated Employee. For purposes of this section, family member
includes the spouse, lineal ascendants and descendants of the Employee or Former
Employee and the spouses of such lineal ascendants and descendants.
The determination of who is a Highly Compensated Employee, including
the determinations of the number and identity of Employees in the top-paid
group, the top
II-6
100 Employees, the number of Employees treated as officers and the compensation
that is considered, will be made in accordance with Code Section 414(q) and the
regulations thereunder.
2.30. "Hour of Service" means:
(a) Each hour for which an Employee is paid or entitled to payment for the
performance of duties during the applicable Plan Year. The Employer may round up
hours at the end of a computation period or more frequently.
(b) 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.
Notwithstanding the preceding sentence:
(1) No more then 501 Hours of Service shall be
credited under this subsection (b) to an Employee on account of any single
continuous period during which the Employee performs no duties (whether or not
such period occurs in a single computation period);
(2) An hour for which an Employee is directly or
indirectly paid, or entitled to payment on account of a period during which no
duties-are performed is not required to be credited to the Employee if such
payment is made or due under a plan maintained solely for the purpose of
complying with applicable worker's compensation or unemployment compensation or
disability insurance laws; and
(3) Hours of Service shall not be credited for a
payment which solely reimburses an Employee for medical or medically related
expenses incurred by the Employee.
For purposes of subsection (b) above, e payment shall be
deemed to be made by or due from the Employer regardless of whether such payment
is made by or due from the Employer directly or indirectly through, among
others, a trust fund or insurer to which the Employer contributes or pays
premiums and regardless of whether contributions made or due to the trust fund,
insurer or other entity are for the benefit of particular Employees or are on
behalf of a group of Employees in the aggregate.
(c) 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 subsection (a) and subsection (b), as
the case may be, and under this subsection (c). Crediting of Hours of Service
for back pay awarded or agreed to with respect to periods described in
subsection (b) above shall be subject to the limitations set forth in that
subsection.
In the case of a payment which is made or due on account of a
period during which an Employee performs no duties, and which results in the
crediting of Hours of Service under subsection (c) above, or in the case of an
award or agreement for back pay, to the extent that such award or agreement is
made with respect to a period described in
11-7
subsection (b) above, the number of Hours of Service to be credited shall be
determined in accordance with Department of Labor Regulations Section
2530.200b-2(b). Hours shall be credited to the applicable computation period in
accordance with Department of Labor Regulations Section 2530.200b-2(c). This
section shall be interpreted in a manner consistent with the aforementioned
regulations.
To the extent possible, Hours of Service shall be determined from the Employer's
records of hours worked and hours for which payment is made or due. In the event
that the hours worked by an Employee ere not accurately determinable from such
records, he shall instead be credited with ten (10) hours daily, forty-five (45)
hours weekly, ninety-five (95) hours semi-monthly or one hundred ninety (190)
hours monthly if he is paid on a daily, weekly, semi-monthly or monthly basis,
respectively, so long as such Employee shall have completed an Hour of Service
during such period.
For purposes of this Plan, Hours of Service will be credited
for employment with other members of an Affiliated Service Group (under Code
Section 414(m)), s controlled group of corporations (under Code Section 414(b))
or a group of trades or businesses under common control (under 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.
2.31. "Insurer" means any legal reserve life insurance company as may
issue any contract under the provisions of this Plan.
2.32. "Investment Manager" means any fiduciary, other than the Trustee
or the Plan Administrator, who:
(a) is delegated the power to manage, acquire or dispose of
any assets of the Plan or the Trust;
(b) is (i) registered as an investment advisor under the
Investment Advisors Act of 1940, iii) a bank as defined in that Act, or/iii) an
insurance company qualified to perform services described above under the laws
of more than one state; and the Plan.
(c) has acknowledged in writing that he is a Fiduciary with
respect to
2.33. "Limitation Year" means the Plan Year.
2.34. "Named Fiduciary" means the Trustee, the Plan Administrator, the
Investment Manager and the Named Appeals Fiduciary. Each Named Fiduciary shall
have only those particular powers, duties, responsibilities and obligations as
ere specifically given him under this Plan and/or the Trust Agreement.
2.35. "Net Income" means the current and accumulated earnings of the
Employer, as determined by the Employer's regularly engaged accountant upon the
basis of the Employer's books of account, in accordance with generally accepted
accounting principles, if applicable, but without any deduction being taken for
any of the following: (i)
11-8
depreciation, (ii) extraordinary losses resulting from the sale of assets not in
the ordinary course of business, (iii) casualty losses in excess of recovery,
(iv) contributions to this or any other qualified retirement plan, or (v)
Federal, state, county or city income taxes.
2.36. "Nonhighly Compensated Employee" means an Employee who is not a
Highly Compensated Employee.
2.37. "Normal Retirement Age" or "Normal Retirement Date" shall be as
defined in the Adoption Agreement. At Normal Retirement Age, benefits under this
Plan shall be fully vested and nonforfeitable.
2.38. "Participant" means any person who has been or who is an Employee
who has been admitted to participation in this Plan. The term "Participant"
shall include Active Participants (those Participants who are eligible to share
in Employer contributions to the Plan), Inactive Participants (those
Participants who have terminated employment but on whose behalf an account is
being maintained, Ineligible Participants or Participants who have terminated
employment to work for another member of a Controlled Group), Retired
Participants (those former Participants presently receiving benefits under this
Plan) and Vested Participants (if this Plan is terminated, former Active
Participants who remain employees of the Employer, any of whom are entitled at
some future date to a distribution of benefits from this Plan).
2.39. "Period of Service" means a period of service commencing on the
Employee's Employment Commencement Date or Reemployment Commencement Date,
whichever is applicable, and ending on his Severance from Service Date.
2.40. "Period of Severance" means the period of time commencing on the
Severance from Service Date end ending on the date on which the Employee again
performs an Hour or Service. For purposes hereof, a one-year Period of Severance
means a 12-consecutive month period beginning on the Severance from Service Date
during which the Employee does not perform an Hour of Service for the Employer.
2.41. "Person" means an individual, partnership, joint venture,
corporation, mutual company, joint-stock company, trust, estate, unincorporated
organization, association or employee organization.
2.42. "Plan" means the Plan of the Employer as set forth herein,
together with all exhibits and amendments thereto.
2.43. "Plan Administrator" means the entity, person or committee named
as such pursuant to the Adoption Agreement and the provisions of Article XVI
hereof.
2.44. "Plan Year" means the 12-month period specified in the Adoption
Agreement.
2.45. "Predecessor Entity" means a former employer who maintained the
Plan of the current Employer.
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2.46. "Predecessor Plan" means any Pension or Profit Sharing Plan
maintained by the Predecessor Entity or the Employer.
2.47. "Qualified Employer Matching Contributions" means fully vested
and nonforfeitable Employer Matching Contributions that satisfy the additional
requirements of Regulation Section 1.401 (k)-I (g)(7)(iii) and which may be
treated as Elective Contributions for purposes of the nondiscrimination tests
under Section 401(k) and 401(m) of the Code.
2.48. "Qualified Employer Nonelective Contributions" means fully vested
and nonforfeitable Employer Contributions, other then Elective Contributions end
Employer Matching Contributions, that satisfy the additional requirements of
Regulation Section 401(k)-1(g)(7)(iii) and which may be treated as Elective
Contributions for purposes of the nondiscrimination tests under Section 401(k)
and 401(m) of the Code.
2.49. "Reemployment Commencement Date" means the first date, following
a Period of Severance which is not required to be taken into account under the
service spanning rules of the Elapsed Time Method of crediting service, on which
the Employee completes an Hour of Service following the last vesting computation
period in which a Break in Service occurred.
2.50. "Salary Reduction Contribution Account" means the account
maintained for a Participant to record contributions made on the Participant's
behalf by the Employer pursuant to a Salary Reduction Agreement described in
Article IV and adjustments relating thereto.
2.51. "Severance from Service Date" means the earlier of (i) the date
on which an Employee quits, retires, is discharged or dies or (ii) the first
anniversary of the first date of a period in which an Employee remains absent
from service (with or without pay) With the Employer or Employers maintaining
the Plan for any reason other than quit, retirement, discharge or death, such as
vacation, holiday, sickness, disability, leave of absence or layoff.
2.52. "Taxable Year" means and refers to the twelve-month period
adopted by the Employer as its fiscal year for Federal income tax purposes. If
at any time the term "Employer" shall include more than one (1) entity and such
separate entities shall not have the same fiscal year for tax purposes, then the
Taxable Year for purposes of the Plan shall be the Taxable Year of the original
Employer.
2.53. "Trust" means the Trust which the Employer has established as of
the same date as its adoption of this Plan, together with all amendments
thereto, to hold the assets of this Plan. The Trust, and any future amendments
thereto, shall form a pert of this Plan, and any amendments hereto, and is
hereby incorporated by reference and shall have the same force and effect as if
all the terms and provisions thereof were set forth in full herein.
2.54. "Trust Fund" means the assets of the Trust.
2.55. "Trustee" means the person(s), corporation or banking association
appointed by the Employer to serve as Trustee and who has accepted such Trust by
11-10
execution of the Trust Agreement, acting in its capacity as a party to the
Trust, and any successor or successors in the Trust.
2.56. "Valuation Data" means the Anniversary Date or any interim date
as of which the Trust Fund is valued by the Trustee.
2.57. "Vested Interest" means the nonforfeitable right of a Participant
to benefits under the Plan.
2.58. "Vesting Computation Period" means the twelve (12) consecutive
month period coinciding with the Plan Year. An Employee who has one thousand
(1,000) or more Hours of Service during a Plan Year shall be credited with a
Year of Service for Vesting purposes for that Plan Year.
2.59. "Year of Participation" means each Plan Year during which this
Plan is in existence in which a Participant completes one thousand (1,000) Hours
of Service.
2.60. "Year of Service" means the twelve (12) consecutive month period
during which the Employee completes one thousand (1,000) or more Hours of
Service.
(a) For purposes of determining Years of Service and One-Year
Breaks in Service for purposes of eligibility, the initial twelve (12) month
period shall commence on the Employee's Employment Commencement Date. The second
twelve (12) month period shall be the Plan Year which commences prior to the end
of the initial twelve-month period and which includes the anniversary of the
Employee's Employment Commencement Date.
In the case of an Employer who has elected to provide 100%
vesting after not more than three (3) Years of Service (not more than two (2)
Years of Service for Plan Years beginning after December 31, 1988), the second
and subsequent twelve-month period shall commence on the anniversary of the
Employee's Employment Commencement Date. However, if the Employee fails to
complete three (3) Years of Service (two (2) Years of Service for Plan Years
beginning after December 31, 1988) during the initial eligibility computation
periods, then the eligibility computation period shall be the Plan Year,
retroactive to the Plan Year that includes the Employee's first anniversary of
employment.
(b) For purposes of determining Years of Service and One-Year
Breaks in Service for purposes of computing a Participant's Accrued Benefit or
his nonforfeitable right to his Accrued Benefit, the twelve-month period shall
be the Plan Year.
(c) All Years of Service with other members of a Controlled
Group of corporations, with other trades or businesses under common control,
with other members of an Affiliated Service Group or any other entity required
to be aggregated with the Employer pursuant to Code Section 414(o) and the
regulations thereunder shall be credited for purposes of determining an
Employee's eligibility or his nonforfeitable right to his Accrued Benefit.
II-11
ARTICLE III
PARTICIPATION AND ENTRY DATE
3.01. Initial Eligibility.
(a) Age and Service Requirements. The age and service
requirements for participation in this Plan are as designated in the Adoption
Agreement,
(b) Time of Participation. Any eligible Employee who has
satisfied the age and service requirements shall become a Participant on the
Effective Date or Entry Date coincident with or immediately following the date
he satisfies the minimum age and service requirements of this Plan.
(c) Ineligible Employees. All Employees shall be eligible to
participate in this Plan except any Employee who is included in a unit of
Employees covered by a collective bargaining agreement between Employee
representatives and the Employer in which retirement benefits were the subject
of good faith bargaining between such Employee representatives and the Employer.
3.02. Latest Date for Participation. Notwithstanding anything in this
Plan, including the Adoption Agreement, to the contrary, any Employee who has
satisfied the minimum age and service requirements of the Plan and who is
otherwise entitled to participate in the Plan shall commence participation in
the Plan no later than the earlier of:
(a) The first day of the first Plan Year beginning after the
date on which such Employee first satisfied such requirements; or
(b) The date six (6) months after the date on which the
Employee first satisfied such requirements, unless such Employee was separated
from service and did not return before the date referred to in subsection (a) or
(b) hereof, whichever is applicable. If such separated Employee returns to
service after either of such dates without incurring a one-year Break in
Service, the Employee shall commence participation immediately upon his return.
If this Plan uses the Elapsed Time Method described in the Department of Labor
Regulations, an Employee who has a period of absence commencing before the date
referred to in subsection (a) or (b) hereof, whichever is applicable, shall
commence participation as of such applicable date no later than the date such
absence ended. However, if an Employee's prior service is disregarded on account
of the Plan's Break in Service rules, then, for purposes of this subsection,
such service is also disregarded for purposes of determining the date on which
such Employee first satisfied the minimum age and service requirements.
3.03. Procedure for and Effect of Admission. Each Employee who becomes
eligible for admission to participation in this Plan shall complete such forms
and provide such data as are reasonably required by the Plan Administrator. By
becoming a Participant, each Employee shall for all purposes be deemed
conclusively to have assented to the provisions of the Plan, the corresponding
Trust Agreement and to all amendments to such instruments.
III-1
3.04. Reemployment Before Break in Service. If an Employee who has
separated from service end who has satisfied the minimum age end service
requirements for participation in this Plan, as set forth in the Adoption
Agreement, end who is otherwise entitled to participate in this Plan, returns to
service after the Entry Date without incurring a Break in Service, such Employee
shall commence participation immediately upon his return to service.
3.05. Break in Service.
(a) Except as provided in Section 3.05(b), 3.05(c), 3.05(d)
and 3.05(e), all of an Employee's Years of Service with the Employer or with
another employer maintaining this Plan shall be taken into account in computing
his credited service for eligibility purposes.
(b) In the case of an Employee who incurs a one-year Break in
Service under the Plan if it provides that, after not more than three (3) Years
of Service (two (2) Years of Service for Plan Years beginning after December 31,
1988), each Participant's right to his Accrued Benefit under the Plan is
completely nonforfeitable at the time such benefit accrues, the Employee's
service before the Break in Service shall not be taken into account after the
Break in Service in determining the Employee's Years of Service if such Employee
has not satisfied such service requirement.
(c) If the Adoption Agreement references this subsection (c),
a Former Participant who did not have a nonforfeitable right to any portion of
his Employer-derived Accrued Benefit at the time of his termination of
participation shall be considered a new Employee for eligibility purposes if the
number of consecutive Breaks in Service equals or exceeds the aggregate number
of Years of Service before such break. If such former Participant's Years of
Service before his termination exceed the number of consecutive Breaks in
Service after such termination, such Participant shall participate immediately
upon his return to employment. If this Plan uses the Elapsed Time Method
described in the Department of Labor regulations, such Years of Service prior to
such Break in Service shall be disregarded if the Period of Severance is at
least one (1) year and the Period of Severance equals or exceeds the prior
Period of Service, whether or not consecutive, completed before such Period of
Severance. In computing such aggregate number of Years of Service prior to such
Break in Service, any Years of Service which could have been disregarded under
this section by reason of any prior Break in Service shall be disregarded.
If this Plan elects the Elapsed Time Method of crediting
service in the Adoption Agreement, the following Periods of Severance shall be
taken into account in determining a one-year Period of Service for purposes of
initial eligibility to participate and a Period of Service for purposes of
retention of eligibility to participate in addition to taking into account an
Employee's Period of Service:
(1) If an Employee xxxxxx from service by reason of a
quit, discharge or retirement and then performs an Hour of Service within 12
months of the Severance from Service Date, the Period of Severance shall be
taken into account; and
(2) Notwithstanding subsection (1) above, if an
Employee xxxxxx from service by reason of a quit, discharge or retirement during
an absence from
III-2
service of 12 months or less for any reason other than a quit, discharge,
retirement or death and then performs an Hour of Service within 12 months of the
date on which the Employee was first absent from service, the Period of
Severance shall be taken into account.
(d) If the Adoption Agreement specifies this subsection (d), a
Former Participant who did not have a nonforfeitable right to any portion of his
Employer-derived Accrued Benefit at the time of his termination of
participation, whose prior service cannot be disregarded and who is reemployed
after a Break in Service (or Period of Severance) shall participate in this Plan
immediately upon his Reemployment Commencement Date. For purposes hereof, Years
of Service with the Employer before any period of consecutive one-year Breaks in
Service shall be disregarded and shall not be taken into account If the number
of consecutive one-year Breaks in Service equals or exceeds the greater of:
(1) five (5), or
(2) the aggregate number of Years of Service before
such period.
(e) If the Adoption Agreement designates this subsection (e),
a Former Participant's eligibility to participate shall be retroactive to his
Reemployment Commencement Date after a Break in Service after he has completed a
Year of Service following such break, and his service prior to the Break in
Service shall be disregarded until he completes a Years of Service following
such Break in Service.
(f) If the Adoption Agreement specifies this subsection (f),
any Former Participant, whether vested or nonvested at the time of termination
of participation, shall participate immediately upon his Reemployment
Commencement Date.
3.06. Employees Who Lose or Gain Eligible Status.
(a) In the event a Participant becomes ineligible to
participate because he is no longer a member of an eligible class of Employees,
but he has not incurred a one-year Break in Service, such Employee shall
participate immediately upon his return to an eligible class of Employees. Such
effected Participant shall continue to be credited with vesting Years of Service
even though the Participant may not be entitled to further accrual credit under
this Plan. If such affected Participant does not incur a Break in Service, he
shall reenter pursuant to subsection (b) below. If such Participant incurs a
one-year Break in Service, his eligibility to participate shall be determined
pursuant to Section 3.05.
(b) 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 designated in the Adoption Agreement and
would otherwise have become a Participant had he been in the eligible class.
3.07. Predecessor Employer. If the Employer maintains the Plan of a
Predecessor Employer, service as a common law employee for such Predecessor
Employer shall be treated as service for the Employer. If the Predecessor
Employer was not a corporation,
III-3
Years of Service shall not include service with the Predecessor Employer as a
partner or sole proprietor unless the Employer shall designate otherwise in the
Adoption Agreement. If the Predecessor Employer did not maintain a plan or
maintained a plan that has been terminated. Years of Service under this Plan
shall not include service with the Predecessor Employer unless the Employer
shall designate otherwise in the Adoption Agreement.
3.08. Owner-Employees. Notwithstanding anything herein to the contrary,
no Owner-Employee may become a Participant initially, or remain a Participant,
if such Owner-Employee, either alone or in conjunction with one or more other
Owner-Employees:
(a) Controls an unincorporated trade or business other than
the business of the Employer unless the employees of such other trade or
business are included under a plan which meets the requirements of the Code and
which provides contributions and benefits which are not less favorable than the
contributions and benefits provided for Owner-Employees under this Plan; or
(b) Controls both the business of the Employer and one or more
other unincorporated trades or businesses, unless plans are established with
respect to such other trades or businesses and such plans and this Plan, when
coalesced, would form a single plan which meets the requirements of the Code; or
(c) If such Owner-Employee is covered under a plan of a trade
or business, or under the plans of two or more trades or businesses which he
does not control, and such individual controls a trade or business, unless the
contributions and benefits of the employees under the plan of the trade or
business which he does control are as favorable as those provided for him under
the most favorable plan of the trade or business which he does not control.
III-4
ARTICLE IV
EMPLOYER CONTRIBUTIONS
4.01. Employer Contributions Under a Cash or Deferred Arrangement
Pursuant to Code Section 401(k). For each Plan Year, the Employer shall
contribute an amount equal to the total amount of contributions agreed to be
made by it pursuant to Salary Reduction Agreements (as described in t4.02)
entered into between the Employer end Participants for such Plan Year.
Contributions made by the Employer for a given Plan Year pursuant to Salary
Reduction Agreements shall be deposited in the Trust Fund as soon as
administratively feasible, but in no event later than the date the Employer
files its Federal income tax return for such Plan Year. No Participant shall be
permitted to have Elective Deferrals (as defined below) made under this Plan,
together with any other qualified plan maintained by the Employer or any related
Employer, during any taxable year in excess of the dollar limitation contained
in Section 402(g) of the Code in effect at the beginning of such taxable year.
4.02. Salary Reduction Contributions. A Participant may elect to enter
into a written Salary Reduction Agreement with the Employer which will be
applicable to all payroll periods within a Plan Year. The terms of any such
Salary Reduction Agreement shall provide that the Participant agrees to accept s
reduction in salary from the Employer equal to any whole percentage of the
Participant's Compensation per payroll period, not to exceed the percentage, of
such Compensation specified in the Adoption Agreement. In consideration of such
agreement, the Employer will make Salary Reduction Contributions to the
Participant's Salary Reduction Contribution Account on behalf of the Participant
in amounts which total the amount by which the Participant's Compensation from
the Employer was reduced during the Plan Year pursuant to the Salary Reduction
Agreement.
Amounts credited to a Participant's Salary Reduction Contribution
Account shall be 100% vested and nonforfeitable at all times.
Further, Salary Reduction Agreements shall be governed by the
following:
(a) A Salary Reduction Agreement shall apply to each payroll
period during which an effective Salary Reduction Agreement is on file with the
Employer.
(b) Salary Reduction Contributions may be commenced or ceased
at any time during the Plan Year subject to a reasonable notification time prior
to the end of a payroll period for administrative purposes as established by the
Plan Administrator.
(c) A Salary Reduction Agreement may be amended by a
Participant at any time within a reasonable notification period to increase or
decrease the amount of such Participant's Compensation which is subject to
salary reduction.
(d) The Employer may amend or revoke a Salary Reduction
Agreement with a Participant at any time if the Employer determines that such
revocation or amendment is necessary to ensure that a Participant's Annual
Additions for a Plan Year will not exceed
IV-1
the limitations under Code Section 415 as set forth in Article V or to ensure
that the discrimination tests under Code Section 401(k) set forth in this
Article IV are satisfied for such Plan Year.
No amounts may be withdrawn by a Participant from a Salary
Reduction Contribution Account earlier than upon separation from service, death,
disability or termination of the Plan.
The Plan Administrator, in its sole discretion, may limit the
maximum amount of Salary Reduction Contributions for all Participants or any
classification of Participants to the extent it determines that such limitation
is necessary to keep the Plan in compliance with applicable rules for tax
qualification under Code ii Section 401 (a) and 401 (k).
4.03. Employer Matching Contributions. For each Plan Year the Employer
will make Matching Contributions (as defined in Section 401(m) of the Code) as
specified in the Adoption Agreement.
Employer Matching Contributions shall be subject to a vesting schedule
as specified in the Adoption Agreement, and, in any event, shall be fully vested
at Normal Retirement Age under the Plan, upon termination of the Plan or upon
complete discontinuance of Employer contributions. Forfeitures of Employer
Matching Contributions shall be applied as specified in the Adoption Agreement.
"Qualified Employer Matching Contributions" shall mean such
contributions as defined in Section 2.47 which are subject to the distribution
and nonforfeitability requirements set forth in Code Section 401 (k) when made.
4.04. Employer Nonelective Contributions. The Employer shall make such
nonelective contributions to the Trust for a Plan Year, in such amounts as
permitted under the Code, as the Employer, in its discretion, shall determine.
Although the Plan is designed to qualify as a profit sharing plan for purposes
of Code Section 401(a), 402, 412 and 417, for Plan Years commencing after
December 31, 1985, Nonelective Contributions may be made without regard to
current or accumulated earnings and profits for the taxable year. This provision
shall not be construed as requiring the Employer to make Nonelective
Contributions in respect of any specific Plan Year.
Employer Nonelective Contributions shall be subject to a vesting
schedule as specified in the Adoption Agreement, and, in any event, shall be
fully vested at Normal Retirement Age under the Plan, upon termination of the
Plan or upon complete discontinuance of Employer contributions.
"Qualified Employer Nonelective Contributions" shall mean such
contributions as defined in Section 2.48 made by the Employer and allocated to
Participants" accounts which Participants may not elect to receive in cash until
distributed from the Plan, which are nonforfeitable when made end which are
distributable only in accordance with the distribution provisions that are
applicable to Elective Deferrals and Qualified Employer Matching Contributions.
IV-2
4.05. Elective Deferrals and Distribution of Excess Elective Deferrals.
"Elective Deferrals" shall mean any Employer Contributions made to the Plan at
the election of the Participant, in lieu of cash Compensation, and shall include
contributions made pursuant to a Salary Reduction Agreement. 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 1401(k)
of the Code, any simplified employee pension cash or deferred arrangement as
described in Section 402(h)(1)(B) of the Code or other arrangements described
under Section 1457, 501 (c)(18) and 403(b) of the Code. Elective Deferrals shall
not include any deferrals properly distributed as excess annual additions.
"Excess Elective Deferrals" shall mean those Elective Deferrals that
are includible in a Participant's gross income under Section 402(g) of the Code
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 Article V of the Plan, unless such amounts
are distributed no later than the first April 15 following the close of the
Participant's taxable year.
Excess Elective Deferrals shall be adjusted for any income or loss up
to the date of distribution. The income or loss allocable to Excess Elective
Deferrals is the sum of: (i) income or loss allocable to the Participant's
Elective Deferrals under the Plan for the taxable year multiplied by a fraction,
the numerator of which is such Participant's Excess Elective Deferrals for the
year end the denominator of which is the Participant's account balance
attributable to Elective Deferrals without regard to any income or loss
occurring during such taxable year; and (ii) ten percent of the amount
determined under (i) multiplied by the number of whole calendar months between
the end of the Participant's taxable year and the date of distribution, counting
the month of distribution if distribution occurs after the 15th of such month.
4.06. Actual Deferral Percentage as a Test. Elective Deferrals must meet the
nondiscrimination requirements of Section 401 (a)(4) and 401 (k)(3) of the Code.
The Actual Deferral Percentage (hereinafter "ADP") for Participants who are
Highly Compensated Employees for each Plan Year and the ADP for Participants who
are Nonhighly Compensated Employees for the same Plan Year must satisfy one of
the following tests:
(a) The ADP for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the ADP for Participants who are
Nonhighly Compensated Employees for the same Plan Year multiplied by 1.25; or
(b) The ADP for Participants who ere Highly Compensated
Employees for the Plan Year shall not exceed the ADP for Participants who are
Nonhighly Compensated Employees for the same Plan Year multiplied by 2.0,
provided that the ADP for Participants who are Highly Compensated Employees does
not exceed the ADP for Participants who are Nonhighly Compensated Employees by
more than two (2) percentage points.
IV-3
(c) Special Rules:
(1) The ADP for any Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible to have Elective
Deferrals (and Qualified Employer Nonelective Contributions or Qualified
Employer 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 ere maintained by the
Employer shall be determined as if such Elective Deferrals (and, if applicable,
such Qualified Employer Nonelective Contributions or Qualified Employer Matching
Contributions, or both) were made under a special 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.
(2) In the event this Plan satisfies the requirements
of Section 401(k), 401 (a)(4) or 410(b) of the Code only if aggregated with one
or more other plans, or if one or more other plans satisfy the requirements of
such sections of the Code only if aggregated with this Plan, then this section
shall be applied by determining the ADP of Employees as if all such plans were a
single plan. For Plan Years beginning after December 31, 1989, plans may be
aggregated in order to-satisfy Section 401(k) of the Code only if they have the
same Plan Year end only as provided in Regulations Section 1.401(k)-1.
(3) For purposes of determining the ADP of a
Participant who is a 5% owner or one of the ten most highly paid Highly
Compensated Employees, the Elective Deferrals (and Qualified Employer
Nonelective and 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 Employer
Nonelective and Matching Contributions, or both) and Compensation for the Plan
Year of Family Members (as defined in Section 414(q)(6) of the Code). Family
Members, with respect to such Highly Compensated Employees, shall be disregarded
as separate employees in determining the ADP both for Participants who are
Nonhighly Compensated Employees end for Participants who are Highly Compensated
Employees.
(4) For purposes of determining the ADP test,
Elective Deferrals, Qualified Nonelective Employer Contributions and Qualified
Employer Matching Contributions must be made before the last day of the 12-month
period immediately following the Plan Year to which the contributions relate.
(5) The Employer shall maintain records sufficient to
demonstrate satisfaction of the ADP test and the amount of Qualified Nonelective
Contributions or Qualified Employer Matching Contributions, or both, used in
such test.
(6) The determination and treatment of the ADP
amounts of any Participant shall satisfy such other requirements as may be
prescribed by the Secretary of the Treasury.
IV-4
(7) For purposes hereof, "Actual Deferral Percentage"
(ADP) shall mean, for a specified group of Participants for a Plan Year, the
average of the ratios (calculated separately for each Participant in such group)
of (i) the amount of Employer Contributions actually paid over to the Trust on
behalf of such Participant for the Plan Year to (ii) the Participant's
Compensation for the portion of such Plan Year during which the Participant was
eligible to participate in the Plan. Employer Contributions on behalf of any
Participant shall include: (i) any Elective Deferrals made, including excess
Elective Deferrals, but excluding Elective Deferrals taken into account in the
ACP test, and (ii) Qualified Employer Nonelective and 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 ere made.
4.07. Qualified Employer Matching Contributions end Actual Contribution
(a) "Qualified Employer Matching Contributions" shall mean
Employer Matching Contributions which are subject to the distribution and
nonforfeitability requirements under Code Section 401(k) when made.
(b) The Actual Contribution Percentage (hereinafter "ACP") for
Participants who ere Highly Compensated Employees for each Plan Year and the ACP
for Participants who are Nonhighly Compensated Employees for the same Plan Year
must satisfy one of the following ACP tests:
(1) The ACP for Participants who are Highly
Compensated Employees for the Plan Year shall not exceed the ACP for
Participants who are Nonhighly Compensated Employees for the same Plan Year
multiplied by 1.25; or
(2) The ACP for Participants who are Highly
Compensated Employees for the Plan Year shall not exceed the ACP for
Participants who ere Nonhighly Compensated Employees for the same Plan Year
multiplied by 2.0, provided that the ACP for Participants who are Highly
Compensated Employees does not exceed the ACP for Participants who are Nonhighly
Compensated Employees by more than two (2) percentage points.
(c) If one or more Highly Compensated Employees participates
in both an arrangement permitting Elective Deferrals subject to the ADP test and
a plan providing for Employer Matching Contributions subject to the ACP test and
the sum of ADP and ACP for Highly Compensated Employees exceeds the Aggregate
Limit, then the ACP of such Highly Compensated Employees may be reduced
(beginning with the Highly Compensated Employee whose ACP is the highest) so
that the limit is not exceeded.
(d) Multiple use does not occur if neither the ADP nor the ACP
of the Highly Compensated Employees exceeds 1.25 times the ADP or ACP of the
Nonhighly Compensated Employees.
(e) For purposes of determining the ACP, Employer Matching
Contributions and Qualified Employer Nonelective Contributions are considered
made for a Plan Year
IV-5
if made no later than the end of the 12-month period beginning on the day after
the close of the Plan Year.
(f) Definitions:
(1) "Aggregate Unit" meant the sum of (i) 125% of the
greater of the ADP of Nonhighly Compensated Employees for the Plan Year or the
ACP of Nonhighly Compensated Employees for the Plan Year and (ii) the lesser of
200% of or two plus the lesser of such ADP or ACP.
(2) "Actual Contribution Percentage" means the
average of the actual Contribution percentages of eligible Participants in a
group.
(3) "Contribution Percentage" means the ratio
(expressed as a percentage) of the Participant's Contribution Percentage Amounts
to the Participant's Compensation for the Plan Year.
(4) "Contribution Percentage Amount" means the sum
of Employer Matching Contributions and Qualified Employer Matching Contributions
(to the extent not taken into account for purposes of the ADP test) made on
behalf of a Participant for the Plan Year. The Employer may include Qualified
Employer Nonelective Contributions in the Contribution Percentage Amounts, end
the Employer may also elect to use Elective Deferrals in the Contribution
Percentage Amounts so long as the ADP test i8 met before the Elective Deferrals
ere used in the ACP test and continues to be met following the exclusion of
those Elective Deferrals that ere used to meet the ACP test.
(5) "Employer Matching Contribution" means an
Employer Contribution made to this or any other defined contribution plan on
behalf of a Part0cipant on account of the Participant's Elective Deferral.
4.08. Distribution of Excess Contributions. Notwithstanding any other
provisions 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 10% excise tax will be imposed on the Employer with respect to
such amounts. Such distributions shall be made to Highly Compensated Employees
on the basis of the respective portions of the Excess Contributions which are
attributable to each of such Employees.
Excess Contributions shall be adjusted for any income or loss up to the
date of distribution. The income or loss allocable to Excess Contributions is
the sum of: (i) income or loss allocable to the Participant's Elective Deferral
account (and, if applicable, the Qualified Employer Nonelective Contribution
Account or the Qualified Employer Matching Contribution Account, or both) for
the Plan Year multiplied by a fraction, the numerator of which is such
Participant's Excess Contributions for the year and the denominator of which is
the Participant's account balance attributable to Elective Deferrals (and
Qualified Employer Nonelective or Matching Contributions, or both, if included
in the ADP test) without regard
IV-6
to any income or loss occurring during such Plan Year, and (ii) 10% of the
amount determined under (I) multiplied by the number of whole calendar months
between the end of the Plan Year and the date of distribution, counting the
month of distribution if distribution occurs after the 15th day of such month.
4.09. Forfeitures and Vesting of Matching Contributions. Employer
Matching Contributions shall vest as provided in the Adoption Agreement. In any
event, Employer Matching Contributions shall be fully vested at Normal
Retirement Age, upon complete or partial termination of the Plan or upon
complete discontinuance of Employer Contributions. Forfeitures of Employer
Matching Contributions shall be made in accordance with Article VI.
4.10. Distribution of Excess Aggregate Contributions. Notwithstanding
any other provisions of the Plan, Excess Aggregate Contributions, plus any
income and minus any loss allocable thereto, shall be forfeited, if forfeitable,
or 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. If such Excess Aggregate Contributions are distributed more
than 2 1/2 months after the last day of the Plan Year, a 10% excise tax will be
imposed on the Employer with respect to those amounts. Forfeitures of Excess
Aggregate Contributions may be reallocated or applied to reduce Employer
Contributions as provided in the Adoption Agreement.
4.11. Qualified Employer Nonelective Contributions. The Employer may
elect to make Qualified Nonelective Contributions on behalf of Employees as
provided in the Adoption Agreement. "Qualified Employer Nonelective
Contributions" shall mean contributions (other than Employer Matching
Contributions or Qualified Employer Matching Contributions) made by the Employer
and allocated to Participants" accounts that 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.
4.12. Nonforfeitability and Vesting. A Participant's accrued benefit
derived from Elective Deferrals, Qualified Employer Nonelective Contributions
and Qualified Employer Matching Contributions shall be nonforfeitable at all
times. Separate accounts shall be maintained for each Participant. Each account
will be credited with applicable contributions and earnings thereon.
4.13. Distribution Requirements, Elective Deferrals, Qualified Employer
Nonelective Contributions and Qualified Employer Matching Contributions, and
income allocable to each, shall be distributable to Participants no earlier than
upon the Participant's separation from service, death or disability except upon
the occurrence of one of the following distributable events:
(a) Termination of the Plan in the absence of or without the
establishment of a successor plan as provided in Regulations Section 1.401(k)-I
(d)(3).
(b) Disposition by a corporation to an unrelated corporation
of substantially all of the assets used in a trade or business of the
corporation if such corpora-
IV-7
xxxx continues to maintain this Plan after the disposition, but only with
respect to Employees who continue employment with the corporation acquiring such
assets.
(c) Disposition by a corporation to an unrelated entity of
such corporation's interest in a subsidiary if such corporation continues to
maintain this Plan, but only with respect to Employees who continue employment
with such subsidiary.
(d) Attainment by a Participant of age 59 1/2 (if specifically
permitted in the Adoption Agreement).
4.14. Payment of Nonelective Contributions. All Employer Nonelective
Contributions shall be paid direct to the Trustee and may be made at any date or
dates selected by the Employer within the time prescribed by law for the filing
of the Employer's Federal income tax return for such year, including any
extensions of time obtained for filing the return.
4.15. Exclusive Benefit: Refund of Contribution. All contributions made
by the Employer are made for the exclusive benefit of the Participants and their
beneficiaries, and such contributions shall not be used for nor diverted to
purposes other than for the exclusive benefit of the Participants and their
beneficiaries (including the costs of maintaining and administering the Plan and
Trust). Notwithstanding the foregoing, nonelective amounts contributed to the
Trust by the Employer may be refunded to the Employer under the following
circumstances end subject to the following limitations:
(a) Initial Nonqualification. In the event that the
Commissioner of Internal Revenue determines that the Plan is not initially
qualified under the Code, any contribution made incident to that initial
qualification by the Employer must be returned to the Employer within one (1)
year after the date the initial qualification is denied, but only if the
application for Qualification is made by the time prescribed by law for filing
the Employer's Federal income tax return for the taxable year in which the Plan
is adopted, or such later date as the Secretary of the Treasury may prescribe.
(b) Mistakes. If a Contribution to the Trust Fund in whole or
in part is attributable to a good faith mistake of fact or a good faith mistake
in determining the deductibility of the contribution under Code Section 404
(e.g., incorrect information as to the eligibility or compensation of a
Participant, or a mathematical or actuarial error), then an amount shall be
returned to the Employer equal to the excess of (1) the amount contributed over
(2) the amount which would have been contributed had there not occurred a
mistake of fact or a mistake in determining the deduction. Earnings attributable
to the excess contribution shall not be returned to the Employer, but losses
attributable thereto shall reduce the amount to be returned.
The withdrawal of the amount attributable to the mistaken
contribution shall be reduced appropriately if it would cause the balance of an
individual account of a Participant to be reduced to less than the balance which
would have been in the account had the mistaken amount not been contributed.
IV-8
The return to the Employer of the amount involved shall be
paid by the Trustee after demand by the Employer and shall be made within one
(1) year of the mistaken payment of the contribution or disallowance of the
deduction, as the case may be.
Notwithstanding any other provision of this section, no refund
shall be made to the Employer which is specifically chargeable to the Account(s)
of any Participant(s) in excess of one hundred percent (100%) of the amount in
such Account(s) nor shall a refund be made by the Trustee of any funds,
otherwise subject to refund hereunder, which have been distributed to
Participants and/or beneficiaries. In the case that such distributions become
refundable, the Employer shall have a claim directly against the distributees to
the extent of the refund to which it is entitled.
All refunds pursuant to this Section 4.15 shall be limited in
amount, circumstance and timing to the provisions of Section 403(c) of ERISA,
and no such refund shall be made if, solely on account of such refund, the Plan
would cease to be a qualified plan pursuant to Section 401(a) of the Code.
4.16. Types of Contributions. Employer Nonelective Contributions may be
made in cash or other property acceptable to the Trustee.
4.17. Omission of Eligible Employee. If, in any Plan Year, any Employee
who should have been included as a Participant in the Plan is erroneously
omitted and discovery of such omission is not made until after an Employer
Nonelective Contribution for the Plan Year has been made, the Employer shall
make a subsequent contribution with respect to the omitted Employee in the
amount which would have been contributed with respect to such Participant
regardless of whether or not it is deductible in whole or in part in any taxable
year under the applicable provisions of the Code.
4.18. Inclusion of Ineligible Employee. If, in any Plan Year, any
individual 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 an Employer Nonelective Contribution for the Plan Year has been made, the
Employer shall not be entitled to recover the contribution made with respect to
the ineligible individual regardless of whether or not a deduction is allowable
with respect to such contribution. However, such contribution shall be used to
reduce Employer Nonelective Contributions to the Plan with respect to the Plan
Year or succeeding Plan Years in which such discovery occurs.
IV-9
ARTICLE V
LIMITATIONS ON BENEFITS
5.01. (a) Annual Additions Limitations. Notwithstanding the provisions
of Section 6.01 and 6.02 of this Plan, in no event shall the annual additions to
a Participant's Salary Reduction Contribution Account, Employer Nonelective
Contribution Account and Employer Matching Contribution Account (including any
Qualified Employer Contributions) for a "Limitation Year" exceed the lesser of
twenty-five percent (25%) of such Participant's Compensation or the defined
contribution dollar limitation (Thirty Thousand Dollars ($30,000) or, if
greater, one-fourth (1/4) of the defined benefit dollar limitation set forth in
Code Section 415(b)(1) as in effect for the Limitation Year until such time as a
greater amount may be allowed pursuant to Section 415(d) of the Code). For
purposes hereof, the amounts contributed to any Defined Contribution Plan
maintained by the Employer or a member of a Controlled Group or a member of an
Affiliated Service Group or other entity under Code Section 414(o) shall be
aggregated with contributions made by the Employer under this Plan for any
Employee in computing his annual additions limitation. To the extent Defined
Contribution Plans of a member of a Controlled Group or a member of an
Affiliated Service Group are aggregated, any compensation of an Employee from
such member shall also be aggregated, subject to the limitations contained
herein. Moreover, in no event shall the amounts allocated to the Employer
Contribution Accounts of any Participant be greater than the maximum amount
allowed pursuant to Section 415 of the Code with respect to combinations of
plans without disqualification of any such plan.
If a short Limitation Year is created because of an amendment changing
the Limitation Year to a different 12 consecutive month period, the maximum
annual additions to a Participant's account for the short Limitation Year shall
not exceed the lesser of (i) the defined contribution dollar limitation
multiplied by a fraction, the numerator of which is the number of months in the
short Limitation Year and the denominator of which is 12, or (ii) 25% of the
Participant's Compensation for the short Limitation Year.
For purposes of this Section 5.01, the term "annual additions," as it
applies to the Accounts of any Participant, shall mean the sum for any
"Limitation Year" of:
(1) Employer Contributions allocated to his or her
Employer Contribution Account(s);
(2) Employee Contributions to the Plan, if any; and
(3) Forfeitures (at their fair market value)
reallocable to the Participant's Account(s).
Unless otherwise defined by resolution of the Board
of Directors, the term "Limitation Year" shall mean and correspond to the Plan
Year.
(b) Limitations Under Combination of Plans. If the Employer
maintains both a Defined Contribution Plan and a Defined Benefit Plan qualifying
under Section 401(a) or
V-1
Section 403(a) of the Code, the annual additions under the Defined Contribution
Plan for any Participant, expressed as a Defined Contribution Plan fraction, and
the annual benefit under the Defined Benefit Plan for any Participant, expressed
as a Defined Benefit Plan fraction, shall not exceed 1.0, as provided in Section
415 of the Code. For this purpose,
(1) The Defined Benefit Plan fraction for any year is
a fraction:
(A) the numerator of which is the projected
annual benefit of the Participant under such Plan determined as of the close of
such Plan Year, and
(B) the denominator of which is the lesser
of 125% of the maximum dollar limit for that year or 140% of 100% of the average
Compensation of the Participant over his high three years.
(2) The Defined Contribution Plan fraction for any
year is a fraction:
(A) the numerator of which is the sum of the
annual additions as of the close of a Plan Year, and
(B) the denominator of which is the lesser
of 125% of the maximum dollar limit or 140% of 25% of Compensation for such year
and all prior Years of Service, provided, however, that the annual additions for
each Plan Year are subject to the limitations set forth in Section 5.01(a)
hereof.
In the event the sum of the Defined Benefit Plan
fraction and the Defined Contribution Plan fraction exceeds 1.0 in any Plan
Year, the Defined Contribution Plan fraction shall be reduced, and, if required,
the accruals under the Defined Benefit Plan shall be frozen until such time as
the 1.0 limitation is no longer exceeded.
(c) Excess Annual Additions. If the annual additions
limitation described in this Article V is exceeded for any Plan Year, first, any
voluntary contribution in the Plan Year shall be returned to the Participant
whose annual additions limitation was exceeded. Second, the excess, if any,
consisting of forfeitures, shall be reallocated to the other eligible
Participants who received an allocation of the Employer's Contribution under
Section 6.01 of this Plan in proportion to the ratio which each such
Participant's total Compensation for the applicable Plan Year bears to the total
Compensation paid to all such Participants for the applicable Plan Year. If the
annual additions limitation is still exceeded after the above steps, then the
excess, consisting of forfeitures, shall be held in a suspense account. This
process shall be repeated each Plan Year until the suspense account is
exhausted. Upon termination of this Plan, the balance in such suspense account
shall revert to the Employer.
5.02. Definition of Compensation for Purposes of Section 415 of the Code. For
purposes of applying the limitations of Code Section 415, the term
"Compensation" shall have the following meaning:
V-2
(a) Compensation for a Limitation Year includes the
Participant's earned income, wages, salaries, fees for professional services and
other amounts received for personal services actually rendered in the course of
employment with the Employer maintaining this Plan to the extant that the
amounts are includible in gross income in such year (including, but not limited
to, commissions paid salesmen, Compensation for service on the basis of a
percentage of profits, commissions on insurance premiums, tips, bonuses, fringe
benefits, reimbursements and expense allowances).
(b) Compensation does not include such items as Contributions
made by the Employer to a plan of deferred compensation to the extent that,
before the application of the Code Section 415 limitations to that plan, the
Contributions are not includible in the gross income of the Employee for the
taxable year in which contributed. In addition, Employer Contributions made on
behalf of an Employee to a simplified employee pension described in Code Section
408(k) are not considered as Compensation for the taxable year in which
contributed to the extent such Contributions are deductible by the Employee
under Code Section 219(b)(7). Additionally, any distributions from a plan of
deferred compensation ere not considered as Compensation for Section 415
purposes, regardless of whether such amounts are includible in the gross income
of the Employee when distributed. However, any amounts received by an Employee
pursuant to an unfunded nonqualified plan may be considered as Compensation for
Code Section 415 purposes in the year such amounts are includible in the gross
income of the Employee.
(c) For Limitation Years beginning after December 31, 1991,
for purposes of applying the limitations of Code Section 415, Compensation for a
Limitation Year is the Compensation actually paid and includible in gross income
during such Limitation Year.
V-3
ARTICLE VI
ALLOCATION OF CONTRIBUTIONS AND FORFEITURES
6.01. Employer Contributions. As of each Anniversary Date, there shall
be allocated to the Employer Nonelective Contribution Account or Salary
Reduction Contribution Account or Employer Matching Contribution Account of each
Active Participant an amount determined under the formula set forth in the
Adoption Agreement.
For purposes hereof, any Participant who was on an Excused Absence,
retired, suffered a Disability or died during the Plan Year shall be deemed an
Active Participant with respect to such Plan Year (unless, in the case of an
Excused Absence, the Participant's employment has terminated), and for purposes
of the allocation of Employer Nonelective Contributions, such Participant shall
share in the allocation on the basis of actual Compensation with respect to such
Plan Year. Otherwise, Participants who do not complete a Year of Service during
such Plan Year or persons not in the employ of the Employer or a member of a
Controlled Group at the end of a Plan Year (regardless of the number of Hours of
Service completed during such Plan Year) shall not share in the Employer
Nonelective Contribution made with respect to the Employer's fiscal year ending
with or within such Plan Year; provided, however, that, for any Plan Year in
which this Plan is determined to be top-heavy, allocation of the Employer
Contribution shall be subject to the provisions of Section 20.17.
Notwithstanding the preceding sentence, effective for Plan Years beginning after
December 31, 1988, or such later date as may be provided under applicable law or
regulations, if the Plan fails to meet the coverage requirements of Code Section
410(b)(1) due solely to Participants who do not complete a Year of Service or
who are not in the employ of the Employer or a member of a Controlled Group at
the end of the Plan Year but who receive credit for more than 500 Hours of
Service for the Plan Year, a sufficient number of such Participants shall be
included in the allocation of the Employer Contribution to satisfy one of the
coverage tests under Code Section 410(b)(1) in accordance with the following
procedure: The minimum number of members of such group of Participants shall
share in the Employer Nonelective Contribution as are required to meet the
coverage tests under Code Section 410(b)(1) based on their respective Hours of
Service credited during the Plan Year, ranked in descending order. If more than
one individual receives credit for the lowest number of Hours of Service for
which any individual must be covered in order to meet the coverage tests, then
all individuals receiving credit for exactly that number of Hours of Service
shall share in the allocation of the Employer Nonelective Contribution.
Any Participant who remained in the employ of the Employer or a member
of a Controlled Group through the end of the Plan Year, but who changed from an
eligible to ineligible classification during the Plan Year, shall be deemed an
Active Participant for such Plan Year, but only with respect to his Compensation
while in an eligible status; provided, however, that any Participant who changed
from an ineligible classification to an eligible classification shall be
considered an Active Participant only with respect to his Compensation while in
the eligible status.
6.02. Forfeitures. Forfeitures of the nonvested portions of
Participants" Employer Nonelective Contribution Accounts shall be reallocated as
additional Employer
VI-1
Nonelective Contributions pursuant to the provisions of Section t4.01
and 6.01 hereof. This means that the vested and nonvested portions of e
Participant's Nonelective Employer Contribution Account shall be maintained for
his benefit, sharing in Trust Fund earnings, end realized and unrealized gains
and losses, unless his account is segregated pursuant to Section 16.12, until
such time as the nonvested portion of his Employer Nonelective Contribution
Account has been forfeited pursuant to the provisions of iA.11 of the Adoption
Agreement. In no event shall forfeitures resulting from contributions of an
Adopting Employer be allocated for the benefit of another Adopting Employer.
Forfeitures of the nonvested portions of participants" Employer
Matching Contribution Accounts shall not be reallocated to other Participants"
Accounts but shall be applied to reduce Employer Matching Contributions.
VI-2
ARTICLE VII
CONTRIBUTIONS BY PARTICIPANTS AND ROLLOVER CONTRIBUTIONS
7.01. Mandatory Employee Contributions. No contributions shall be
required of any Employee under this Plan.
7.02. Voluntary Employee Contributions.
(a) No nondeductible Employee voluntary contributions will be
accepted from any Employee under this Plan. Existing Nondeductible Employee
Voluntary Contribution Accounts, if any, will be maintained as separate accounts
and will be nonforfeitable and fully vested at all times in the Participant on
whose behalf they were established.
(b) No deductible Employee voluntary contributions will be
accepted from any Employee under this Plan. Existing Deductible Employee
Voluntary Contribution Accounts, if any, will be maintained as separate accounts
and will be nonforfeitable and fully vested at all times in the Participant on
whose behalf they were established.
(c) No withdrawals of deductible or nondeductible Employee
voluntary contributions may be made under this Plan until such time and in the
same manner as Employer-derived Contributions are distributed.
7.03. Rollover Contributions.
(a) Direct Inter-Plan Transfers. Any Participant may, with the
written consent of the Plan Administrator, direct the appropriate funding agency
or fiduciary of any qualified Defined Contribution Plan to distribute direct to
the Trustee such Participant's interest in the distributing plan, exclusive of
contributions made by the Participant as an employee or participant thereunder.
Upon receipt of such a distribution, the Trustee shall establish a segregated
account on behalf of the Participant on whose behalf such distribution was
received.
The Trustee, after August 9, 1988, shall not consent to or be
a party to a merger, consolidation or transfer of assets with or from a Defined
Benefit Plan or Target Benefit Plan except with respect to an elective transfer.
The Trustee will hold, administer and distribute the transferred assets as a
part of the Trust Fund, and the Trustee will maintain a separate account for the
benefit of the Employee on whose behalf the Trustee accepted the transfer in
order to reflect the value of the transferred assets. Unless a transfer of
assets to this Plan is an elective transfer, the Plan will preserve all Code
Section 411 (d)(6) protected benefits with respect to those transferred assets.
A transfer is an elective transfer if: (i) the transfer satisfies the
requirements of Section 17.05 of this Plan; (ii) the transfer is voluntary,
under a fully informed election by the Participant; (iii) the Participant has an
alternative that retains his or her Code Section 411(d)(6) protected benefits
(including an option to leave his or her benefits in the transferor plan, if
that plan is not terminating); (iv) the transfer satisfies the applicable
spousal consent requirements of the Code; (v) the
VII-1
transferor plan satisfies the joint end survivor notice requirements of the Code
if the Participant's transferred benefit is subject to those requirements; (vi)
the Participant has a right to immediate distribution from the transferor plan
in lieu of the elective transfer; (vii) the transferred benefit is at least the
greater of the single sum distribution provided by the transferor plan for which
the Participant is eligible or the present value of the Participant's Accrued
Benefit under the transferor plan payable at that plan's normal retirement age;
(viii) the Participant has a 100% nonforfeitable interest in the transferred
benefit; and (ix) the transfer otherwise satisfies applicable Treasury
regulations. An elective transfer may occur between Qualified plans of any type
except as may otherwise be prohibited by law or other provisions of this Plan.
(b) IRA Rollovers. Subject to the same conditions set forth in
Section 7.03(a) above, any Participant who has established an Individual
Retirement Account (pursuant to the provisions of Section 408 of the code)
solely for the purpose of serving as a repository for distributions received
from qualified retirement plans of former employers, exclusive of amounts
contributed by the Employee as a participant therein, and who has not made any
contributions to such Individual Retirement Account on his own behalf, may, with
the consent of the Plan Administrator, transfer all of the assets of such
Individual Retirement Account to the Trustee, which assets shall then be placed
in a segregated account on behalf of the Participant, at all times fully vested
and nonforfeitable.
(c) Rollover Account Conditions and Limitations. Subject to
the same conditions set forth in Section 7.03(a) above, the Trustee shall accept
rollover contributions of distributions from other qualified plans, but such
rollover contributions shall be subject to the following additional conditions:
(1) The amount so received shall constitute any
portion or all of a distribution of the Participant's entire interest in a
qualified plan exclusive of contributions made to such plan by the Participant-;
(2) The Participant shall present a written
certification, in a form satisfactory to the Plan Administrator, to the effect
that (i) the amount so received is the total amount standing to that
Participant's credit in the plan; (ii) no portion of such amount consists of
contributions made by the Participant; and (iii) if such amount is being paid by
the Participant personally, it was received within the prior sixty (60) calendar
days as a total distribution from such other plan;
(3) No rollover contributions will be accepted,
directly or indirectly, from any Individual Retirement Account to which the
Participant contributed on his own behalf. No rollover contribution will be
accepted which consists, in whole or in part, of insurance contracts with
respect to which future premium payments are or may become due unless the Plan
Administrator is satisfied that there are sufficient other segregated account
assets being transferred so as to make maintenance of such contract(s) feasible
without violation of any limitations on assets which may be applied for that
purpose.
(d) Investment of Rollover Accounts. Rollover accounts,
including transferred accounts under Section 7.03(a), shall be segregated
accounts. Such accounts shall be held as separate accounts in the Trust Fund, at
all times fully vested and nonforfeitable, and
VII-2
subject to the provisions of Section 16.12 hereof if such Participant Directed
Accounts are permitted by the Plan Administrator.
(e) Vesting of Rollover Accounts. All rollover and transferred
accounts shall be fully vested in the Participant on whose behalf they are
established.
(f) Distribution of Rollover Accounts. The assets held on
behalf of any Participant in a rollover or transferred account shall be
aggregated with any other vested interest he may have in this Plan for the
purpose of distribution and shall be distributed only at the same time(s) as the
remainder of his vested interest in this Plan, and, to the extant feasible and
permitted by law, by the same method of distribution of benefits.
(g) No Forfeitures Allocated to Rollover Accounts, In no event
shall any forfeitures be allocated to any rollover or transferred accounts.
(h) Transfers from Keoah Plan.. Any account established to hold assets
transferred from a plan under which the Participant was a Self-Employed
Individual or Owner-Employee (within the meaning of Section 401 (c) of the Code)
shall be maintained as a separate segregated account and at all times shall be
fully vested in the Participant. Notwithstanding the provisions of Section 13.06
of the Plan, however, no loans to Participants are permitted to be made from
such accounts.
VII-3
ARTICLE VIII
VESTING AND TERMINATION OF EMPLOYMENT
8.01. Vesting of Interests. Each Participant at all times shall have a
fully vested nonforfeitable right to the value of his or her Salary Reduction
Contribution Account, Qualified Employer Nonelective Contribution Account end
Qualified Employer Matching Contribution Account.
8.02. Employer Contribution Accounts, A Participant's vested and
nonforfeitable interest in his Employer Nonelective Contribution Account and
Employer Matching Contribution Account shall be determined at the time he
separates from service and receives a distribution pursuant to the vesting
schedule elected in the Adoption Agreement.
Notwithstanding anything herein or in the Adoption Agreement to the
contrary, any Employer Nonelective Contributions utilized in satisfying the ADP
test specified in Code Section 401(k) and as set forth in Section 4.06 of this
Plan and any Employer Matching Contributions utilized in satisfying the ACP test
specified in Code Section 401(m) and as set forth in Section 4.09 of this Plan
shall not be subject to e vesting schedule but at all times shall be fully
vested and nonforfeitable. Such contributions, including earnings thereon, shall
be maintained in separate accounts and shall be treated in the same manner as a
Participant's Salary Reduction Contribution Account.
8.03. Application of Forfeitures. The nonvested portion of a
Participant's Employer Contribution Account shall be forfeited at the time he
incurs five (5) consecutive one-year Breaks in Service or at the time he
receives a "Cash Out" pursuant to Section 8.04 below, whichever time is elected
in the Adoption Agreement.
8.04. "Cash Outs". "Cash Outs" of accrued nonforfeitable benefits to
Participants, if permitted under the Adoption Agreement, shall be considered
Qualified "Cash Outs" under the conditions as specified under subsections (a)
and (b) below.
(a) Involuntary. If a Participant terminates service with the
Employer, and the value of the Participant's vested account balance(s) derived
from both Employer Contributions and Employee contributions, if any, is not and
has not ever been greater than $3,500, the Participant will receive a
distribution of the value of the entire vested portion of such account
balance(s) in a lump sum, and the nonvested portion will be treated as a
forfeiture. For purposes of this section, if the value of a Participant's vested
account balance(s) is zero, the Participant shall be deemed to have received a
distribution of such vested account balance(s). A Participant's vested account
balance(s) shall not include accumulated deductible Employee contributions
within the meaning of Code Section 72(o)(5)(B) for Plan Years beginning prior to
January 1, 1989.
Service after the distribution is disregarded for purposes of
determining the nonforfeitable benefit.
VIII-1
(b) Voluntary. Upon entitlement, a Participant may receive a
lump sum distribution of his nonforfeitable account balance(s) provided such
distribution:
(1) represents the present value of his entire
nonforfeitable benefit;
(2) has been elected by the Participant with the
written consent of the Participant's spouse; and
(3) is made on termination of the Participant's
employment with the Employer.
Service after the distribution is disregarded for purposes of
determining the nonforfeitable benefit.
In the case of a voluntary distribution which is less than the
present value of the Participant's total nonforfeitable benefit immediately
prior to distribution, the Accrued Benefit not taken into account in computing
the Accrued Benefit under the Plan is the total Accrued Benefit multiplied by a
fraction, the numerator of which is the amount of the distribution end the
denominator of which is the present value of his total nonforfeitable benefit
immediately prior to such distribution.
Notwithstanding subsections (a) and (b) above, if a
Participant's nonforfeitable Accrued Benefits are paid in the form of an annuity
pursuant to Section 11.02, such benefits cannot be cashed out after the Annuity
Starting Date without the written consent of the Participant and his spouse.
8.05. Restoration of Accrued Benefit Upon Repayment of Distribution and
Nonduplication of Benefits.
(a) If permitted under the Adoption Agreement, in the event an
Employee who received a distribution which was less than the present value of
his Accrued Benefit resumes employment covered by this Plan prior to incurring a
Break in Service, the Accrued Benefit above shall be restored upon repayment to
the Plan of the full amount of the distribution as hereinafter provided. Such
restoration shall be made notwithstanding any provisions of Section 4.01 or 6.01
to the contrary. However, any forfeitures which may be allocated shall be
utilized first to restore the Accrued Benefit, and then such additional Employer
Contribution as may be required will be made.
For purposes of this section, an Employee shall have received
a distribution which is less than the present value of his Accrued Benefit if
any portion of such benefit is forfeitable at the time of such distribution.
(b) in order to have the Accrued Benefit restored upon
repayment to the Plan as hereinabove provided, the Employee must repay the full
amount of his distribution on or before he incurs five (5) consecutive one-year
Breaks in Service following the date of distribution.
VIII-2
(c) The Employer-derived Accrued Benefit required to be
restored by this section shall not be less than the amount in the Account
Balance of the Employee, both the amount distributed end the amount forfeited,
unadjusted by any subsequent gains or losses.
(d) In the event the Employee does not make such election his
right to repayment and restoration of benefit shall cease, and his benefits
shall be adjusted accordingly.
(e) Notwithstanding anything in this Plan to the contrary,
there shall be no duplication of benefits allowed with respect to any period of
service completed by any person.
8.06. Certain Employers: Service included in Determination of
Nonforfeitable Percentage.
(a) Service with a predecessor employer who maintained the
Plan of the current Employer shall be treated as service with the current
Employer.
(b) Service with an Employer shall be treated as service with
certain related employers. These related employers include any other employers
required to be aggregated with such Employer under Section 414(b), (c), (m) or
(o) of the Code.
8.07. Special Early Retirement Rule. Any Participant who has earned a
vested Accrued Benefit and is separated from service after he has satisfied the
service requirement for Early Retirement Benefits, if any, but before he has
satisfied the appropriate age requirement, shall, upon
(a) attaining the required age, and
(b) filing a written request with the Plan Administrator
be one hundred percent (100%) vested in his Employer Nonelective and Matching
Contribution Accounts.
8.08. Effect of Breaks in Service.
(a) in the case of any Employee who has incurred a Break in
Service, Years of Service completed before such break shall not be taken into
account until the Employee has completed one Year of Service after his return to
service.
(b) For Plan Years commencing prior to January 1, 1985, if a
Participant experiences a one-year (or longer) Break in Service and subsequent
to such Break in Service once again becomes an Active Participant, Years of
Service after such break shall not be taken into account in determining the
Participant's vested interest in his or her Accrued Benefit derived from
Employer Contributions accruing prior to such break. Separate accounts shall be
maintained for pre-break and post-break Accrued Benefits.
VIII-3
(c) For Plan Years commencing on or after January 1, 1985, in
the case of a Participant who has 5 or more consecutive one-year Breaks in
Service, all service after such Breaks in Service will be disregarded for the
purpose of vesting the Employer-derived account balance(s) that accrued before
such Breaks in Service. Such Participant's pre-break service will count in
vesting the post-break Employer-derived account balance(s) only if either:
(1) such Participant has any nonforfeitable interest
in the account balance attributable to Employer Contributions at the time of
separation from service; or
(2) upon returning to service the number of
consecutive one-year Breaks in Service is less than the number of Years of
Service.
Separate accounts will be maintained for the Participant's pre-break and
post-break Employer-derived account balance(s). All accounts will share in the
earnings and losses of the Trust Fund.
8.09. Crediting of Years of Service. Except as otherwise provided in
this Article VIII or in the Adoption Agreement, all Years of Service shall be
taken into account for purposes of determining the nonforfeitable percentage of
the Participant's right to Employer-derived Accrued Benefits.
8.10. Accrued Benefit Rules. If a Participant receives a distribution
before incurring five (5) consecutive one-year Breaks in Service and his account
is not 100% vested at the time of the distribution, unless the Participant has
received a qualified "Cash Out," the nonvested amount shall be retained in the
Participant's account until he has incurred five (5) consecutive one-year Breaks
in Service, at which time the amount shall be reallocated as a forfeiture. If
the Participant again becomes an Employee before incurring five (5) consecutive
one-year Breaks in Service, a separate account shall be established for the
amount retained in the account. On a subsequent distribution of the previously
nonvested amount, the vested amount then available for distribution from the
separate account shall be an amount ("X") determined by the formula: X = P (AB +
(R x D)) - (R x D). For purposes of applying the formula: "P" is the vested
percentage at the time of the distribution, "AB" is the account balance of the
separate account at the time of distribution, "D" is the amount of the prior
distribution, and "R" is the ratio of the account balance immediately after the
prior distribution.
8.11. Amendment of Vesting Schedule.
(a) If the vesting schedule under this Plan is amended, each
Participant who has completed at least five (5) Years of Service with the
Employer (three (3) Years of Service with the Employer with respect to Plan
Years beginning after December 31, 1988) may elect, during the election period
specified in this Section 8.11, to have the vested percentage of his Accrued
Benefit derived from Employer Contributions determined under the prior vesting
schedule without regard to such amendment.
VIII-4
(b) For purposes of this Section 8.11 the election period
shall begin as of the date on which the amendment changing the vesting schedule
is adopted and shall end on the latest of the following dates:
(1) the date occurring sixty (60) days after the Plan
amendment is adopted; or
(2) the date which is sixty (60) days after the day
on which the Plan amendment becomes effective; or
(3) the date which is sixty (60) days after the day
the Participant is issued written notice of the Plan amendment by the Plan
Administrator or Employer; or
(4) such later date as may be specified by the Plan
Administrator.
The election provided for in this Section 8.11 shall be made
in writing end shall be irrevocable when made.
Notwithstanding the foregoing, a Participant's nonforfeitable
percentage under this Plan, as emended, cannot at any time be less than such
percentage determined without regard to such amendment.
VIII-5
ARTICLE IX
DEATH BENEFIT
9.01. Preretirement Death Benefit. In the event of the death of an
Active Participant prior to the commencement of benefit payments, the
Participant's Accrued Benefit, reduced by any security interest held by the Plan
by reason of a loan outstanding to such Participant upon death, shall be one
hundred percent (100%) vested.
9.02. Postretirement Death Benefit. In the event of the death of a
Retired Participant whose benefits are in "pay status," or of a Vested
Participant, the death benefit shall be one hundred percent (100%) of the
undistributed balance of the Participant's Accrued Benefit, if any, reduced by
any security interest held by the Plan by reason of a loan outstanding.
9.03. Action to Be Taken on Death. Upon the death of a Participant, or
of a terminated or Retired Participant for whom benefits are still held
hereunder by the Trustee, the Employer shall notify the Plan Administrator. The
Plan Administrator shall cooperate with the death Beneficiary so that the
Beneficiary may receive the benefits so held by the Trustee for such present or
former Participant and shall suitably direct the Trustee as to the action to be
taken by it hereunder.
9.04. Exception for Certain Death Benefit. Upon the death of any
Retired Participant who, at the time of his death, is receiving benefits
pursuant to a contract, policy, program or arrangement having a refund feature,
period certain installments, survivor's benefits or other similar provisions,
there shall be paid such continuing installments or death benefits as are
provided pursuant to such contract, policy, program or arrangement. A
Beneficiary of a Participant who dies on or after his Normal Retirement Date
while still employed by the Employer or who terminates employment on or after
his Normal Retirement Date (or Early Retirement Age under the Plan) and after
satisfying the eligibility requirements for the payment of benefits under the
Plan and thereafter dies before beginning to receive such benefits shall receive
payments under this Plan as provided in Article XI.
9.05. Designation of Beneficiary end Form of Benefit Payment. For Plan
Years commencing before January 1, 1985, each Participant shall have the right
by written notice to the Plan Administrator, in the form prescribed by the Plan
Administrator, to designate and from time to time to change the designation of
one or more beneficiaries and contingent beneficiaries to receive any benefit
which may become payable pursuant to the provisions of this Article. Any
designation or change shall become effective as of the date received by the Plan
Administrator and must be received by the Plan Administrator prior to the
Participant's death to be effective.
For Plan Years commencing on or after January 1, 1985, the following
shall apply:
(a) Beneficiary Designation. Each Participant for whom no
spousal consent is required shall designate his or her Beneficiary at the time
and in the manner
IX-1
established by the Plan Administrator. That designated Beneficiary may be
changed from time to time by filing a new designation in writing with the Plan
Administrator. No spousal consent is required:
(1) if the Participant establishes to the
satisfaction of the Plan Administrator that he or she has no spouse; or
(2) if the Participant's spouse cannot be located; or
(3) because of other circumstances under which no
spousal consent is required pursuant to applicable Treasury or Department of
Labor Regulations.
(b) Form of Benefit Payment Designation. Each Participant for
whom no spousal consent is required in accordance with subsection (a) of this
section shall designate the form of benefit payment under the Plan at the time
and in the manner established by the Plan Administrator. As provided in Reg.
Section 1.401 (a)-20; after the Participant's death, the beneficiary may
subsequently change the optional form of benefit to any form offered under this
Plan.
(c) Spousal Consent. Each Participant for whom a spousal
consent is required in accordance with subsection (a) of this section and who
wishes to designate a beneficiary other than his or her spouse or who wishes to
change a previous beneficiary designation or who wishes to designate a form of
benefit payment shall obtain the consent of his or her spouse on the designation
of beneficiary form or method of payment option request, as the case may be. The
spouse's written consent shall acknowledge the effect of the consent and shall
be witnessed by a representative of the Plan Administrator or by a notary
public. The spouse's consent to a beneficiary designation or a change in
beneficiary designation shall acknowledge the specific nonspouse beneficiary,
including any class of beneficiaries or any contingent beneficiaries. Any
beneficiary designation by a Participant for whom no spousal consent was
required prior to the time of payment of benefits but for whom spousal consent
is required when benefits are paid shall be void unless consented to by the
spouse in accordance with this subsection (c). If spousal consent is required
and not obtained, the Participant shall be deemed to have designated his or her
spouse as Beneficiary.
Any designation or change shall become effective as of the
date received by the Plan Administrator and must be received by the Plan
Administrator prior to the Participant's death to be effective.
In the event that the Participant fails to designate a
Beneficiary to receive a benefit that becomes payable pursuant to the provisions
of this Article, or in the event that the Participant is predeceased by all
designated primary and contingent Beneficiaries, the death benefit shall be
payable to the following classes of takers, each class to take to the exclusion
of all subsequent classes and all members of each class to share equally:
(a) surviving spouse;
IX-2
(b) Lineal descendants (including adopted children) by right
of representation;
(c) surviving parents; and
(d) Participant's estate.
9.06. Deferred Payment of Death Benefit. If any payment becomes payable
to a beneficiary under this Article, the Plan Administrator may, at its
discretion, delay such payment for at least two (2) years from the date of death
so as to provide time for the beneficiaries to consult with the Plan
Administrator regarding alternative methods of distribution of the Participant's
death benefit; provided, however, that no such deferral may be made unless it is
in accordance with Section 11.01(c) of this Plan end Section 4.01 (a)(9) of the
Code.
9.07. Voluntary Accounts. In addition to the death benefit provided
under this Plan, the Beneficiary shall also receive the value, including gains
and/or losses thereon, of any Voluntary Contribution Account(s) of the
Participant.
IX-3
ARTICLE X
RETIREMENT BENEFITS AND DISABILITY BENEFITS
10.01, Normal Retirement Benefit. The Normal Retirement Benefit with
respect to any Participant retiring et his Normal Retirement Age shall be equal
to one hundred percent (100%) of his Accrued Benefit.
10.02. Early Retirement Benefit. The Early Retirement Benefit with
respect to any Participant retiring on or after attaining Early Retirement Age
and satisfying the service requirement as specified in the Adoption Agreement
shall be a benefit equal to one hundred percent (100%) of his Accrued Benefit,
10.03. Deferred Retirement Benefit. The Deferred Retirement Benefit
with respect to any Participant retiring after his Normal Retirement Date shall
be equal to one hundred percent (100%) of his Accrued Benefit.
10.04. Disability Benefit. The Disability Benin shall be payable with
respect to any Participant who has suffered a disability as defined in Article
II of this Plan and who is separated from service with the Employer by reason of
such disability and shall be equal to one hundred percent (100%) of his Accrued
Benefit.
X-1
ARTICLE XI
METHOD AND TIMING OF BENEFIT DISTRIBUTIONS
11.01. Method of Distribution of Vested Benefits. When a Participant
(i) separates from service, or (ii) attains Early Retirement Age, if provided in
the Adoption Agreement, and separates or has separated from service, or (iii)
attains Normal Retirement Age or more and separates from service, or (iv)
becomes disabled, or (v) with respect to such Participant, the latest date for
distribution of benefits occurs pursuant to Section 11.03 and no valid election
has bean made to postpone such date, whichever is applicable, (herein called the
"Termination Date") the Plan Administrator and/or the Trustee, after receipt of
such notice from the Employer or Plan Administrator, shall determine the
Participant's vested Accrued Benefit. If the Participant's vested Accrued
Benefit exceeds or has ever exceeded Three Thousand, Five Hundred Dollars
($3,500), the written consent of the Participant end the written consent of the
Participant's spouse (stated and executed in the form specified in t9.05(c)), if
applicable, shall be obtained within the 90-day period ending on the date of
commencement of distribution of any part of his vested Accrued Benefit (except
as otherwise provided in Regulations Section 1.417(e)-lT(d)); provided, however,
that a total or partial distribution may not be made after the Annuity Starting
Date (as that term is defined in Section 11.02(d)6) of this Plan), regardless of
the present value of the vested Accrued Benefit, without the prior written
consent of the Participant and the Participant's spouse. The Plan Administrator
shall notify the Participant and the Participant's spouse of the right to defer
any distribution until the Participant's vested Accrued Benefit is no longer
immediately distributable. Such notification shall include a general description
of the material features of the optional forms of benefit available under the
Plan and shall be provided no less than 30 nor more than 90 clays prior to the
Annuity Starting Date. For purposes hereof, an Accrued Benefit is immediately
distributable if any part of the Accrued Benefit could be distributed to the
Participant (or surviving spouse) before the Participant attains (or would have
attained if not deceased) the later of age 62 or Normal Retirement Age under the
Plan. In addition, the Participant's vested Accrued Benefit shall be reduced by
any security interest held by the Plan to satisfy an obligation of the
Participant arising in connection with an unpaid loan.
Subject to the provisions of Section 11.02, the Participant may elect
to have his vested Accrued Benefit distributed to him in cash or in kind, or any
combination thereof, in one of the following methods of payment:
(a) A single lump sum payment; or
(b) Payment over either of the following periods (or
combination thereof):
(1) A period certain not longer than the life
expectancy of the Participant; or
(2) A period certain not longer than the joint life
and last survivor expectancy of the Participant and his spouse.
Xl-1
For purposes of this subsection (b), the
determination of the life expectancy of the Participant or the joint life and
last survivor expectancy of the Participant and his spouse is to be made either
(i) only once, at the time the Participant receives the first distribution of
his entire interest under the Plan, or (ii) periodically, in a consistent
manner. Such life expectancy or joint life and last survivor expectancy cannot
exceed the period computed by the use of the expected return multiples in
Regulation Section 1.72-9, or in the case of payments under e contract issued by
an insurance company, the period computed by use of the life expectancy tables
of such company.
The minimum amount to be distributed each year must
be not less than the lesser of the balance of the Participant's entire interest
in the Plan or an amount equal to the quotient obtained by dividing the
Participant's entire interest in the Plan at the beginning of the year by the
life expectancy of the Participant or, if applicable, the joint life and last
survivor expectancy of the Participant and his spouse. A determination of life
expectancy will be made in either case not later than the date the Participant
reaches age 70 by use of the expected return multiples in Section 1.72-9 of the
Income Tax Regulations, and such multiple will be reduced by the number of whole
years passed since the Participant became 70 1/2.
For purposes of this section, the life expectancy of
a Participant and a Participant's spouse (other than in the case of a life
annuity) may be redetermined, but not more frequently than annually, and in
accordance with such rules as may be prescribed by Treasury regulations.
Further, life expectancy and joint and last survivor expectancy shall be
computed using the return multiples of Regulation Section 1.72-9.
If the Participant elects to have his benefit paid in
installments, the amount of the Participant's account shall be segregated and
invested separately from the remainder of the Trust Fund. At any time the
payment of installments may be accelerated or the entire balance of the
segregated account may be paid to the Participant or the Beneficiary if they so
request.
(c) For Plan Years beginning before January 1, 1989,
distribution of. the entire interest of each Participant will be made or will
commence being made to the Participant not later than April I of the calendar
year following the calendar year in which the Participant attains age 70~, or,
in the case of an Employee other than a 5% owner, as defined in Code Section
416, April 1 of the calendar year following the year in which he attains age 70
1/2 or retires, whichever is later. For Plan Years beginning after December 31,
1988, distribution of the entire interest of each Participant will be made or
will commence being made to the Participant not later than April 1 of the
calendar year following the calendar year in which the Participant attains age
70 1/2.
If a Participant dies before his interest in the Plan has been
distributed to him or if distribution has been commenced to his surviving spouse
under one of the methods set forth in subsection (b) above and such surviving
spouse dies before the Participant's entire interest has been distributed, the
entire interest (or the remaining part of such interest if distribution thereof
has commenced) will be distributed within five (5) years after his death (or the
death of his surviving spouse). However, the preceding sentence shall not apply
if distributions have commenced to the Participant before his death, in which
event distributions to the Participant's beneficiary will continue over the
period selected by the Participant.
XI-2
Notwithstanding the foregoing, for Plan Years commencing on or after January 1,
1985, the five-year rule does not apply if (i) any portion of the Participant's
interest is payable to (or for the benefit of) a designated beneficiary, (ii)
the portion of the Participant's interest to which the beneficiary-is entitled
will be distributed over the life of the beneficiary (or over a period not
extending beyond the life expectancy of the beneficiary), and (iii) the
distributions commence no later than one year after the date of the
Participant's death (or such later date which the Secretary may, under
regulations, prescribe). The Retirement Equity Act of 1984 permits the annual
recalculation of the life expectancy of a Participant's and an employee's spouse
(other then in the case of a life annuity). Also, the five-year rule does not
apply if (i) the portion of the Participant's interest to which the surviving
spouse is entitled will be distributed over the life of the surviving spouse (or
over a period not extending beyond the life expectancy of the surviving spouse),
and (ii) the distributions commence no later than the date on which the
Participant would have attained age 70 1/2.
(d) Notwithstanding that periodic distributions may have
commenced pursuant to the provisions of this section, the Participant may, upon
thirty (30) days" prior written notice to the Plan Administrator, change the
amount of periodic distributions to any amount up to the whole amount; provided,
however, that in all events the distributions during the taxable year of the
payee may not be less than the minimum distribution required above under this
section. Distributions shall not be made more frequently than once a month.
(e) If a Participant dies before receiving full payment of the
benefits he is entitled to receive, the residual benefits may be distributed to
the beneficiary or beneficiaries in any of the methods described herein.
When a Participant dies, the Participant's remaining vested
Accrued Benefit shall be paid to his beneficiaries in a lump sum or over one of
the periods described in subsection (b) above.
The Plan Administrator may, if the Participant does not have a
segregated account, with the Participant's written consent, direct the Trustee
to segregate the amount of the Participant's interest end invest the same in a
federally insured bank or savings and loan association savings account.
The Plan Administrator is not required to commence
distribution of a Participant's vested Accrued Benefit at any earlier applicable
Termination Date but may, in its discretion, exercised in a uniform and
nondiscriminatory manner, delay commencement of distribution of benefits to not
later than the latest date for distribution of benefits under Section 11.03.
All distributions from this Plan will be made in accordance
with Section 401 (a)(9) of the Code and the regulations promulgated thereunder,
and the provisions of Section 401 (a)(9) shall override any distribution options
in the Plan inconsistent with said section.
11.02. Joint and Survivor Annuity and Preretirement Survivor Annuity
Requirements. The provisions of this Section 11.02 shall take precedence over
any conflicting provision in this Plan. The naming by a Participant of a
Beneficiary other than the Participant's spouse to
XI-3
receive the benefits provided under this section or the changing of a
Beneficiary once designated shall require the prior written consent of the
Participant's spouse obtained in the manner specified in Section 9.05(c).
(a) Except as provided in subsection (f) of this section 11.02
with respect to certain profit sharing plans, the provisions of this section
shall apply to any Participant who is credited with at least one (1) Hour of
Service with the Employer on or after August 23, 1984.
(b) 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 Participant's vested account balances derived from both Employer
Contributions end nondeductible Employee Voluntary Contributions will be paid in
the form of a qualified joint and survivor annuity; provided, however, that, if
the Participant dies before the annuity starting date, the Participant's
surviving spouse shall receive an annuity in an amount not less than the amount
specified in Code Section 417(c)(2). Payment under a qualified joint and
survivor annuity shall commence immediately.
A Participant who elects to receive a distribution of his
retirement benefits on or after attainment of the earliest retirement age under
the Plan or the earliest date on which the Participant may elect to receive such
benefits shall receive the distribution in the form of a qualified joint and
survivor annuity unless an optional form of benefit is selected pursuant to a
qualified election as defined in Section 11.02(d)(3).
(c) Unless an optional form of benefit has been selected by
the participant within the election period pursuant to a qualified election or
by the beneficiary following the participant's death pursuant to Ii 1.401
(a)-20, if a Participant dies before the annuity starting date, then the
Participant's vested account balances derived from both Employer Contributions
and nondeductible Employee Voluntary Contributions shall be applied toward the
purchase of an annuity for the life of the surviving spouse. The annuity so
purchased shall have a value that is not less than 50% of the Participant's
nonforfeitable Accrued Benefit, including insurance proceeds, determined on the
date of the Participant's death. As provided in Ii Ii9.01 and 9.02 of this Plan,
no portion of a Participant's Accrued Benefit is forfeitable at death. The
determination of the amount applied toward the purchase of the survivor annuity
shall take into account the amount of any security interest held by the Plan by
reason of an outstanding loan to the Participant. The surviving spouse shall be
permitted to direct the commencement of payments under the qualified
preretirement survivor annuity immediately upon the Participant's death.
(d) Definitions.
(1) 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, with
respect to the account balance(s) as of the date of separation, the election
period shall begin on the date of separation. An earlier election may be made by
a Participant, but it is effective only until the first day of the Plan Year in
which the
XI-4
Participant attains age 35, at which time the election becomes invalid and a new
election must be made.
(2) Earliest Retirement Age: The earliest date on
which, under the Plan, the Participant could elect to receive retirement
benefits.
(3) Qualified Election: An election to waive a
qualified joint and survivor annuity or a qualified preretirement survivor
annuity. The election must be in writing and must be consented to in writing by
the Participant's spouse. The spouse's consent to an election shall designate
the beneficiary or the form of benefits which may not be changed without spousal
consent (or the consent of the spouse shall expressly permit designations by the
Participant without any requirement of further consent by the spouse), shall
acknowledge the effect of the election and shall be witnessed by a Plan
representative or notary public. Notwithstanding this consent requirement, if
the Participant establishes to the satisfaction of the Plan Administrator that
such written consent may not be obtained because there is no spouse or the
spouse cannot be located, a waiver will be deemed a qualified election. Any
consent necessary under this provision will be valid only with respect to the
spouse who signs the consent, or in the event of a deemed qualified election,
the designated spouse. Additionally, a revocation of a prior waiver may be made
by a Participant without the consent of the spouse at any time before the
commencement of benefits. The number of revocations shall not be limited.
(4) Qualified Joint and Survivor Annuity: An annuity
for the life of the Participant with a survivor annuity for the life of the
spouse which is not less than 50% and not more than 100% of the amount of the
annuity which is payable during the joint lives of the Participant end the
spouse and which is the amount of benefit which can be purchased with the
Participant's vested account balance(s). A qualified joint and survivor annuity
for a Participant who is not married is an annuity for the life of the
Participant.
(5) 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 only to the extent provided under a
Qualified Domestic Relations Order as described in Section 414(p) of the Code.
(6) Annuity Starting Date: The first day of the first
period for which an amount is payable as an annuity or in any other form.
Notwithstanding the foregoing definition, the first day of the first period for
which a benefit is to be received by reason of disability shall be treated as
the "Annuity Starting Date" only if the benefit is not an auxiliary benefit.
(e) Notice Requirements
(1) In the case of a qualified joint and survivor
annuity, the Plan Administrator shall provide each Participant within a period
of no less than 30 nor more than 90 days prior to the Annuity Starting Date a
written explanation of: (i) the terms and conditions of a qualified joint and
survivor annuity; (ii) the Participant's right to make, and the effect of, an
election to waive the qualified joint and survivor annuity form of benefit;
(iii)
XI-5
the rights of a Participant's spouse; and (iv) the right to make, and the effect
of, a revocation of a previous election to waive the qualified joint and
survivor annuity.
(2) In the case of a qualified preretirement survivor
annuity, the Plan Administrator shall provide each Participant with a written
explanation of the qualified preretirement survivor annuity in such terms and in
such manner as would be comparable to the explanation provided for meeting the
requirements applicable to a qualified joint and survivor annuity within the
applicable period with respect to such Participant. For purposes of such
explanation, the term "applicable period" means, with respect to a Participant,
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 the
provisions of subsection (3) below cease to apply to the Participant.
(D) A reasonable period ending after Code
Section 401(a)(11) applies to the Participant.
(E) 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 this section, a reasonable period
ending after the enumerated events described above 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.
(3) Notwithstanding the other requirements of this
subsection (e), the respective notices prescribed by this section need not be
given to a Participant if the Plan "fully subsidizes" the costs of a qualified
joint and survivor annuity or qualified preretirement survivor annuity. For
purposes of this section, a plan fully subsidizes the costs of a benefit if
under the plan the failure to waive such benefit by a Participant would not
result in a decrease in any plan benefit with respect to such Participant and
would not result in increased contributions from the Participant.
(f) Exceptions. This subsection (f) applies to a profit
sharing plan if the following two conditions ere met: (i) the Participant cannot
or does not elect payments in the form of a life annuity, and (ii) on the death
of the Participant, the Participant's vested account balance(s) will be paid to
The Participant's surviving spouse, but, if there is no surviving spouse, or, if
the surviving spouse has already consented in a manner conforming to a qualified
election, then to the Participant's designated beneficiary. However, this
subsection (f) shall not be operative with respect to the Participant if it is
determined that the profit sharing plan is a direct or indirect transferee of a
defined benefit plan, money purchase pension plan (including a target benefit
plan), stock bonus plan or profit sharing
XI-6
plan which would otherwise provide for a life annuity form of payment to the
Participant. If this subsection (f) is operative, the other provisions of this
section shall be inoperative.
(g) Waiver of 30-Dav Period Prior to Annuity Starting Date. If a distribution is
one to which sections 401(a1(11) and 417 of the Code do not apply, such
distribution may commence less than 30 days after receiving 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.
11.03. Special Rule. Notwithstanding anything in the Plan to the
contrary and pursuant to TEFRA Section 242(b), the interest of a Participant in
the Plan will be distributed in accordance with a written designation made by
such Participant prior to January 1, 1984, of a method of distribution which
does not meet the requirements of Sections 11.01 and 11.02 above and Section 401
(a)(9) of the Code, as amended by TEFRA, but which method of distribution would
not have disqualified the Plan under such section as in effect prior to the
amendment by TEFRA.
11.04. Latest Date for Distribution of Benefits. Notwithstanding
anything contained herein to the contrary, unless the Participant otherwise
elects a later date, the payment of benefits to the Participant will begin no
later than the sixtieth (60th) day after the latest of the close of the Plan
Year in which:
(a) The Participant attains the earlier of age sixty-five (65)
or the Normal Retirement Age specified under this Plan;
(b) Occurs the tenth (10th) anniversary of the year in which
the Participant commenced participation in the Plan; or
(c) The Participant terminates service with the Employer.
Such election referred to above must be made by submitting to
the Plan Administrator a written statement signed by the Participant which
describes the benefit and the date on which the payment of such benefit shall
commence; provided, however, that no election shall be made if the exercise of
such election would cause benefits payable under this Plan with respect to such
Participant in the event of death to be more than "incidental" within the
meaning of paragraph (b)(1)(i) of Regulation Section 1.401.1 or any applicable
successor regulations.
11.05. Receipt or Acquittance. The Plan Administrator and/or the
Trustee may require the Participant or his legal representative or Beneficiary
to sign a receipt or acquittance as a condition of final payment of his Plan
benefit, in full satisfaction of all claims
XI-7
against the Plan, the Trust, the Trustee, the Plan Administrator, the former and
present members of the Committee acting as Plan Administrator, if any, and the
Employer.
11.06. Direct Rollover Under Code Section 401(a)(31).
(a) General. This section applies to distributions made on or
after January 1, 1993. Notwithstanding any provision of this Plan to the
contrary that would otherwise limit a distributee's election under this section,
a distributee may elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee in a direct
rollover.
(b) Definitions.
(1) Eligible Rollover Distribution. An eligible
rollover distribution is any distribution of all or any portion of the balance
to the credit of the distributee, except that an eligible rollover distribution
does not include (i) any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually) made for the life
(or life expectancy) of the distributee or the joint lives (or joint life
expectancies) of the distributee and the distributee's designated beneficiary,
or for a specified period of ten years or more; (ii) any distribution to the
extent such distribution is required under Section 401 (a)(9) of the Code; end
(iii) 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).
(2) Eligible Retirement Plan. An eligible retirement
plan is an individual retirement account described in Section 408(e) of the
Code, an individual retirement annuity described in Section 408(b) of the Code,
an annuity plan described in Section 403(a) of the Code or a qualified trust
described in Section 401(a) of the Code that accepts the distributee's eligible
rollover distribution. However, in the case of an eligible rollover distribution
to the surviving spouse, an eligible retirement plan is an individual retirement
account or individual retirement annuity.
(3) Distributee. A distributee includes an employee
or former employee. In addition, the employee's or former employee's surviving
spouse and the employee's or former employee's spouse or former spouse who is
the alternate payee under a Qualified Domestic Relations Order ("QDRO"), as
defined in Section 414(p) of the Code, ere distributees with regard to the
interest of the spouse or former spouse.
(4) Direct Rollover. A direct rollover is a payment
by the Plan to the eligible retirement plan specified by the distributee.
XI-8
ARTICLE XII
ASSOCIATED COMPANIES
12.01. Definitions of Terms.
(a) "Associated Company" shall mean any related or affiliated
company or corporation which shall have been designated by the Board of
Directors as an Adopting Employer or Employing Company eligible to participate
herein and which shall have adopted this Plan and Trust by the execution of an
Adoption Agreement or by resolution of its Board of Directors.
(b) "Anniversary Date" shall mean the date specified in the
Adoption Agreement as to each Associated Company adopting this Plan or the last
day of the Plan Year as specified in Article II hereof.
(c) "Effective Date" shall mean, as to each Associated Company
adopting this Plan, the date specified in its Adoption Agreement.
(d) "Employer" shall mean any Associated Company which shall
have adopted this Plan on or after the original Effective Date and becomes a
party to this Agreement with the approval of the Board of Directors of the
original Adopting Employer.
(e) "Fiscal Year" shall mean the period specified as the
Fiscal Year of the Trust.
12.02. Service with Associated Companies. In the event an Employee of
one Employer is transferred to another Employer, such transfer shall not be
deemed an interruption of his active continuous service if he enters the
employment of the other Employer immediately upon such transfer. Further, a
Participant hereunder who is so transferred from one Employer shall not be
divested of any of his rights hereunder, nor shall any additional benefits
accrue to his benefit as a result of such transfer; and, in addition, the
Participant's interest hereunder shall continue to vest in accordance with the
provisions of this Agreement. An Employee of one Employer shall be deemed to be
employed with the other Employer(s) if he was employed by any one of the other
Employers on the Effective Date hereof, or on the Effective Date of the
respective Employer's Adoption Agreement or any Anniversary Date hereafter.
12.03. Eligibility of Associated Companies. Participation in this Plan
and Trust Agreement is limited to those Associated Companies who shall have
adopted this Plan end Trust for the sole and exclusive benefit of their
respective Employees who shall become eligible to participate under the terms
and conditions set forth in such Employer's Adoption Agreement.
Such participation, however, shall be contingent upon the obtaining of
a ruling by the Internal Revenue Service to the effect that the Plan of such
Employer is a qualified plan under the provisions of the Code and ERISA; as
amended.
XII-1
12.04. Eligibility Requirement for Employee Participation. Those
Employees of any Associated Company adopting this Plan shall be eligible to
participate after they have met the Eligibility Requirements specified in the
Adoption Agreement.
12.05 Employees Employed by Two or More Employers. In the event of
Participant hereunder is employed by two or more Employers, the benefits shall
be provided and the contributions shall be made by each Employer in the same
amounts and manner as if each were a part of a separate Trust; provided,
however, that the benefits to which the Employee is entitled may be funded, at
the discretion of the Plan Administrator, by one insurance contract which shall
be held by the Trustee as an undivided interest as related to each Employer and
the Trust created hereunder for the benefit of such Participant.
12.06. Employee Transferred from One Employer to Another Employer. In
the event an Employee, a Participant hereunder, is transferred from one Employer
to another Employer without a Break in Service, such transfer shall not divest
such Participant of any of his rights, benefits or privileges hereunder nor
shall such transfer add to or increase any such rights, benefits or privileges.
12.07. Contributions of Each Employer. For purposes of this Plan, each
Employer may make contributions to the Trustee.
12.08. Vesting of Interests. If the employment of any Participant
employed by an Associated Company is terminated for any cause other than Death,
Disability or Retirement, the Participant shall have vested rights in accordance
with the schedule set forth in such Employer's Adoption Agreement.
For the purpose of determining the Years of Credited Service in the
Plan, as to any Employee transferred without a Break in Service from one
Employer to another Employer and a party to this Agreement, years of
participation in all such Plans shall be deemed his "Years of Service" in the
Plan of the Successor Employer.
XII-2
ARTICLE XIII
ADMINISTRATION OF FUNDS
13.01. Investment of Assets. All contributions shall be paid over to
the Trustee and shall be invested by the Trustee in accordance with this Plan
and the Trust Agreement.
13.02. Valuations. The Trust Fund shall be valued by the Trustee at
fair market value annually as of the close of business on the annual Valuation
Date. A similar valuation of the Trust fund may occur at the end of any calendar
month upon direction of the Plan Administrator.
13.03. Crediting of Contributions.
(a) Employer Contributions, Any contributions made in respect
of any Plan Year (or fiscal year ending during a Plan Year) by the Employer
after the end of the Plan Year or later shall be deemed to have been immediately
credited after the valuation occurring at the end of the Plan Year with respect
to which such contribution was made or during which such fiscal year ended.
(b) Voluntary Contributions. Any voluntary contributions by
Participants shall be maintained by the Trustee in segregated accounts
established on behalf of the Participant. Notwithstanding the foregoing, if the
Participant becomes entitled to receive the entire amount standing to his credit
during any Plan Year and such amount is distributed to him for to his
beneficiary, the distribution shall include all amounts contributed by him.
(c) Rollover Contributions. Rollover contributions made
pursuant to Article VII hereof shall be credited to segregated accounts
established on behalf of the Participant on whose behalf contributed as promptly
as practicable following receipt thereof by the Trustee. This subsection (c) is
subject, however, to the provisions of Article VII of this Plan. If the
Participant becomes entitled to receive the entire amount standing to his credit
during any Plan Year and such amount is distributed to him (or his Beneficiary),
the distribution shall include all amounts contributed as rollover contributions
on his behalf during such Plan Year, whether or not formerly credited to his
Account prior to the date of distribution.
13.04. Crediting of Investment Results.
(a) Contract Surrender Values and Dividends. Increases in cash
surrender values of contracts and dividends payable with respect to contracts
shall be allocated direct to the Accounts of Participants for whose benefit the
respective contracts are maintained.
(b) Segregated Accounts. To the extent that the Trustee
maintains segregated Accounts on behalf of any Participant or Beneficiary, there
shall be credited to the Account of such Participant or Beneficiary al1 earnings
and realized or unrealized gains generated by that segregated Account since the
immediately preceding Valuation Date
XIII-1
reduced by losses experienced (whether or not realized), and there shall be
debited from such Account all identifiable separate expenses incurred in the
operation and maintenance of such Account.
(c) General. As of any Valuation Date, the earnings and
realized and unrealized gains of the Trust Fund attributable to investment of
Fund assets, reduced by losses experienced (whether or not realized) and
expenses incurred since the preceding Valuation Date, shall be credited to the
Accounts of the Participants and Beneficiaries who had unpaid balances in their
Accounts as of such Valuation Date in proportion to the balances in such
Accounts as of the prior Valuation Date, after reducing such prior Valuation
Date balances by the amounts withdrawn by or distributed to the Participant or
Beneficiary since such Valuation Date, if any. For purposes of this section, the
balance in any Participant's or Beneficiary's Account shall not include values
contained in contracts. Where there is maintained for any Participant or
Beneficiary, in addition to the Employer Contribution Accounts, other accounts,
such as one or more Voluntary Contribution Accounts, each such other account
shall be considered a separate Account for purposes of crediting investment
results pursuant to this Section 13.04.
The Plan Administrator shall, in a uniform and
nondiscriminatory manner, allocate earnings or losses and realized or unrealized
gains or losses based on proration in time or such other method which shall
reasonably produce an equitable result when Trust funds are transferred to or
from the general Trust Fund during a Plan Year to or from segregated Accounts.
13.05. Investments in Life Insurance.
(a) Limitations. The trustee, if so instructed by the Plan
Administrator, shall invest an amount less than fifty percent (50%) of the
Employer's Contribution allocable to each Participant for the year in which such
instruction is first given in the purchase of an ordinary life insurance
contract for such Participant's Account; provided, however, that:
(1) the aggregate premiums for life insurance in the
case of each Participant shall be less than one-half (1/2) of the aggregate of
the Employer Contributions allocated to him at any particular time, and
(2) the Trustee shall:
(A) convert the entire value of any life
insurance contract at or before retirement into cash, or
(B) if the Plan provides for the payment of
benefits in the form of an annuity, purchase an annuity contract which is not
assignable and not commutable in the hands of the Participant to provide
periodic income so that no portion of the value of the life insurance contract
may be used to continue life insurance protection beyond retirement, or
XIII-2
(C) distribute the life insurance contract
or contracts to the Participant; provided, however, that the contract does not
offer modes of settlement other than those generally provided under this Plan.
No instruction for purchase of life insurance shall
be given by the Plan Administrator unless a request therefor has been completed
by the Participant. The Plan Administrator may thereafter give, or refrain from
giving, such instruction to the Trustee end shall have sole discretion in regard
thereto.
(b) Limitations as to Term or Other Insurance. The
Trustee. If so instructed by the Plan Administrator, shall invest an amount less
than twenty-five percent (25%) of the Employer's Contribution allocable to each
Participant for the year in which such instruction is first given in the
purchase of term or health and accident insurance for such Participant's
Account.
(c) Maintenance of Insurance Contracts. In the event
the Employer's Contribution allocable to any Participant's Account in any Plan
Year is not sufficient to pay the annual premium on all life insurance contracts
held by the Trustee for such Particpant, the Trustee shall apply the Employer's
contribution as allocated to such Participant's Account, to the extent
permissible and available, to the payment of such premiums, and, if additional
funds are required, shall insofar as possible pay the same from any other assets
in its possession to the extent of the respective Participant's interest therein
and by borrowing on such life insurance for the benefit of the insured
thereunder to the extent of the cash value where necessary. In any following
year in which the Employer's Contribution as allocated to each Account exceeds
the amount necessary to pay the premiums on the life insurance contracts held
for such Accounts, the Trustee shall repay outstanding loans against such
Participants life insurance to the extent of such excess funds in such
Participant's Account. The provisions of this section shall not be construed to
impair the Trustee's right to borrow available cash surrender values for the
purpose of investing the proceeds of such loan for the benefit of the respective
Accounts of the Participants whose policies are so borrowed against.
(d) Ownership and Beneficiary Designation Under Life
Insurance. Each life insurance contract purchased by the Trustee shall designate
the Trustee as the sole owner and beneficiary thereof subject to the terms and
provisions of the Trust Agreement. All dividends on life insurance contracts
purchased by the Trustee shall be allocated to the account of the Participant
for whose benefit the life insurance was issued.
13.06. Loans to Participant. Upon the application of any Participant,
the Plan Administrator, in accordance with its uniform and nondiscriminatory
policies, may direct the Trustee to make a loan or loans to such Participant.
Any such loan shall be considered an earmarked investment by the Participant of
part or all of the assets in his Account(s). All Participant loans shall bear a
reasonable rate of interest, but in no event in excess of the applicable legal
rate for such loan, shall be adequately secured and shall have a definite
repayment date and schedule. All loans granted or renewed after August 19, 1985,
shall be subject to the requirements of the Retirement Equity Act of 1984 and
the Regulations promulgated thereunder. The prior written consent of the
Participant's spouse, stated and executed in the form specified in Section
9.05(c) within the 90-day period ending on the date the
XIII-3
loan is secured, is required for all loans secured by the Participant's vested
Accrued Benefit. The obligation of a Participant shall be evidenced by a note
which shall contain terms of repayment and any other provisions which may be
agreed upon by the Plan Administrator and the Trustee or as required by law.
In addition to the limitations and conditions specified in the Adoption
Agreement, all loans made to Participants under this Section 13.06 shall be
subject to the following restrictions:
(a) No loan to any Participant or Beneficiary can be made to
the extent that such loan, when added to the outstanding balance of all other
loans to the Participant or Beneficiary, would exceed the lesser of (i) $50,000
reduced by the excess (if any) of the highest outstanding balance of loans
during the one-year period ending on the day before the loan is made over the
outstanding balance of loans from the Plan on the date the loan is made, or (ii)
one-half of the present value of the nonforfeitable Accrued Benefit of the
Participant, or, if greater, the total Accrued Benefit up to $10,000. For
purposes of the above limitations, all loans from ell plans of employers
described in Code ii Section 414(b), (c), (m) and (o) are aggregated.
(b) Each loan shall by its terms require that repayment of
principal and interest be amortized in level payments, not less frequently than
quarterly, over a period not extending beyond five (5) years from the date of
the loan, unless the loan proceeds are used to acquire a dwelling unit which,
within a reasonable time determined at the time the loan is made, will be used
as the principal residence of the Participant.
An assignment or pledge of any portion of a Participant's
interest in the Plan, and a loan, pledge or assignment with respect to any
insurance contract purchased under the Plan will be treated as a loan subject to
this section.
Notwithstanding the foregoing provisions of this Section
13.06, no loans shall be made to any Participant who is a Self-Employed
Individual within the meaning of t401 (c) of the Code or to any Participant who
is a Shareholder-Employee within the meaning of Section 1379(d) of the Code.
In the event of default, foreclosure on the note and
attachment of security will not occur until a distributable event occurs in the
Plan.
Additional specific conditions are set forth in a separate
document entitled "Participant Loan Procedures," as may be amended from time to
time, applicable to loans granted or renewed after October 18, 1989, which
document is attached to this Plan and made a part hereof by this reference.
XIII-4
ARTICLE XIV
ALLOCATION OF AUTHORITY AND RESPONSIBILITIER
14.01. Authority and Responsibilities of Employer. The Employer, as
Plan sponsor, shall serve as a "Named Fiduciary" having the following (and only
the following) authority and responsibility:
(a) To establish end communicate to the Trustee a funding
policy for the Plan;
(b) To appoint the Trustee and the Plan Administrator and to
monitor each of their performances;
(c) To appoint an investment manager (or to refrain from such
appointment), to monitor the performance of the investment manager so appointed,
and to terminate such appointment. More than one investment manager may be
appointed and in office at any time pursuant hereto;
(d) To communicate such information to the Plan Administrator
and to the Trustee as each needs for the proper performance of its duties; and
(e) To provide channels and mechanisms through which the Plan
Administrator and/or the Trustee can communicate with Participants and their
beneficiaries.
In addition, the Employer shall perform such duties as are
imposed by law or by regulation and shall serve as Plan Administrator in the
absence of an appointed Plan Administrator.
14.02. Authority and Responsibilities of the Plan Administrator. The
Plan Administrator shall have authority and responsibilities imposed by Article
XVI hereof. With respect to the said authority and responsibility, the Plan
Administrator shall be a "Named Fiduciary, and, as such, shall have no authority
or responsibility other than as granted in this Plan or as imposed as a matter
of law.
14.03. Authority and Responsibilities of the Trustee. The Trustee shall
be the "Named Fiduciary" with respect to investment of Trust Fund assets and
shall have the powers and duties set forth in the Trust Agreement.
14.04. Limitations on Obligations of Named Fiduciaries. No Named
Fiduciary shall have authority or responsibility to deal with matters other than
as delegated to it under this Plan, under the Trust Agreement or by operation of
law. A Named Fiduciary shall not in any event be liable for breach of fiduciary
responsibility or obligation by another fiduciary (including Named Fiduciaries)
if the responsibility or authority of the act or omission deemed to be a breach
was not within the scope of the said Named Fiduciary's authority or delegated
responsibility.
XIV-1
ARTICLE XV
CLAIMS PROCEDURE
15.01. Applications for Benefits. All applications for benefits shall
be submitted in writing on forms provided by the Plan Administrator. Such
application shall include a11 information end exhibits deemed necessary by the
Plan Administrator to properly evaluate the merit of the claim for benefits and
to make such determinations as are necessary with respect thereto.
15.02. Appeals of Denied Claims for Benefits. In the event that any
claim for benefits is denied in whole or in part, the Participant or Beneficiary
whose claim for benefits has been so denied shall be notified of such denial in
writing by the Plan Administrator. The notice advising of the denial shall
specify the reason or reasons for denial, make specific reference to pertinent
Plan provisions, describe any additional material or information necessary for
the claimant to perfect the claim (explaining why such material or information
is needed), and shall advise the Participant or Beneficiary, as the case may be,
of the procedure for the appeal of such denial. All appeals shall be made by the
following procedure:
(a) The Participant or Beneficiary whose claim has been denied
shall file with the Plan Administrator a notice of desire to appeal the denial.
Such notice shall be filed within sixty (60) days of notification by the Plan
Administrator of claim denial, shall be made in writing and shall set forth all
of the facts upon which the appeal is base. Appeals not timely filed shall be
barred.
(b) The Plan Administrator shall, within twenty (20) days of
receipt of the Participant's or Beneficiary's notice of appeal, establish a
hearing date on which the Participant or Beneficiary may make an oral
presentation to the Named Appeals Fiduciary in support of his appeal. The
Participant or Beneficiary shall be given not less than ten (10) days" notice of
the date set for the hearing.
(c) The Named Appeals Fiduciary shall consider the merits of
the claimant's written and oral presentations, the merits of any facts or
evidence in support of the denial of benefits and such other facts and
circumstances as the Named Appeals Fiduciary shall deem relevant. If the
claimant elects not to make an oral presentation, such election shall not be
deemed adverse to his or her interest, and the Named Appeals Fiduciary shall
proceed as set forth below as though an oral presentation of the contents of the
claimant's written presentation had been made.
(d) The Named Appeals Fiduciary shall render a determination
upon the appealed claim which determination shall be accompanied by a written
statement as to the reasons therefor. The determination so rendered by the Named
Appeals Fiduciary shall be binding upon all parties.
XV-1
15.03. Appointment of the Named Appeals Fiduciary. The Named Appeals
Fiduciary shall be the person or persons named as such by the Board of
Directors, or, if no such person or persons be named, then the person or persons
named by the Plan Administrator as the Named Appeals Fiduciary. Named Appeals
Fiduciaries may et any time be removed by the Board of Directors, and any Named
Fiduciary named by the Plan Administrator may be removed by it. ell such
removals may be with or without cause and shall be effective on the date stated
in the notice of removal. The Named Appeals Fiduciary, if there be more then one
determining the merits of any appeal, shall act by a majority vote on each
matter coming before it. The Named Appeals Fiduciary shall be a "Named
Fiduciary" within the meaning of XXXXX, and, unless appointed to other fiduciary
responsibilities, shall have no authority, responsibility or liability with
respect to any matter other than the proper discharge of the functions of the
Named Appeals Fiduciary as set forth herein.
XV-2
ARTICLE XVI
THE PLAN ADMINISTRATOR
16.01. Administration by Plan Administrator. This Plan shall be
administered by the Plan Administrator. The Plan Administrator shall be as
specified in the Adoption Agreement.
16.02. Control of Plan by Plan Administrator. The Plan Administrator
shall have complete control of the administration of the Plan herein embodied,
with all powers necessary to enable it properly to carry out its duties in that
respect. Not in limitation, but in amplification, of the foregoing, the Plan
Administrator shall have the power to construe the Plan and to determine all
questions that shall arise thereunder, and shall also have all the powers
elsewhere in this instrument conferred upon it. It shall decide all questions
relating to the eligibility of Employees to participate in the benefits of this
Plan. It shall be responsible for the administration and accounting of
Participants" Accounts. All disbursements by the Trustee, except for the
ordinary expenses of administration of the Trust, shall be made upon, and in
accordance with, the instructions of the Plan Administrator. The decisions of
the Plan Administrator upon all matters within the scope of its authority shall
be binding upon all persons interested in this Plan.
16.03. Authority and Responsibility of the Plan Administrator. The Plan
Administrator shall have the following duties and responsibilities:
(a) To maintain and retain records relating to Plan
Participants, Former Participants and each of their Beneficiaries;
(b) To prepare and furnish to Participants all information
required under Federal law or provisions of this Plan to be furnished to them;
(c) To prepare and furnish to the Trustee sufficient Employee
data and the amount of Contributions received from all sources so that the
Trustee may maintain separate Accounts for Participants and make required
payments of benefits;
(d) To prepare and file or publish with the Secretary of
Labor, the Secretary of the Treasury, their delegates and all other appropriate
government officials all reports and other information required under law to be
so filed or published;
(e) To provide directions to the Trustee with respect to the
purchase of life insurance, methods of benefit payment, valuations at dates
other than Annual Valuation Dates and on all other matters where called for in
the Plan or requested by the Trustee;
(f) To provide direction to the Trustee regarding investment
of the Trust Fund pursuant to Section 16.08;
XVI-1
(g) To construe the provisions of the Plan, to correct defects
therein and to supply omissions thereto;
(h) To engage assistants and professional advisors;
(i) To arrange for bonding, as required; and
(j) To provide procedures for determination of claims for
benefits,
all as further set forth herein.
16.04. Reporting and Disclosure. The Plan Administrator shall keep all
individual and group records relating to Plan Participants, Former Participants
and Beneficiaries, and all other records necessary for the proper operation of
the Plan. Such records shall be made available to each Participant and
Beneficiary for examination during business hours except that a Participant or
Beneficiary shall examine only such records as pertain exclusively to the
examining Participant or Beneficiary and the Plan and Trust Agreement. The Plan
Administrator shall prepare and file as required by law or regulation all
reports, forms, documents and other items required by ERISA and/or the Code, and
every other relevant statute, each as amended, and all regulations thereunder.
This provision shall not be construed as imposing upon the Plan Administrator
the responsibility or authority for the preparation, preservation, publication
or filing of any document required to be prepared, preserved or filed by the
Trustee or by any other Named Fiduciary to whom such responsibilities are
delegated by law or by this Plan.
16.05. Construction of the Plan. The Plan Administrator shall take such
steps as are considered necessary and appropriate to remedy any inequity that
results from incorrect information received or communicated in good faith or as
the consequence of an administrative error. The Plan Administrator shall
interpret the Plan end shall determine the questions arising in the
administration, interpretation and application of the Plan. It shall endeavor to
act, whether by general rules or by particular decisions, so as not to
discriminate in favor of or against any person and so as to treat all persons in
similar circumstances uniformly. The Plan Administrator shall correct any
defect, reconcile any inconsistency or supply any omission with respect to this
Plan.
16.06. Engagement of Assistants end Advisors. The Plan Administrator
shall have the right to hire, at the expense a the Employer, such professional
assistants and consultants as it, in its sole discretion, deems necessary or
advisable, including, but not limited to:
(a) Investment managers and/or advisors;
(b) Accountants;
(c) Actuaries;
(d) Attorneys;
XVI-2
(e) Consultants;
(f) Clerical and office personnel; and
(g) Medical practitioners.
To the extent that the costs for such assistants and advisors
are not paid by the Employer, they shall be paid from the Trust Fund as an
expense of the Plan at the direction of the Plan Administrator.
16.07. Investment of the Trust Fund. The Plan Administrator should
adopt an investment philosophy and should communicate same to the Trustee, or
such other advisors who may be in charge of investment selection. In discharging
this duty, the Plan Administrator shall act solely in the interests of the
Participants and their Beneficiaries and for the exclusive purpose of providing
benefits to such Participants and Beneficiaries, and defraying reasonable
expenses of administering the Plan and Trust, by diversifying the investment of
the Plan's assets so as to minimize the risk of large losses, unless under the
circumstances it is clearly prudent not to do so, with care, skill, prudence and
diligence under the circumstances then prevailing that a prudent man acting in a
like capacity and familiar with such matters and with a similar investment
philosophy would use in the conduct of an enterprise of like character and with
like aims, and in accordance with the documents and instructions governing this
Plan and Trust insofar as such documents and instructions are consistent with
ERISA. In discharging this duty, the overall makeup of the Trust Fund should be
considered so that some percentage of the Trust Fund may be in speculative or
illiquid investments so long as these investments, when considered in relation
to the total Trust Fund, do not make the Trust Fund imprudently invested. The
Trustee may, at the direction of the Plan Administrator, invest any portion of
the Trust Fund attributable to Employer Nonelective Contributions or Employer
Matching Contributions [the investment of which is directed by the Plan
Administrator and not subject to directed investment by Participants] in
qualifying mocks, bonds, debentures or other marketable obligations or
securities issued by, or in Qualifying real property or any interest therein of,
the Employer or any affiliated company of the Employer.
16.08. Directed Investments by Plan Administrator. The Trustee shall be
subject to the directions of the Plan Administrator with respect to investment
and reinvestment of Trust Fund assets; provided, however, that such directions
are made in accordance with the terms of this Plan and are not contrary to
ERISA. To the extent the authority under this section is used, the Trustee shall
not be liable for following such directions, as provided in Section 405(b)(3)(B)
of ERISA.
16.09. Prohibited Transactions. Notwithstanding anything to the
contrary herein contained, the Plan Administrator shall have no authority to
direct the Trustee to engage in any prohibited transaction set forth in Section
Section 406 and 407 of ERISA and Section 4975 of the Code, as added by Section
2003(a) of ERISA.
16.10. Investment in Savings Accounts and Trust Funds. Pursuant to
Section 408(b)(4) of ERISA and Section 4975(d)(4) of the Code, as added by
Section 2003(a) of ERISA, the Plan Administrator shall have the power to
instruct the Trustee to invest all or part of the Plan's
XVI-3
assets in deposits which bear a reasonable interest rate in a bank or similar
financial institution supervised by the United States or a State, even though
such bank or other institution is a fiduciary of the Plan. Furthermore, pursuant
to Section 408(b)(8) of ERISA and 4975(d)(8) of the Code, the Plan Administrator
may expressly permit a transaction between the Plan and a common or collective
Trust Fund or pooled investment fund maintained by a party in interest and/or a
disqualified person which is a bank or trust company supervised by a State or
Federal Agency if such transaction is a sale or purchase of an interest in the
fund and the bank or trust company receives no more than reasonable
compensation.
16.11. Disqualified Persons. Pursuant to Section 411 of ERISA, no
person shall serve or be permitted to act on behalf of the Plan Administrator,
or serve as a Named Fiduciary, officer, Trustee, custodian, counsel, agent or
Employee of the Plan, or as a consultant to the Plan, if such person has been
convicted of, or has been imprisoned as a result of his conviction of, any of
the offenses enumerated in said section.
16.12. Participant Directed Accounts. Notwithstanding anything to the
contrary herein contained, if permitted under the Adoption Agreement, the Plan
Administrator may elect to allow Participants to direct the investment of their
own Accounts. In the event of such election, the following provisions shall
apply:
(a) Each Participant shall have the right to direct or
"earmark" the investment of all or a portion of the assets in his Salary
Reduction Contribution Account and his Qualified Employer Nonelective
Contribution Account consisting of special fully vested Nonelective Employer
Contributions utilized in satisfying the Actual Deferral Percentage tests, if
any, among a variety of investment vehicles selected and made available for this
purpose by the Plan Administrator.
(b) The Participant shall notify the Trustee of such intent in
writing, and said written notice shall designate the name of the investment and
state the portion of the Participant's Salary Reduction Contribution Account or
separate fully vested Qualified Employer Nonelective Contribution Account that
he desires to be so directed. Upon receipt of such notification, the Trustee
shall proceed with making such earmarked investment unless the Trustee, in its
discretion, deems that such investment could disqualify the Plan or cause the
income of the Trust to be subject to income tax, in which case the Trustee shall
immediately so notify the Plan Administrator.
(c) Any income and any increase or decrease in the value of
any directed investment shall be allocated to the corresponding Account of the
Participant who earmarked the investment. The Trustee may deduct from a
Participant's earmarked Account the unpaid Trustee fees assessed for maintaining
such earmarked Account, if any, together with all unpaid costs and any expenses
paid by the Trustee in connection with the investment of the assets in the
earmarked Account if such fees, costs and expenses remain unpaid for thirty (30)
days. The Trustee may deduct from the earmarked Account such unpaid fees, costs
and expenses of the Trustee before making any distributions. If there is
insufficient cash in the earmarked Account to pay the Trustee's unpaid fees,
costs and expenses, the Trustee may, notwithstanding anything in this Plan to
the contrary, withhold distribution until such fees, costs and expenses have
been paid in full.
XVl-4
(d) The right of each Participant to earmark investments among
any of the investment vehicles made available by the Plan Administrator shall
not be subject to further approval by the Plan Administrator or by the Trustee.
However, the Plan Administrator shall have the fight to refuse to make any
investment which could, in the Plan Administrator's discretion, disqualify the
Plan or cause the income of the Trust to be subject to income tax. Pursuant to
Section 404(c)(2) of ERISA, the Trustee and the Plan Administrator, when
directed by s Participant, shall not be liable for any loss, or by reason of any
breach, which results from such Participant's exercise of his right to earmark
his investments.
16.13. Bonding. The Plan Administrator shall arrange for such bonding
as is required by law, but no bonding in excess of the amount required by law
shall be considered required by this Plan.
16.14. Indemnification of the Plan Administrator. Each person who acts
within the scope of his duties on behalf of the Plan Administrator shall be
indemnified by the Employer against expenses, judgments, fines, settlements and
other amounts (other than amounts paid in settlement to which the Employer does
not consent) reasonably incurred by him in connection with any action to which
he may be a party by reason of his service on behalf of the Plan Administrator
except in relation to matters as to which he shall be adjudged in such action to
be personally guilty of negligence or willful misconduct in the performance of
his duties. The foregoing right to indemnification shall be in addition to such
other rights as such person may enjoy as a matter of law or by reason of
insurance coverage of any kind, Rights granted hereunder shall be in addition to
and not in lieu of any rights to indemnification to which such person may be
entitled pursuant to the bylaws of the Employer or as a matter of law. Service
on behalf of the Plan Administrator shall be deemed in partial fulfillment of
such person's function as an employee, officer and/or director of the Employer,
if he serves in such other capacity as well.
16.15. Minutes of Plan Administrator. The Plan Administrator shall keep
minutes of its meetings.
16.16. Compensation of the Plan Administrator, The Plan Administrator
shall not receive compensation for the administration of this Plan.
XVl-5
ARTICLE XVII
AMENDMENT. TERMINATION. MERGER AND CONSOLIDATION OF THE PLAN
17.01. Amendment. The provisions of this Plan may be amended at any
time and from time to time by the Employer; provided, however, that:
(a) No amendment shall increase the duties or liabilities of
the Plan Administrator or of the Trustee without the consent of such party;
(b) No amendment (including the adoption of this Plan as a
restatement of an existing plan) shall decrease a Participant's Accrued Benefit,
except to the extent permitted under Code Section 412(c)(8), and may not reduce
or eliminate Code Section 411(d)(6) protected benefits determined immediately
prior to the adoption date (or, if later, the effective date) of the amendment.
An amendment reduces or eliminates Code Section 411(d)(6) protected benefits of
the amendment has the effect of either (i) eliminating or reducing an early
retirement benefit or a retirement-type subsidy (as defined in Treasury
regulations), or (ii) except as provided by Treasury regulations, eliminating an
optional form of benefit. The Plan Administrator shall disregard an amendment to
the extent application of the amendment would fail to satisfy this section. If
the Plan Administrator must disregard an amendment because the amendment would
violate clause (i) or clause (ii) hereof, the Plan Administrator must maintain a
schedule of the early retirement option or other optional forms of benefit the
Plan must continue for the affected Participants.
(c) No amendment shall provide for the use of funds or assets
held to provide benefits under this Plan other than for the benefit of Employees
and their Beneficiaries or to provide that funds may revert to the Employer.
Each amendment shall be approved by the Employer.
Notwithstanding the foregoing, any amendment necessary to initially qualify this
Plan under S401(a) of the Code may be made without the approval of the Board of
Directors if signed by the proper officers of the Employer if the Employer is a
corporation.
17.02. Plan Termination.
(a) Right Reserved. While it is the Employer's intention to
continue the Plan indefinitely in operation, the right is, nevertheless,
reserved to terminate the Plan in whole or in part. Termination of the Plan
shall result in full and immediate vesting in each Participant of the entire
amount standing to his credit in his Account(s), and there shall not thereafter
be any forfeitures with respect to any Participant for any reason. Plan
termination shall be effective as of the date specified by resolution of the
Board of Directors. In addition, to the extent there is a partial termination,
as such term is defined for purposes of Section 411(d)(3) of the Code, the
Employer Nonelective and Matching Contribution Accounts of all Participants at
the date of such partial termination shall become fully vested and
nonforfeitable.
XVII-1
(b) Effect on Remaining Participants etc. The Employer shall
advise the Trustee of the termination of the Plan and shall provide instructions
as to disposition of the Trust. If so instructed by the Employer, the Trustee
shall pay over to each Participant (and vested Former Participant) the value of
his vested interest, end thereupon dissolve the Trust. Except as provided for
elsewhere in this Plan, no assets held in the Trust shall revert to the Employer
on termination of the Plan.
17.03. Complete Discontinuance of Employer Contributions. While it is
the Employer's intention to make substantial and recurring Contributions to the
Trust Fund pursuant to the provisions of this Plan, the right is nevertheless
reserved at any time to completely discontinue Employer Contributions. Such
complete and permanent discontinuance shall be established by resolution of the
Board of Directors and shall have the effect of a termination of the Plan,
resulting in full end immediate vesting in each Participant of the entire amount
standing to his credit in his Account(s), 6xcept that the Trustee shall not have
authority to dissolve the Trust Fund except upon adoption of a further
resolution by the Board of Directors to the effect that the Plan is terminated
and upon receipt from the Employer of instructions to dissolve the Trust Fund
pursuant to Section 15.02(c) hereof.
17.04. Suspension of Employer Contributions. The Employer shall have
the right at any time, and from time to time, to suspend Employer Contributions
to the Trust Fund pursuant to this Plan. Such suspension shall have no effect on
the operation of the Plan except as set forth below:
(a) If the Board of Directors determines by resolution that
such suspension shall be permanent, a permanent discontinuance of Contributions
will be deemed to have occurred as of the date of such resolution or such
earlier date as is therein specified.
(b) If such suspension becomes a plan termination, a complete
discontinuance of Contributions will be imputed. In such case, the complete
discontinuance shall be deemed to have occurred on the earlier of:
(1) The date specified by resolution of the Board of
Directors or established as a matter of equity by the Plan Administrator or
(2) The last day of the Plan Year next following the
last Plan Year in which there was a substantial Contribution.
17.05. Mergers and Consolidations of Plans. In the event of any merger or
consolidation with, or transfer of assets Or liabilities to, any other plan,
each Participant in the event of termination shall have a benefit in the
surviving or transferee plan (determined as if such plan were then terminated
immediately after such merger, etc.) that is equal to or greeter than the
benefit he would have been entitled to receive immediately before such merger,
etc., in the Plan in which he was then a Participant (had such Plan been
terminated at that time). For purposes hereof, Former Participants and
Beneficiaries shall be considered Participants.
XVII-2
ARTICLE XVIII
MISCELLANEOUS PROVISIONS
18.01. Nonalienation of Benefits
(a) General. Except as provided in subsection (b) of this
section 18.01, none of the payments, benefits or rights of any Participant or
Beneficiary shall be subject to any claim of any creditor, and, in particular,
to the fullest extent permitted by law, all such payments, benefits end rights
shall be free from attachment, garnishment, trustee's process or any other legal
or equitable process available to any creditor of such Participant or
Beneficiary. Except as provided in subsection (b) of this section, no
Participant or beneficiary shall have the right to alienate, anticipate,
commute, pledge, encumber or assign any of the benefits or payments which he may
expect to receive, contingently or otherwise under this Plan, except the right
to designate a Beneficiary or Beneficiaries as hereinbefore provided.
(b) Exceptions. This provision shall not apply to a "qualified
domestic relations order" defined in Code Section 414(p), and those other
domestic relations orders permitted to be so treated by the Plan Administrator
under the provisions of the Retirement Equity Act of 1984. The Plan
Administrator shall establish a written procedure to determine the qualified
status of domestic relations orders and to administer distributions under such
qualified orders. Further, if so provided under a "qualified domestic relations
order," a former spouse of a Participant shall be treated as the spouse or
surviving spouse for all purposes under the Plan.
This provision shall not apply to the extent a Participant or
Beneficiary is indebted to the Plan, for any reason, under any provision of this
Plan or the corresponding Trust. At the time a distribution is to be made to or
for a Participant's or Beneficiary's benefit, such proportion of the amount
distributed as shall equal such indebtedness shall be paid by the Trustee to the
Trustee or the Plan Administrator, at the direction of the Plan Administrator,
to apply against or discharge such indebtedness. Prior to making a payment,
however, the Participant or Beneficiary must be given written notice by the Plan
Administrator that such indebtedness is to be so paid in whole or in part from
the Participant's Accrued Benefit. If the Participant or Beneficiary does not
agree that the indebtedness is a valid claim against his vested Accrued Benefit,
he shall be entitled to a review of the validity of the claim in accordance with
procedures provided in Article XV.
18.02. No Contract of Employment. Neither the establishment of the
Plan, nor any modification thereof, nor the creation of any fund, trust or
account, nor the payment of any benefits shall be construed as giving any
Participant or Employee, or any person whomsoever, the right to be retained in
the service of the Employer, and all Participants and other Employees shall
remain subject to discharge to the same extent as if the Plan had never been
adopted.
18.03. Severability of Provisions. If any provision of this Plan shall
be held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other
XVIII-1
provisions hereof, and this Plan shall be construed and enforced as if such
provisions had not been included.
18.04. Insurance Companies. No insurance company which shall issue any
policy as provided for in this Plan shall be a party to this Plan or have any
responsibility for the validity of this Plan. The liability of any such
insurance company shall be only as provided in any policy which it may issue.
Any insurance company shall be fully protected from all liabilities in accepting
premium payments from the Trustee and in making payments to or on direction of
the Trustee, without liability as to the application of such payments. Such
insurance company shall be fully protected in dealing with the Trustee as the
sole owner of policies held under this Plan, end shall not be liable in assuming
that the Plan has not been emended or terminated until notice of any amendment
or termination of the Plan has been received by the insurance company at its
Home Office. No amendment of the Plan shall deprive the insurance company of any
protection except as to policies issued by it after receipt at its Home Office
of notice of the terms of such amendment. The insurance company shall be fully
protected in dealing with the Trustee according to the latest notification
received by it at its Home Office. The Plan Administrator shall furnish each
insurance company with the name(s) and address(as) of the Trustee and shall
furnish each insurance company with any changes in same.
18.05. Transfers To and From Other Qualified Plans. Subject to the
provisions of Article VII, with the written consent of the Plan Administrator,
there may be transferred to the Trustee all or any assets held under another
plan which satisfies the requirements of Section 401 of the Code and which is
maintained for the benefit of any person who is or is about to become a
Participant in this Plan, provided that such assets and earnings thereon shall
be allocated to the Participant and shall be one hundred percent (100%) vested
et ell times end shall not be forfeitable for any cause. Further, the Trustee,
if directed by the Participant, shall transfer the vested interest of the
Participant whose employment with the Employer is terminated to any other plan
which satisfies the requirements of Section 401 of the Code (specifically
Section 401 (8)(31) for purposes of a "direct transfer of eligible rollover
distributions" as further described in Section 11.06 of this Plan) and in which
such Participant is or is about to become a Participant.
18.06. Separate Trust Agreement. The Employer shall establish a Trust
pursuant to which the Trustee shall hold, invest, administer and distribute the
Trust Fund and the income therefrom, in accordance with the provisions of the
separate Trust Agreement between the Employer and the Trustee. The Trust
Agreement constitutes a part of the Plan, and its terms are incorporated into
the Plan. The Plan constitutes a part of the Trust Agreement, and its terms are
incorporated into the Trust Agreement.
18.07. Heirs, Assigns and Personal Representatives. This Plan shall be
binding upon the heirs, executors, administrators, successors and assigns of the
parties, including each Participant and Beneficiary, present and future.
18.08. Headings and Captions. The headings and captions herein are
provided for reference and convenience only, shall not be considered part of the
Plan and shall not be employed in the construction of the Plan.
XVIII-2
18.09. Gender and Number. Except where otherwise clearly indicated by
context, the masculine and neuter shall include the feminine and the neuter, the
singular shall include the plural, and vice-versa.
18.10 Controlling Law. This Plan shall be construed and enforced
according to the laws of the State of California to the extent not preempted by
Federal law, which shall otherwise control.
18.11. Title to Assets. No Participant or Beneficiary shall have any
right to, or interest in, any assets of the Trust Fund upon termination of his
employment or otherwise, except as provided from time to time under this Plan,
end then only to the extent of the benefits payable under the Plan to such
Participant out of the assets of the Trust Fund. All payments of benefits as
provided for in this Plan shall be made from the assets of the Trust Fund, and
neither the Employer nor any other person shall be liable therefor in any
manner.
18.12. Payments to Minors, etc. Any benefit payable to or for the
benefit of a minor, an incompetent person or other person incapable of
receipting therefor shall be deemed paid when paid to such person's guardian or
to the party providing or reasonably appearing to provide for the care of such
person, and such payment shall fully discharge the Trustee, the Plan
Administrator, the Employer and all other parties with respect thereto.
18.13. Benefits of Persons Who Cannot Be Located. If the Plan
Administrator determines, in good faith and in its discretion, that a person
entitled to receive payment or a distribution hereunder cannot be located, the
Plan Administrator shall, nevertheless, give written notice to such person of
the fact that such benefit is payable. Such written notice shall be given by
U.S. Mail to the person entitled to payment (according to the records of the
Plan Administrator) at the last known address of such person. If such person
makes no claim for such benefit before the earlier of a period of two (2) years
after the giving of such written notice or the termination of the Plan, then the
Trustee is authorized to declare a forfeiture of the benefit otherwise payable
to such person, provided such person has not yet been located. Notwithstanding
the foregoing, if a claim for payment of such benefit is thereafter made by such
person or any successor in interest of such person who would qualify as a
beneficiary thereof, such benefit shall be reinstated and paid in full.
18.14. Mechanical Reproduction. One (1) set of the pages constituting
this Plan has been executed and shall be deemed the original, even though
physically produced by the use of automatic printing or copying machines, if
such set bears the original signatures of the parties hereto.
18.15. Discrepancies. In the event any discrepancy or conflict in
interpretation occurs between The provisions of this Plan and the provisions of
the Adoption Agreement, the Adoption Agreement shall control.
XVIII-3
ARTICLE XIX
AFFILLIATED SERVICE GROUP
19.01. Definitions. For purposes of this Plan, the term "Affiliated
Service Group, in accordance with Section 414(m) of the Code, means a group
consisting of a service organization (hereinafter in this section referred to as
the "first organization") and one or more of the following:
(a) any service organization which --
(1) is a shareholder or partner in the first
organization, and
(2) regularly performs services for the first
organization or is regularly associated with the first organization in
performing services for third persons, and
(b) any other organization if --
(1) a significant portion of the business of such
organization is the performance of services (for the first organization, for
organizations described in subsection (a) above, or for both) of a type
historically performed in such service field by employees, and
(2) ten percent (10%) or more of the interests in
such organization is held by persons who are officers, highly compensated
employees or owners of the first organization or an organization described in
subsection (a) above.
For purposes of this section, the term "service organization"
means an organization, the principal business of which is the performance of
services.
Such organizations, if any, which constitute, with the
Employer hereunder, an Affiliated Service Group shall be specified in the
Adoption Agreement.
Wherever the word "Employer" appears in this Plan, that word
shall be interpreted to mean any member of such Affiliated Service Group,
together with any other organizations as may hereafter become members, end ell
service with any member of the Affiliated Service Group shall be treated as
service with a single Employer.
19.02. Limitation on Benefits and Contributions. For purposes hereof,
all defined benefit plans (whether or not terminated) of the Affiliated Service
Group shall be treated as one (1) defined benefit plan, and all defined
contribution plans (whether or not terminated) of the Affiliated Service Group
shall be treated as one (1) defined contribution plan. A Participant's
Compensation shall, for purposes hereof, include the annual Compensation of the
Participant from any Employer who is a member of the Affiliated Service Group.
For purposes of Article V hereof, all benefits, annual additions and
Compensation from all members of the Affiliated Service Group will be
aggregated.
XIX-1
19.03. Multiple Integrated Plans of Members. The retirement plan of
each member of the Affiliated Service Group is designed so that there will be no
duplication of benefits. However, in the event that an Employee should become
eligible to participate in the retirement plans of more than one member of the
Affiliated Service Group, such plans will be amended, If applicable, effective
as of the date upon which such Employee becomes eligible to participate in more
than one plan, to comply with the provisions of Section l7 of Revenue Ruling
71-446, i.e. such plans will be appropriately modified so as to ensure that the
extent of integration does not exceed 100%.
19.04. Control. In the event that the provisions of this Article XIX
conflict in any way with any other provisions of this Plan, this Article XIX
shall control.
XIX-2
ARTICLE XX
ADDITIONAL REQUIREMENTS FOR TOP-HEAVY PLANS
20.01. Generally. If for any Plan Year beginning after December 31,
1983, the Plan is determined to be top-heavy, then additional requirements set
forth in this Article XX shall apply. These additional requirements limit the
amount of a Participant's Compensation which may be taken into account; provide
for more rapid vesting for Participants; provide a minimum accrued benefit or
minimum contribution for Participants; place additional restrictions on
distributions to Key Employees; and reduce the limits on contributions and
benefits.
20.02. Top-Heavy Determination: Aggregation of Related Employers. All
Employers who are members of a controlled group of corporations as defined in
Code Section 414(b)), a group of trades or businesses which are under common
control (as defined in Code Section 414(c)), an Affiliated Service Group (as
defined in Code Section 414(m)), or any other entity required to be aggregated
with the Employer pursuant to Code 3414(o) shall be treated as a single Employer
for purposes of applying the limitations of this Article XX.
20.03. Top-Heavy Determination: Key Employee. A Key Employee shall be
any Employee or Former Employee (including any deceased 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
Section 415(b)(1)(A) of the Code, one of the ten employees having annual
Compensation exceeding the limitation under Section 415(c)(1 )(A) of the Code
and owning (or considered as owning within the meaning of Code 3318) the largest
interests in the Employer, a 5% owner of the Employer or a 1% owner of the
Employer who has an annual compensation of more than $150,000. The determination
period is the Plan Year containing the determination date and the four preceding
Plan Years.
The determination of who is a Key Employee will be made in accordance
with Section 416(i) of the Code and the regulations thereunder.
In general, an officer shall mean an administrative executive who is in
regular and continuing service. Officer shall not include those employed for a
special or single transaction. An Employee who merely has the title of an
officer, but not the authority, shall not be considered an officer.
There shall be a maximum number of officers considered Key Employees.
No more than the lesser of 50 Employees, or the greater of three Employees or
10% of all Employees, shall be treated as Key Employees by reason of being
officers. If this maximum limit on the number of officers is exceeded, the
officers who shall be Key Employees are those officers, selected from the group
of individuals who were officers in the current Plan Year or the four preceding
Plan Years, who had the largest annual Compensation while officers in that
five-year period.
An Employee who has some ownership interest shall be considered to be
one of the top ten owners under subsection (b) unless at least ten (10) other
Employees own a greeter interest in the Employer than the Employee. However, an
Employee shall not
XX-1
be considered a top ten owner for a Plan Year if the Employee earns less than
the maximum dollar limitation under Code Section 415(c)(1)(A) as in effect for
the calendar year in which the determination date falls.
An Employee shall be considered to own more than a 5% interest under
subsection (c) if he owns more than 5% of the corporation's outstanding stock or
stock possessing 5% of the total combined voting power of all stock of the
corporation. An Employee is also treated as owning stock which is owned by
certain members of his family or, in the case of any Employer which is not a
corporation, by partnerships, estates, trusts or corporations in which the
Employee has an interest as provided in Code Section 318. The same rules shall
apply to determine whether an Employee is a more than 1% owner under subsection
(d). In the case of an Employer that is not e corporation, ownership shall be
determined in accordance with regulations issued by the Secretary of the
Treasury.
For purposes of determining 5% and 1% owners, each Employer who would
otherwise be aggregated under Section 20.02 shall be treated as a separate
Employer. However, for purposes of determining whether an Employee has
compensation of more than $150,000, Compensation from each entity required to be
aggregated by Section 20.02 shall be taken into account. Compensation, for
purposes of determining whether an Employee has Compensation of more than
$150,000, shall mean Compensation as defined for Testing the limits on
contributions and benefits under Code Section 415. To determine whether a
self-employed individual who is a more than 1% owner is a Key Employee,
Compensation shall mean earned income from the trades or businesses under which
the Plan is maintained.
20.04. Top-Heavy Determination: Non-Key Employees. A Non-Key Employee
shall be any Employee who is not a Key Employee.
20.05. Top-Heavy Determination: Disregarded Employee. If an Employee
ceases to be e Key Employee, his Accrued Benefit or Account(s) shall be
disregarded for any Determination Date following the last Determination Date for
which he was a Key Employee. Thus, if an Employee is a Key Employee on any date
during the Plan Year in which he separate; from service with the Employer, his
Accrued Benefit or Account(s) shall be taken into account as a Key Employee's,
but only with respect to the Determination Date within the Plan Year of
separation or the four following Plan Years. With respect to subsequent Plan
Years, his Accrued Benefit or Account(s) shall be disregarded (unless the
Employee returns to service with the Employer as a Key Employee).
In addition, the account balance or Accrued Benefit of a Participant
who has not performed any services for the Employer during the 5-year period
ending on the Determination Date shall be disregarded. However, if the
Participant returns to service with The Employer after the 5-year period, such
Participant's total account balance or Accrued Benefit shall be included in
determining the Plan's top-heavy ratio under Section 20.07 and 20.08.
20.06. Top-Heavy Determination: Beneficiary. The term Key Employee
includes a deceased Employee as represented by his Beneficiary.
XX-2
20.07. Top-Heavy Ratio: Defined Contribution Plan. The Plan shall be a
top-heavy Plan if, as of the Determination Date, the aggregate of the Accounts
of Key Employees exceeds 60% of the aggregate of Accounts of all Employees.
The Account, as of any Determination Date, for any Employee shall be
the sum of:
(a) the account balance as of the most recent Valuation Date
occurring within the 12-month period ending on the Determination Date;
(b) an adjustment for Contributions due as of a Determination
Date;
and
(c) certain distributions described in Section 20.11.
For a profit sharing or stock bonus plan, the adjustment in
subsection (b) above shall include the amount of any Employee nondeductible
contributions, Employer Contributions and reallocated forfeitures actually made
on or after the Valuation Date but on or before the Determination Date. However,
for the first Plan Year only, the adjustment in subsection (b) also shall
include the amount of Employer Contributions made after the Determination Date
that are allocated as of a date in that first Plan Year.
For a pension plan, the account balance in subsection (a)
above shall include amounts required to be allocated on or before the
Determination Date, whether or not these amounts have actually been contributed
prior to that Date. The adjustment in subsection (b) shall include the amount of
any Employee nondeductible contributions made on or after the Valuation Date but
on or before the Determination Date. Also, the adjustment in subsection (b)
shall include any Employer Contributions made or due to be made after the
Valuation Date but prior to the expiration of the extended payment period to
satisfy the minimum funding standards under Code Section 412(c)(10).
The Accrued Benefit of any Employee (other then a Key
Employee) shall be determined as if such benefit accrued not more rapidly than
the slowest accrual rate permitted under Section 411 (b)(1)(C) of the Code.
In the case of a simplified employee pension plan, at the
election of the Employer, aggregate Employer Contributions shall be used in lieu
of the account balance in subsection (a) above.
20.08. Top-Heavy Ratio: Defined Benefit Plan. The Plan shall be a
top-heavy Plan if, as of the Determination Date, the present value of Accrued
Benefits under the Plan for Key Employees exceeds 60% of the present value of
Accrued Benefits for all Employees.
Certain distributions, described in Section 20.11, shall be added to
the present value of Accrued Benefits.
The present value of Accrued Benefits for purposes of the Determination
Date shall be the same as the present value of Accrued Benefits calculated on
the most
XX-3
recent Valuation Date within a 12-month period ending on the Determination Date.
The Valuation Date shall be the date used for computing minimum funding costs,
regardless of whether a valuation is performed for that year.
For the first Plan Year only, Accrued Benefits for a current Participant shall
be determined either: (i) as if the individual terminated employment on the lest
day of that Plan Year or (ii) as if the individual terminated employment as of
the Valuation Date, but taking into account the estimated Accrued Benefit as of
the Determination Date.
For succeeding Plan Years, a current Participant's Accrued Benefit
shall be determined as if the individual terminated employment as of the most
recent Valuation Date within the 12-month period ending on the Determination
Date.
Actuarial assumptions used to determine present value shall be
reasonable. They shall include an interest and a postretirement mortality
assumption, and the assumptions utilized under the Plan ere specified in its
Adoption Agreement. They may include preretirement mortality end future
increases in the cost of living. They shall not include future withdrawal or
future salary increases. In the case of a Plan for which the Qualified Joint and
Survivor Annuity is the normal form of benefit, the spouse of the Participant
may be assumed to be the same age as the Participant. Ancillary benefits,
including preretirement death and disability benefits end postretirement medical
benefits, shall not be taken into account. Subsidized benefit options and
subsidized early retirement benefits shall not be taken into account unless they
are nonproportional subsidies. If a plan provides for a nonproportional subsidy,
the benefit shall be assumed to commence at the age at which the benefit is most
valuable. A subsidy is nonproportional unless the subsidy applies to a group of
employees that would independently satisfy the requirements of Code Section
410(b). The actuarial assumptions and benefits considered to determine present
value of Accrued Benefits shall be set forth in the Adoption Agreement for the
defined benefit plan.
20.09. Top-Heavy Ratio: Aggregation Group. For purposes of determining
whether the Plan is part of a top-heavy group, the following aggregation rules
apply:
(a) Required Aggregation Group. All plans maintained by an
Employer in which a Key Employee participates shall be aggregated to determine
whether or not the plans, as a group, are top-heavy. Each other plan of the
Employer which enables any plan in which a Key Employee participates to meet the
requirements of Code Section 401 (a)(4) or 410(b) shall also be aggregated, in
addition, each terminated plan which was maintained by the Employer within the
last five (5) years ending on the Determination Date for the Plan Year in
question shall also be aggregated.
(b) Permissive Aggregation Group. One or more plans, which are
not required to be aggregated, may be aggregated with each other or with plans
under subsection (a) if such group would continue to meet the requirements of
Code Section 401(a)(4) and 410(b) with such plan(s) being taken into account.
Collectively bargained plans that include a Key Employee shall
be included in a required aggregation group of that Employer. Collectively
bargained plans that do not include a Key Employee may be included in a
permissive aggregation group.
XX-4
However, the vesting rules under Section 20.14, the minimum
benefit and contribution provisions under ii Section 20.15 to 20.18, and the
provision limiting the amount of includible Compensation under Section 20.13
shall not apply to a collectively bargained plan whether or it includes a Key
Employee.
20.10. Top-Heavy Ratio: Top-Heavy Group. An aggregation group
shall be a top-heavy group, as of the Determination Date, if the sum of:
(a) the aggregate of Accounts of Key Employees under ell
defined contribution plans in such group (determined in accordance with 120.07),
and
(b) the present value of the Accrued Benefits for Key
Employees under all defined benefit plans in such group (determined in
accordance with Section 20.08)
exceeds 60% of the same amounts determined for all Employees under all plans
included within the aggregation group.
If a required aggregation group is top-heavy, then each plan
required to be included within the group shall be top-heavy, if a permissive
aggregation group is top-heavy, only those plans which are part of a required
aggregation group shall be top-heavy. If the aggregation group is not e
top-heavy group, then no individual plan included in the group shall be
top-heavy, even though a plan standing alone would be top-heavy under Section
20.07 or Section 20.08.
20.11. Top-Heavy Ratio: Distributions: Reliever Contributions.
Distributions as provided in Code Section 416(g)(3) made within the Plan Year
which includes the Determination Date, or within the four preceding Plan Years,
shall be added to the present value of Accrued Benefits or Accounts in testing
for top-heaviness, except to the extent already included in the present value of
the Accrued Benefits or Accounts as of the Determination Date. In the case of
the distribution of an annuity contract or a guaranteed annuity certificate from
a group annuity contract, the amount of such distribution shall be the current
actuarial value of such contract or certificate determined on the date of
distribution. Distributions made prior to the first Plan Year after December 31,
1983, shall be taken into account under this rule.
In the case of relievers and plan-to-plan Transfers, both initiated by
the Employee and made from the plan of one Employer to the plan of another
Employer (i.e., unrelated):
(a) The plan making the distribution counts the distribution,
and
(b) The plan receiving the reliever distribution or
plan-to-plan transfer considers it part of the Accrued Benefit or Account, but
only if it was accepted prior to December 31, 1983.
XX-5
In the case of rollovers and plan-to-plan transfers either not
initiated by the Employee or made to a plan of the same Employer (i.e.,
related):
(a) The plan providing the rollover or plan-to-plan transfer
does not count the rollover as a distribution; and
(b) The plan accepting the rollover counts the rollover or
plan-to-plan transfer in the present value of Accrued Benefits or Accounts.
For purposes of determining the character of rollovers and
plan-to-plan transfers, the related employer rules of Section 20.02 shall apply.
20.12. Top Heavy Ratio: Determination Date. Whether a plan is top-heavy
shall be determined on the Determination Date. In the case of an Employer who
maintains a single plan, the Determination Date shall be:
(a) For the first Plan Year, the last day of the Plan Year;
and
(b) For any other Plan Year, the last day of the preceding
Plan Year.
In the case of an Employer who maintains more than one plan,
which plans are to be aggregated under Section 20.09:
(a) The present value of Accrued Benefits or Accounts
(including distributions) shall be determined separately for each plan as of its
Determination Date;
(b) Then, the present values of the plans shall be aggregated
by adding the results of each plan as of their respective Determination Dates
that fall within the same calendar year.
The Valuation Date shall be the same date as the Determination
Date.
20.13. Limit on Includible Compensation. Only the first $200,000 of a
Participant's Compensation shall be taken into account under the Plan. The
$200,000 limit shall be increased automatically beginning in 1990 to the extent
permitted by the Internal Revenue Service. A top-heavy Plan shall continue to
provide for any Accrued Benefits attributable to Compensation in excess of
$200,000 to the extent such benefits were accrued before the effective date of
this provision.
20.14. Top-Heavy Vesting. If for any Plan Year the Plan is a top-heavy
Plan, then each Participant's Accrued Benefit or account balance derived from
Employer Contributions shall become nonforfeitable under a vesting schedule
selected in the Adoption Agreement. All service required to be counted under the
Plan shall be counted for top-heavy vesting. All service disregarded under the
Plan shall be disregarded for top-heavy vesting except to the extent the
Secretary of the Treasury provides otherwise in regulations. If the Plan becomes
top-heavy, the Accrued Benefits or account balance of any Employee who does not
have an Hour of Service after the Plan becomes top-heavy shall not be subject to
the Top-Heavy vesting schedule.
XX-6
Top-heavy minimum benefits or minimum contributions under Section 20.15
to 20.18 may not be forfeited under Plan rules otherwise applicable relating to
a suspension of benefits upon reemployment or a forfeiture upon withdrawal of
mandatory employee contributions.
For any Plan Year in which the Plan ceases to be top-heavy, the regular
vesting schedule which was in effect prior to the time when the Plan became
top-heavy shall be reinstated. However, any portion of the Participant's Accrued
Benefit or Account that was vested prior to the time the Plan ceased to be
top-heavy shall remain vested. In addition; any Participant credited with five
(three, for Plan Years commencing after December 31, 1988) or more Years of
Service at the time the Plan ceased to be top-heavy shall have the option of
remaining under the top-heavy vesting schedule.
20.15. Minimum Benefits Under a Top-Heavy Plan. In the case of an
Employer which maintains a single Plan, for any Plan Year for which the Plan is
top-heavy, each Participant and each other Employee specified in Section 20.16
or 120.17 shall receive either a minimum Contribution or minimum Accrued
Benefit.
20.16. Minimum Benefit: Defined Benefit Plan. For any Plan Year for
which the Plan is top-heavy, a Participant's Employer provided Accrued Benefit,
when expressed as an annual retirement benefit, calculated under the Adoption
Agreement shall, in no event, be less than the lesser of:
(a) 2% of the Participant's Average Compensation for his high
five years multiplied by the number of Years of Service; or
(b) 20% of the Participant's Average Compensation for his high
five years.
Any accruals of Employer-derived benefits, whether or not
attributable to years for which the Plan is top-heavy, may be used to satisfy
the defined benefit minimum.
A minimum benefit calculated under this section shall not
decrease in a later Plan Year, whether or not the Plan is top-heavy at that
time.
Average Compensation for the Participant's high five years
shall be his Compensation from the Employer during the five consecutive years
during which the Participant had the highest aggregate Compensation from the
Employer. Compensation required to be taken into account for purposes of this
section is Compensation within the meaning of Code Section 415. Years for this
purpose shall have the same meaning as the annual period used to calculate
Average Annual Compensation under the Plan's Normal Retirement Benefit formula.
Years taken into account shall be properly adjusted in accordance with
regulations issued by the Secretary of the Treasury for years not included in a
Year of Service. In addition, years ending in a Plan Year beginning before
January 1, 1984, and years beginning after the close of the last year in which
the Plan was top-heavy shall not be taken into account.
XX-7
For purposes of determining the minimum benefits under
subsection (a) above, all Years of Service during which a Participant is
credited with 1,000 or more Hours of Service, and which are required to be taken
into account under the Plan for purposes of calculating vesting service under
the Adoption Agreement, shall be taken into account. However, Years of Service
in which the Plan was not top-heavy and Years of Service ending in a Plan Year
beginning before January 1, 1984, shall be excluded.
The Minimum Benefit is an annual retirement benefit which
shall be expressed as a single life annuity with no ancillary benefits
commencing at Normal Retirement Age or its equivalent. No adjustment may be
provided for preretirement ancillary benefits. A minimum benefit in a form other
than a single life annuity or commencing at a date other than Normal Retirement
Age must be equivalent as determined under the actuarial assumptions set forth
in the Adoption Agreement.
A Participant shall not fail to accrue a minimum benefit
merely because he:
(a) was not employed on a specified date;
(b) had Compensation of less than a stated amount; or
(c) declined to make mandatory Employee contributions.
20.17. Minimum Contribution: Defined Contribution Plan. For any Plan
Year for which the Plan is top-heavy, Employer Contributions and reallocated
forfeitures (in the case of a profit sharing plan) allocated to the Account of
any Participant shall equal at least 3% of the Participant's Compensation as
that term is defined in Section 5.02. However, a minimum percentage of
Compensation of less than 3% shall apply if such minimum percentage of
Compensation is equal to the largest percentage of Compensation provided on
behalf of any Key Employee. The largest percentage of Compensation for any Key
Employee shall be the largest ratio for any Key Employee of less than 3% where
the ratio equals the sum of Employer Contributions and reallocated forfeitures
(if any) provided on behalf of a Key Employee for that Plan Year divided by the
Compensation for such Key Employee.
For purposes of determining an Employer Contribution, amounts
contributed under a Salary Reduction Agreement or an agreement to forego an
increase in salary in connection with a plan qualified under Code Section 401(k)
are taken into account.
A Participant shall not fail to receive a Minimum Contribution merely
because he:
(a) failed to be credited with 1,000 Hours of Service for the
Plan Year;
(b) declined to make mandatory Employee contributions;
(c) or has been excluded from the Plan because such
individual's Compensation is less than a stated amount but must be considered a
Participant in order for the Plan to satisfy the coverage requirements of Code
Section 401(e)(4) and 410(b).
XX-8
In addition, a Participant who was credited with 1,000 or more
Hours of Service in the Plan Year, but separated from service prior to the end
of the Plan Year, shall not be entitled to a Minimum Contribution.
20.18. Coordination Where Employer Has Two or More Plans. If the
Employer maintains one or more plans in addition to this Plan and one or mere
Employees ere covered by this Plan end at least one other plan, the minimum
benefit or minimum contribution for each such Employee shall be specified in the
Adoption Agreement. There shall be no required duplication of minimum benefits
or contributions as provided in Section 416(f) of the Code and regulations
promulgated thereunder.
20.19. Commencement of Benefits to Key Employees. Unless a Key Employee
elects otherwise in writing, his entire interest shall be distributed, or
commence to be distributed, not later than the sixtieth day after the close of
the Plan Year in which occurs the later of his termination of employment (for
reasons other than death or disability) or his attainment of Normal Retirement
Age under the Plan. However, in any event, distribution must be made, or
commence to be made, no later than April I of the calendar year following the
year in which he attains age 70 1/2 unless a timely designation was made prior
to January 1, 1984, pursuant to Section 242(b)(2) of TEFRA.
20.20. Modified Aggregate Limit on Contributions and Benefits. This
section establishes additional rules with respect to the aggregate limit on
benefits and contributions for a Participant who participates in both a Defined
Benefit Plan and a Defined Contribution Plan that are included in a top-heavy
group. Unless certain requirements are mat, for any Limitation Year for which
the plans are included in the top-heavy group, the Defined Benefit Plan and
Defined Contribution Plan fractions under Article V shall be modified,
effectively providing the Participant with an aggregate limit equal to the
lesser of 1.0 (as applied only to the dollar limits, rather than 1.25) or 1.4
(as applied to the percentage limits).
The fractions shall be modified as follows:
(a) The denominator of the modified Defined Benefit Plan
fraction shall be the lesser of (i) the maximum permissible dollar amount in
effect for such Limitation Year (or, if greater, that Participant's current
Accrued Benefit as of the last Limitation Year beginning before January 1,
1983), or (ii) the product of 1.4 multiplied by 100% of the highest average
Compensation for any three consecutive calendar years of service during which
the Participant was an Active Participant in the Plan.
(b) The denominator of the modified Defined Contribution Plan fraction shall be
the sum of the lesser of the following amounts, computed separately for each
Limitation Year with the Employer: (i) the dollar limit in effect for such
Limitation Year, or (ii) 1.4 time 25% of the Participant's Compensation for such
year.
In some cases the aggregate of a Participant's Accrued Benefit
under an Employer's Defined Benefit Plan and annual additions under the
Employer's Defined Contribution Plan, computed using the Defined Benefit and
Defined Contribution Plan fractions, may exceed 1.0 at the time the Participant
is first required to use the fractions as enacted by TEFRA to compute the
modified aggregate limit. In such a case, the Participant shall be
XX-9
permitted no further benefit accruals under the Defined Benefit Plan and no
additional Employer Contributions, reallocated forfeitures or voluntary
nondeductible Employee contributions under the Defined Contribution Plan until
the sum of the Defined Contribution and Defined Benefit Plan fractions of the
Plan is less than 1.0.
These modifications to the Defined Benefit and Defined
Contribution Plan fractions shall not apply if the plans of the Employer in
which the Participant participates (i) meet the requirements of the
concentration test, and (ii) provide either an extra minimum benefit (in the
case of the Defined Benefit Plan) or an extra minimum contribution (in the case
of the Defined Contribution Plan) for Non-Key Employees participating in the
plans. The extra contribution or benefit shall be in addition to the minimum
contribution or minimum benefit required for all top-heavy plans under Section
Section 20.15 to 20.18.
The concentration test shall be satisfied with respect to a
Participant if the present value of Accrued Benefits end Accounts does not
exceed 90% of the present value of Accrued Benefits and Accounts for all
Employees. These present values shall be computed using the same rules as set
forth in Section 20.10 to determine whether or not the plans are a top-heavy
group.
The requirement for an extra minimum benefit for Non-Key
Employees shall be satisfied for a Limitation Year if, in addition to the
minimum benefit otherwise required in a Defined Benefit Plan, for the Plan Year
ending with or within such year, the additional Accrued Benefit of each Non-Key
Employee who is a Participant is not less than the lesser of: (i) 1% of the
Employee's Average Annual Compensation for his high five years multiplied by the
Employee's Years of Service with the Employer, or (ii) 10% of such Average
Annual Compensation for his high five years. This extra minimum benefit
generally is determined in the same manner as the minimum benefit required under
the rules for a top-heavy defined benefit plan under Section 20.16. However, for
purposes of the extra minimum benefit, a Year of Service shall be taken into
account only if: (i) such Year of Service includes the last day of a Plan Year
for which the Plan is a top-heavy Plan (or included in a top-heavy group), and
(ii) such Plan Year ends with or within a Limitation Year for which the
aggregate limit of the Key Employee exceeds 1.0 under the modified fractions.
In a Defined Contribution Plan, the requirement for an extra
minimum contribution shall be satisfied for a Limitation Year if, for the Plan
Year ending with or within such year, the Employer contributes on behalf of each
Non-Key Employee who is a Participant an extra amount (in addition to the usual
minimum contribution set forth in Section 20.17) that is not less than 1% of the
Employee's Compensation for the year.
XX-10
HORIZONS TECHNOLOGY, INC.
RETIREMENT PLAN
Participant Loan Procedures
In accordance with end subject to the provisions of Section 13.06 of the
HORIZONS TECHNOLOGY, INC., RETIREMENT PLAN and SectionA-14 of the Adoption
Agreement, loans to Participants may be made from assets in the Trust Funds. In
addition to the provisions governing Participant loans incorporated in the Plan
and the Adoption Agreement, the specific conditions and procedures described in
this instrument shall apply to all Participant loans granted or renewed after
October 18, 1989.
Details regarding the application for and approval or denial of loans
to Participants, together with information relating to limitations on types or
amounts of loans, determination of interest rates, types of collateral accepted
and events constituting default, are set forth herein. This instrument, which
may be emended from time to time, describes the Participant loan program
authorized under the Plan and forms a part of the Plan in accordance with ERISA
Section 408(b)(1) and Department of Labor Regulations Section 2550.408b-1.
1. PERSON(S) AUTHORIZED TO ADMINISTER THE PARTICIPANT LOAN PROGRAM.
The Director of Human Resources, with the assistance of the Assistant
to the Director, oversees the administration of the program on behalf of the
Retirement and Benefit Plans Committee serving at the direction of the Plan
Administrator. Information regarding Plan provisions and assistance in applying
for loans may be obtained from the Committee or from local personnel
representatives.
2. LOAN APPLICATION PROCEDURE.
A Participant desiring to apply for a loan from the Plan must submit a
request for the loan to the Retirement and Benefit Plans Committee either
directly or through a local personnel representative. An information sheet in
question and answer form (containing examples of the application of the loan
limits and other information, such as the approximate length of time needed to
process a loan application) will be given to the applying Participant. To
document the details of the loan, the Participant will be provided with a form
entitled "Simple interest Promissory Note and Federal Disclosure." In order to
make formal application for the loan, the form must be completed, with the
assistance of a member of the Committee or local personnel representative, and
signed by the Participant. All loans secured by a married Participant's vested
Accrued Benefits under the Plan must be consented to in writing by the
Participant's spouse prior to disbursement of the loan proceeds, and the
spouse's written consent must be acknowledged by a notary public. Applicants for
loans will be advised that interest on loans secured by the Participant's
elective contribution account(s) under the Plan is not deductible. The
Retirement and Benefit Plans Committee, acting on behalf of the Plan
Administrator, will review the completed Promissory Note form and will advise
the applying Participant whether the loan has been approved or denied and
-1-
the reasons therefor. Every loan granted will be subject to all the limitations
and restrictions imposed by the Plan and this instrument.
3. BASIS FOR APPROVING OR DENYING LOANS,
Loans will be made to Participants on a uniform and nondiscriminatory
basis, without regard to any individual's race, color, religion, sex, age or
national origin. Only those factors which would be considered in a normal
commercial setting will be given consideration, and loans will not be
unreasonably withheld from any applicant. Loans in excess of the limitations
established under the Plan or otherwise failing to satisfy all requirements will
not be approved.
4. LIMITATIONS ON TYPES OR AMOUNTS OF LOANS OFFERED.
All loans are Participant-directed, "earmarked" investments. The
minimum amount which may be borrowed is $1,000. Loans may not exceed the lesser
of 50% of the Participant's fully vested Accrued Benefits under the Plan or the
entire balance in the Participant's combined fully vested Salary Reduction
Contribution Account and fully vested separate Qualified Employer Nonelective
Contribution Account composed only of Employer contributions used to satisfy the
Actual Deferral Percentage Test up to a dollar maximum of $50,000. A
Participant's vested Accrued Benefits under the Plan include the vested portions
of the Participant's Employer Matching Contribution Account and Employer
Nonelective Contribution Account, the Participant's fully vested Salary
Reduction Contribution Account and the Participant's fully vested separate
Qualified Employer Nonelective and Matching Contribution Accounts (if any)
composed only of those nonforfeitable Employer contributions utilized to satisfy
the Actual Deferral Percentage Test and/or the Actual Contribution Percentage
Test. Loans to a Participant, in the aggregate, will be made from and may not
exceed the balance in the Participant's fully vested Salary Reduction
Contribution Account and fully vested separate Qualified Employer Nonelective
Contribution Account composed only of those contributions used to satisfy the
Actual Deferral Percentage Test.
There are no restrictions on the type of loan (i.e., real estate loan,
automobile purchase loan, etc.) or on the intended use of the proceeds. However,
all loans must be fully amortized over a period of 5 years (unless the loan
proceeds are used to acquire a dwelling unit which, within a reasonable time,
will be used as the principal residence of the Participant, in which event the
repayment period may be extended up to a maximum of 10 years) and must be
payable in quarterly or more frequent installments. As long as the Participant
remains an Employee of HORIZONS TECHNOLOGY, INC., loans shall be repaid by means
of automatic payroll deductions and generally shall be repaid in biweekly
installments.
In the event a Participant terminates employment after being granted a
Participant loan, the Participant's entire interest (including the Participant
loan) may be rolled over to another qualified plan permitting such rollovers, or
the balance of the loan may be repaid in full and the Accrued Benefits
distributed to the Participant. However, any terminated Employee who has not
received a gash-out and who elects to defer distribution of Accrued Benefits
until a later date is an "inactive" Participant, and the terms of any
outstanding Participant loan in effect at the time of termination of employment
remain in effect. Moreover, any other inactive Participant with undistributed
Accrued Benefits may apply for a
-2-
Participant loan on like terms and conditions. Repayment shall be as called for
under the Simple Interest Promissory Note and will be made direct to the Trustee
by the inactive Participant rather than through payroll deductions. Security for
the loan will be 50% of the inactive Participant's vested Accrued Benefits, and,
as an offset to the protection provided by payroll deductions, if the principal
balance of the loan is in excess of twenty-five percent (25%) of the vested
Accrued Benefits, additional collateral acceptable to the Plan Administrator
will be required. Failure by an Inactive Participant to make any payment when
due shall constitute a default, and the Plan will foreclose on the collateral,
which will constitute a taxable distribution to the Participant.
5. PROCEDURE FOR DETERMINING A REASONABLE INTEREST RATE.
The interest rate to be charged for Participant loans shall be one percent
(1%) above the average of the commercial loan prime rates set from time to time
by at least two banking institutions located in the Participant's immediate
geographical area. To assure that the interest rate for each Participant loan is
the currently prevailing rate, the average of the amounts of the commercial loan
prime rates will be determined by the Retirement end Benefit Plans Committee at
the time each loan is approved. The interest rates established under this P. 5
are applicable to earmarked Participant loans repaid as specified in P. 4 above.
6. TYPES OF COLLATERAL ACCEPTED.
Loans to active Participants may be secured only by a pledge of up to
fifty percent (50%) of the value of the Participant's vested Accrued Benefits
under the Plan. As explained in P. 4, a Participant's vested Accrued Benefits
include his Salary Reduction Contribution Account, his separate Qualified
Employer Contribution Accounts composed only of those fully vested contributions
utilized to satisfy the Actual Deferral Percentage Test and/or the Actual
Contribution Percentage Test, the vested portion of the Participant's Employer
Nonelective Contribution Account and the vested portion of the Participant's
Employer Matching Contribution Account. Notwithstanding the preceding sentence,
however, Participant loans will be made only from the Participant's Salary
Reduction Contribution Account and separate Qualified Employer Nonelective
Contribution Account corn-posed only of those fully vested contributions
utilized to satisfy the Actual Deferral Percentage Test, and no loans will be
approved in excess of the balances in those accounts. Additional collateral in a
form acceptable to the Plan Administrator is required for loans to inactive
Participants where the outstanding principal balance is in excess of 25% of such
Participant's vested Accrued Benefits and payroll deductions are not available
for repayment purposes.
7. EVENTS CONSTITUTING DEFAULT.
Failure to pay any portion of the amount of principal or interest on a
Participant loan when due shall constitute a default. All Participant loans are
made from the assets in the respective Participant's fully vested elective
contribution accounts in order to assure that the Plan and the remaining
Participants will suffer no loss in the event of default. In addition, except
for loans to inactive Participants as provided under P. 4, all Participant loans
must be repaid by means of automatic payroll deduction to assure consistent
repayment in accordance with the terms of the loan for maximum protection of
Plan assets. In the event there
-3-
is a default, on the occurrence of a distributable event, such as termination of
employment, the Plan will foreclose on the collateral by first deducting the
balance of unpaid principal and interest on the loan(s) from the Participant's
otherwise distributable account balances in the Plan and then foreclosing on any
additional collateral provided, as necessary. Such foreclosure will constitute e
taxable distribution to the Participant in the amount of the outstanding unpaid
principal, subject to the 10% excise tax on early distributions if the
Participant is under age 59 1/2, as if the Participant had received such amount
in cash.
-4-
EXHIBIT A
ADOPTION AGREEMENT
PLAN SPECIFICATIONS, SPECIFIC DEFINITIONS AND ELECTIONS
A.01. Name. The name of this Plan, as amended and restated, shall be the
HORIZONS TECHNOLOGY, INC., RETIREMENT PLAN.
A.02. Plan Year. The Plan Year shall be the twelve-month period commencing
January I and ending December 31 each year.
A.03. Employer. Employer shall be HORIZONS TECHNOLOGY, INC., a Delaware
corporation, or any successor corporation. Employer's Fiscal Year ends
January 31. The Employer, represented by a Retirement and Benefit
Plans Committee composed of members appointed by the Employer to act
on its behalf, shall serve as Plan Administrator in accordance with
Article XVI of the Plan.
A.04. Effective Date. The original Effective Date of this Plan is January 1,
1984. The Effective Date of this amendment and restatement of the
Plan, except for those provisions for which other effective dates are
specifically designated in the Plan, shall be January 1, 1987.
A.05. Entry Date. The Entry Date as to each Employee is as follows:
(1) From the original Effective Date of the Plan until October 20,
1987: The later of the Employee's Employment Commencement Date
or the date on which the Employee attains age twenty-one (21).
(2) From October 20, 1987, through December 31, 1989: The later of
the first day of the fourth (4th) pay period following the
Employee's Employment Commencement Date or the date on which
the Employee attains age twenty-one (21).
(3) From the first day of the first pay period commencing on or
after January 1, 1990, through December 31, 1990: The later of
the first day of the first pay period beginning after the
Employee's Employment Commencement Date or the date on which
the Employee attains age twenty-one (21).
(4) From January 1, 1991: (i) The Employee's Employment
Commencement Date, if the Employee has attained age twenty-one
(21) on or before his Employment Commencement Date; or (ii) If
A-1
the Employee has not attained age twenty-one (21) as of his
Employment Commencement Date, the first clay of the Plan Year
(or the Employee's Employment Commencement Date within the
Plan Year, if later) during which the Employee attains age
twenty-one (21).
A.06. For Plan Years through the Plan Year ending December 31, 1992,
Compensation for purposes of this Plan shall mean all compensation
which constitutes wages subject to tax as reported on Form W-2 (e:
defined in Code Section 3401(a)), including bonuses, commissions,
overtime and other taxable remuneration, before reductions on account
of any withholding, such as income taxes, Social Security taxes and
insurance premiums.
For the Plan Year commencing January 1, 1993, and ending December 31,
1993, Compensation shall mean all compensation which constitutes wages
subject to tax as reported on Form W-2 (as defined in Code ~3401 (a)),
including bonuses, "non-recoverable draws" paid to sales personnel
employed by the Company, overtime and other taxable remuneration,
before reductions on account of any withholding, such as income taxes,
Social Security taxes and insurance premiums, with the exception of
commissions and "recoverable draws" paid to sales personnel employed by
the Company, which shall be excluded from Compensation taken into
account under this Plan. For purposes of this definition of
Compensation, the terms "non-recoverable draws" and "recoverable draws"
shall mean payments made to sales personnel in advance of actual
earnings as specifically explained in the Horizons Technology, Inc.
Sales Commission Plan communicated to all affected employees. For any
self-employed individual covered under the Plan, Compensation shall
mean "Earned Income" as defined in Section 2.11 of the Plan.
Compensation shall not include deferred compensation, stock options and
other distributions which receive special Federal income tax benefits,
with the exception that, except for purposes of Code Section 415, the
portion of an Employee's Compensation that is deferred pursuant to a
salary reduction election under the Elective Deferral provisions of
Article IV of this Plan shall be considered Compensation, and,
effective September 1, 1989, amounts contributed by the Employer to a
Flexible Benefit Plan, pursuant to a salary reduction agreement, which
are not includible in the gross income of the Employee under Section
125 of the Code shall be considered Compensation.
For Plan Years commencing January 1, 1994, and thereafter, Compensation
shall mean all compensation which constitutes wages subject to tax as
reported on Form W-2 (as defined in Code Section 3401 (a)), including
bonuses, overtime, commissions paid to Employees whose Base Annual
Compensation does not exceed $50,000 and other taxable remuneration,
A-2
before reductions on account of any withholding, such as income taxes,
Social Security taxes and insurance premiums, but specifically
excluding from Compensation commissions paid to Employees whose Base
Annual Compensation exceeds $50,000 and any "recoverable draws" paid to
sales personnel employed by the Company. For purposes of this
definition of Compensation, the term "recoverable draws" shall mean
payments made to sales personnel in advance of actual earnings as
specific Xxxxx explained in the Horizons Technology, Inc., Sales
Commission Plan communicated to all affected employees. For any
self-employed individual covered under the Plan, Compensation shall
mean "Earned Income" as defined in t2.11 of the Plan. Compensation
shall not include deferred compensation, stock options and other
distributions which receive specie Federal income tax benefits, with
the exception that, except for purpose., of Code t415, the portion of
an Employee's Compensation that is deferred pursuant to a salary
reductionelection under the Elective Deferral provisions of Article IV
of this Plan shall be considered Compensation, and, effective September
1, 1989, amounts contributed by the Employer to a Flexible Benefit
Plan, pursuant to a salary reduction agreement, which are not
includible in the gross income of the Employee under ii 125 of the Code
shall be considered Compensation.
For Plan Years beginning after December 31, 1988, the annual
Compensation of each Participant taken into account under the Plan for
any Plan Year shall not exceed $200,000, as adjusted by the Secretary
of the Treasury at the same time and in the same manner as under Code
Section 415(d), except that the dollar increase in effect on January I
of any calendar year is effective for years beginning in such calendar
year, and the first adjustment to the $200,000 limitation is effected
on January 1, 1990. If the Plan determines Compensation on a period of
time that contains fewer than 12 calendar months, then the annual
Compensation limit is the amount equal to the annual Compensation limit
for the calendar year in which the Compensation period begins
multiplied by the ratio obtained by dividing the number of full
months-in the period by 12. In determining the Compensation of a
Participant for purposes of this limitation, the rules of Code Section
401 (a)(17) and 414(q)(6) shall apply, and for purposes of applying the
$200,000 limit on the Compensation of a Highly Compensated Employee,
the family unit of such Employee will be treated as a single Highly
Compensated Employee with $200,000 in Compensation. The $200,0OO limit
will be allocated among members of the family unit in proportion to
each member's Compensation (except for purposes of determining
Compensation below the Plan's Integration Level, if applicable). For
purposes of this Section, a family unit is define(( as the Highly
Compensated Employee, his or her spouse and lineal descendants under
age 19 at the end of the Plan Year.
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for
Plan Years beginning on or after January 1, 1994, the annual
Compensation
A-3
of each Employee taken into account under the Plan shall not exceed the
OBRA "93 annual compensation limit. The OBRA "93 annual compensation
limit is $150,000, as adjusted by the Commissioner for increases in the
cost of living in accordance with Section 401 (a)(17)(B) of the Intern;
Revenue Code. The cost-of-living adjustment in effect for a calendar
year applies to any period, not exceeding 12 months, over which Compensation
is determined (determination period) beginning in such calendar year.
If a determination period consists of fewer than 12 months, the OBRA
"93 annual compensation limit will be multiplied by a fraction, the
numerator of which is the number of months in the determination period,
end the denominator of which is 12.
For plan years beginning on or after January 1, 1994, any reference in
this Plan to the limitation under Section 401(a)(17) of the Code shall
mean the OBRA "93 annual compensation limit set forth in this
provision.
If Compensation for any prior determination period is taken into
account in determining an Employee's benefits accruing in the current
Plan Year, the Compensation for that prior determination period is
subject to the OBRA "93 annual compensation limit in effect for that
prior determination period. For this purpose, for determination periods
beginning before the first day of the first Plan Year beginning on or
after January 1, 1994, the OBRA "93 annual compensation limit is
$150,000.
For Limitation Years beginning after December 31, 1991, Compensation
shall include only those amounts actually paid or made available to an
Employee and shall not include accrued Compensation.
A.07. Normal Retirement Age or Date. A Participant's Normal Retirement Age or
Normal Retirement Date shall mean the date on which he attains age
sixty-five (65).
A.08. Early Retirement Date. A Participant's Early Retirement Date shall be
the first day of the month following his separation from service with
the Employer after he has attained age Fifty-Five (55) and has
completed six (6) Years of Service with the Employer, but prior to his
attainment of Normal Retirement Age under the Plan.
A.09. Eligibility for Participation. An eligible Employee employed
prior to October 20, 1987, shall participate in this Plan on the later
of the date on which he attains age twenty-one (21) or his Employment
Commencement Date. Effective from October 20, 1987, through December
31, 1989, an eligible Employee shall Participate in this Plan on the
later of the date on which he attains age twenty-one (21) or the first
day of the fourth (4th) pay period following the Employee's Employment
Commencement Date. Effective the first day of the first pay period
beginning on or after January 1, 1990, through December 31, 1990, an
eligible Employee shall participate in this Plan on the later of the
date on which he attains age
A-4
twenty-one (21) or the first day of the first pay period following his
Employment Commencement Date. Effective January 1, 1991, an eligible
Employee shall participate in this Plan as of his Employment
Commencement Date if he has then attained age twenty-one (21), or, if
he has not attained age twenty-one (21), he shall participate as of the
first day of the Plan Year (or his Employment Commencement Date, if
later) during which he attains age twenty-one (21).
In addition to the ineligible Employees designated in J3.01 lc) of the
Plan temporary Employees, whether full-time or part-time, shall be
ineligible to participate in this Plan. A "temporary Employee," for
purposes hereof, shall be defined as an Employee hired to fill a
position for which the period of employment, predetermined at date of
hire, is limited to a period not to exceed six (6) months, at the
conclusion of which such Employee's employment with the Employer is
terminated. A temporary Employee whose status is changed as a result of
a transfer to a permanent position, whether full-time or pert-time,
shall be eligible to participate in this Plan upon satisfaction of the
eligibility requirements set forth above with his Employment
Commencement Date being the date of his change in status.
All persons becoming "Leased Employees" of the Employer for purposes of
coverage under the Plan pursuant to the provisions of Code t414(n) and
proposed or final regulations thereunder on or before December 31,
1990, shall continue to participate in the Plan in accordance with ~i
~iA.0~ and 2.20 of the Plan. All persons becoming "Leased Employees" of
the Employer for purposes of coverage under the Plan pursuant to the
provisions of Code Section 414(n) and proposed or final regulations
thereunder on or after the first day of the Plan Year commencing
January 1, 1991, shall be ineligible and shall be excluded from
participation in the Plan.
A Former Participant shall be eligible to participate immediately upon
his Reemployment Commencement Date.
A Former Participant is defined as a Participant who has terminated his
employment with the Employer and has received a distribution of the
vested portion of his accrued benefits under the Plan.
A.1O. Employer Contributions and Allocations. Employer Contributions shall be
made as follows:
(a) Salary Reduction Contributions shall be permitted in the
amount of twelve percent (12%) of a Participant's total base
annual Compensation for Participants whose base annual
Compensation is under $50,000 or eight percent (8%) of a
Participant's total base annual Compensation for Participants
whose base annual Compensation is $50,000 or more, and such
Contributions shall be made by the Employer, pursuant to the
provisions of Article IV of the Plan, for each payroll period
in accordance
A-5
with a Salary Reduction Agreement form signed by the
Participant. Notwithstanding any provisions of Article IV to
the contrary, an election by e Participant of a Salary
Reduction Amount, once made, shall continue in effect until
changed by the Participant, except as noted below, end the
Participant may increase, decrease or revoke such election
during any payroll period to take effect with the succeeding
payroll period by giving reasonable prior written notice to
the Plan Administrator. All contributions made on behalf of a
Participant under a Salary Reduction Agreement shall at all
times be fully vested end nonforfeitable. As specified in
Section 4.02 of the Plan, Salary Reduction Contributions may
be limited and Salary Reduction Agreements may be amended or
revoked by the Employer with respect to any Participant or
group of Participants to ensure compliance with Section 4Ol(k)
and 415 of the Code.
(b) From the original Effective Date of the Plan through the first
payroll period to end on or after January 1, 1990, the
Employer shall make a Matching Contribution in the amount of
fifty percent (50%) of a Participant's Salary Reduction
Contribution during each payroll period for which a Salary
Reduction Agreement is in effect; provided, however, that such
50% Matching Contribution shall not apply to any Salary
Reduction Contribution elected by the Participant in excess
of"5% of his Compensation (8% of his Compensation effective
with the payroll period commencing January 2, 1988).
Effective on the first day of the first payroll period to
begin on or after January 1, 1990, through the first payroll
period to end on or after January 1, 1993, the Employer shall
make Matching Contributions during each payroll period for
which a Salary Reduction Agreement is In effect as follows:
(1) For a Participant who elects to make a Salary
Reduction Contribution in any amount less than three
percent (3%) of his Compensation, the Employer shall
make a Matching Contribution of fifty percent (50%)
of the Participant's Salary Reduction Contribution.
(2) For a Participant who elects to make s Salary
Reduction Contribution of at least three percent (3%)
up to a maximum of four percent (4%) of his
Compensation, the Employer shall make a Matching
Contribution of one hundred percent (100%) of the
Participant's Salary Reduction Contribution.
(3) Employer Matching Contributions shall not apply to
any Salary Reduction Contribution elected by a
Participant in excess of 4% of his Compensation.
Effective on the first day of the first payroll period to
begin on or after January 1, 1993, and thereafter, the
Employer shall make Matching
A-6
Contributions during each payroll period for which a Salary
Reduction Agreement is in effect as follows:
(1) For a Participant who elects to make a Salary
Reduction Contribution in any amount less than three
percent (3%) of his or her Compensation, the Employer
shall make a Matching Contribution c fifty percent
(50%) of the Participant's Salary Reduction
Contribution .
(2) For a Participant who elects to make a Salary
Reduction Contribution of et least 3% of his or her
Compensation, the Employer shall make a Matching
Contribution of one hundred percent (100%) of the
Participant's Salary Reduction Contribution for the
first 3% of Compensation.
(3) No Employer Matching Contributions shall be made on
any Salary Reduction Contribution elected by a
Participant in excess of three percent (3%) of his or
her Compensation.
All Matching Contributions made on behalf of a Participant
shall vest in accordance with the vesting schedule set forth
in Section A.11 of this Adoption Agreement. Such Matching
Contributions shall be allocated to the respective Employer
Matching Contribution Account of the Participant on whose
behalf the contribution was made. Adjustments in the amount of
the Matching Contribution shall be made to reflect any change
made by the Participant in his Salary Reduction Agreement to
take effect for the succeeding payroll period.
(c) For any Plan Year, the Employer may, in its sole discretion,
make Non- elective Contributions to the Plan in accordance
with Section 4.04. Such Contributions, if any, shall be
allocated in accordance with Section 6.01 among the Employer
Nonelective Contribution Accounts of Active Participants in
the proportion each such Active Participant's Compensation
bears to the total Compensation of all Active Participants for
the Plan Year. Employer Nonelective Contribution Accounts
shall vest in accordance with the vesting schedule set forth
in Section A.11 of this Adoption Agreement.
(d) In addition, the Employer may, in its sole discretion, elect
to make certain other Qualified Nonelective Contributions as
defined in Section 2.48 or Qualified Matching Contributions as
defined in 12.47 which shall be fully vested and
nonforfeitable, and such nonforfeitable Contributions end
accrued earnings thereon shall be maintained as separate,
fully vested Qualified Employer Nonelective Contribution
Accounts and Qualified Employer Matching Contribution Accounts
for the respective Participants receiving an allocation of
such Contributions; provided, however, that in no event shall
any allocation be discriminatory in favor of Highly
Compensated Employees. Notwithstanding anything in the Plan or
in this Adoption
A-7
Agreement to the contrary, Qualified Employer Nonelective
Contribution utilized in satisfying the ADP tests shall be
treated in the same manner; Salary Reduction Contributions for
purposes of the Participant loan provisions and earmarking
provisions contained in the Plan and in the Adoption
Agreement.
A.11. Vesting of Participant's Interest. Subject to the limitations set forth
in Article VIII of the Plan, if the employment of any Participant is
terminated for any cause other Than Death, Disability or Normal
Retirement, the Participant shall have a nonforfeitable, vested right
to his Accrued Benefit derived from Employer Matching Contributions and
Employer Nonelective, Contributions, if any. The percentage of such
vested and nonforfeitable interest shall be determined in accordance
with The following schedule:
For all Plan Years from the original Effective Date of the Plan through
the Plan Year ending December 31, 1989:
Years of Credited Service Percentage
------------------------- ----------
Less than 2 years None
2 years but fewer than 3 20%
3 years but fewer than 4 40%
4 years but fewer than 5 60%
5 years but fewer than 6 80%
6 years or more 100%
For the Plan Year commencing January 1, 1990, and thereafter:
Years of Credited Service Percentage
------------------------- ----------
Less than 1 year None
1 year but fewer than 2 10%
2 years but fewer than 3 20%
3 years but fewer than 4 40%
4 years but fewer than 5 60%
5 years but fewer than 6 80%
6 years or more 100%
All of a Participant's Years of Service with the Employer shall be
taken into account for Credited Years of Service for vesting purposes
except as follows:
(a) Years of Service with the Employer during any period prior to
January 1, 1983, shall not be taken into account.
(b) Years of Service prior to age 18 shall not be taken into
account.
A-8
(c) Effective January 1, 1985, in the case of a Participant who
has 5 or more consecutive 1-year Breaks in Service, the
Participant's pre-break service will count in vesting of the
Employer-derived Accrued Benefit only if either:
(i) such Participant has any nonforfeitable interest in
the Accrued Benefit attributable to Employer
Contributions at the time of separation from service;
or
(ii) upon returning to service the number of consecutive
1-year Breaks in Service is less than the number of
Years of Service.
(d) Service during any Vesting Computation Period in which the
Participant fails to complete a Year of Service, whether or
not a Break in Service occurs during such period, shall not be
taken into account.
Application of Forfeitures. The nonvested portion of a
Participant's Employer Matching Contribution Account and
Employer Nonelective Contribution Account shall be forfeited
at the time he receives a distribution of his vested interest
in such Accounts, and the forfeiture shall be reallocated as
of the last clay of the Plan Year during which the
distribution is made. If a Participant has no vested interest
in his Employer Matching Contribution Account or Employer
Nonelective Contribution Account at the time of his separation
from service, the entire balance of the Account shall be
forfeited and reallocated as of the last day of the Plan Year
during which the separation from service occurs.
A.12. Timing of Distribution,. This Plan does elect the "Cash Out" and
restoration provisions set forth in Article VIII of the Plan.
Distributions to Participants of their vested end nonforfeitable
interests in their Salary Reduction Contribution Accounts, Employer
Matching Contribution Accounts, Employer Nonelective Contribution
Accounts, Qualified Employer Matching Contribution Accounts and
Qualified Employer Nonelective Contribution Accounts for reasons other
than Death, Disability or Normal Retirement shall be made as follows:
(1) Amounts deferred by the Participant as elective contributions
under; a Salary Reduction Agreement (Salary Reduction
Contributions), Qualified Employer Matching Contributions and
Qualified Employer Nonelective Contributions, including
accrued earnings thereon, may be distributed to the
Participant as soon as administratively feasible following the
Participant's separation from service with the Employer if so
requested by the Participant, but in no event will such
amounts be distributed later than the amounts distributed
pursuant to subparagraph (2) below.
A-9
(2) Amounts allocated to the account(s) of a Participant as
Employer Matching Contributions and Employer Nonelective
Contributions which are nonforfeitable under the vesting
schedule(s) set forth in IA. 11, including accrued earnings
thereon, shall be distributed to the Participant as soon as
administratively feasible following the end of the Plan Year
during which the Participant separated from service with the
Employer if so requested by the Participant.
A.13. Employee Voluntary Contributions and Reliever Contributions.
No Employee Voluntary Contributions of any kind will be permitted under
this Plan. Reliever Contributions and certain transfers of assets will
be permitted in accordance with the provisions of Article VII of the
Plan.
A.14. Particpant Directed Accounts and Participant Loans, Participants may
"earmark" the investment of the assets in their Salary Reduction
Contribution Accounts and Qualified Employer Nonelective Contribution
Accounts, if any, among the various optional forms of investment
available under the Plan and Trust pursuant to the provisions of t16.12
of the Plan. All Participant loans made under Section 13.06 of the Plan
shall be earmarked investments and shall be maintained as segregated,
earmarked accounts of the respective Participants, subject to the
provisions of Section 16.12. Notwithstanding anything to the contrary
in Section 13.06, all Participant loans shall be made only from the
Participant's Salary Reduction Contribution Account and/or the
Participant's Qualified Employer Nonelective Contribution Account, and
the amount of such outstanding loans in the aggregate shall be limited
to the lesser of 5096 of the Participant's fully vested accrued
benefits under the Plan or the entire balance in the Participant's
combined nonforfeitable Salary Reduction Contribution Account and
Qualified Employer Nonelective Contribution Account. All loans shall be
made in accordance with the separate document attached to the Plan and
made a part thereof entitled "Participant Loan Procedures," as it may
be amended from time to time.
A.15. Crediting of Service. This Plan does not utilize the Elapsed Time
Method of crediting service.
A.16. Trustee. The Trustee of the Trust created under this amended and
restated Plan shall be LINCOLN TRUST COMPANY.
A.17. Right to Amend or Change Elections. The elections made under this
Adoption Agreement may be changed by the Employer from time to time by
a written instrument signed by the Employer and accepted by the
Trustee. No amendment shall deprive any Participant of any vested
interest hereunder (unless required in order to qualify under Section
401 (a) of the Code) or increase the duties of the Trustee, except with
its written consent.
A-10
THE PLAN TO WHICH THIS ADOPTION AGREEMENT IS AN EXHIBIT IS HEREBY
INCORPORATED AND MADE A PART HEREOF.
The Undersigned, as Plan Administrator, agrees to serve as the Named
Fiduciary, possessing the authority to control and manage the operation and
administration of the Plan: and to discharge its duties with respect to the Plan
as described therein.
Date: May 19, 1994
"EMPLOYER" and "PLAN ADMINISTRATOR"
HORIZONS TECHNOLOGY, INC.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
XXXXX X. XXXXXX
By: /s/ X. Xxxxxxx Xxxxx
-----------------------------------
X. XXXXXXX XXXXX
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------
XXXX X. XXXXXXX
By: /s/ Xxxxxxx X. XxxXxxx
-----------------------------------
XXXXXXX X. XxxXXXX
APPROVED AS TO FORM:
XXXXXXXX X. XXXXXXXXX LAW CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxxxxx
-----------------------------------
Attorney for Employer
A-11
AMENDMENT TO HORIZONS TECHNOLOGY, INC. RETIREMENT PLAN
Horizons Technology, Inc. hereby adopts the following amendment to the
Horizons Technology, Inc. Retirement Plan (the "Plan"):
1. Section A.05 of the Plan is hereby amended to read as follows with
respect to Employees with an Employment Commencement Date after December 31,
1998:
"'Entry Date' shall mean the first day of the calendar quarter
(January 1, April 1, July 1 or October 1) coinciding with or following an
Employee's Employment Commencement Date provided that the Employee has attained
age 21 as of such Entry Date."
2. The first sentence of Section A. 10(a) of the Plan is hereby amended
to read as follows:
"Subject to the limitations set forth in the Plan, each
Participant may elect Compensation Deferrals, in the manner prescribed by the
Committee, in whole percentages from one percent to 15 percent of the
Participant's Compensation."
3. Section A. 10(b) of the Plan is hereby amended by the addition of
the following paragraph at the end thereof:
"Effective with respect to payroll periods commencing after
December 31,1998, an Employer Matching Contribution shall be made on behalf of
each Participant for a payroll period which shall equal the lesser of: (i) the
Compensation Deferrals made during such payroll period by such Participant; or
(ii) four percent of the Participant's Compensation for such payroll period. A
portion of each Participant's Employer Matching Contributions Account equal to
fifty percent of the aggregate Employer Matching Contributions (valued as of the
date of contribution) allocated to such Account after December 31, 1998 shall be
invested in Titan Stock.'
4. The vesting schedule set forth in Section A. 11 of the Plan is
hereby amended to read as follows with respect to Participants with at least one
Hour of Service after December 31, 1998:
"Years of Credited Service Percentage Vested
-------------------------- -----------------
less than 2 0%
2 25%
3 50%
4 75%
5 or more 100%"
5. The last paragraph of Section A. 11 of the Plan is hereby amended to
read as follows:
"Application of Forfeitures. The nonvested portion of a
Participant's Employer Matching Contribution Account and Employer Nonelective
Contribution Account shall be
1
forfeited at the time he receives a distribution of his vested interest in such
Accounts. If a Participant has no vested interest in his Employer Matching
Contribution Account or Employer Nonelective Contribution Account at the time of
his separation from service, the entire balance of the Account shall be
forfeited as of the last day of the Plan Year during which the separation from
service occurs. Forfeitures during a Plan Year shall be used first to pay any
expenses lawfully payable from the assets of the Plan, second to reduce the
amount of the Employer Matching Contributions to be made by the Company for that
Plan Year and third to restore forfeitures of reemployed Participants in
accordance with Section 8.05."
6. Section A.15 of the Plan is hereby amended to read as follows with
respect to periods after December 31, 1998:
"Crediting, of Service. This Plan utilizes the Elapsed Time
Method of crediting service."
7. Section 2.29 of the Plan is hereby amended in its entirety to read
as follows:
"2.29. `Highly Compensated Employee' shall mean:
(a) Any Employee who performs services for the Company or any
Related Company who (i) was a 5% owner of the Company or any Related Company at
any time during the Plan Year or the preceding Plan Year; or (ii) for the
preceding Plan Year, received compensation from the Company or any Related
Company in excess of $80,000 (as adjusted pursuant m Section 415(d) of the Code)
and for the preceding Plan Year was a member of the "top-paid group" for such
year.
(b) Any Employee who separated from service (or was deemed to
have separated) prior to the current Plan Year, who performs no services for the
Company or any Related Company during the current Plan Year, and who met the
description in (a) above for the year of his separation or any year after he
attained age 55.
(c) The top-paid group for a Plan Year shall consist of the
top 20% of Employees ranked on the basis of compensation received during the
year excluding Employees described in Section 414(q)(5) of the Code and Treasury
Regulations thereunder. For purposes of this definition of `Highly Compensated
Employee', `compensation' means compensation within the meaning of Section
415(c)(3) of the Code, but including elective or salary reduction contributions
to a cafeteria plan, cash or deferred arrangement or tax-sheltered annuity.
(d) This definition of `Highly Compensated Employee' shall be
effective for Plan Years beginning on or after January 1, 1997, except that for
purposes of determining if an Employee was a Highly Compensated Employee in
1997, this definition will be treated as having been in effect in 1996."
8. The initial paragraph and subsections (a) and (b) of Section 2.60
of the Plan are hereby amended in their entirety to read as follows with respect
to Years of Service commencing on or after January 1, 1999:
"2.60 `Year of Service' shall mean a 365-day Period of
Service. For the purpose of vesting, an Employee shall be credited with a number
of Years of Service equal to the number of days in the Employee's Period of
Service divided by 365. Any remaining Period of Service less than 365 days shall
be disregarded. In computing the Years of Service rendered to the Company for
purposes of vesting, the Participant's total Period of Service with the Company
shall be taken into account, with the following exceptions:
(a) In the case of a Participant who has any one-year Period
of Severance, the Period of Service before such Period of Severance shall not be
required to be taken into account until the Employee has completed a one-year
Period of Service after his return; however, in the case of an Employee who has
a five-year Period of Severance, the Period of Service after such severance
shall not be taken into account for the purpose of determining the vested
portion of the amount credited to the Account of a Participant derived from
Company contributions which accrued before such severance;
(b) An Employee who incurs a Period of Severance and who is
subsequently reemployed shall be treated as a new Employee for purposes of the
Plan, with the Period of Service prior to such Period of Severance ignored, if
both conditions (i) and (ii) are met.
Condition (i): The Employee had no vested interest in his
Employer Matching Contributions Account or Employer Nonelective Contributions
Account at the time of such Period of Severance.
Condition (ii): The uninterrupted Period of Severance equals
of exceeds the greater of:
(i) The Period of Service completed prior to such Period
of Severance, or
(ii) five years.
Periods of Service previously eliminated by a prior application of this
paragraph shall not be counted for the purpose of Condition (ii)."
9. Sections 4.06 and 4.07 of the Plan are hereby amended to provide
that the Actual Deferral Percentage or Actual Contribution Percentage for
non-Highly Compensated Employees shall be the percentage determined for the Plan
Year preceding the Plan Year being tested.
10. Sections 8.04(a) and 11.01 of the Plan are hereby amended to
substitute "$5,000" for "$3,500."
11. Article XI of the Plan is hereby amended by the addition of the
following sections 11.7 and 11.8:
"11.7 Age 59-1/2 Withdrawals
Subject to Section 11.02, a Participant may withdraw all or a
portion of his vested Accounts after he attains age 59-1/2. Such withdrawal
shall be made in the manner prescribed by the Committee. A Participant may make
only one withdrawal pursuant to this Section in any one calendar year.
11.8 Hardship Withdrawals from Compensation Deferral Accounts
(a) Subject to Section 11.02 and the approval of the Committee
and guidelines promulgated by the Committee, withdrawals from the Participant's
Compensation Deferral Account and Rollover Account may be permitted to meet a
financial hardship resulting from:
(1) Uninsured medical expenses previously incurred by
the Participant, or the Participant's spouse or dependent or necessary to obtain
such medical care;
(2) The purchase (excluding mortgage payments) or a
principal residence of the Participant;
(3) Thc payment of tuition for the next 12 months of
post-secondary education for the Participant, or the Participant's spouse,
children or dependents;
(4) The prevention of eviction of the Participant
from his principal residence, or foreclosure on the mortgage of the
Participant's principal residence; and
(5) Any other event described in Treasury Regulations
or rulings as an immediate and heavy financial need and approved by the
Committee as a reason for permitting distribution under this Section 6.3.
The Committee shall determine, in a non-discriminatory manner, whether a
Participant has a financial hardship. A distribution may be made under this
Section only if such distribution does not exceed the amount required to meet
the immediate financial need created by the hardship (including taxes or
penalties reasonably anticipated from the distribution) and is not reasonably
available from other resources of the Participant.
(b) The withdrawal amount shall not in any event exceed the
value of the Participant's Compensation Deferral Account and Rollover Account as
of the date immediately preceding the date of the Committee's acceptance of the
Participant's written application for a hardship withdrawal. In addition, except
as provided otherwise in the following sentence, the amount of any withdrawal
pursuant to this Section from a Participant's Compensation Deferral Account
shall not exceed the value of the Participant's Compensation Deferrals to such
Account, less previous withdrawals and excluding earnings. Notwithstanding the
foregoing, any distribution under this Section may include earnings accrued to
the Participant's Compensation Deferral Account prior to 1989. Payment of the
withdrawal shall be in a single sum no later than
the end of the month following the date on which the withdrawal is approved by
the Committee or as soon thereafter as is practicable.
(c) A Participant shall not be permitted to make any
withdrawals under this Section until he has obtained all distributions, other
than hardship distributions, and all nontaxable loans currently available under
all qualified profit sharing and retirement plans maintained by the Company or a
Related Company.
(d) The Participant's request for a withdrawal shall include
his written statement that the need cannot be relieved: (i) through
reimbursement or compensation by insurance or otherwise; (ii) by reasonable
liquidation of the Participant's assets, to the extent such liquidation would
not itself cause immediate and heavy financial need; (iii) by cessation of
Compensation Deferrals under the Plan; or (iv) by other distributions or
nontaxable loans currently available from plans maintained by the Company or a
Related Company, or by borrowing from commercial sources on reasonable
commercial terms.
(e) If a Participant withdraws any amount from his
Compensation Deferral Account or Reliever Account pursuant to this Section, he
must agree in writing that he shall be unable to elect that any Compensation
Deferrals or any other employee contributions (excluding mandatory employee
contributions to a defined benefit plan) be made on his behalf under the Plan or
under any other plan maintained by the Company or a Related Company until one
year after receipt of the withdrawal. For purposes of the preceding sentence, a
plan includes any qualified plan or nonqualified plan of deferred compensation
and any stock purchase or stock option plan, but does not include cafeteria
plans or any other health or welfare benefit plans. In addition, a Participant
who withdraws any amount from his Compensation Deferral Account or Reliever
Account pursuant to this Section shall be unable to elect any Compensation
Deferrals under the Plan or under any other plan maintained by the Company or a
Related Company for the Participant's taxable year immediately following the
taxable year of the withdrawal to any extent that such Compensation Deferral
would exceed the applicable limit under Section 402(g) of the Code for such
taxable year, reduced by the amount of such Participant's Compensation Deferrals
for the taxable year of the withdrawal."
12. Section 13.06 of the Plan is hereby amended in its entirety to read
as follows with respect to loans made after December 31, 1998.
"13.06 Loans to Participants.
(f) Each Participant shall have the right, subject to prior
approval by the Committee, to borrow from his Accounts. Application for a loan
must be submitted by a Participant to the Committee or its delegate on such
form(s) as the Committee may require. The Committee may permit loan applications
in writing, by telephone or by electronic mail. Approval shall be granted or
denied as specified in subsection (b), on the terms specified in subsection (c).
For purposes of this Section, but only to the extent required by Department of
Labor Regulations Section 2550.408b-1, the term `Participant' shall include any
Employee, former Employee, Beneficiary or alternate payee under a qualified
domestic relations order, as
defined in Section 414(p) of the Code, who is a party in interest and has an
interest in the Plan that is not contingent.
(g) The Committee shall grant any loan which meets each of the
requirements of paragraphs (1), (2) and (3) below:
(1) The amount of the loan, when added to the
outstanding balance of all other loans to the Participant from all qualified
plans of the Company or any Related Company shall not exceed the lesser of:
(i) $50,000, reduced by the excess, if any,
of a Participant's highest outstanding balance of all loans from the Plan or any
other qualified plan maintained by the Company or any Related Company during the
preceding 12 months over the outstanding balance of such loans on the loan date,
or
(ii) 50 percent of the value of the vested
balance of the Participant's Accounts;
(2) The loan shall be for at least $1,000; and
(3) No more than one loan may be outstanding to a
Participant at any time.
(h) Each loan granted shall, by its terms, satisfy each of the
following additional requirements:
(1) Each loan must be for a minimum initial term of
one year and must be repaid within five years;
(2) Each loan must require substantially level
amortization over the term of the loan, with payments not less frequently than
quarterly; and
(3) Each loan must be adequately secured, with the
security to consist of the balance of the Participant's Accounts.
(i) In the case of any Participant who is an
active Employee, automatic payroll deductions shall be required as additional
security.
(ii) In the case of any other Participant,
the outstanding loan balance may at no time exceed 50 percent of the outstanding
vested balance of the Participant's Accounts. If such limit is at any time
exceeded, or if the Participant fails to make timely repayment, the loan will be
treated as in default and become immediately payable in full.
(iii) The investment gain or loss
attributable to the loan shall not be included in the calculation or allocation
of the increase or decrease in fair market value of the Investment Funds.
Instead, the entire gain or loss (including
any gain or loss attributable to interest payments or default) shall be
allocated to the Accounts of the Participant.
(4) Each loan shall bear a reasonable rate of
interest, which rate shall be the prime rate (as determined by the Committee) as
of the last day of the calendar quarter preceding the calendar quarter in which
the loan is made, plus one percent. Furthermore, the Participant's Accounts
shall be charged a setup fee not to exceed the fee charged by the Plan's
recordkeeper at the time the loan is made; such setup fee shall be paid to the
Plan's recordkeeper.
(i) All loan payments shall be transmitted by
the Company to the Trustee as soon as practicable but not later than the date of
transmittal to the Trustee of Compensation Deferrals withheld during the month
during which such loan amounts were received or withheld. Each loan may be
prepaid in full at any time. Any prepayment shall be paid directly to the
Trustee in accordance with procedures adopted by the Committee.
(j) Each loan shall be evidenced by a promissory note executed
by the Participant and payable in full to the Trustee, not later than the
earliest of (i) a fixed maturity date meeting the requirements of subsection
(c)(1) above, (ii) the Participant's death, (iii) the termination of the Plan or
(iv) the Participant's separation from service. Such promissory note shall
evidence such terms as are required by this Section.
(k) The Committee shall have the power to modify the above
rules or establish any additional rules with respect to loans extended pursuant
to this Section. Such rules may be included in a separate document or documents
and shall be considered a part of the Plan; provided, each rule and each loan
shall be made only in accordance with the regulations and rulings of the
Internal Revenue Service and Department of Labor and other applicable state or
federal law. The Committee shall act in its sole discretion to ascertain whether
the requirements of such regulations and rulings and this Section have been
met."
Unless otherwise specified, the amendments set forth above shall be
effective as of January 1, 1999. Capitalized terms within the text of amendments
shall have the same meaning as in the Titan Corporation Consolidated Retirement
Plan except that they shall be applied with respect to the Horizons Technology,
Inc. Retirement Plan.
IN WITNESS WHEREOF, Horizons Technology, Inc. has caused this amendment
to be executed this 1st day of January, 1999.
Horizons Technology, Inc.
By: /s/ Xxxxxx X. Xxxx
Its: Assistant Secretary
