EXHIBIT 10.10
The PruArray Prototype Plan and
Trust and IRS Opinion Letters
[LOGO OF PRUARRAY PLAN]
PruArray 401(k) Plan
401(k) Plan Document
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DUPLICATION OR REPRODUCTION, INCLUDING THE USE OF ELECTRONIC MEANS, IS
PROHIBITED BY LAW WITHOUT THE EXPRESS CONSENT OF THE AUTHOR.
TABLE OF CONTENTS
Paragraph Page
ARTICLE I: DEFINITIONS
1.1 Actual Deferral Percentage 1
1.2 Adoption Agreement 1
1.3 Aggregate Limit 1
1.4 Annual Additions 1
1.5 Annuity Starting Date 1
1.6 Applicable Calendar Year 1
1.7 Applicable Life Expectancy 2
1.8 Average Contribution Percentage (ACP) 2
1.9 Average Deferral Percentage (ADP) 2
1.10 Break In Service 2
1.11 Code 2
1.12 Compensation 2
1.13 Contribution Percentage 3
1.14 Defined Benefit Plan 4
1.15 Defined Benefit (Plan) Fraction 4
1.16 Defined Contribution Dollar Limitation 4
1.17 Defined Contribution Plan 4
1.18 Defined Contribution (Plan) Fraction 4
1.19 Designated Beneficiary 5
1.20 Disability 5
1.21 Distribution Calendar Year 5
1.22 Early Retirement Age 5
1.23 Earned Income 5
1.24 Effective Date 5
1,25 Election Period 5
1.26 Elective Deferral 5
1.27 Eligible Participant 5
1.28 Employee 6
1.29 Employer 6
1.30 Entry Date 6
1.31 Excess Aggregate Contributions 6
1.32 Excess Amount 6
1.33 Excess Contribution 6
1.34 Excess Elective Deferrals 6
1.35 Family Member 6
1.36 First Distribution Calendar Year 6
1.37 Fund 7
1.38 Hardship 7
1.39 Highest Average Compensation 7
1.40 Highly Compensated Employee 7
1.41 Hour Of Service 7
1.42 Key Employee 8
1.43 Leased Employee 9
1.44 Limitation Year 9
1.45 Master Or Prototype Plan 9
1.46 Matching Contribution 9
1.47 Maximum Permissible Amount 9
1.48 Net Profit 9
1.49 Normal Retirement Age 9
1.50 Owner-Employee 9
1.51 Paired Plans 9
1.52 Participant 10
1.53 Participant's Benefit 10
1.54 Permissive Aggregation Group 10
1.55 Plan 10
1.56 Plan Administrator 10
1.57 Plan Year 10
1.58 Present Value 10
1.59 Projected Annual Benefit 10
1.60 Qualified Deferred Compensation Plan 10
1.61 Qualified Domestic Relations Order I0
1.62 Qualified Early Retirement Age 10
1.63 Qualified Joint And Survivor Annuity 11
1.64 Qualified Matching Contribution 11
1.65 Qualified Non-Elective Contributions 11
1.66 Qualified Voluntary Contribution 11
1.67 Required Aggregation Group 11
1.68 Required Beginning Date 11
1.69 Rollover Contribution 11
1.70 Salary Savings Agreement 11
1.71 Self-Employed Individual 11
1.72 Service 11
1.73 Service Company 12
1.74 Shareholder Employee 12
1.75 Simplified Employee Pension Plan 12
1.76 Sponsor 12
1.77 Spouse (Surviving Spouse) 12
1.78 Super Top-Heavy Plan 12
1.79 Taxable Wage Base 12
1.80 Top-Heavy Determination Date 12
1.81 Top-Heavy Plan 12
1.82 Top-Heavy Ratio 12
1.83 Top-Paid Group 13
1.84 Transfer Contribution 13
1.85 Trustee 13
1.86 Valuation Date 13
1.87 Vested Account Balance 14
1.88 Voluntary Contribution 14
1.89 Welfare Benefit Fund 14
1.90 Year Of Service 14
ARTICLE II: ELIGIBILITY REQUIREMENTS
2.1 Participation 14
2.2 Change In Classification Of Employment 14
2.3 Computation Period 15
2.4 Employment Rights 15
2.5 Service With Controlled Groups 15
2 6 Owner-Employees 15
2.7 Leased Employees 15
2.8 Omission Of Eligible Employee 16
2.9 Inclusion Of Ineligible Employee 16
Paragraph Page
ARTICLE III: EMPLOYER CONTRIBUTIONS
3.1 Amount 16
3.2 Expenses And Fees 16
3.3 Responsibility For Contributions 16
3.4 Return Of Contributions 16
3.5 Form Of Contribution 16
ARTICLE IV: EMPLOYEE CONTRIBUTIONS
4.1 Voluntary Contributions 17
4.2 Qualified Voluntary Contributions 17
4.3 Rollover Contribution 17
4.4 Transfer Contribution 17
4.5 Employer Approval Of Transfer Contributions 18
4.6 Elective Deferrals 18
4.7 Direct Rollover Of Benefits 18
ARTICLE V: PARTICIPANT ACCOUNTS
5.1 Separate Accounts 19
5.2 Adjustments To Participant Accounts 19
5.3 Allocating Employer Contributions 19
5.4 Allocating Investment Earnings And Losses 20
5.5 Participant Statements 20
ARTICLE VI: RETIREMENT BENEFITS AND DISTRIBUTIONS
6.1 Normal Retirement Benefits 20
6.2 Early Retirement Benefits 21
6.3 Benefits On Termination Of Employment 21
6.4 Restrictions On Immediate Distributions 22
6.5 Normal Form Of Payment 23
6.6 Commencement Of Benefits 23
6.7 Claims Procedures 23
6.8 In-Service Withdrawals 23
6.9 Hardship Withdrawal 24
6.10 Order Of Withdrawals 25
ARTICLE VII: DISTRIBUTION REQUIREMENTS
7.1 Joint And Survivor Annuity Requirements 25
7.2 Minimum Distribution Requirements 25
7.3 Limits On Distribution Periods 25
7.4 Required Distributions On Or After The
Required Beginning Date 26
7.5 Required Beginning Date 26
7.6 Transitional Rule 27
7.7 Designation Of Beneficiary For Death Benefit 28
7.8 Nonexistence Of Beneficiary 28
7.9 Distribution Beginning Before Death 28
7.10 Distribution Beginning After Death 28
7.11 Distribution Of Excess Elective Deferrals 29
7.12 Distributions Of Excess Contributions 29
7.13 Distribution Of Excess Aggregate Contributions 30
ARTICLE VIII: JOINT AND SURVIVOR ANNUITY REQUIREMENTS
8.1 Applicability Of Provisions 30
8.2 Payment Of Qualified Joint And Survivor Annuity 30
8.3 Payment Of Qualified Pre-Retirement
Survivor Annuity 30
8.4 Qualified Election 31
8.5 Notice Requirements For Qualified Joint
And Survivor Annuity 31
8.6 Notice Requirements For Qualified Pre-
Retirement Survivor Annuity 31
8.7 Special Safe-Harbor Exception For
Certain Profit-Sharing Plans 32
8.8 Transitional Joint And Survivor
Annuity Rules 32
8.9 Automatic Joint And Survivor Annuity
And Early Survivor Annuity 33
8.10 Annuity Contracts 33
ARTICLE IX: VESTING
9.1 Employee Contributions 33
9.2 Employer Contributions 33
9.3 Computation Period 34
9.4 Requalification Prior To Five Consecutive
One-Year Breaks In Service 34
9.5 Requaliflcation After Five Consecutive
One-Year Breaks In Service 34
9.6 Calculating Vested Interest 34
9.7 Forfeitures 34
9.8 Amendment Of Vesting Schedule 34
9.9 Service With Controlled Groups 35
ARTICLE X: LIMITATIONS ON ALLOCATIONS AND ANTIDISCRIMINATION TESTING
10.1 Participation In This Plan Only 35
10.2 Disposition Of Excess Annual Additions 35
10.3 Participation In This Plan And Another
Prototype Defined Contribution Plan, Welfare
Benefit Fund, Or Other Medical Account
Maintained By The Employer 36
10.4 Disposition Of Excess Annual Additions Under 36
Two Plans
10.5 Participation In This Plan And Another
Defined Contribution Plan Which Is Not A
Master Or Prototype Plan 37
10.6 Participation In This Plan And A
Defined Benefit Plan 37
10.7 Average Deferral Percentage (ADP) Test 37
10.8 Special Rules Relating To
Application Of ADP Test 37
10.9 Average Contribution Percentage (ACP) Test 38
10.10 Special Rules Relating To Application
Of ACP Test 38
ARTICLE XI: ADMINISTRATION
11.1 Plan Administrator 39
11.2 Trustee 40
11.3 Administrative Fees And Expenses 40
11.4 Duties And Indemnification 40
11.5 Special Provisions Concerning The
Service Company 41
ARTICLE XII: TRUST FUND
12.1 The Fund 42
12.2 Control Of Plan Assets 42
12.3 Exclusive Benefit Rules 42
12.4 Assignment And Alienation Of Benefits 42
12.5 Determination of Qualified Domestic
Relations Order (QDRO) 42
ARTICLE XIII: INVESTMENTS
13.1 Fiduciary Standards 43
13.2 No Investment Discretion 43
Paragraph Page
13.3 Investment Directions 43
13.4 Permitted Investments 44
13.5 Shareholder Rights 44
I3.6 Liquidation Of Assets 45
13.7 Arbitration 45
13.8 Participant Loans 45
13.9 Insurance Policies 47
ARTICLE XIV: TOP-HEAVY PROVISIONS
14.1 Applicability Of Rules 48
14.2 Minimum Contribution 48
14.3 Minimum Vesting 49
14.4 Limitations On Allocations 49
ARTICLE XV: AMENDMENT AND TERMINATION
15.1 Amendment By Sponsor 49
15.2 Amendment By Employer 49
15.3 Termination 49
15.4 Qualification Of Employer's Plan 50
15.5 Mergers And Consolidations 50
15.6 Resignation And Removal 50
15.7 Qualification Of Prototype 50
ARTICLE XVI: GOVERNING LAW 50
ARTICLE I--DEFINITIONS
1.1 Actual Deferral Percentage
The ratio (expressed as a percentage and calculated separately for each
Participant) of:
(a) the amount of Employer contributions [as defined at (c) and (d)] actually
paid over to the Fund on behalf of such Participant for the Plan Year to
(b) the Participant's Compensation for such Plan Year. Unless otherwise
specified by the Employer in the Adoption Agreement, Compensation will include
all amounts earned from the Employer and actually paid during the Plan Year.
Employer contributions on behalf of any Participant shall include:
(c) any Elective Deferrals made pursuant to the Participant's deferral
election, including Excess Elective Deferrals, but excluding Elective
Deferrals that are either taken into account in the Contribution Percentage
test (provided the ADP test is satisfied both with and without exclusion of
these Elective Deferrals) or are returned as excess Annual Additions; and
(d) at the election of the Employer, Qualified Non-Elective Contributions and
Qualified Matching Contributions.
For purposes of computing Actual Deferral Percentages, an Employee who would be
a Participant but for the failure to make Elective Deferrals shall be treated as
a Participant on whose behalf no Elective Deferrals are made.
1.2 Adoption Agreement
The document attached to this Plan by which an Employer elects to establish a
qualified retirement plan and trust under the terms of this Prototype Plan and
Trust.
1.3 Aggregate Limit - The sum of:
(a) 125 percent of the greater of the ADP of the non-Highly Compensated
Employees for the Plan Year or the ACP of non-Highly Compensated Employees
under the Plan subject to Code Section 401(m) for the Plan Year beginning with
or within the Plan Year of the cash or deferred arrangement as described in
Code Section 401(k) or Code Section 402(h)(1)(B), and
(b) the lesser of 200% or two percent plus the lesser of such ADP or ACP.
Alternatively, the aggregate limit can be determined by substituting "the lesser
of 200% or 2 percent plus" for "125% of" in (a) above, and substituting "125%
of" for "the lesser of 200% or 2 percent plus" in (b) above.
1.4 Annual Additions
The sum of the following amounts credited to a Participant's account for the
Limitation Year:
(a) Employer Contributions,
(b) Employee Contributions (under Article W),
(c) forfeitures,
(d) amounts allocated after March 31, 1984 to an individual medical account,
as defined in Code Section 415(1)(2), which is part of a pension or annuity
plan maintained by the Employer (these amounts are treated as Annual Additions
to a Defined Contribution Plan though they arise under a Defined Benefit
Plan), and
(e) amounts derived from contributions paid or accrued after 1985, in taxable
years ending after 1985, which are either attributable to post-retirement
medical benefits allocated to the account of a Key Employee, or to a Welfare
Benefit Fund maintained by the Employer, are also treated as Annual Additions
to a Defined Contribution Plan. For purposes of this paragraph, an Employee is
a Key Employee if he or she meets the requirements of paragraph 1.43 at any
time during the Plan Year or any preceding Plan Year. Welfare Benefit Fund is
defined at paragraph 1.89.
(f) allocations under a Simplified Employee Pension Plan.
Excess amounts applied in a Limitation Year to reduce Employer contributions
will be considered Annual Additions for such Limitation Year, pursuant to the
provisions of Article X.
1.5 Annuity Starting Date
The first day of the first period for which an amount is paid as an annuity or
in any other form.
1.6 Applicable Calendar Year
The First Distribution Calendar Year, and in the event of the recalculation of
life expectancy, such succeeding calendar year. If payments commence in
accordance with paragraph 7.4(e) before the
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Required Beginning Date, the Applicable Calendar Year is the year such payments
commence. If distribution is in the form of an immediate annuity purchased after
the Participant's death with the Participant's remaining interest, the
Applicable Calendar Year is the year of purchase.
1.7 Applicable Life Expectancy
Used in determining the required minimum distribution. The life expectancy (or
joint and last survivor expectancy) calculated using the attained age of the
Participant (or Designated Beneficiary) as of the Participant's (or Designated
Beneficiary's) birthday in the Applicable Calendar Year reduced by one for each
calendar year which has elapsed since the date life expectancy was first
calculated. If life expectancy is being recalculated, the Applicable Life
Expectancy shall be the life expectancy as so recalculated. The life expectancy
of a non-Spouse Beneficiary may not be recalculated.
1.8 Average Contribution Percentage (ACP) The average of the Contribution
Percentages for each Highly Compensated Employee and for each non-Highly
Compensated Employee.
1.9 Average Deferral Percentage (ADP)
The average of the Actual Deferral Percentages for each Highly Compensated
Employee and for each non-Highly Compensated Employee.
1.10 Break In Service
If the Hour counting method has been chosen by the Employer in the Adoption
Agreement, a Break In Service is a 12-consecutive month period during which an
Employee fails to complete more than 500 Hours of Service. If the Elapsed Time
method has been chosen by the Employer in the Adoption Agreement, a Break In
Service is a period of severance of at least 12 consecutive months.
1.11 Code
The Internal Revenue Code of 1986, including any amendments.
1.12 Compensation
Unless otherwise specified by the Employer in the Adoption Agreement,
Compensation shall include all amounts earned from the Employer and actually
paid during the Plan Year.
(a) Code Section 3401(a) Wages. Compensation is defined as wages within the
meaning of Code Section 3401(a) for the purposes of Federal income tax
withholding at the source but determined without regard to any rules that
limit the remuneration included in wages based on the nature or location of
the employment or the services performed [such as the exception for
agricultural labor in Code Section 3401(a)(2)].
(b) Code Section 415 Compensation. For purposes of applying the limitations of
Article X and Top-Heavy Minimums, the definition of Compensation shall be Code
Section 415 Compensation defined as follows: a Participant's Earned Income,
wages, salaries, and fees for professional services and other amounts received
(without regard to whether or not an amount is paid in cash) for personal
services actually rendered in the course of employment with the Employer
maintaining the Plan to the extent that the amounts are includible in gross
income [including, but not limited to, commissions paid salesmen, compensation
for services on the basis of a percentage of profits, commissions on insurance
premiums, tips, bonuses, fringe benefits and reimbursements or other expense
allowances under a nonaccountable plan (as described in Regulation 1.62-
2(c))], and excluding the following:
(1) Employer contributions to a plan of deferred compensation which are not
includible in the Employee's gross income for the taxable year in which
contributed, or Employer contributions under a Simplified Employee Pension
Plan or any distributions from a plan of deferred compensation,
(2) Amounts realized from the exercise of a non-qualified stock option, or
when restricted stock (or property) held by the Employee either becomes
freely transferable or is no longer subject to a substantial risk of
forfeiture,
(3) Amounts realized from the sale, exchange or other disposition of stock
acquired under a qualified stock option; and
(4) other amounts which received special tax benefits, or contributions
made by the Employer (whether or not under a salary reduction agreement)
towards the purchase of an annuity described in Code Section 403(b) (whether
or not the amounts are actually excludable from the gross income of the
Employee).
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For purposes of applying the limitations of Article X, Compensation for a
Limitation Year is the Compensation actually paid or made available during such
Limitation Year. Notwithstanding the preceding sentence, Compensation for a
Participant in a defined contribution plan who is permanently and totally
disabled [as defined in Code Section 22(e)(3)1 is the Compensation such
Participant would have received for the Limitation Year if the Participant had
been paid at the rate of Compensation paid immediately before becoming
permanently and totally disabled. Such imputed Compensation for the disabled
Participant may be taken into account only if the participant is not a Highly
Compensated Employee [as defined in Code Section 414(q)] and contributions made
on behalf of such Participant are nonforfeitable when made.
If the Employer fails to pick the determination period in the Adoption
Agreement, the Plan Year shall be used. Unless otherwise specified by the
Employer in the adoption agreement. Compensation shall be determined as provided
in Code Section 3401(a) (as defined in this paragraph 1.12(a)). In
nonstandardized Adoption Agreement 002, the Employer may choose to eliminate or
exclude categories of Compensation which do not violate the provisions of Code
Sections 401(a)(4), 414(s) the regulations thereunder and Revenue Procedure 89-
65.
Beginning with 1989 Plan Years, the annual Compensation of each Participant
which may be taken into account for determining all benefits provided under the
Plan (including benefits under Article XIV) for any Plan Year shall not exceed
$200,000, as adjusted under Code Section 415(d). For Plan Years beginning on or
after January 1, 1994, the annual Compensation of each Participant taken into
account for determining all benefits provided under the Plan for any Plan Year
shall not exceed $150.000, as adjusted for increases in the cost-of-living in
accordance with Code Section 401(a)(17). The cost-of-living adjustment in effect
for a calendar year applies to any determination period beginning in such
calendar year.
In determining the Compensation of a Participant for purposes of this
limitation, the rules of Code Section 414(q)(6) shall apply, except in applying
such rules, the term "family" shall include only the spouse of the Participant
and any lineal descendants of the Participant who have not attained age 19
before the end of the Plan year. If, as a result of the application of such
roles the adjusted annual Compensation limitation is exceeded, then (except for
purposes of determining the portion of Compensation up to the integration level
if this Plan provides for permitted disparity), the limitation shall be prorated
among the affected individuals in proportion to each such individual's
Compensation as determined under this section prior to the application of this
limitation.
If a Plan has a Plan Year that contains fewer than 12 Calendar Months, then the
annual compensation limit for that period is an amount equal to the annual
Compensation as adjusted for the calendar year in which the compensation period
begins, multiplied by a fraction the numerator of which is the number of full
months in the short determination period and the denominator of which is 12. If
compensation for any prior plan year is taken into account in determining an
employees contributions or benefits for the current year, the compensation for
such prior year is subject to the applicable annual compensation limit in effect
for that prior year. For this purpose, for years beginning before January 1,
1990, the applicable annual compensation limit is $200,000.
Compensation shall not include deferred compensation other than contributions
through a salary reduction agreement to a cash or deferred plan under Code
Section 401(k), a Simplified Employee Pension Plan under Code Section
402(h)(1)(B), a cafeteria plan under Code Section 125 or a tax-deferred annuity
under Code Section 403(b). Unless elected otherwise by the Employer in the
Adoption Agreement, these deferred amounts will be considered as Compensation
for Plan purposes. These deferred amounts are not counted as Compensation for
purposes of Articles X and XIV except for Code Sections 401(k) and 401(m)
testing. When applicable to a Self-Employed Individual, Compensation shall mean
Earned Income.
1.13 Contribution Percentage
The ratio (expressed as a percentage and calculated separately for each
Participant) of:
(a) the Participant's Contribution Percentage Amounts [as defined at (c)-(f)]
for the Plan Year, to
(b) the Participant's Compensation for such Plan Year. Unless otherwise
specified by the Employer in the Adoption Agreement, Compensation will include
all amounts earned from the Employer and actually paid during the Plan Year.
Contribution Percentage Amounts on behalf of any Participant shall include:
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(c) the amount of Employee Voluntary Contributions, Matching Contributions,
and Qualified Matching Contributions (to the extent not taken into account for
purposes of the ADP test) made under the Plan on behalf of the Participant for
the Plan Year,
(d) forfeitures of Excess Aggregate Contributions or Matching Contributions
allocated to the Participant's account which shall be taken into account in
the year in which such forfeiture is allocated,
(e) at the election of the Employer, Qualified Non-Elective Contributions, and
(f) the Employer also may elect to use Elective Deferrals in the Contribution
Percentage Amounts so long as the ADP test is met before the Elective
Deferrals are used in the ACP test and continues to be met following the
exclusion of those Elective Deferrals that are used to meet the ACP test.
Contribution Percentage Amounts shall not include Matching Contributions,
whether or not Qualified, that are forfeited either to correct Excess Aggregate
Contributions, or because the contributions to which they relate are Excess
Deferrals, Excess Contributions, or Excess Aggregate Contributions.
1.14 Defined Benefit Plan
A Plan under which a Participant's benefit is determined by a formula contained
in the Plan and no individual accounts are maintained for Participants.
1.15 Defined Benefit (Plan) Fraction
A fraction, the numerator of which is the sum of the Participant's Projected
Annual Benefits under all the Defined Benefit Plans (whether or not terminated)
maintained by the Employer, and the denominator of which is the lesser of 125
percent of the dollar limitation determined for the Limitation Year under Code
Sections 415(b) and (d) or 140 percent of the Highest Average Compensation,
including any adjustments under Code Section 415(b).
Notwithstanding the above, if the Participant was a Participant as of the first
day of the first Limitation Year beginning after 1986, in one or more Defined
Benefit Plans maintained by the Employer which were in existence on May 6, 1986,
the denominator of this fraction will not be less than 125 percent of the sum of
the annual benefits under such plans which the Participant had accrued as of the
close of the last Limitation Year beginning before 1987, disregarding any
changes in the terms and conditions of the plan after May 5, 1986. The preceding
sentence applies only if the Defined Benefit Plans individually and in the
aggregate satisfied the requirements of Section 415 for all Limitation Years
beginning before 1987.
1.16 Defined Contribution Dollar Limitation
Thirty thousand dollars ($30,000) or if greater, one-fourth of the defined
benefit dollar limitation set forth in Code Section 415(b)(1) as in effect for
the Limitation Year.
1.17 Defined Contribution Plan
A Plan under which individual accounts are maintained for each Participant to
which all contributions, forfeitures, investment income and gains or losses, and
expenses are credited or deducted. A Participant's benefit under such Plan is
based solely on the fair market value of his or her account balance.
1.18 Defined Contribution (Plan) Fraction
A Fraction, the numerator of which is the sum of the Annual Additions to the
Participant's account under all the Defined Contribution Plans (whether or not
terminated) maintained by the Employer for the current and all prior Limitation
Years (including the Annual Additions attributable to the Participant's
nondeductible Employee contributions to all Defined Benefit Plans, whether or
not terminated, maintained by the Employer, and the Annual Additions
attributable to all Welfare Benefit Funds, as defined in paragraph 1.89 and
individual medical accounts, as defined in Code Section 415(1)(2), maintained by
the Employer), and the denominator of which is the sum of the maximum aggregate
amounts for the current and all prior Limitation Years of service with the
Employer (regardless of whether a Defined Contribution Plan was maintained by
the Employer). The maximum aggregate amount in the Limitation Year is the lesser
of 125 percent of the dollar limitation determined under Code Sections 415(b)
and (d) in effect under Code Section 415(c)(1)(A) or 35 percent of the
Participant's Compensation for such year.
If the Employee was a Participant as of the end of the first day of the first
Limitation Year beginning after 1986, in one or more Defined Contribution Plans
maintained by the Employer which were in existence on May 6, 1986, the numerator
of this fraction will be adjusted if the sum of this fraction and the Defined
Benefit Fraction would otherwise
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exceed 1.0 under the terms of this Plan. Under the adjustment, an amount equal
to the product of (1) the excess of the sum of the fractions over 1.0 times (2)
the denominator of this fraction will be permanently subtracted from the
numerator of this fraction. The adjustment is calculated using the fractions as
they would be computed as of the end of the last Limitation Year beginning
before 1987, and disregarding any changes in the terms and conditions of the
Plan made after May 6, 1986, but using the Section 415 limitation applicable to
the first Limitation Year beginning on or after January 1, 1987. The Annual
Addition for any Limitation Year beginning before 1987, shall not be re-computed
to treat all Employee Contributions as Annual Additions.
1.19 Designated Beneficiary
The individual who is designated as the beneficiary under the Plan in accordance
with Code Section 401(a)(9) and the regulations thereunder.
1.20 Disability
An illness or injury of a potentially permanent nature, expected to last for a
continuous period of not less than 12 months, certified by a physician selected
by or satisfactory to the Employer, which prevents the Employee from engaging in
any occupation for wage or profit for which the Employee is reasonably fitted by
training, education or experience.
1.21 Distribution Calendar Year
A calendar year for which a minimum distribution is required.
1.22 Early Retirement Age
The age set by the Employer in the Adoption Agreement (but not less than 55),
which is the earliest age at which a Participant may retire and receive his or
her benefits under the Plan.
1.23 Earned Income
Net earnings from self-employment in the trade or business with respect to which
the Plan is established, determined without regard to items not included in
gross income and the deductions allocable to such items, provided that personal
services of the individual are a material income-producing factor. Earned income
shall be reduced by contributions made by an Employer to a qualified plan to the
extent deductible under Code Section 404. For tax years beginning after 1989,
net earnings shall be determined taking into account the deduction for one-half
of self-employment taxes allowed to the Employer under Code Section 164(f) to
the extent deductible.
1.24 Effective Date
The date on which the Employer's retirement plan or amendment to such plan
becomes effective. Unless otherwise specified in the Adoption Agreement, the
effective date shall be the first day of the Plan Year during which the Adoption
Agreement is executed by the Employer. For amendments reflecting statutory and
regulatory changes post Tax Reform Act of 1986, the Effective Date will be the
date upon which such amendment is first administratively applied.
1.25 Election Period
The period which begins on the first day of the Plan Year in which the
Participant attains age 35 and ends on the date of the Participant's death. If a
Participant separates from service prior to the first day of the Plan Year in
which age 35 is attained, the Election Period shall begin on the date of
separation, with respect to the account balance as of the date of separation.
1.26 Elective Deferral
Employer contributions made to the Plan at the election of the Participant, in
lieu of cash Compensation. Elective Deferrals shall also include contributions
made pursuant to a Salary Savings Agreement or other deferral mechanism, such as
a cash option contribution. With respect to any taxable year, a Participant's
Elective Deferral is the sum of all Employer contributions made on behalf of
such Participant pursuant to an election to defer under any qualified cash or
deferred arrangement as described in Code Section 401(k), any simplified
employee pension cash or deferred arrangement as described in Code Section
402(h)(1)(B), any eligible deferred compensation plan under Code Section 457,
any plan as described under Code Section 501(c)(18), and any Employer
contributions made on the behalf of a Participant for the purchase of an annuity
contract under Code Section 403(b) pursuant to a Salary Savings Agreement.
Elective Deferrals shall not include any deferrals properly distributed as
Excess Annual Additions.
1.27 Eligible Participant
Any Employee who is eligible to make a Voluntary Contribution, or an Elective
Deferral (if the Employer takes such contributions into account in the
calculation of the Contribution Percentage), or to receive a
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Matching Contribution (including forfeitures) or a Qualified Matching
Contribution. If a Voluntary Contribution or Elective Deferral is required as a
condition of participation in the Plan, any Employee who would be a Participant
in the Plan if such Employee made such a contribution shall be treated as an
Eligible Participant even though no Voluntary Contributions or Elective
Deferrals are made.
1.28 Employee
Any person employed by Employer (including the Self-Employed Individuals and
partners), all Employees of a member of an affiliated service group [as defined
in Code Section 414(m)], Employees of a controlled group of corporations [as
defined in Code Section 414(b)], all Employees of any incorporated or
unincorporated trade or business which is under common control [as defined in
Code Section 414(c)], leased Employees [as defined in Code Section 414(n)] and
any Employee required to be aggregated by Code Section 414(o). All such
Employees shall be treated as employed by a single Employer.
1.29 Employer
The Self-Employed Individual, partnership, corporation or other organization
which adopts this Plan including any firm that succeeds the Employer and adopts
this Plan. For purposes of Article X, Limitations on Allocations, Employer shall
mean the Employer that adopts this Plan, and all members of a controlled group
of corporations [as defined in Code Section 414(b) as modified by Code Section
415(h)], all commonly controlled trades or businesses [as defined in Code
Section 414(c) as modified by Code Section 415(h)] or affiliated service groups
[as defined in Code Section 414(m)] of which the adopting Employer is a part,
and any other entity required to be aggregated with the Employer pursuant to
regulations under Code Section 414(0).
1.30 Entry Date
The date on which an Employee commences participation in the Plan as
determined by the Employer in the Adoption Agreement. Unless the Employer
specifies otherwise in the Adoption Agreement, Entry into the Plan shall be on
the first day of the Plan Year or the first day of the seventh month of the Plan
Year coinciding with or following the date on which an Employee meets the
eligibility requirements.
1.31 Excess Aggregate Contributions
The excess, with respect to any Plan Year, of:
(a) The aggregate Contribution Percentage Amounts taken into account in
computing the numerator of the Contribution Percentage actually made on behalf
of Highly Compensated Employees for such Plan Year, over
(b) The maximum Contribution Percentage Amounts permitted by the ACP test
(determined by reducing contributions made on behalf of Highly Compensated
Employees in order of their Contribution Percentages beginning with the
highest of such percentages).
Such determination shall be made after first determining Excess Elective
Deferrals pursuant to paragraph 1.34 and then determining Excess Contributions
pursuant to paragraph 1.33.
1.32 Excess Amount
The excess of the Participant's Annual Additions for the Limitation Year over
the Maximum Permissible Amount.
1.33 Excess Contribution
With respect to any Plan Year, the excess of:
(a) The aggregate amount of Employer contributions actually taken into account
in computing the ADP of Highly Compensated Employees for such Plan Year, over
(b) The maximum amount of such contributions permitted by the ADP test
(determined by reducing contributions made on behalf of Highly Compensated
Employees in order of the ADPs, beginning with the highest of such
percentages).
1.34 Excess Elective Deferrals
Those Elective Deferrals that are includible in a Participant's gross income
under Code Section 402(g) to the extent such Participant's Elective Deferrals
for a taxable year exceed the dollar limitation under such Code Section. Excess
Elective Deferrals shall be treated as Annual Additions under the Plan, unless
such amounts are distributed no later than the first April 15th following the
close of the Participant's taxable year.
1.35 Family Member
The Employee's Spouse, any lineal descendants and ascendants and the Spouse of
such lineal descendants and ascendants.
1.36 First Distribution Calendar Year
For distributions beginning before the Participant's death, the First
Distribution Calendar Year is the
6
calendar year immediately preceding the calendar year which contains the
Participant's Required Beginning Date. For distributions beginning after the
Participant's death, the First Distribution Calendar Year is the calendar year
in which distributions are required to begin pursuant to paragraph 7.10.
1.37 Fund
All contributions received by the Trustee under this Plan and Trust, investments
thereof and earnings and appreciation thereon.
1.38 Hardship
An immediate and heavy financial need of the Employee where such Employee lacks
other available resources.
1.39 Highest Average Compensation
The average Compensation for the three consecutive Years of Service with the
Employer that produces the highest average. A Year of Service with the Employer
is the 12-consecutive month period defined in the Adoption Agreement.
1.40 Highly Compensated Employee
Any Employee who performs service for the Employer during the determination year
and who, during the immediate prior year:
(a) received Compensation from the Employer in excess of $75,000 [as adjusted
pursuant to Code Section 415(d)]; or
(b) received Compensation from the Employer in excess of $50,000 [as adjusted
pursuant to Code Section 415(d)] and was a member of the Top-Paid Group for
such year; or
(c) was an officer of the Employer and received Compensation during such year
that is greater than 50 percent of the dollar limitation in effect under Code
Section 415(b)(1)(A).
Notwithstanding (a), (b) and (c), an Employee who was not Highly Compensated
during the preceding Plan Year shall not be treated as a Highly Compensated
Employee with respect to the current Plan Year unless such Employee is a member
of the 100 Employees paid the greatest Compensation during the year for which
such determination is being made.
(d) Employees who are five percent (5%) Owners at any time during the
immediate prior year or determination year.
Highly Compensated Employee includes Highly Compensated active Employees and
Highly Compensated former Employees.
1.41 Hour Of Service
(a) Hour Counting Method:
(1) Each hour for which an Employee is paid, or entitled to payment, for the
performance of duties for the Employer. These hours shall be credited to the
Employee for the computation period in which the duties are performed; and
(2) Each hour for which an Employee is paid, or entitled to payment, by the
Employer on account of a period of time during which no duties are performed
(irrespective of whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including disability), layoff, jury
duty, military duty or leave of absence. No more than 501 Hours of Service
shall be credited under this paragraph for any single continuous period
(whether or not such period occurs in a single computation period). Hours
under this paragraph shall be calculated and credited pursuant to Section
2530.200b-2 of the Department of Labor Regulations which are incorporated
herein by this reference; and
(3) Each hour for which back pay, irrespective of mitigation of damages, is
either awarded or agreed to by the Employer. The same Hours of Service shall
not be credited both under paragraph (a) or paragraph (b), as the case may
be, and under this paragraph (c). These hours shall be credited to the
Employee for the computation period or periods to which the award or
agreement pertains rather than the computation period in which the award,
agreement or payment is made.
(4) Hours of Service shall be credited for employment with the Employer and
with other members of an affiliated service group [as defined in Code Section
414(m)], a controlled group of corporations [as defined in Code Section
414(b)], or a group of trades or businesses under common control [as defined
in Code Section 414(c)] of which the adopting Employer is a member, and any
other entity required to be aggregated with the Employer pursuant to Code
Section 414(o) and the regu-
7
lations thereunder. Hours of Service shall also be credited for any
individual considered an Employee for purposes of this Plan under Code
Section 414(n) or Code Section 414(o) and the regulations thereunder.
(5) Solely for purposes of determining whether a Break in Service, as defined
in paragraph 1.10, for participation and vesting purposes has occurred in a
computation period, an individual who is absent from work for maternity or
paternity reasons shall receive credit for the Hours of Service which would
otherwise have been credited to such individual but for such absence, or in
any case in which such hours cannot be determined, 8 Hours of Service per day
of such absence. For purposes of this paragraph, an absence from work for
maternity or paternity reasons means an absence by reason of the pregnancy of
the individual, by reason of a birth of a child of the individual, by reason
of the placement of a child with the individual in connection with the
adoption of such child by such individual, or for purposes of caring for such
child for a period beginning immediately following such birth or placement.
The Hours of Service credited under this paragraph shall be credited in the
computation period in which the absence begins if the crediting is necessary
to prevent a Break in Service in that period, or in all other cases, in the
following computation period. No more than 501 hours will be credited under
this paragraph.
(6) Unless specified otherwise in the Adoption Agreement, the Hours of
Service Method shall be used. Also, unless specified otherwise in the
Adoption Agreement, Hours of Service shall be determined on the basis of
actual hours for which an Employee is paid or entitled to payment.
(b) Elapsed Time Method
(1) For purposes of this section, Hour of Service shall mean each hour for
which an Employee is paid or entitled to payment for the performance of
duties for the Employer.
(2) Break In Service is a period of severance of at least 12 consecutive
months.
(3) Period of severance is a continuous period of time during which the
Employee is not employed by the Employer. Such period begins on the date the
Employee retires, quits or is discharged, or if earlier, the 12 month
anniversary of the date on which the Employee was otherwise first absent from
service.
(4) In the case of an individual who is absent from work for maternity or
paternity reasons, the 12-consecutive month period beginning on the first
anniversary of the first date of such absence shall not constitute a Break In
Service. For purposes of this paragraph, an absence from work for maternity
or paternity reasons means an absence (i) by reason of the pregnancy of the
individual, (ii) by reason of the birth of a child of the individual, (iii)
by reason of the placement of a child with the individual in connection with
the adoption of such child by such individual, or (iv) for purposes of caring
for such child for a period beginning immediately following such birth or
placement.
(5) Each Employee will share in Employer contributions for the period
beginning on the date the Employee commences participation under the plan and
ending on the date on which such Employee xxxxxx employment with the Employer
or is no longer a member of an eligible class of Employees.
(6) If the Employer is a member of an affiliated service group (under section
414(m)), a controlled group of corporations (under section 414(b)), a group
of trades or businesses under common control (under section 414(c)) or any
other entity required to be aggregated with the Employer pursuant to section
414(o), service will be credited for any employment for any period of time
for any other member of such group. Service will also be credited for any
individual required under section 414(n) or section (414)(o) to be considered
an Employee of any Employer aggregated under section 414(b), (c), or (m).
1.42 Key Employee
Any Employee or former Employee (and the beneficiaries of such employee) who at
any time during the determination period was an officer of the Employer if such
individual's annual compensation exceeds 50% of the dollar limitation under Code
Section 415(b)(1)(A) (the defined benefit maximum
8
annual benefit), an owner (or considered an owner under Code Section 318) of one
of the ten largest interests in the employer if such individual's compensation
exceeds 100% of the dollar limitation under Code Section 415(c)(1)(A), a 5%
owner of the Employer. or a 1% owner of the Employer who has an annual
compensation of more than $150,000. For purposes of determining who is a Key
Employee, annual compensation shall mean Compensation as defined for Article X,
but including amounts deferred through a salary reduction agreement to a cash or
deferred plan under Code Section 401(k), a Simplified Employee Pension Plan
under Code Section 408(k), a cafeteria plan under Code Section 125 or a tax-
deferred annuity under Code Section 403(b). The determination period is the Plan
Year containing the Determination Date and the four preceding Plan Years. The
determination of who is a Key Employee will be made in accordance with Code
Section 416(i)(1) and the regulations thereunder.
1.43 Leased Employee
Any person (other than an Employee of the recipient) who, pursuant to an
agreement between the recipient and any other person ("leasing organization"),
has performed services for the recipient [or for the recipient and related
persons determined in accordance with Code Section 414(n)(6)] on a substantially
full-time basis for a period of at least one year, and such services are of a
type historically performed by Employees in the business field of the recipient
Employer.
1.44 Limitation Year
The Plan Year as designated by the Employer in the Adoption Agreement for
purposes of determining the maximum Annual Addition to a Participant's account.
All qualified plans maintained by the Employer must use the same Limitation
Year. If the Limitation Year is amended to a different 12-consecutive month
period, the new Limitation Year must begin on a date within the Limitation Year
in which the amendment is made.
1.45 Master Or Prototype Plan
A plan, the form of which is the subject of a favorable opinion letter from the
Internal Revenue Service.
1.46 Matching Contribution
An Employer contribution made to this or any other defined contribution plan on
behalf of a Participant on account of an Employee Voluntary Contribution made by
such Participant, or on account of a Participant's Elective Deferral, under a
Plan maintained by the Employer.
1.47 Maximum Permissible Amount
The maximum Annual Addition that may be contributed or allocated to a
Participant's account under the plan for any Limitation Year shall not exceed
the lesser of:
(a) the Defined Contribution Dollar Limitation, or
(b) 25% of the Participant's Compensation for the Limitation Year.
The compensation limitation referred to in (b) shall not apply to any
contribution for medical benefits [within the meaning of Code Section 401(h) or
Code Section 419A(f)(2)] which is otherwise treated as an Annual Addition under
Code Section 415(1)(1) or 419(d)(2). If a short Limitation Year is created
because of an amendment changing the Limitation Year to a different 12-
consecutive month period, the Maximum Permissible Amount will not exceed the
Defined Contribution Dollar Limitation multiplied by the following fraction:
Number of months in the short Limitation Year divided by 12.
1.48 Net Profit
The current and accumulated operating earnings of the Employer before Federal
and State income taxes, excluding nonrecurring or unusual items of income, and
before contributions to this and any other qualified plan of the Employer.
Unless otherwise specified in the Adoption Agreement, profits will not be
required for Profit-Sharing contributions to the Plan.
1.49 Normal Retirement Age
The age, set by the Employer in the Adoption Agreement, at which a Participant
may retire and receive his or her benefits under the Plan. Unless otherwise
specified in the Adoption Agreement, the Normal Retirement Age shall be 65.
1.50 Owner-Employee
A sole proprietor, or a partner owning more than 10% of either the capital or
profits interest of the partnership.
1.51 Paired Plans
Two or more Plans maintained by the Sponsor designed so that a single or any
combination of Plans adopted by an Employer will meet the antidiscrimination
rules, the contribution and benefit limitations, and the Top-Heavy provisions of
the Code.
9
1.52 Participant
Any Employee who has met the eligibility requirements and is participating in
the Plan.
1.53 Participant's Benefit
The account balance as of the last Valuation Date in the calendar year
immediately preceding the Distribution Calendar Year (valuation calendar year)
increased by the amount of any contributions or forfeitures allocated to the
account balance as of the dates in the valuation calendar year after the
Valuation Date and decreased by distributions made in the valuation calendar
year after the Valuation Date. A special exception exists for the second
distribution Calendar Year. For purposes of this paragraph, if any portion of
the minimum distribution for the First Distribution Calendar Year is made in the
second Distribution Calendar Year on or before the Required Beginning Date, the
amount of the minimum distribution made in the second distribution calendar year
shall be treated as if it had been made in the immediately preceding
Distribution Calendar Year.
1.54 Permissive Aggregation Group
Used for Top-Heavy testing purposes, it is the Required Aggregation Group of
plans plus any other plan or plans of the Employer which, when considered as a
group with the Required Aggregation Group. would continue to satisfy the
requirements of Code Sections 401(a)(4) and 410.
1.55 Plan
The Employer's retirement plan as embodied herein and in the Adoption Agreement.
1.56 Plan Administrator
The Employer.
1.57 Plan Year
The 12-consecutive month period designated by the Employer in the Adoption
Agreement. If no such period is designated, the Plan Year shall be the
Employer's taxable year.
1.58 Present Value
Used for Top-Heavy test and determination purposes, when determining the Present
Value of accrued benefits, with respect to any Defined Benefit Plan maintained
by the Employer, interest and mortality rates shall be determined in accordance
with the provisions of the respective plan. If applicable. interest and
mortality assumptions will be specified in Section 11 of the Adoption Agreement.
1.59 Projected Annual Benefit
Used to test the maximum benefit which may be obtained from a combination of
retirement plans, it is the annual retirement benefit (adjusted to an actuarial
equivalent straight life annuity if such benefit is expressed in a form other
than a straight life annuity or Qualified Joint and Survivor Annuity) to which
the Participant would be entitled under the terms of a Defined Benefit Plan or
plans, assuming:
(a) the Participant will continue employment until Normal Retirement Age under
the plan (or current age, if later), and
(b) the Participant's Compensation for the current Limitation Year and all
other relevant factors used to determine benefits under the plan will remain
constant for all future Limitation Years.
1.60 Qualified Deferred Compensation Plan
Any pension, profit-sharing, stock bonus, or other plan which meets the
requirements of Code Section 401 and includes a trust exempt from tax under Code
Section 501(a) or any annuity plan described in Code Section 403(a).
An Eligible Retirement Plan is an individual retirement account (IRA) as
described in section 408(a) of the Code, an individual retirement annuity (IRA)
as described in section 408(b) of the Code, an annuity plan as described in
section 403(a) of the Code, or a qualified trust as described in section 401(a)
of the Code, which accepts Eligible Rollover Distributions. However, in the case
of an Eligible Rollover Distribution to a surviving Spouse, an Eligible
Retirement Plan is an individual retirement account or individual retirement
annuity.
1.61 Qualified Domestic Relations Order
A QDRO is a signed Domestic Relations Order issued by a State Court which
creates, recognizes or assigns to an alternate payee(s) the right to receive all
or part of a Participant's Plan benefit and which meets the requirements of Code
Section 414(p). An alternate payee is a Spouse. former Spouse, child, or other
dependent who is treated as a beneficiary under the Plan as a result of the
QDRO.
1.62 Qualified Early Retirement Age
For purposes of paragraph 8.9, Qualified Early Retirement Age is the latest of:
(a) the earliest date, under the Plan, on which the Participant may elect to
receive retirement benefits, or
10
(b) the first day of the 120th month beginning before the Participant reaches
Normal Retirement Age, or
(c) the date the Participant begins participation.
1.63 Qualified Joint And Survivor Annuity
An immediate annuity for the life of the Participant with a survivor annuity for
the life of the Participant's Spouse which is at least one-half of but not more
than the amount of the annuity payable during the joint lives of the Participant
and the Participant's Spouse. The exact amount of the Survivor Annuity is to be
specified by the Employer in the Adoption Agreement. If not designated by the
Employer, the Survivor Annuity will be 1/2 of the amount paid to the Participant
during his or her lifetime. The Qualified Joint and Survivor Annuity will be the
amount of benefit which can be provided by the Participant's Vested Account
Balance.
1.64 Qualified Matching Contribution
Matching Contributions which when made are subject to the distribution and
nonforfeitability requirements under Code Section 401(k).
1.65 Qualified Non-Elective Contributions Contributions (other than Matching
Contributions or Qualified Matching Contributions) made by the Employer and
allocated to Participants' accounts that the Participants may not elect to
receive in cash until distributed from the Plan; that are nonforfeitable when
made; and that are distributable only in accordance with the distribution
provisions that are applicable to Elective Deferrals and Qualified Matching
Contributions.
1.66 Qualified Voluntary Contribution
A tax-deductible voluntary Employee contribution. These contributions may no
longer be made to the Plan.
1.67 Required Aggregation Group
Used for Top-Heavy testing purposes, it consists of:
(a) each qualified plan of the Employer in which at least one Key Employee
participates or participated at any time during the determination period
(regardless of whether the plan has terminated), and
(b) any other qualified plan of the Employer which enables a plan described in
(a) to meet the requirements of Code Sections 401(a)(4) or 410.
1.68 Required Beginning Date
The date on which a Participant is required to take his or her first minimum
distribution under the Plan. The rules are set forth at paragraph 7.5.
1.69 Rollover Contribution
A contribution made by a Participant of an amount distributed to such
Participant from another Qualified Deferred Compensation Plan in accordance with
Code Sections 402(a)(5), (6), and (7). An Eligible Rollover Distribution is any
distribution of all or any portion of the balance to the credit of the
Participant except that an Eligible Rollover Distribution does not include:
(a) any distribution that is one of a series of substantially equal periodic
payments (not less frequently than annually) made for the life (or life
expectancy) of the Participant or the joint lives (or joint life expectancies)
of the Participant and the Participant's Designated Beneficiary, or for a
specified period of ten years or more;
(b) any distribution to the extent such distribution is required under section
401(a)(9) of the Code; and
(c) the portion of any distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized appreciation
with respect to employer securities).
A Direct Rollover is a payment by the plan to the Eligible Retirement Plan
specified by the Participant.
1.70 Salary Savings Agreement
An agreement between the Employer and a participating Employee where the
Employee authorizes the Employer to withhold a specified percentage of his or
her Compensation for deposit to the Plan on behalf of such Employee.
1.71 Self-Employed Individual
An individual who has Earned Income for the taxable year from the trade or
business for which the Plan is established including an individual who would
have had Earned Income but for the fact that the trade or business had no Net
Profit for the taxable year.
1.72 Service
The period of current or prior employment with the Employer. If the Employer
maintains a plan of a predecessor employer, Service for such predecessor shall
be treated as Service for the Employer.
11
1.73 Service Company
Prudential Mutual Fund Services, Inc., or its successor serving from time to
time.
1.74 Shareholder Employee
An Employee or Officer who owns [or is considered as owning within the meaning
of Code Section 318(a)(1)], on any day during the taxable year of an electing
small business corporation (S Corporation), more than 5% of such corporation's
outstanding stock.
1.75 Simplified Employee Pension Plan
An individual retirement account which meets the requirements of Code Section
408(k), and to which the Employer makes contributions pursuant to a written
formula. These plans are considered for contribution limitation and Top-Heavy
testing purposes.
1.76 Sponsor
Shall be Prudential Mutual Fund Management, Inc.
1.77 Spouse (Surviving Spouse)
The Spouse or Surviving Spouse of the Participant, provided that a former Spouse
will be treated as the Spouse or Surviving Spouse and a current Spouse will not
be treated as the Spouse or Surviving Spouse to the extent provided under a
Qualified Domestic Relations Order as described in Code Section 414(p).
1.78 Super Top-Heavy Plan
A Plan described at paragraph 1.81 under which the Top-Heavy Ratio [as defined
at paragraph 1.82] exceeds 90%.
1.79 Taxable Wage Base
For plans with an allocation formula which takes into account the Employer's
contribution under the Federal Insurance Contributions Act (FICA), the
contribution and benefit base in effect under Section 230, of the Social
Security Act, at the beginning of the Plan Year, or the amount elected by the
Employer in the Adoption Agreement.
1.80 Top-Heavy Determination Date
For any Plan Year subsequent to the first Plan Year, the last day of the
preceding Plan Year. For the first Plan Year of the Plan, the last day of that
year.
1.81 Top-Heavy Plan
For any Plan Year beginning after 1983, the Employer's Plan is top-heavy if any
of the following conditions exist:
(a) If the Top-Heavy Ratio for the Employer's Plan exceeds 60% and this Plan
is not part of any required Aggregation Group or Permissive Aggregation Group
of Plans.
(b) If the Employer's plan is a part of a Required Aggregation Group of plans
but not part of a Permissive Aggregation Group and the Top-Heavy Ratio for the
group of plans exceeds 60%.
(c) If the Employer's plan is a part of a Required Aggregation Group and part
of a Permissive Aggregation Group of plans and the Top-Heavy Ratio for the
Permissive Aggregation Group exceeds 60%.
1.82 Top-Heavy Ratio
(a) If the Employer maintains one or more Defined Contribution plans
(including any Simplified Employee Pension Plan) and the Employer has not
maintained any Defined Benefit Plan which during the 5-year period ending on
the Determination Date(s) has or has had accrued benefits, the Top-Heavy Ratio
for this Plan alone, or for the Required or Permissive Aggregation Group as
appropriate, is a fraction,
(1) the numerator of which is the sum of the account balances of all Key
Employees as of the Determination Date(s) [including any part of any account
balance distributed in the 5-year period ending on the Determination
Date(s)], and
(2) the denominator of which is the sum of all account balances [including
any part of any account balance distributed in the 5-year period ending on
the Determination Date(s)], both computed in accordance with Code Section 416
and the regulations thereunder.
Both the numerator and denominator of the Top-Heavy Ratio are increased to
reflect any contribution not actually made as of the Determination Date, but
which is required to be taken into account on that date under Code Section 416
and the regulations thereunder.
(b) If the Employer maintains one or more Defined Contribution Plans
(including any Simplified Employee Pension Plan) and the Employer maintains or
has maintained one or more Defined Benefit Plans which during the 5-year
period ending on the Determination Date(s) has or has had any accrued
benefits, the Top-Heavy
12
Ratio for any Required or Permissive Aggregation Group as appropriate is a
fraction, the numerator of which is the sum of account balances under the
aggregated Defined Contribution Plan or Plans for all Key Employees,
determined in accordance with (a) above, and the Present Value of accrued
benefits under the aggregated Defined Benefit Plan or Plans for all Key
Employees as of the Determination Date(s), and the denominator of which is the
sum of the account balances under the aggregated Defined Contribution Plan or
Plans for all Participants, determined in accordance with (a) above, and the
Present Value of accrued benefits under the Defined Benefit Plan or Plans for
all Participants as of the Determination Date(s), all determined in accordance
with Code Section 416 and the regulations thereunder. The accrued benefits
under a Defined Benefit Plan in both the numerator and denominator of the Top-
Heavy Ratio are increased for any distribution of an accrued benefit made in
the 5-year period ending on the Determination Date.
(c) For purposes of (a) and (b) above, the value of account balances and the
Present Value of accrued benefits will be determined as of the most recent
Valuation Date that falls within or ends with the 12-month period ending on
the Determination Date, except as provided in Code Section 416 and the
regulations thereunder for the first and second plan years of a Defined
Benefit Plan. The account balances and accrued benefits of a participant (1)
who is not a Key Employee but who was a Key Employee in a prior year, or (2)
who has not been credited with at least one hour of service with any Employer
maintaining the Plan at any time during the 5-year period ending on the
Determination Date, will be disregarded. The calculation of the Top-Heavy
Ratio, and the extent to which distributions, rollovers, and transfers are
taken into account will be made in accordance with Code Section 416 and the
regulations thereunder. Qualified Voluntary Employee Contributions will not be
taken into account for purposes of computing the Top-Heavy Ratio. When
aggregating plans the value of account balances and accrued benefits will be
calculated with reference to the Determination Dates that fall within the same
calendar year. The accrued benefit of a Participant other than a Key Employee
shall be determined under (1) the method, if any, that uniformly applies for
accrual purposes under all Defined Benefit Plans maintained by the Employer,
or (2) if there is no such method, as if such benefit accrued not more rapidly
than the slowest accrual rate permitted under the fractional rule of Code
Section 411 (b)(1)(C).
1.83 Top-Paid Group
The group consisting of the top 20% of Employees when ranked on the basis of
Compensation paid during such year. For purposes of determining the number of
Employees in the group (but not who is in it), the following Employees shall be
excluded:
(a) Employees who have not completed 6 months of Service.
(b) Employees who normally work less than 17-1/2 hours per week.
(c) Employees who normally do not work more than 6 months during any year.
(d) Employees who have not attained age 21.
(e) Employees included in a collective bargaining unit, covered by an
agreement between employee representatives and the Employer, where retirement
benefits were the subject of good faith bargaining and provided that 90% or
more of the Employer's Employees are covered by the agreement.
(f) Employees who are nonresident aliens and who receive no earned income
which constitutes income from sources within the United States.
1.84 Transfer Contribution
A non-taxable transfer of a Participant's benefit directly from a Qualified
Deferred Compensation Plan to this Plan.
1.85 Trustee
The individual(s) or institution appointed by the Employer in the Adoption
Agreement.
1.86 Valuation Date
The last business day of each Plan Year or such other date consistent with the
operational cycle of the Service Company, as agreed to by the Employer and the
Service Company on which Participant accounts are revalued in accordance with
Article V hereof. For Top-Heavy purposes, the date selected by the Employer as
of which the Top-Heavy Ratio is calculated.
13
The value of mutual funds and other marketable investments shall be determined
using the most recent price quoted on a national securities exchange or over the
counter market. The value of investments for which there is no market shall be
determined in the sole judgement of the Employer or issuer and neither the
Trustee nor Service Company shall have responsibility with respect to the
valuation of such assets.
1.87 Vested Account Balance
The aggregate value of the Participant's Vested Account Balances derived from
Employer and Employee contributions (including Rollovers), whether vested before
or upon death, including the proceeds of insurance contracts, if any, on the
Participant's life. The provisions of Article VIII shall apply to a Participant
who is vested in amounts attributable to Employer contributions, Employee
contributions (or both) at the time of death or distribution.
1.88 Voluntary Contribution
An Employee contribution made to the Plan by or on behalf of a Participant that
is included in the Participant's gross income in the year in which made and that
is maintained under a separate account to which earnings and losses are
allocated.
1.89 Welfare Benefit Fund
Any fund that is part of a plan of the Employer, or has the effect of a plan,
through which the Employer provides welfare benefits to Employees or their
beneficiaries. For these purposes, Welfare Benefits means any benefit other than
those with respect to which Code Section 83(h) (relating to transfers of
property in connection with the performance of services), Code Section 404
(relating to deductions for contributions to an Employee's trust or annuity and
Compensation under a deferred payment plan), Code Section 404A (relating to
certain foreign deferred compensation plans) apply. A "Fund" is any social club,
voluntary employee benefit association, supplemental unemployment benefit trust
or qualified group legal service organization described in Code Section
501(c)(7), (9), (17) or (20); any trust, corporation, or other organization not
exempt from income tax, or to the extent provided in regulations, any account
held for an Employer by any person.
1.90 Year Of Service
If the Hour counting method has been chosen by the Employer in the Adoption
Agreement, a Year Of Service is a 12-consecutive month period during which an
Employee is credited with not less than 1,000 (or such lesser number as
specified by the Employer in the Adoption Agreement, Hours of Service. If the
Elapsed Time Method has been chosen by the Employer in the Adoption Agreement,
an Employee will receive credit for the aggregate of all time period(s)
commencing with the Employee's first day of employment or reemployment and
ending on the date a Break In Service begins. The first day of employment or
reemployment is the first day the Employee performs an Hour of Service. An
Employee will also receive credit for any period of severance of less than 12
consecutive months. Fractional periods of a year will be expressed in terms of
days.
ARTICLE II--ELIGIBILITY REQUIREMENTS
2.1 Participation
Unless otherwise specified in the Adoption Agreement, the Plan shall cover all
Employees having completed at least one Year of Service and who have attained
age 21. Employees who meet the eligibility requirements in the Adoption
Agreement on the Effective Date of the Plan shall become Participants as of the
Effective Date of the Plan. Unless stated to the contrary in the Adoption
Agreement, all Employees employed on the Effective Date of the Plan may
participate, even if they have not satisfied the Plan's specified eligibility
requirements. Other Employees shall become Participants on the Entry Date
coinciding with or immediately following the date on which they meet the
eligibility requirements. The Employee must satisfy the eligibility requirements
specified in the Adoption Agreement and be employed on the Entry Date to become
a Participant in the Plan. In the event an Employee who is not a member of the
eligible class of Employees becomes a member of the eligible class, such
Employee shall participate immediately if such Employee has satisfied the
minimum age and service requirements and would have previously become a
Participant had he or she been in the eligible class. A former Participant shall
again become a Participant upon returning to the employ of the Employer. For
this purpose, Participant's Compensation and Service shall be considered from
date of rehire.
2.2 Change In Classification Of Employment
If a Participant is transferred to an ineligible class of
14
Employees, or is otherwise reclassified as an ineligible Employee, any
contribution or allocation of forfeitures which would otherwise be made for him
hereunder for the Plan Year of such transfer or reclassification shall be made.
No contribution or allocation of forfeitures for or by him shall be made,
however, for any subsequent Plan Year prior to the Plan Year in which he again
becomes a Participant.
2.3 Computation Period
To determine Years of Service and Breaks in Service for purposes of eligibility,
the 12-consecutive month period shall commence on the date on which an Employee
first performs an Hour of Service for the Employer and each anniversary thereof,
such that the succeeding 12-consecutive month period commences with the
employee's first anniversary of employment and so on. If, however, the period so
specified is one year or less, the succeeding 12-consecutive month period shall
commence on the first day of the Plan Year prior to the anniversary of the date
they first performed an Hour of Service regardless of whether the Employee is
entitled to be credited with 1,000 (or such lesser number as specified by the
Employer in the Adoption Agreement) Hours of Service during their first
employment year.
2.4 Employment Rights
Participation in the Plan shall not confer upon a Participant any employment
rights, nor shall it interfere with the Employer's right to terminate the
employment of any Employee at any time.
2.5 Service With Controlled Groups
All Years of Service with other members of a controlled group of corporations
[as defined in Code Section 414(b)], trades or businesses under common control
[as defined in Code Section 414(c)], or members of an affiliated service group
[as defined in Code Section 414(m)] shall be credited for purposes of
determining an Employee's eligibility to participate
2.6 Owner-Employees
If this Plan provides contributions or benefits for one or more Owner-Employees
who control both the business for which this Plan is established and one or more
other trades or businesses, this Plan and the Plan established for other trades
or businesses must, when looked at as a single Plan, satisfy Code Sections
401(a) and (d) for the Employees of this and all other trades or businesses.
If the Plan provides contributions or benefits for one or more Owner-Employees
who control one or more other trades or businesses, the Employees of the other
trades or businesses must be included in a Plan which satisfies Code Sections
401(a) and (d) and which provides contributions and benefits not less favorable
than provided for Owner-Employees under this Plan.
If an individual is covered as an Owner-Employee under the plans of two or more
trades or businesses which are not controlled, and the individual controls a
trade or business, then the contributions or benefits of the Employees under the
plan of the trades or businesses which are controlled must be as favorable as
those provided for him or her under the most favorable plan of the trade or
business which is not controlled.
For purposes of the preceding sentences, an Owner-Employee, or two or more
Owner-Employees, will be considered to control a trade or business if the Owner-
Employee, or two or more Owner-Employees together:
(a) own the entire interest in an unincorporated trade or business, or
(b) in the case of a partnership, own more than 50% of either the capital
interest or the profits interest in the partnership.
For purposes of the preceding sentence, an Owner-Employee, or two or more Owner-
Employees shall be treated as owning any interest in a partnership which is
owned, directly or indirectly, by a partnership which such Owner-Employee, or
such two or more Owner-Employees, are considered to control within the meaning
of the preceding sentence.
2.7 Leased Employees
Any leased Employee shall be treated as an Employee of the recipient Employer;
however, contributions or benefits provided by the leasing organization which
are attributable to services performed for the recipient Employer shall be
treated as provided by the recipient Employer. A leased Employee shall not be
considered an Employee of the recipient if such Employee is covered by a money
purchase pension plan providing:
(a) a non-integrated Employer contribution rate of at least 10% of
Compensation, [as defined in Code Section 415(c)(3) but including amounts
contributed by the Employer pursuant to a salary reduction agreement, which
are excludable from the Employee's gross income under a cafeteria
15
plan covered by Code Section 125, a cash or deferred profit-sharing plan under
Section 401(k) of the Code, a Simplified Employee Pension Plan under Code
Section 402(h)(1)(B ) and a tax-sheltered annuity under Code Section 403(b)],
(b) immediate participation, and
(c) full and immediate vesting.
This exclusion is only available if Leased Employees do not constitute more than
twenty percent (20%) of the recipients non-highly compensated work force.
2.8 Omission Of Eligible Employee
If, in any Plan Year, any Employee who should be included as a Participant in
the Plan is erroneously omitted and discovery of such omission is not made until
after a contribution for the year has been made, the omitted Employee shall be
included in the next valuation. The Employer shall make any additional
contribution with respect to the omitted Employee that may be deemed necessary.
Such contribution shall be made regardless of whether it is deductible in whole
or in part in any taxable year under applicable provisions of the Code. The
Employee shall receive credit under the terms of the Plan for any period during
which he should have been included as a Participant.
2.9 Inclusion Of Ineligible Employee
If in any Plan Year. any person who should not have been included as a
Participant in the Plan is erroneously included and discovery of such incorrect
inclusion is not made until after a contribution for the year has been made, the
Employer shall not be entitled to recover the contribution made with respect to
the ineligible person regardless of whether or not a deduction is allowable with
respect to such contribution. In such event, the amount contributed with respect
to the ineligible person shall be removed from the ineligible Employee's Account
and treated as a forfeiture.
ARTICLE III--EMPLOYER CONTRIBUTIONS
3.1 Amount
The Employer intends to make periodic contributions to the Plan in accordance
with the formula or formulas selected in the Adoption Agreement. However, the
Employer's contribution for any Plan Year shall be subject to the limitations on
allocations contained in Article X.
3.2 Expenses And Fees
The Employer shall also be authorized to reimburse the Fund for all expenses and
fees incurred in the administration of the Plan or Trust and paid out of the
assets of the Fund. Such expenses shall include, but shall not be limited to,
fees for professional services, printing and postage. Commissions may not be
reimbursed.
3.3 Responsibility For Contributions
The Trustee shall not be required to determine if the Employer has made a
contribution or if the amount contributed is in accordance with the Adoption
Agreement or the Code. The Employer shall have sole responsibility in this
regard. The Trustee shall be accountable solely for contributions actually
received by it, within the limits of Article XI.
3.4 Return Of Contributions
Contributions made to the Fund by the Employer shall be irrevocable except as
provided below:
(a) Any contribution forwarded to the Trustee because of a mistake of fact,
provided that the contribution is returned to the Employer within one year of
the contribution.
(b) In the event that the Commissioner of Internal Revenue determines that the
Plan is not initially qualified under the Internal Revenue Code, any
contribution made incident to that initial qualification by the Employer must
be returned to the Employer within one year after the date the initial
qualification is denied, but only if the application for the qualification is
made by the time prescribed by law for filing the Employer's return for the
taxable year in which the Plan is adopted, or such later date as the Secretary
of the Treasury may prescribe.
(c) Contributions forwarded to the Trustee are presumed to be deductible and
are conditioned on their deductibility. Contributions which are determined to
not be deductible will be returned to the Employer.
3.5 Form Of Contribution
Except as contemplated in paragraphs 4.3 and 4.4, no contribution shall be made
in property other than United States currency or such other property as is
acceptable to the Service Company.
16
ARTICLE IV--EMPLOYEE CONTRIBUTIONS
4.1 Voluntary Contributions
Unless otherwise specified in the Adoption Agreement, an Employee may not make
Voluntary Contributions to the Plan established hereunder. If permitted, they
will be made in a uniform and nondiscriminatory manner. Such contributions are
subject to the limitations on Annual Additions and are subject to
antidiscrimination testing.
4.2 Qualified Voluntary Contributions
A Participant may no longer make Qualified Voluntary Contributions to the Plan.
Xxxxxxx already contributed may not remain in the Trust Fund. The Participant
must withdraw the Qualified Voluntary Contribution amounts already contributed
by making a written application to the Plan Administrator.
4.3 Rollover Contribution
Unless provided otherwise in the Adoption Agreement, a Participant and an
Employee in an eligible class of Employees who has not met the eligibility
requirements for participation in the Plan may make a Rollover Contribution to
any Defined Contribution Plan established hereunder of all or any part of an
amount distributed or distributable to him or her from a Qualified Deferred
Compensation Plan provided:
(a) the amount distributed to the Participant is deposited in the Plan no
later than the sixtieth day after such distribution was received by the
Participant,
(b) the amount distributed is not one of a series of substantially equal
periodic payments made for the life (or life expectancy) of the Participant or
the joint lives (or joint life expectancies) of the Participant and the
Participant's Designated Beneficiary, or for a specified period of ten years
or more;
(c) the amount distributed is not required under section 401(a)(9) of the
Code;
(d) if the amount distributed included property such property is rolled over,
or if sold the proceeds of such property may be rolled over,
(e) the amount distributed is not includible in gross income (determined
without regard to the exclusion for net unrealized appreciation with respect
to employer securities).
In addition, if the Adoption Agreement allows Rollover Contributions, the Plan
will also accept any Eligible Rollover Distribution (as defined at paragraph
1.69) directly to the Plan.
Rollover Contributions, which relate to distributions prior to January 1, 1993,
must be made in accordance with paragraphs (a) through (e) and additionally meet
the requirements of paragraph (f):
(f) the distribution from the Qualified Deferred Compensation Plan constituted
the Participant's entire interest in such Plan and was distributed within one
taxable year to the Participant:
(1) on account of separation from Service, a Plan termination, or in the case
of a profit-sharing or stock bonus plan, a complete discontinuance of
contributions under such plan within the meaning of Section 402(a)(6)(A) of
the Code, or
(2) in one or more distributions which constitute a qualified lump sum
distribution within the meaning of Code Section 402(e)(4)(A), determined
without reference to subparagraphs (B) and (H),
Such Rollover Contribution may also be made through an individual Retirement
Account qualified under Code Section 408 where the IRA was used as a conduit
from the Qualified Deferred Compensation Plan, the Rollover Contribution is made
in accordance with the rules provided under paragraph (a) through (e) and the
Rollover Contribution does not include any regular IRA contributions, or
earnings thereon, which the Participant may have made to the IRA. Rollover
Contributions which relate to distributions prior to January 1, 1993, may be
made through an IRA in accordance with paragraphs (a) through (f) and additional
requirements as provided in the previous sentence. The Trustee shall not be held
responsible for determining the tax-free status of any Rollover Contribution
made under this Plan.
4.4 Transfer Contribution
Unless provided otherwise in the Adoption Agreement, a Participant and an
Employee in an eligible class of Employees who has not met the eligibility
requirements for participation in the Plan,
17
may, subject to the provisions of paragraph 4.5, also arrange for the direct
transfer of his or her benefit from a Qualified Deferred Compensation Plan to
this Plan. For accounting and record keeping purposes, Transfer Contributions
shall be identical to Rollover Contributions.
In the event the Employer accepts a Transfer Contribution from a Plan in which
the Employee was directing the investments of his or her account, the Employer
may continue to permit the Employee to direct his or her investments in
accordance with paragraph 13.7 with respect only to such Transfer Contribution.
Notwithstanding the above, the Employer may refuse to accept such Transfer
Contributions.
Notwithstanding anything to the contrary, if a Participant changes
classification of employment between eligible and ineligible classes, then the
Employer may transfer said Participant's account balance between the appropriate
plans maintained by the Employer, so long as such transfer will not result in an
illegal cut back in benefits in violation of Code Section 41 l(d)(6).
4.5 Employer Approval Of Transfer Contributions
The Employer maintaining a safe-Harbor Profit-Sharing Plan in accordance with
the provisions of paragraph 8.7, acting in a nondiscriminatory manner, may in
its sole discretion refuse to allow Transfer Contributions to its profit-sharing
plan, if such contributions are directly or indirectly being transferred from a
defined benefit plan, a money purchase pension plan (including a target benefit
plan), a stock bonus plan, or another profit-sharing plan which would otherwise
provide for a life annuity form of payment to the Participant.
4.6 Elective Deferrals
A Participant may enter into a Salary Savings Agreement with the Employer
authorizing the Employer to withhold a portion of such Participant's
Compensation not to exceed $7,000 per calendar year as adjusted under Code
Section 415(d) or, if lesser, the percentage of Compensation specified in the
Adoption Agreement and to deposit such amount to the Plan. No Participant shall
be permitted to have Elective Deferrals made under this Plan or any other
qualified plan maintained by the Employer, during any taxable year, in excess of
the dollar limitation contained in Code Section 402(g) in effect at the
beginning of such taxable year.
Thus, the $7,000 limit may be reduced if a Participant contributes pre-tax
contributions to qualified plans of this or other Employers. Any such
contribution shall be credited to the Employee's Salary Savings Account. Unless
otherwise specified in the Adoption Agreement, a Participant may amend his or
her Salary Savings Agreement to increase, decrease or terminate the percentage
upon 30 days written notice to the Employer. If a Participant terminates his or
her agreement, such Participant shall not be permitted to put a new Salary
Savings Agreement into effect until the first pay period in the next Plan Year,
unless otherwise stated in the Adoption Agreement. The Employer may also amend
or terminate said agreement on written notice to the Participant. If a
Participant has not authorized the Employer to withhold at the maximum rate and
desires to increase the total withheld for a Plan Year, such Participant may
authorize the Employer upon 30 days notice to withhold a supplemental amount up
to 100% of his or her Compensation for one or more pay periods. In no event may
the sum of the amounts withheld under the Salary Savings Agreement plus the
supplemental withholding exceed 25% of a Participant's Compensation for a Plan
Year. Elective Deferrals shall be deposited in the Trust no later than the date
described in Section 2510.3-102 of the Department of Labor Regulations.
4.7 Direct Rollover Of Benefits
Notwithstanding any provision of the plan to the contrary that would otherwise
limit a Participant's election under this Paragraph, for distributions made on
or after January 1, 1993, a Participant may elect, at the time and in the manner
prescribed by the Plan Administrator, to have any portion of an Eligible
Rollover Distribution paid directly to an Eligible Retirement Plan specified by
the Participant in a Direct Rollover. Any portion of a distribution which is not
paid directly to an Eligible-Retirement Plan shall be distributed to the
Participant. For purposes of this Paragraph, a Surviving Spouse or a spouse or
former spouse who is an alternate payee under a Qualified Domestic Relations
Order as defined in section 414(p) of the Code, will be permitted to elect to
have any Eligible Rollover Distribution paid directly to an individual
retirement account (IRA), an individual retirement annuity (IRA), or another
qualified retirement Plan.
The plan provisions otherwise applicable to distributions continue to apply to
Rollover and Transfer Contributions.
18
ARTICLE V--PARTICIPANT ACCOUNTS
5.1 Separate Accounts
The Employer shall establish a separate bookkeeping account for each Participant
showing the total value of his or her interest in the Fund. Each Participant's
account shall be separated for bookkeeping purposes into the following sub-
accounts:
(a) Employer contributions.
(1) Matching Contributions.
(2) Qualified Matching Contributions.
(3) Qualified Non-Elective Contributions.
(4) Discretionary Contributions.
(5) Elective Deferrals.
(b) Voluntary Contributions (and additional amounts including required
contributions and, if applicable, either repayments of loans previously
defaulted on and treated as "deemed distributions" on which a tax report has
been issued, and amounts paid out upon a separation from service which have
been included in income and which are repaid after being re-hired by the
Employer).
(c) Transfer Contributions.
(d) Rollover Contributions.
5.2 Adjustments To Participant Accounts
As of each Valuation Date of the Plan, the Employer shall add to each account:
(a) the Participant's share of the Employer's contribution and forfeitures as
determined in the Adoption Agreement,
(b) any Elective Deferrals, Voluntary, Rollover or Transfer Contributions made
by the Participant,
(c) any repayment of amounts previously paid out to a Participant upon a
separation from Service and repaid by the Participant since the last Valuation
Date, and
(d) the Participant's proportionate share of any investment earnings and
increase in the fair market value of the Fund since the last Valuation Date,
as determined at paragraph 5.4.
The Employer shall deduct from each account:
(e) any withdrawals or payments made from the Participant's account since the
last Valuation Date, and the Participant's proportionate share of any decrease
in the fair market value of the Fund since the last Valuation Date, as
determined at paragraph 5.4.
5.3 Allocating Employer Contributions
The Employer's contribution shall be allocated to Participants in accordance
with the allocation formula selected by the Employer in the Adoption Agreement,
and the minimum contribution and allocation requirements for Top-Heavy Plans.
Unless otherwise specified in the Adoption Agreement, the Plan will not be
integrated with Social Security. Beginning with the 1990 Plan Year and
thereafter, for plans on Standardized Adoption Agreement 001, Participants who
are credited with more than 500 Hours of Service or are employed on the last day
of the Plan Year must receive a full allocation of Employer contributions. In
Nonstandardized Adoption Agreement 002, Employer contributions shall be
allocated to the accounts of Participants employed by the Employer on the last
day of the Plan Year unless indicated otherwise in the Adoption Agreement. In
the case of a non-Top-Heavy, Nonstandardized Plan, Participants must also have
completed a Year of Service unless otherwise specified in the Adoption
Agreement. For Nonstandardized Adoption Agreement 002, the Employer may only
apply the last day of the Plan Year and Year of Service requirements if the Plan
satisfies the requirements of Code Sections 401 (a)(26) and 410(b) and the
regulations thereunder including the exception for 401(k) plans. If, when
applying the last day and Year of Service requirements, the Plan fails to
satisfy the aforementioned requirements, additional Participants will be
eligible to receive an allocation of Employer Contributions until the
requirements are satisfied. Participants who are credited with a Year of
Service, but not employed at Plan Year end, are the first category of additional
Participants eligible to receive an allocation. If the requirements are still
not satisfied, Participants credited with more than 500 Hours of Service and
employed at Plan Year end are the next category of Participants eligible to
receive an allocation. Finally, if necessary to satisfy the said requirements,
any Participant credited with more than 500 Hours of Service will be eligible
for an allocation of Employer Contributions. The Service requirement is not
applicable with respect to any Plan Year during which the Employer's Plan is
Top-Heavy.
19
In the event the Employer selects an integrated allocation formula, the
Employer's contribution will be allocated in accordance with the following
method unless otherwise specified in the Adoption Agreement:
(a) First, to the extent contributions and forfeitures are sufficient, all
Participants will receive an allocation equal to 3% of their Compensation.
(b) Next, any remaining Employer Contributions and forfeitures will be
allocated to Participants who have Compensation in excess of the Taxable Wage
Base (excess Compensation). Each such Participant will receive an allocation
in the ratio that his or her excess compensation bears to the excess
Compensation of all Participants. Participants may only receive an allocation
of 3% of excess Compensation.
(c) Next, any remaining Employer contributions and forfeitures will be
allocated to all Participants in the ratio that their Compensation plus excess
Compensation bears to the total Compensation plus excess Compensation of all
Participants. Participants may only receive an allocation of up to 2.7% of
their Compensation plus excess Compensation, under this allocation method. If
the Taxable Wage Base as defined in Section 3 of the Adoption Agreement is
less than the maximum, but more than the greater of $10,000 or 20% of the
maximum, then the 2.7% must be reduced. If the amount specified is greater
than 80% but less than 100% of the maximum Taxable Wage Base, the 2.7% must be
reduced to 2.4%. If the amount specified is greater than the greater of
$10,000 or 20% of the maximum Taxable Wage Base, but not more than 80%, 2.7%
must be reduced to 1.3%.
(d) Next, any remaining Employer contributions and forfeitures will be
allocated to all Participants (whether or not they received an allocation
under the preceding paragraphs) in the ratio that each Participant's
Compensation bears to all Participants' Compensation.
If the Plan is not Top-Heavy, subparagraphs (a) and (b) above may be
disregarded and 5.7%, 5.4% or 4.3% may be substituted for 2.7%, 2.4% or 1.3%
where it appears in (c) above.
5.4 Allocating Investment Earnings And Losses Participant's share of investment
earnings and any or decrease in the fair market value of the Fund shall be based
on the proportionate value of all active accounts (other than accounts with
segregated investments) as of the last Valuation Date less withdrawals since the
last Valuation Date. If applicable, segregated accounts may be allocated
earnings, up through the date of segregation, under the above method, at the
Plan Administrator's discretion. If Employer and/or Employee contributions are
made monthly, quarterly, or on some other systematic basis, the adjusted value
of such accounts for allocation of investment Income and gains or losses shall
include one-half the contributions for such period. If Employer and/or Employee
contributions are not made on a systematic basis, it is assumed that they are
made at the end of the valuation period and therefore will not receive an
allocation of investment earnings and gains or losses for such period.
Notwithstanding the above, if contributions are made on a nonsystematic basis,
at the Plan Administrator's discretion, such contributions will be credited with
an allocation of the actual investment earnings and gains and losses from the
actual date of deposit of each such contribution until the end of the period. In
no event shall this election of allocating gains and losses be used to
discriminate. Finally, the Plan Administrator may elect to disregard
nonsystematic contributions mad, during the year, altogether, and allocate
earnings exclusively on the basis of all active accounts (other than accounts
with segregated investments) as of the last Valuation Date less withdrawals
since the last Valuation Date, or, if applicable, take into consideration any
systematic contributions, as provide, above. Accounts with segregated
investments shall receive only the income or loss on such segregate,
investments.
5.5 Participant Statements
The Employer shall periodically (not less often than annually), prepare a
statement for each Participant showing the additions to and subtractions from
his or her account since the last such statement and the fair market value of
his or her account as of the date for which the statement is prepared.
ARTICLE VI--RETIREMENT BENEFITS AND DISTRIBUTIONS
6.1 Normal Retirement Benefits
A Participant shall be entitled to receive the balance held in his or her
account from Employer contributions upon attaining Normal Retirement Age or at
20
such earlier dates as the provisions of this Article VI may allow. If the
Participant elects to continue working past his or her Normal Retirement Age, he
or she will continue as an active Plan Participant and no distribution shall be
made to such Participant until his or her actual retirement date unless the
employer elects otherwise in the Adoption Agreement, or a minimum distribution
is required by law. Settlement shall be made in the normal form, or if elected,
in one of the optional forms of payment provided below.
6.2 Early Retirement Benefits
If the Employer so provides in the Adoption Agreement, an Early Retirement
Benefit will be available to individuals who meet the age and Service
requirements. An individual who meets the Early Retirement Age requirements and
separates from Service, will become fully vested, regardless of any vesting
schedule which otherwise might apply. If a Participant separates from Service
before satisfying the age requirements, but after having satisfied the Service
requirement, the Participant will be entitled to elect an Early Retirement
benefit upon satisfaction of the age requirement.
6.3 Benefits On Termination Of Employment
(a) If a Participant terminates employment prior to Normal Retirement Age,
such Participant shall be entitled to receive the vested balance held in his
or her account payable at Normal Retirement Age in the normal form, or if
elected, in one of the optional forms of payment provided hereunder. If
applicable, the Early Retirement Benefit provisions may be elected.
Notwithstanding the preceding sentence, a former Participant may, if allowed
in the Adoption Agreement, make application to the Employer requesting early
payment of any deferred vested and nonforfeitable benefit due.
(b) If a Participant terminates employment, and the value of that
Participant's vested account balance derived from Employer and Employee
contributions is not greater than $3,500, the Participant may receive a lump
sum distribution of the value of the entire vested portion of such account
balance and the non-vested portion will be treated as a forfeiture. The
Employer shall continue to follow their consistent policy, as may be
established, regarding immediate cash-outs of Vested Account Balances of
$3,500 or less. For purposes of this Article, if the value of a Participant's
Vested Account Balance is zero, the Participant shall be deemed to have
received a distribution of such Vested Account Balance immediately following
termination. Likewise, if the Participant is reemployed prior to incurring 5
consecutive 1-year Breaks In Service they will be deemed to have immediately
repaid such distribution. For Plan Years beginning prior to 1989, a
Participant's Vested Account Balance shall not include Qualified Voluntary
Contributions. Notwithstanding the above, if the Employer maintains or has
maintained a policy of not distributing any amounts until the Participant's
Normal Retirement Age, the Employer can continue to uniformly apply such
policy.
(c) If a Participant terminates employment with a Vested Account Balance
derived from Employer and Employee contributions in excess of $3,500, and
elects (with his or her Spouse's consent, if required) to receive 100% of the
value of his or her Vested Account Balance in a lump sum, the non-vested
portion will be treated as a forfeiture. The Participant (and his or her
Spouse, if required) must consent to any distribution, when the Vested
Account Balance described above exceeds $3,500 or if at the time of any prior
distribution it exceeded $3,500. For purposes of this paragraph, for Plan
Years beginning prior to 1989, a Participant's Vested Account Balance shall
not include Qualified Voluntary Contributions.
(d) Distribution of less than 100% of the Participant's Vested Account Balance
shall be permitted upon termination of employment.
(e) If a Participant who is not 100% vested receives or is deemed to receive a
distribution pursuant to this paragraph and resumes employment covered under
this Plan, the Participant shall have the right to repay to the Plan the full
amount of the distribution attributable to Employer contributions on or before
the earlier of the date that the Participant incurs 5 consecutive 1-year
Breaks in Service following the date of distribution or five years after the
first date on which the Participant is subsequently reemployed. In such event,
the Participant's account shall be restored to the value thereof at the time
the distribution was made and may further be increased by the Plan's income
and investment gains and/or losses on the undistributed amount
21
from the date of distribution to the date of repayment.
(f) A Participant shall also have the option, to postpone payment of his or
her Plan benefits until the first day of April following the calendar year in
which he or she attains age 70-1/2. Any balance of a Participant's account
resulting from his or her Employee contributions not previously withdrawn, if
any, may be withdrawn by the Participant immediately following separation from
Service.
(g) If a Participant ceases to be an active Employee as a result of a
Disability as defined at Paragraph 1.21, such Participant shall be able to
make an application for a disability retirement benefit payment. The
Participant's account balance will be deemed "immediately distributable" as
set forth in paragraph 6.4, and will be fully tested pursuant to paragraph
9.2.
6.4 Restrictions On Immediate Distributions
(a) An account balance is immediately distributable if any part of the account
balance could be distributed to the Participant (or Surviving Spouse) before
the Participant attains (or would have attained if not deceased) the later of
the Normal Retirement Age or age 62.
(b) If the value of a Participant's vested account balance derived from
Employer and Employee Contributions exceeds (or at the time of any prior
distribution exceeded) $3,500, and the account balance is immediately
distributable, the Participant and his or her Spouse (or where either the
Participant or the Spouse has died, the Survivor) must consent to any
distribution of such account balance. The consent of the Participant and the
Spouse shall be obtained in writing within the 90-day period ending on the
annuity starting date, which is the first day of the first period for which an
amount is paid as an annuity or any other form. The Plan Administrator shall
notify the Participant and the Participant's Spouse of the right to defer any
distribution until the Participant's account balance is no longer immediately
distributable. Such notification shall include a general description of the
material features, and an explanation of the relative values of, the optional
forms of benefit available under the plan in a manner that would satisfy the
notice requirements of Code Section 417(a)(3), and shall be provided no less
than 30 days and no more than 90 days prior to the annuity starting date.
(c) Notwithstanding the foregoing, only the Participant need consent to the
commencement of a distribution in the form of a qualified Joint and Survivor
Annuity while the account balance is immediately distributable. Furthermore,
if payment in the form of a Qualified Joint and Survivor Annuity is not
required with respect to the Participant pursuant to paragraph 8.7 of the
Plan, only the Participant need consent to the distribution of an account
balance that is immediately distributable. Neither the consent of the
Participant nor the Participant's Spouse shall be required to the extent that
a distribution is required to satisfy Code Section 401(a)(9) or Code Section
415. In addition, upon termination of this Plan if the Plan does not offer an
annuity option (purchased from a commercial provider), the Participant's
account balance may, without the Participant's consent, be distributed to the
Participant or transferred to another Defined Contribution Plan [other than an
employee stock ownership plan as defined in Code Section 4975(e)(7)] within
the same controlled group.
(d) For purposes of determining the applicability of the foregoing consent
requirements to distributions made before the first day of the first Plan Year
beginning after 1988, the Participant's vested account balance shall not
include amounts attributable to Qualified Voluntary Contributions.
(e) If a distribution is one to which Code Section 401(a)(11) and 417 do not
apply, such distribution may commence less than 30 days after the notice
required under Section 1.411(a)-11(c) of the Income Tax Regulations is given,
provided that:
(1) the Plan Administrator clearly informs the Participant that the
Participant has a right to a period of at least 30 days after receiving the
notice to consider the decision of whether or not to elect a distribution
(and, if applicable, a particular distribution option), and
(2) the Participant, after receiving the notice, affirmatively elects a
distribution.
22
6.5 Normal Form Of Payment
The normal form of payment for a profit- sharing plan satisfying the
requirements of paragraph 8.7 hereof shall be a lump sum with no option for
annuity payments. For all other plans, the normal form of payment hereunder
shall be a Qualified Joint and Survivor Annuity as provided under Article VIII.
A Participant whose vested account balance derived from Employer and Employee
contributions exceeds $3,500, or if at the time of any prior distribution it
exceeded $3,500, shall (with the consent of his or her Spouse) have the right to
receive his or her benefit in a lump sum or in monthly, quarterly, semi-annual
or annual payments from the Fund over any period not extending beyond the life
expectancy of the Participant and his or her Beneficiary. For purposes of this
paragraph, for Plan Years prior to 1989, a Participant's Vested Account Balance
shall not include Qualified Voluntary Contributions. The normal form of payment
shall be automatic, unless the Participant files a written request with the
Employer prior to the date on which the benefit is automatically payable.
electing a lump sum or installment payment option. No amendment to the Plan may
eliminate one of the optional distribution forms listed above.
6.6 Commencement Of Benefits
(a) Unless the Participant elects otherwise, distribution of benefits will
begin no later than the 60th day after the close of the Plan Year in which the
latest of the following events occurs:
(1) the Participant attains age 65 (or normal retirement age if earlier),
(2) the 10th anniversary of the year in which the Participant commenced
participation in the Plan, or
(3) the Participant terminates Service with the Employer.
(b) Notwithstanding the foregoing, the failure of a Participant and Spouse (if
necessary) to consent to a distribution while a benefit is immediately
distributable, within the meaning of paragraph 6.4 hereof, shall be deemed an
election to defer commencement of payment of any benefit sufficient to satisfy
this paragraph.
6.7 Claims Procedures
Upon retirement, death, or other severance of employment, the Participant or his
or her representative may make application to the Employer requesting payment of
benefits due and the manner of payment. If no application for benefits is made,
the Employer shall automatically pay any vested benefit due hereunder in the
normal form at the time prescribed at paragraph 6.4. If an application for
benefits is made, the Employer shall accept, reject, or modify such request and
shall notify the Participant in writing setting forth the response of the
Employer and in the case of a denial or modification the Employer shall:
(a) state the specific reason or reasons for the denial,
(b) provide specific reference to pertinent Plan provisions on which the
denial is based,
(c) provide a description of any additional material or information necessary
for the Participant or his representative to perfect the claim and an
explanation of why such material or information is necessary, and
(d) explain the Plan's claim review procedure as contained in this Plan.
In the event the request is rejected or modified, the Participant or his or her
representative may within 60 days following receipt by the Participant or
representative of such rejection or modification, submit a written request for
review by the Employer of its initial decision. Within 60 days following such
request for review, the Employer shall render its final decision in writing to
the Participant or representative stating specific reasons for such decision. If
the Participant or representative is not satisfied with the Employer's final
decision, the Participant or representative can institute an action in a federal
court of competent jurisdiction; for this purpose, process would be served on
the Employer.
6.8 In-Service Withdrawals
An Employee may withdraw all or any part of the fair market value of his or her
Voluntary Contributions, Qualified Voluntary Contributions, Rollover
Contributions, upon written request to the Employer. Transfer Contributions,
which originate from a Plan meeting the safe-harbor provisions of paragraph 8.7,
may also be withdrawn, by an Employee, upon written request to the Employer.
Transfer Contributions not meeting the safe-harbor provisions may only be
withdrawn upon retirement,
23
death, disability, termination or termination of the Plan, and will be subject
to Spousal consent requirements contained in Code Sections 411(a)(11) and 417.
No such withdrawals are permitted from a money purchase plan until the
participant reaches Normal Retirement Age. Such request shall include the
Employee's address, social security number, birthdate, and amount of the
withdrawal. If at the time a distribution of Qualified Voluntary Contributions
is received the Participant has not attained age 59-1/2 and is not disabled, as
defined at Code Section 22(e)(3), the Participant will be subject to a federal
income tax penalty, unless the distribution is rolled over to a qualified plan
or individual retirement plan within 60 days of the date of distribution. A
Participant may withdraw all or any part of the fair market value of his or her
pre-1987 Voluntary Contributions with or without withdrawing the earnings
attributable thereto. Post-1986 Voluntary Contributions may only be withdrawn
along with a portion of the earnings thereon. The amount of the earnings to be
withdrawn is determined by using the formula: DA [1-(V / V+E)], where DA is the
distribution amount, V is the amount of Voluntary Contributions and V+E is the
amount of Voluntary Contributions plus the earnings attributable thereto. A
Participant withdrawing his or her other contributions prior to attaining age
59-1/2, will be subject to a federal tax penalty to the extent that the
withdrawn amounts are includible in income. Any Participant in a profit-sharing
plan may, if permitted by the Employer in the Adoption Agreement, withdraw all
or any part of the fair market value of any of such vested contributions, plus
the investment earnings thereon, after attaining age 59-1/2 without separating
from Service. Such Employer contributions may not have been used to satisfy the
antidiscrimination test of Code Section 401(k). Such distributions shall not be
eligible for redeposit to the Fund. A withdrawal under this paragraph shall not
prohibit such Participant from sharing in any future Employer Contribution he or
she would otherwise be eligible to share in. A request to withdraw amounts
pursuant to this paragraph must if applicable, be consented to by the
Participant's Spouse. The consent shall comply with the requirements of
paragraph 6.4 relating to immediate distributions.
6.9 Hardship Withdrawal
Unless otherwise specified by the Employer in the Adoption Agreement, a
Participant may not request a Hardship withdrawal prior to attaining age 59-1/2.
If permitted and the Participant has not attained age 59-1/2, the Participant
may be subject to a federal income tax penalty. Such request shall be in writing
to the Employer who shall have sole authority to authorize a hardship
withdrawal, pursuant to the rules below. Hardship withdrawals may include
Elective Deferrals regardless of when contributed and any earnings accrued and
credited thereon as of the last day of the Plan Year ending before July 1, 1989
and Employer related contributions including but not limited to Employer
Matching Contributions, plus the investment earnings thereon to the extent
vested. Qualified Matching Contributions, Qualified Non-Elective Contributions
and Elective Deferrals reclassified as Voluntary Contributions plus the
investment earnings thereon are only available for hardship withdrawal prior to
age 59-1/2 to the extent that they were credited to the Participant's Account as
of the last day of the Plan Year ending prior to July 1, 1989. The Plan
Administrator may limit withdrawals to Elective Deferrals and the earnings
thereon as stipulated above. Hardship withdrawals are subject to the Spousal
consent requirements contained in Code Sections 401(a)(11) and 417. Only the
following reasons are valid to obtain hardship withdrawal:
(a) medical expenses [within the meaning of Code Section 213(d)], incurred or
necessary for the medical care of the Participant, his or her Spouse, children
and other dependents,
(b) the purchase (excluding mortgage payments) of the principal residence for
the Participant,
(c) payment of tuition and related educational expenses for the next twelve
(12) months of post-secondary education for the Participant, his or her
Spouse, children or other dependents, or
(d) the need to prevent eviction of the Employee from or a foreclosure on the
mortgage of, the Employee's principal residence.
Furthermore, the following conditions must be met in order for a withdrawal to
be authorized:
(e) the Participant has obtained all distributions, other than hardship
distributions, and all nontaxable loans under all plans maintained by the
Employer,
(f) all plans maintained by the Employer, other
24
than flexible benefit plans under Code Section 125 providing for current
benefits, provide that the Employee's Elective Deferrals and Voluntary
Contributions will be suspended for twelve months after the receipt of the
Hardship distribution,
(g) the distribution is not in excess of the amount of the immediate and heavy
financial need [(a) through (d) above], including amounts necessary to pay any
federal, state or local income tax or penalties reasonably anticipated to
result from the distribution, and
(h) all plans maintained by the Employer provide that an Employee may not make
Elective Deferrals for the Employee's taxable year immediately following the
taxable year of the hardship distribution in excess of the applicable limit
under Code Section 402(g) for such taxable year, less the amount of such
Employee's pre-tax contributions for the taxable year of the hardship
distribution.
If a distribution is made at a time when a Participant has a nonforfeitable
right to less than 100% of the account balance derived from Employer
contributions and the Participant may increase the nonforfeitable percentage in
the account:
(i) A separate account will be established for the Participant's interest in
the Plan as of the time of the distribution, and
(j) At any relevant time the Participant's nonforfeitable portion of the
separate account will be equal to an amount ("X") determined by the formula:
X = P [AB + (R X D)] - (R X D)
For purposes of applying the formula: "P" is the nonforfeitable percentage at
the relevant time, "AB" is the account balance at the relevant time, "D" is the
amount of the distribution and "R" is the ratio of the account balance at the
relevant time to the account balance after distribution.
6.10 Order Of Withdrawals
Unless the Participant directs otherwise, withdrawals shall be made:
(a) First, from amounts attributable to Voluntary Contributions;
(b) Second, from amounts attributable to Rollover Contributions;
(c) Third, from amounts attributable to Transfer Contributions;
(d) Fourth, from amounts attributable to Elective Deferrals;
(e) Fifth, from amounts attributable to Qualified Non-Elective Contributions;
(f) Sixth, from amounts attributable to Qualified Matching Contributions;
(g) Seventh. from amounts attributable to vested matching Contributions; and
(h) Eighth, from amounts attributable to vested Discretionary Contributions.
ARTICLE VII - DISTRIBUTION REQUIREMENTS
7.1 Joint And Survivor Annuity Requirements
All distributions made under the terms of this Plan must comply with the
provisions of Article VIII including, if applicable, the safe harbor provisions
thereunder.
7.2 Minimum Distribution Requirements
All distributions required under this Article shall be determined and made in
accordance with the minimum distribution requirements of Code Section 401(a)(9)
and the regulations thereunder, including the minimum distribution incidental
benefit rules found at Regulations Section 1.401(a)(9)-2. The entire interest of
a Participant must be distributed or begin to be distributed no later than the
Participant's Required Beginning Date. Life expectancy and joint and last
survivor life expectancy are computed by using the expected return multiples
found in Tables V and VI of Regulations Section 1.72-9.
In determining required distributions under the Plan, Participants and/or their
Spouse (Surviving Spouse) shall have the right to have their life expectancy
recalculated annually. Whether the Participant only or both the Participant and
Spouse's lives shall be recalculated shall be determined by the Participant.
7.3 Limits On Distribution Periods
As of the First Distribution Calendar Year, distribu-
25
tions if not made in a single-sum, may only be made over one of the following
periods (or a combination thereof):
(a) the life of the Participant,
(b) the life of the Participant and a Designated Beneficiary,
(c) a period certain not extending beyond the life expectancy of the
participant, or
(d) a period certain not extending beyond the joint and last survivor
expectancy of the Participant and a designated beneficiary.
7.4 Required Distributions On Or After The Required Beginning Date
(a) If a participant's benefit is to be distributed over (1) a period not
extending beyond the life expectancy of the Participant or the joint life and
last survivor expectancy of the Participant and the Participant's Designated
Beneficiary or (2) a period not extending beyond the life expectancy of the
Designated Beneficiary, the amount required to be distributed for each
calendar year, beginning with distributions for the First Distribution
Calendar Year, must at least equal the quotient obtained by dividing the
Participant's benefit by the Applicable Life Expectancy.
(b) For calendar years beginning before 1989. If the Participant's Spouse is
not the Designated Beneficiary, the method of distribution selected must have
assured that at least 50% of the Present Value of the amount available for
distribution was to be paid within the life expectancy of the Participant.
(c) For calendar years beginning after 1988, the amount to be distributed each
year, beginning with distributions for the First Distribution Calendar Year
shall not be less than the quotient obtained by dividing the Participant's
benefit by the lesser of (1) the Applicable Life Expectancy or (2) if the
Participant's Spouse is not the Designated Beneficiary, the applicable divisor
determined from the table set forth in Q&A-4 of Regulations Section
1.401(a)(9)-2. Distributions after the death of the Participant shall be
distributed using the Applicable Life Expectancy as the relevant divisor
without regard to Regulations Section 1.401(a)(9)-2.
(d) The minimum distribution required for the Participant's First Distribution
Calendar Year must be made on or before the Participant's Required Beginning
Date. The minimum distribution for other calendar years, including the minimum
distribution for the Distribution Calendar Year in which the Participant's
Required Beginning Date occurs, must be made on or before December 31 of that
Distribution Calendar Year.
(e) If the Participant's benefit is distributed in the form of an annuity
purchased from an insurance company, distributions thereunder shall be made in
accordance with the requirements of Code Section 401(a)(9) and the Regulations
thereunder.
(f) For purposes of determining the amount of the required distribution for
each Distribution Calendar Year, the account balance to be used is the account
balance determined as of the last valuation preceding the Distribution
Calendar Year. This balance will be increased by the amount of any
contributions or forfeitures allocated to the account balance after the
valuation date in such preceding calendar year. Such balance will also be
decreased by distributions made after the Valuation Date in such preceding
Calendar Year.
(g) For purposes of subparagraph 7.4(f), if any portion of the minimum
distribution for the First Distribution Calendar Year is made in the second
Distribution Calendar Year on or before the Required Beginning Date, the
amount of the minimum distribution made in the second Distribution Calendar
Year shall be treated as if it had been made in the immediately preceding
Distribution Calendar Year.
7.5 Required Beginning Date
(a) General Rule. The Required Beginning Date of a Participant is the first
day of April of the calendar year following the calendar year in which the
Participant attains age 70-1/2.
(b) Transitional Rules. The Required Beginning Date of a Participant who
attains age 70-1/2 before 1988, shall be determined in accordance with (1) or
(2) below:
(1) Non-5-percent owners. The Required Beginning Date of a Participant who
is not a 5-percent owner is the first day of April of the calendar year
following the calendar year in
26
which the later of retirement or attainment of age 70-1/2 occurs. In the case
of a Participant who is not a 5-percent owner who attains age 70-1/2 during
1988 and who has not retired as of January 1, 1989, the Required Beginning
Date is April 1, 1990.
(2) 5-percent owners. The Required Beginning Date of a Participant who is a
5-percent owner during any year beginning after 1979, is the first day of
April following the later of:
(i) the calendar year in which the Participant attains age 70-1/2, or
(ii) the earlier of the calendar year with or within which ends the plan
year in which the Participant becomes a 5-percent owner, or the calendar
year in which the Participant retires.
(c) A Participant is treated as a 5-percent owner for purposes of this
Paragraph if such Participant is a 5-percent owner as defined in Code Section
416(i) (determined in accordance with Code Section 416 but without regard to
whether the Plan is Top-Heavy) at any time during the Plan Year ending with or
within the calendar year in which such Owner attains age 66-1/2 or any
subsequent Plan Year.
(d) Once distributions have begun to a 5-percent owner under this paragraph,
they must continue to be distributed, even if the Participant ceases to be a
5-percent owner in a subsequent year.
7.6 Transitional Rule
(a) Notwithstanding the other requirements of this Article and subject to the
requirements of Article VIII, Joint and Survivor Annuity Requirements,
distribution on behalf of any Employee, including a 5-percent owner, may be
made in accordance with all of the following requirements (regardless of when
such distribution commences):
(1) The distribution by the Trust is one which would not have disqualified
such Trust under Code Section 401(a)(9) as in effect prior to amendment by
the Deficit Reduction Act of 1984.
(2) The distribution is in accordance with a method of distribution
designated by the Employee whose interest in the Trust is being distributed
or, if the Employee is deceased, by a beneficiary of such Employee.
(3) Such designation was in writing, was signed by the Employee or the
beneficiary, and was made before 1984.
(4) The Employee had accrued a benefit under the Plan as of December 31,
1983.
(5) The method of distribution designated by the Employee or the
beneficiary specifies the time at which distribution will commence, the
period over which distributions will be made, and in the case of any
distribution upon the Employee's death, the beneficiaries of the Employee
listed in order of priority.
(b) A distribution upon death will not be covered by this transitional rule
unless the information in the designation contains the required information
described above with respect to the distributions to be made upon the death of
the Employee.
(c) For any distribution which commences before 1984, but continues after
1983, the Employee or the beneficiary, to whom such distribution is being
made, will be presumed to have designated the method of distribution under
which the distribution is being made if the method of distribution was
specified in writing and the distribution satisfies the requirements in
subparagraphs (a)(1) and (5) above.
(d) If a designation is revoked, any subsequent distribution must satisfy the
requirements of Code Section 401(a)(9) and the regulations thereunder. If a
designation is revoked subsequent to the date distributions are required to
begin, the Trust must distribute by the end of the calendar year following the
calendar year in which the revocation occurs the total amount not yet
distributed which would have been required to have been distributed to satisfy
Code Section 401(a)(9) and the regulations thereunder, but for the section
242(b)(2) election of the Tax Equity and Fiscal Responsibility Act of 1982.
For calendar years beginning after 1988, such distributions must meet the
minimum distribution incidental benefit requirements in section 1.401(a)(9)-2
of the Income Tax Regulations. Any changes in the designation will be
considered to be a revocation
27
of the designation. However, the mere substitution or addition of another
beneficiary (one not named in the designation) under the designation will not be
considered to be a revocation of the designation, so long as such substitution
or addition does not alter the period over which distributions are to be made
under the designation, directly or indirectly (for example, by altering the
relevant measuring life). In the case in which an amount is transferred or
rolled over from one plan to another plan, the rules in Q&A J-2 and Q&A J-3 of
the regulations shall apply.
7.7 Designation Of Beneficiary For Death Benefit
Each Participant shall file a written designation of beneficiary with the
Employer upon qualifying for participation in this Plan. Such designation shall
remain in force until revoked by the Participant by filing a new beneficiary
form with the Employer. The Participant may elect to have a portion of his or
her account balance invested in an insurance contract. If an insurance contract
is purchased under the Plan, the Trustee must be named as Beneficiary under the
terms of the contract. However, the Participant shall designate a Beneficiary to
receive the proceeds of the contract after settlement is received by the
Trustee. Under a profit-sharing plan satisfying the requirements of paragraph
8.7, the Designated Beneficiary shall be the Participant's Surviving Spouse, if
any, unless such Spouse properly consents otherwise.
7.8 Nonexistence Of Beneficiary
Any portion of the amount payable hereunder which is not disposed of because of
the Participant's or former Participant's failure to designate a beneficiary, or
because all of the Designated Beneficiaries predeceased the Participant, shall
be paid to his or her Spouse. If the Participant had no Spouse at the time of
death, payment shall be made to the personal representative of his or her estate
in a lump sum.
7.9 Distribution Beginning Before Death
If the Participant dies after distribution of his or her interest has begun, the
remaining portion of such interest will continue to be distributed at least as
rapidly as under the method of distribution being used prior to the
Participant's death.
7.10 Distribution Beginning After Death
If the Participant dies before distribution of his or her interest begins,
distribution of the Participant's entire interest shall be completed by December
31 of the calendar year containing the fifth anniversary of the Participant's
death except to the extent that an election is made to receive distributions in
accordance with (a) or (b) below:
(a) If any portion of the Participant's interest is payable to a Designated
Beneficiary, distributions may be made over the life or over a period certain
not greater than the life expectancy of the Designated Beneficiary commencing
on or before December 31 of the calendar year immediately following the
calendar year in which the Participant died;
(b) If the Designated Beneficiary is the Participant's surviving Spouse, the
date distributions are required to begin in accordance with (a) above shall
not be earlier than the later of (1) December 31 of the calendar year
immediately following the calendar year in which the participant died or (2)
December 31 of the calendar year in which the Participant would have attained
age 70-1/2.
If the Participant has not made an election pursuant to this paragraph 7.10 by
the time of his or her death, the Participant's Designated Beneficiary must
elect the method of distribution no later than the earlier of (1) December 31 of
the calendar year in which distributions would be required to begin under this
section, or (2) December 31 of the calendar year which contains the fifth
anniversary of the date of death of the participant. If the Participant has no
Designated Beneficiary, or if the Designated Beneficiary does not elect a method
of distribution, then distribution of the Participant's entire interest must be
completed by December 31 of the calendar year containing the fifth anniversary
of the Participant's death.
For purposes of this paragraph if the Surviving Spouse dies after the
Participant, but before payments to such Spouse begin, the provisions of this
paragraph with the exception of paragraph (b) therein, shall be applied as if
the Surviving Spouse were the Participant. For the purposes of this paragraph
and paragraph 7.9, distribution of a Participant's interest is considered to
begin on the Participant's Required Beginning Date (or, if the preceding
sentence is applicable, the date distribution is required to begin to the
Surviving Spouse). If distribution in the form of an annuity described
28
In paragraph 7.4(e) irrevocably commences to the Participant before the Required
Beginning Date, the date distribution is considered to begin is the date
distribution actually commences.
For purposes of paragraph 7.9 and this paragraph, if an amount is payable to
either a minor or an individual who has been declared incompetent, the benefits
shall be paid to the legally appointed guardian for the benefit of said minor or
incompetent individual, unless the court which appointed the guardian has
ordered otherwise.
7.11 Distribution Of Excess Elective Deferrals
(a) Notwithstanding any other provision of the Plan, Excess Elective Deferrals
plus any income and minus any loss allocable thereto, shall be distributed no
later than April 15, 1988, and each April 15 thereafter, to Participants to
whose accounts Excess Elective Deferrals were allocated for the preceding
taxable year, and who claim Excess Elective Deferrals for such taxable year.
Excess Elective Deferrals shall be treated as Annual Additions under the plan,
unless such amounts are distributed no later than the first April 15th
following the close of the Participant's taxable year. A Participant is deemed
to notify the Plan Administrator of any Excess Elective Deferrals that arise
by taking into account only those Elective Deferrals made to this Plan and any
other plans of this Employer.
(b) Furthermore, a Participant who participates in another plan allowing
Elective Deferrals may assign to this Plan any Excess Elective Deferrals made
during a taxable year of the Participant, by notifying the Plan Administrator
of the amount of the Excess Elective Deferrals to be assigned. The
Participant's claim shall be in writing; shall be submitted to the Plan
Administrator not later than March 1 of each year; shall specify the amount of
the Participant's Excess Elective Deferrals for the preceding taxable year;
and shall be accompanied by the Participant's written statement that if such
amounts are not distributed, such Excess Elective Deferrals. when added to
amounts deferred under other plans or arrangements described in Code Sections
401(k), 408(k) [Simplified Employee Pensions], or 403(b) [annuity programs for
public schools and charitable organizations] will exceed the $7,000 limit as
adjusted under Code Section 415(d) imposed on the Participant by Code Section
402(g) for the year in which the deferral occurred.
(c) Excess Elective Deferrals shall be adjusted for any income or loss up to
the end of the taxable year, during which such excess was deferred. Income or
loss will be calculated under the method used to calculate investment earnings
and losses elsewhere in the Plan or any other reasonable method. Whichever
method is selected shall be used for all Participants and for all corrective
distributions made from the Plan for the Plan Year.
(d) If the Participant receives a return of his or her Elective Deferrals, the
amount of such contributions which are returned must be brought into the
Employee's taxable income.
7.12 Distributions of Excess Contributions
(a) Notwithstanding any other provision of this Plan, Excess Contributions,
plus any income and minus any loss allocable thereto, shall be distributed no
later than the last day of each Plan Year to Participants to whose accounts
such Excess Contributions were allocated for the preceding Plan Year. If such
excess amounts are distributed more than 2-1/2 months after the last day of
the Plan Year in which such excess amounts arose, a ten (10) percent excise
tax will be imposed on the Employer maintaining the Plan with respect to such
amounts. Such distributions shall be made to Highly Compensated Employees on
the basis of the respective portions of the Excess Contributions attributable
to each of such Employees. Excess Contributions of Participants who are
subject to the Family Member aggregation rules of Code Section 414(q)(6) shall
be allocated among the Family Members in proportion to the Elective Deferrals
(and amounts treated as Elective Deferrals) of each Family Member that is
combined to determine the Average Deferral Percentage.
(b) Excess Contributions (including the amounts recharacterized) shall be
treated as Annual Additions under the Plan.
(c) Excess Contributions shall be adjusted for any income or loss up to the
end of the Plan Year. Income or loss will be calculated under the method used
to calculate investment earnings and losses elsewhere in the Plan.
29
(d) Excess Contributions shall be distributed from the Participant's Elective
Deferral account and Qualified Matching Contribution account (if applicable)
in proportion to the Participant's Elective Deferrals and Qualified Matching
Contributions (to the extent used in the ADP test) for the Plan Year. Excess
Contributions shall be distributed from the Participant's Qualified Non-
Elective Contribution account only to the extent that such Excess
Contributions exceed the balance in the Participant's Elective Deferral
account and Qualified Matching Contribution account.
7.13 Distribution Of Excess Aggregate Contributions
(a) Notwithstanding any other provision of this Plan, Excess Aggregate
Contributions, plus any income and minus any loss allocable thereto, shall be
forfeited, if forfeitable, or if not forfeitable, distributed no later than
the last day of each Plan Year to Participants to whose accounts such Excess
Aggregate Contributions were allocated for the preceding Plan Year. Excess
Aggregate Contributions shall be allocated to Participants who are subject to
the Family Member aggregation rules of Code Section 414(q)(6) in the manner
prescribed by the regulations.
If such Excess Aggregate Contributions are distributed more than 2-1/2 months
after the last day of the Plan Year in which such excess amounts arose, a ten
(10) percent excise tax will be imposed on the Employer maintaining the Plan
with respect to those amounts. Excess Aggregate Contributions shall be treated
as Annual Additions under the plan.
(b) Excess Aggregate Contributions shall be adjusted for any income or loss up
to the end of the Plan Year. The income or loss allocable to Excess Aggregate
Contributions is the sum of income or loss for the Plan Year allocable to the
Participant's Voluntary Contribution account, Matching Contribution account
(if any, and if all amounts therein are not used in the ADP test) and, if
applicable. Qualified Non-Elective Contribution account and Elective Deferral
account. Income or loss will be calculated under the method used to calculate
investment earnings and losses elsewhere in the Plan.
(c) Forfeitures of Excess Aggregate Contributions may either be reallocated to
the accounts of non-Highly Compensated Employees or applied to reduce Employer
contributions, as elected by the employer in the Adoption Agreement.
(d) Excess Aggregate Contributions shall be forfeited if such amount is not
vested. If vested, such excess shall be distributed in the following order:
(i) First, from the Participant?s Voluntary Contribution account;
(ii) Second, from the Participant?s Matching Contribution account; and
(iii) Third, from the Participant?s Qualified Matching Contribution account
(if applicable).
ARTICLE VIII - JOINT AND SURVIVOR ANNUITY REQUIREMENTS
8.1 Applicability Of Provisions
The provisions of this Article shall apply to any Participant who is credited
with at least one Hour of Service with the Employer on or after August 23, 1984
and such other Participants as provided in paragraph 8.8.
8.2 Payment Of Qualified Joint And Survivor Annuity
Unless an optional form of benefit is selected pursuant to a Qualified Election
within the 90-day period ending on the Annuity Starting Date, a married
Participant's Vested Account Balance will be paid in the form of a Qualified
Joint and Survivor Annuity and an unmarried Participant's Vested Account Balance
will be paid in the form of a life annuity. The Participant may elect to have
such annuity distributed upon attainment of the Early Retirement Age under the
Plan.
8.3 Payment Of Qualified Pre-Retirement Survivor Annuity
Unless an optional form of benefit has been selected within the Election Period
pursuant to a Qualified Election, if a Participant dies before benefits have
commenced then the Participant's vested account balance shall be paid in the
form of an annuity for the life of the Surviving Spouse. The Surviving Spouse
may elect to have such annuity distributed within a reasonable period after the
Participant's death.
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A Participant who does not meet the age 35 requirement set forth in the Election
Period as of the end of any current Plan Year may make a special qualified
election to waive the qualified Pre-retirement Survivor Annuity for the period
beginning on the date of such election and ending on the first day of the Plan
Year in which the Participant will attain age 35. Such election shall not be
valid unless the Participant receives a written explanation of the Qualified
Pre-retirement Survivor Annuity in such terms as are comparable to the
explanation required under paragraph 8.5. Qualified Pre-retirement Survivor
Annuity coverage will be automatically reinstated as of the first day of the
Plan Year in which the Participant attains age 35. Any new waiver on or after
such date shall be subject to the full requirements of this Article.
8.4 Qualified Election
A Qualified Election is an election to either waive a Qualified Joint and
Survivor Annuity or a qualified pre-retirement survivor annuity. Any such
election shall not be effective unless:
(a) the Participant's Spouse consents in writing to the election;
(b) the election designates a specific beneficiary, including any class of
beneficiaries or any contingent beneficiaries, which may not be changed
without spousal consent (or the Spouse expressly permits designations by the
Participant without any further spousal consent);
(c) the Spouse's consent acknowledges the effect of the election; and
(d) the Spouse's consent is witnessed by a Plan representative or notary
public.
Additionally, a Participant's waiver of the Qualified Joint and Survivor Annuity
shall not be effective unless the election designates a form of benefit payment
which may not be changed without spousal consent (or the Spouse expressly
permits designations by the Participant without any further spousal consent). If
it is established to the satisfaction of the Plan Administrator that there is no
Spouse or that the Spouse cannot be located, a waiver will be deemed a Qualified
Election. Any consent by a Spouse obtained under this provision (or
establishment that the consent of a Spouse may not be obtained) shall be
effective only with respect to such Spouse. A consent that permits designations
by the Participant without any requirement of further consent by such Spouse
must acknowledge that the Spouse has the right to limit consent to a specific
beneficiary, and a specific form of benefit where applicable, and that the
Spouse voluntarily elects to relinquish either or both of such rights. A
revocation of a prior waiver may be made by a Participant without the consent of
the Spouse at any time before the commencement of benefits. The number of
revocations shall not be limited. No consent obtained under this provision shall
be valid unless the Participant has received notice as provided in paragraphs
8.5 and 8.6 below.
8.5 Notice Requirements For Qualified Joint And Survivor Annuity
In the case of a Qualified Joint and Survivor Annuity, the Plan Administrator
shall, no less than 30 days and no more than 90 days prior to the Annuity
Starting date, provide each Participant a written explanation of:
(a) the terms and conditions of a Qualified Joint and Survivor Annuity;
(b) the Participant's right to make and the effect of an election to waive the
Qualified Joint and Survivor Annuity form of benefit;
(c) the rights of a Participant?s Spouse; and
(d) the right to make, and the effect of, a revocation of a previous election
to waive the Qualified Joint and Survivor Annuity.
8.6 Notice Requirements For Qualified Pre-Retirement Survivor Annuity
In the case of a qualified pre-retirement survivor annuity as described in
paragraph 8.3, the Plan Administrator shall provide each Participant within the
applicable period for such Participant a written explanation of the qualified
pre-retirement survivor annuity in such terms and in such manner as would be
comparable to the explanation provided for meeting the requirements of paragraph
8.5 applicable to a Qualified Joint and Survivor Annuity. The applicable period
for a Participant is whichever of the following periods ends last:
(a) the period beginning with the first day of the Plan Year in which the
Participant attains age 32 and ending with the close of the Plan Year
preceding the Plan Year in which the Participant attains age 35;
31
(b) a reasonable period ending after the individual becomes a Participant;
(c) a reasonable period ending after this Article first applies to the
Participant. Notwithstanding the foregoing, notice must be provided within a
reasonable period ending after separation from Service in the case of a
Participant who separates from Service before attaining age 35.
For purposes of applying the preceding paragraph, a reasonable period ending
after the events described in (b) and (c) is the end of the two-year period
beginning one-year prior to the date the applicable event occurs, and ending
one-year after that date. In the case of a Participant who separates from
Service before the Plan Year in which age 35 is attained, notice shall be
provided within the two-year period beginning one year prior to separation and
ending one year after separation. If such a Participant subsequently returns to
employment with the Employer, the applicable period for such Participant shall
be re-determined.
8.7 Special Safe-Harbor Exception For Certain Profit-Sharing Plans
(a) This paragraph shall apply to a Participant in a profit-sharing plan, and
to any distribution, made on or after the first day of the first plan year
beginning after 1988, from or under a separate account attributable solely to
Qualified Voluntary contributions, as maintained on behalf of a Participant in
a money purchase pension plan, (including a target benefit plan) if the
following conditions are satisfied:
(1) the Participant does not or cannot elect payments in the form of a life
annuity; and
(2) on the death of a Participant, the Participant's Vested Account Balance
will be paid to the Participant's Surviving Spouse, but if there is no
Surviving Spouse, or if the Surviving Spouse has consented in a manner
conforming to a Qualified Election, then to the Participant's Designated
Beneficiary.
The Surviving Spouse may elect to have distribution of the Vested Account
Balance commence within the 90-day period following the date of the
Participant's death. The account balance shall be adjusted for gains or losses
occurring after the Participant?Participant's death in accordance with the
provisions of the Plan governing the adjustment of account balances for other
types of distributions. These safe-harbor rules shall not be operative with
respect to a Participant in a profit-sharing plan if that plan is a direct or
indirect transferee of a Defined Benefit Plan, money purchase plan, a target
benefit plan, stock bonus plan, or profit-sharing plan which is subject to the
survivor annuity requirements of Code Section 401(a)(11) and Code Section 417,
and would therefore have a Qualified Joint and Survivor Annuity as its normal
form of benefit.
(b) The Participant may waive the spousal death benefit described in this
paragraph at any time provided that no such waiver shall be effective unless
it satisfies the conditions (described in paragraph 8.4) that would apply to
the Participant's waiver of the Qualified Pre-Retirement Survivor Annuity.
(c) If this paragraph 8.7 is operative, then all other provisions of this
Article other than paragraph 8.8 are inoperative.
8.8 Transitional Joint And Survivor Annuity Rules
Special transition rules apply to Participants who were not receiving benefits
on August 23, 1984.
(a) Any living Participant not receiving benefits on August 23, 1984, who
would otherwise not receive the benefits prescribed by the previous paragraphs
of this Article, must be given the opportunity to elect to have the prior
paragraphs of this Article apply if such Participant is credited with at least
one Hour of Service under this Plan or a predecessor Plan in a Plan Year
beginning on or after January 1, 1976 and such Participant had at least 10
Years of Service for vesting purposes when he or she separated from Service.
(b) Any living Participant not receiving benefits on August 23, 1984, who was
credited with at least one Hour of Service under this Plan or a predecessor
Plan on or after September 2, 1974. And who is not otherwise credited with any
Service in a Plan Year beginning on or after January 1, 1976, must be given
the opportunity to have his or her benefits paid in accordance with paragraph
8.9.
(c) The respective opportunities to elect [as described in (a) and (b) above]
must be afforded
32
to the appropriate Participants during the period commencing on August 23, 1984
and ending on the date benefits would otherwise commence to said Participants.
8.9 Automatic Joint And Survivor Annuity And Early Survivor Annuity
Any Participant who has elected pursuant to paragraph 8.8(b) and any Participant
who does not elect under paragraph 8.8(a) or who meets the requirements of
paragraph 8.8(a), except that such Participant does not have at least 10 years
of vesting Service when he or she separates from Service, shall have his or her
benefits distributed in accordance with all of the following requirements if
benefits would have been payable in the form of a life annuity.
(a) Automatic Joint and Survivor Annuity. If benefits in the form of a life
annuity become payable to a married Participant who:
(1) begins to receive payments under the Plan on or after Normal
Retirement, or
(2) dies on or after Normal Retirement Age while still working for the
Employer, or
(3) begins to receive payments on or after the Qualified Early Retirement
Age, or
(4) separates from Service on or after attaining Normal Retirement (or the
Qualified Early Retirement Age) and after satisfying the eligibility
requirements for the payment of benefits under the Plan and thereafter dies
before beginning to receive such benefits, then such benefits will be
received under this Plan in the form of a Qualified Joint and Survivor
Annuity, unless the Participant has elected otherwise during the Election
Period. The Election Period must begin at least 6 months before the
Participant attains Qualified Early Retirement Age and end not more than 90
days before the commencement of benefits. Any election will be in writing
and may be changed by the Participant at any time.
(b) Election of Early Survivor Annuity. A Participant who is employed after
attaining the Qualified Early Retirement Age will be given the opportunity to
elect, during the Election Period, to have a survivor annuity payable on
death. If the Participant elects the survivor annuity, payments under such
annuity must not be less than the payments which would have been made to the
Spouse under the Qualified Joint and Survivor Annuity if the Participant had
retired on the day before his or her death. Any election under this provision
will be in writing and may be changed by the Participant at any time. The
Election Period begins on the later of:
(1) the 90th day before the Participant attains the Qualified Early
Retirement Age, or
(2) the date on which participation begins, and ends on the date the
Participant terminates employment.
8.10 Annuity Contracts
Any annuity contract distributed under this Plan must be nontransferable. The
terms of any annuity contract purchased and distributed by the Plan to a
Participant or Spouse shall comply with the requirements of this Plan.
ARTICLE IX - VESTING
9.1 Employee Contributions
A Participant shall always have a 100% vested and nonforfeitable interest in his
or her Elective Deferrals, Voluntary Contributions, Qualified Voluntary
Contributions, Rollover Contributions, and Transfer Contributions plus the
earnings thereon. No forfeiture of Employer related contributions (including any
minimum contributions made under paragraph 14.2) will occur solely as a result
of an Employee's withdrawal of any Employee contributions.
9.2 Employer Contributions
A Participant shall acquire a vested and nonforfeitable interest in his or her
account attributable to Employer contributions in accordance with the table
selected in the Adoption Agreement, provided that if a Participant is not
already fully vested, he or she shall become so upon attaining Normal Retirement
Age, Early Retirement Age, on death prior to normal retirement, on retirement
due to Disability, or on termination of the Plan. If no table is selected in the
Adoption Agreement, an Employee shall acquire a vested and nonforfeitable
interest in his or her account attributable to Employer contributions in
accordance with the following percentages: 20% after 2 Years Of Service, 20%
additional for each of
33
the following Years Of Service, reaching 100% after 6 Years Of Service with the
Employer.
9.3 Computation Period
The computation period for purposes of determining Years of Service and Breaks
in Service for purposes of computing a Participant's nonforfeitable right to his
or her account balance derived from Employer contributions shall be the Plan
Year. In the event a former Participant with no vested interest in his or her
Employer contribution account requalifies for participation in the Plan after
incurring a Break in Service, such Participant shall be credited for vesting
with all pre-break and post-break Service.
9.4 Requalification Prior To Five Consecutive One-Year Breaks In Service
The account balance of such Participant shall consist of any undistributed
amount in his or her account as of the date of re-employment plus any future
contributions added to such account plus the investment earnings on the account.
The vested account balance of such Participant shall be determined by
multiplying the Participant's account balance (adjusted to include any
distribution or redeposit made under paragraph 6.3) by such Participant's vested
percentage. All Service of the Participant, both prior to and following the
break, shall be counted when computing the Participant's vested percentage.
9.5 Requalification After Five Consecutive One-Year Breaks In Service
If such Participant is not fully vested upon reemployment, a new account shall
be established for such Participant to separate his or her deferred vested and
nonforfeitable account, if any, from the account to which new allocations will
be made. The Participant?s deferred account to the extent remaining shall be
fully vested and shall continue to share in earnings and losses of the Fund.
When computing the Participant's vested portion of the new account, all pre-
break and post-break Service shall be counted. However, notwithstanding this
provision, no such former Participant who has had five consecutive one-year
Breaks in Service shall acquire a larger vested and nonforfeitable interest in
his or her prior account balance as a result of requalification hereunder.
9.6 Calculating Vested Interest
A Participant's vested and nonforfeitable interest shall be calculated by
multiplying the fair market value of his or her account attributable to Employer
contributions on the Valuation Date preceding distribution by the decimal
equivalent of the vested percentage as of his or her termination date. The
amount attributable to Employer contributions for purposes of the calculation
includes amounts previously paid out pursuant to paragraph 6.3 and not repaid if
the non-vested portion has not been forfeited. The Participant's vested and
nonforfeitable interest, once calculated above, shall be reduced to reflect
those amounts previously paid out to the Participant and not repaid by the
Participant. The Participant's vested and nonforfeitable interest so determined
shall continue to share in the investment earnings and any increase or decrease
in the fair market value of the Fund up to the Valuation Date preceding or
coinciding with payment.
9.7 Forfeitures
Any balance in the account of a Participant who has separated from Service to
which he or she is not entitled under the foregoing provisions, shall be
forfeited and applied as provided in the Adoption Agreement. A forfeiture may
only occur if the Participant has received a distribution from the Plan or if
the Participant has incurred five consecutive 1-year Breaks in Service.
Furthermore, a Highly Compensated Employee's Matching Contributions may be
forfeited, even if vested, if the contributions to which they relate are Excess
Deferrals, Excess Contributions or Excess Aggregate Contributions.
9.8 Amendment Of Vesting Schedule
No amendment to the Plan shall have the effect of decreasing a Participant's
vested interest determined without regard to such amendment as of the later of
the date such amendment is adopted or the date it becomes effective. Further, if
the vesting schedule of the Plan is amended, or the Plan is amended in any way
that directly or indirectly affects the computation of any Participant's
nonforfeitable percentage or if the Plan is deemed amended by an automatic
change to or from a Top-Heavy vesting schedule, each Participant with at least
three Years of Service with the Employer may elect, within a reasonable period
after the adoption of the amendment, to have his or her nonforfeitable
percentage computed under the Plan without regard to such amendment. For
Participants who do not have at least one Hour of Service in any Plan Year
beginning after 1988, the preceding sentence shall be
34
applied by substituting "Five Years of Service" for "Three Years of Service"
where such language appears. The period during which the election may be made
shall commence with the date the amendment is adopted and shall end on the later
of:
(a) 60 days after the amendment is adopted;
(b) 60 days after the amendment becomes effective; or
(c) 60 days after the Participant is issued written notice of the amendment by
the Employer or the Trustee. If the Trustee is asked to so notify, the Fund
will be charged for the costs thereof.
No amendment to the Plan shall be effective to the extent that it has the effect
of decreasing a Participant's accrued benefit. Notwithstanding the preceding
sentence, a Participant's account balance may be reduced to the extent permitted
under section 412(c)(8) of the Code (relating to financial hardships). For
purposes of this paragraph, a Plan amendment which has the effect of decreasing
a Participant's account balance or eliminating an optional form of benefit, with
respect to benefits attributable to service before the amendment, shall be
treated as reducing an accrued benefit.
9.9 Service With Controlled Groups
All Years of Service with other members of a controlled group of corporations
[as defined in Code Section 414(b)], trades or businesses under common control
[as defined in Code Section 414(c)], or members of an affiliated service group
[as defined in Code Section 414(m)] shall be considered for purposes of
determining a Participant nonforfeitable percentage.
ARTICLE X - LIMITATIONS ON ALLOCATIONS AND ANTIDISCRIMINATION TESTING
10.1 Participation In This Plan Only
If the Participant does not participate in and has never participated in another
qualified plan, a Welfare Benefit Fund (as defined in paragraph 1.89) or an
individual medical account, as defined in Code Section 415(1)(2), or a
Simplified Employee Pension Plan, as defined in Code Section 408(k), maintained
by the adopting Employer, which provides an Annual Addition as defined in
paragraph 1.4, the amount of Annual Additions which may be credited to the
Participant,s account for any Limitation Year will not exceed the lesser of the
Maximum Permissible Amount or any other limitation contained in this Plan. If
the Employer contribution that would otherwise be contributed or allocated to
the Participant's account would cause the Annual Additions for the Limitation
Year to exceed the Maximum Permissible Amount, the amount contributed or
allocated will be reduced so that the Annual Additions for the Limitation Year
will equal the Maximum Permissible Amount. Prior to determining the
Participant's actual Compensation for the Limitation Year, the Employer may
determine the Maximum Permissible Amount for a Participant on the basis of a
reasonable estimate of the Participant's Compensation for the Limitation Year,
uniformly determined for all Participants similarly situated. As soon as is
administratively feasible after the end of the Limitation Year, the Maximum
Permissible Amount for the Limitation Year will be determined on the basis of
the Participant?s actual Compensation for the Limitation Year.
10.2 Disposition Of Excess Annual Additions
If, pursuant to paragraph 10.1 or as a result of the allocation of forfeitures,
there is an Excess Amount, the excess will be disposed of under one of the
following methods as determined in the Adoption Agreement. If no election is
made in the Adoption Agreement then method "(a)" below shall apply.
(a) Suspense Account Method
(1) Any Elective Deferrals and nondeductible Employee Voluntary
Contributions, to the extent they would reduce the Excess Amount, will be
returned to the Participant;
(2) If after the application of paragraph (1) an Excess Amount still
exists, and the Participant is covered by the Plan at the end of the
Limitation Year, the Excess Amount in the Participant's account will be
used to reduce Employer contributions (including any allocation of
forfeitures) for such Participant in the next Limitation Year, and each
succeeding Limitation Year if necessary;
(3) If after the application of paragraph (1) an Excess Amount still
exists, and the Participant is not covered by the Plan at the end of the
Limitation Year, the Excess Amount will be held unallocated in a suspense
account. The suspense account will be applied to reduce
35
future Employer contributions (including allocation of any forfeitures) for all
remaining Participants in the next Limitation Year, and each succeeding
Limitation Year if necessary;
(4) If a suspense account is in existence at any time during the
Limitation Year pursuant to this paragraph, it will not participate in the
allocation of investment gains and losses. If a suspense account is in
existence at any time during a particular Limitation Year, all amounts in
the suspense account must be allocated and reallocated to Participants'
accounts before any Employer contributions or any Employee Contributions
may be made to the Plan for that Limitation Year. Excess amounts may not
be distributed to Participants or former Participants.
(b) Spillover Method
(1) Any Elective Deferrals and nondeductible Employee Voluntary
Contributions, to the extent they would reduce the Excess Amount, will be
returned to the Participant.
(2) Any Excess Amount which would be allocated to the account of an
individual Participant under the Plan's allocation formula will be
reallocated to other Participants in the same manner as other Employer
contributions. No such reallocation shall be made to the extent that it
will result in an Excess Amount being created in such Participant's own
account.
(3) To the extent that amounts cannot be reallocated under (1) above, the
suspense account provisions of (a) above will apply.
10.3 Participation In This Plan And Another Qualified Master and Prototype
Defined Contribution Plan, Welfare Benefit Fund, Individual Medical Account Or
Simplified Employee Pension Plan Maintained The Employer
The Annual Additions which may be credited to a Participant's account under this
Plan for any Limitation Year will not exceed the Maximum Permissible Amount
reduced by the Annual Additions credited to a Participant's account under the
other qualified Master or Prototype Defined Contribution Plans, Welfare Benefit
Funds, and individual medical accounts as defined in Code Section 415(1)(2), or
Simplified Employee Pension Plan, maintained by the Employer, which provide an
Annual Addition as defined in paragraph 1.4 for the same Limitation Year. If the
Annual Additions, with respect to the Participant under other Defined
Contribution Plans and Welfare Benefit Funds maintained by the Employer, are
less than the Maximum Permissible Amount and the Employer contribution that
would otherwise be contributed or allocated to the Participant?s account under
this Plan would cause the Annual Additions for the Limitation Year to exceed
this limitation, the amount contributed or allocated will be reduced so that the
Annual Additions under all such plans and funds for the Limitation Year will
equal the Maximum Permissible Amount. If the Annual Additions with respect to
the Participant under such other Defined Contribution Plans and Welfare Benefit
Funds in the aggregate are equal to or greater than the Maximum Permissible
Amount, no amount will be contributed or allocated to the Participant's account
under this Plan for the Limitation Year. Prior to determining the Participant's
actual Compensation for the Limitation Year, the Employer may determine the
Maximum Permissible Amount for a Participant in the manner described in
paragraph 10.1. As soon as administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for the Limitation Year will be
determined on the basis of the Participant's actual Compensation for the
Limitation Year.
10.4 Disposition Of Excess Annual Additions Under Two Plans
If, pursuant to paragraph 10.3 or as a result of forfeitures, a Participant's
Annual Additions under this Plan and such other plans would result in an Excess
Amount for a Limitation Year, the Excess Amount will be deemed to consist of the
Annual Additions last allocated except that Annual Additions attributable to a
Simplified Employee Pension Plan will be deemed to have been allocated first,
followed by Annual Additions attributable to a Welfare Benefit Fund or
Individual Medical Account as defined in Code Section 415(1)(2) regardless of
the actual allocation date. If an Excess Amount was allocated to a Participant
on an allocation date of this Plan which coincides with an allocation date of
another plan, the Excess Amount attributed to this Plan will be the product of:
36
(a) the total Excess Amount allocated as of such date, times
(b) the ratio of:
(1) the Annual Additions allocated to the Participant for the Limitation
Year as of such date under the Plan, to
(2) the total Annual Additions allocated to the Participant for the
Limitation Year as of such date under this and all the other qualified
Master or Prototype Defined Contribution Plans.
Any Excess Amount attributed to this Plan will be disposed of in the manner
described in paragraph 10.2.
10.5 Participation In This Plan And Another Defined Contribution Plan Which Is
Not A Qualified Master Or Prototype Plan
If the Participant is covered under another qualified Defined Contribution Plan
maintained by the Employer which is not a qualified Master or Prototype Plan,
Annual Additions which may be credited to the Participant's account under this
Plan for any Limitation Year will be limited in accordance with paragraphs 10.3
and 10.4 as though the other plan were a Master or Prototype Plan, unless the
Employer provides other limitations in the Adoption Agreement.
10.6 Participation In This Plan And A Defined Benefit Plan
If the Employer maintains, or at any time maintained, a qualified Defined
Benefit Plan covering any Participant in this Plan, the sum of the Participant's
Defined Benefit Plan Fraction and Defined Contribution Plan Fraction will not
exceed 1.0 in any Limitation Year. For any Plan Year during which the Plan is
Top-Heavy, the Defined Benefit and Defined Contribution Plan Fractions shall be
calculated in accordance with Code Section 416(h). The Annual Additions which
may be credited to the Participant's account under this Plan for any Limitation
Year will be limited in accordance with the provisions set forth in the Adoption
Agreement.
10.7 Average Deferral Percentage (A D P) Test
With respect to any Plan Year, the Average Deferral Percentage for Participants
who are Highly Compensated Employees and the Average Deferral Percentage for
Participants who are non-Highly Compensated Employees must satisfy one of the
following tests:
(a) Basic Test - The Average Deferral Percentage for Participants who are
Highly Compensated Employees for the Plan Year is not more than 1.25 times the
Average Deferral Percentage for Participants who are non-Highly Compensated
Employees for the same Plan Year, or
(b) Alternative Test - The Average Deferral Percentage for Participants who
are Highly Compensated Employees for the Plan Year does not exceed the Average
Deferral Percentage for Participants who are non-Highly Compensated Employees
for the same Plan Year by more than 2 percentage points provided that the
Average Deferral Percentage for Participants who are Highly Compensated
Employees is not more than 2.0 times the Average Deferral Percentage for
Participants who are non-Highly Compensated Employees.
10.8 Special Rules Relating To Application Of ADP Test
(a) The Actual Deferral Percentage for any Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible to have Elective
Deferrals (and Qualified Non-Elective Contributions or Qualified Matching
Contributions, or both, if treated as Elective Deferrals for purposes of the
ADP test) allocated to his or her accounts under two or more arrangements
described in Code Section 401(k), that are maintained by the Employer, shall
be determined as if such Elective Deferrals (and, if applicable, such
Qualified Non-Elective Contributions or Qualified Matching Contributions, or
both) were made under a single arrangement. If a Highly Compensated Employee
participates in two or more cash or deterred arrangements that have different
Plan Years, all cash or deferred arrangements ending with or within the same
calendar year shall be treated as a single arrangement.
(b) In the event that this Plan satisfies the requirements of Code Sections
401(k), 401(a)(4), or 410(b), only if aggregated with one or more other plans,
or if one or more other plans satisfy the requirements of such Code Sections
only if
37
XXX gated with this Plan, then this Section shall XXX applied by determining the
Actual Deferral Percentage of Employees as if all such plans XXX a single plan.
For Plan Years beginning XXX 1989, plans may be aggregated in order to XXX Code
Section 401(k) only if they have the XXX Plan Year.
XXX For purposes of determining the Actual Deferral Percentage of a Participant
who is a 5-percent owner or one of the ten most highly-paid XXXly Compensated
Employees, the Elective Deferrals (and Qualified Non-Elective Contributions or
Qualified Matching Contributions, or both, if treated as Elective Referrals for
purposes of the ADP test) and Compensation of such Participant shall include the
Elective Deferrals (and, if applicable, Qualified Non-Elective Contributions and
Qualified Matching Contributions, or both) for the XXX Year of Family Members as
defined in paragraph 1.36 of this Plan. Family Members, with respect to such
Highly Compensated Employees, shall be disregarded as separate Employees in
determining the ADP both for Participants who are non-Highly Compensated
Employees and for participants who are Highly Compensated Employees. In the
event of repeal of the family aggregation rules under Code Section 414(q)(6),
all applications of such rules under this Plan will cease as of the effective
date of such repeal.
(d) For purposes of determining the ADP test, Elective Deferrals, Qualified Non-
Elective Contributions and Qualified Matching Contributions must be made before
the last day of the twelve-month period immediately following the Plan Year to
which contributions relate.
(e) The Employer shall maintain records sufficient to demonstrate satisfaction
of the ADP test [the amount of Qualified Non-Elective Contributions or Qualified
Matching Contributions, or both, used in such test.
(f) The determination and treatment of the Actual Deferral Percentage amounts of
any Participant shall satisfy such other requirements may be prescribed by the
Secretary of the Treasury.
10.9 Average Contribution Percentage (ACP) Test
If the Employer makes Matching Contributions or if the Plan allows Employees to
make Voluntary Contributions the Plan must meet additional nondiscrimination
requirements provided under Code Section 401(m). If Employee Contributions
(including any Elective Deferrals recharacterized as Voluntary Contributions)
are made pursuant to this Plan, then in addition to the ADP test referenced in
paragraph 10.7, the Average Contribution Percentage test is also applicable. The
Average Contribution Percentage for Participants who are Highly Compensated
Employees for each Plan Year and the Average Contribution Percentage for
Participants who are Non-Highly Compensated Employees for the same Plan Year
must satisfy one of the following tests:
(a) Basic Test - The Average Contribution Percentage for Participants who are
Highly Compensated Employees for the Plan Year shall not exceed the Average
Contribution Percentage for Participants who are non-Highly Compensated
Employees for the same Plan Year multiplied by 1.25; or
(b) Alternative Test - The ACP for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the Average Contribution
Percentage for Participants who are non-Highly Compensated Employees for the
same Plan Year multiplied by two (2), provided that the Average Contribution
Percentage for Participants who are Highly Compensated Employees does not
exceed the Average Contribution Percentage for Participants who are non-Highly
Compensated Employees by more than two (2) percentage points.
10.10 Special Rules Relating To Application Of ACP Test
(a) If one or more Highly Compensated Employees participate in both a cash or
deferred arrangement and a plan subject to the ACP test maintained by the
Employer and the sum of the ADP and ACP of those Highly Compensated Employees
subject to either or both tests exceeds the Aggregate Limit, then the ADP or
ACP of those Highly Compensated Employees who also participate in a cash or
deferred arrangement will be reduced (beginning with such Highly
38
Compensated Employee whose ADP or ACP is the highest) as set forth in the
Adoption Agreement so that the limit is not exceeded. The amount by which each
Highly Compensated Employee's Contribution Percentage Amounts is reduced shall
be treated as an Excess Aggregate Contribution. The ADP and ACP of the Highly
Compensated Employees are determined after any corrections required to meet the
ADP and ACP tests. Multiple use does not occur if both the ADP and ACP of the
Highly Compensated Employees does not exceed 1.25 multiplied by the ADP and ACP
of the non-Highly Compensated Employees.
(b) For purposes of this Article, the Contribution Percentage for any
Participant who is a Highly Compensated Employee and who is eligible to have
Contribution Percentage Amounts allocated to his or her account under two or
more plans described in Code Section 401(a), or arrangements described in Code
Section 401(k) that are maintained by the Employer, shall be determined as if
the total of such Contribution Percentage Amounts was made under each Plan. If
a Highly Compensated Employee participates in two or more cash or deferred
arrangements that have different plan years, all cash or deferred arrangements
ending with or within the same calendar year shall be treated as a single
arrangement.
(c) In the event that this Plan satisfies the requirements of Code Sections
401(a)(4), 401(m), or 410(b) only if aggregated with one or more other plans,
or if one or more other plans satisfy the requirements of such Code Sections
only if aggregated with this Plan, then this Section shall be applied by
determining the Contribution Percentage of Employees as if all such plans were
a single plan. For plan years beginning after 1989, plans may be aggregated in
order to satisfy Code Section 401(m) only if the aggregated plans have the
same Plan Year.
(d) For purposes of determining the Contribution percentage of a Participant
who is a five-percent owner or one of the ten most highly-paid, Highly
Compensated Employees, the Contribution Percentage Amounts and Compensation of
such Participant shall include the Contribution Percentage Amounts and
Compensation for the Plan Year of Family Members as defined in Paragraph 1.36
of this Plan. Family Members, with respect to Highly Compensated Employees,
shall be disregarded as separate Employees in determining the Contribution
Percentage both for Participants who are non-Highly Compensated Employees and
for Participants who are Highly Compensated Employees. In the event of repeal
of the family aggregation rules under Code Section 414(q)(6), all applications
of such rules under this Plan will cease as of the effective date of such
repeal.
(e) For purposes of determining the Contribution Percentage test, Employee
Contributions are considered to have been made in the Plan Year in which
contributed to the trust. Matching Contributions and Qualified Non-Elective
Contributions will be considered made for a Plan Year if made no later than
the end of the twelve-month period beginning on the day after the close of the
Plan Year.
(f) The Employer shall maintain records sufficient to demonstrate satisfaction
of the ACP test and the amount of Qualified Non-Elective Contributions or
Qualified Matching Contributions, or both, used in such test.
(g) The determination and treatment of the Contribution Percentage of any
Participant shall satisfy such other requirements as may be prescribed by the
Secretary of the Treasury.
(h) Qualified Matching Contributions and Qualified Non-Elective Contributions
used to satisfy the ADP test may not be used to satisfy the ACP test.
ARTICLE XI - ADMINISTRATION
11.1 Plan Administrator
The Employer shall be the named fiduciary and Plan Administrator. These duties
shall include:
(a) appointing the Plan's attorney, accountant, actuary, or any other party
needed to administer the Plan,
(b) directing the Trustee with respect to payments from the Fund,
(c) communicating with Employees regarding their participation and benefits
under the Plan, including the administration of all claims procedures,
39
(d) filing any returns and reports with the Internal Revenue Service,
Department of Labor, or any other governmental agency,
(e) reviewing and approving any financial reports, investment reviews, or
other reports prepared by any party appointed by the Employer under paragraph
(a).
(f) establishing a funding policy and investment objectives consistent with
the purposes of the Plan and the Employee Retirement Income Security Act of
1974, and
(g) construing and resolving any question of Plan interpretation. The Plan
Administrator's interpretation of Plan provisions including eligibility and
benefits under the Plan is final, and unless it can be shown to be arbitrary
and capricious will not be subject to "de novo" review.
11.2 Trustee
The Trustee shall only be responsible for maintaining the trust account(s) in
accordance with applicable laws on behalf of the Employer. The Trustee's tries
shall include:
(a) receiving contributions under the terms of the Plan, but not determining
the amount or enforcing the payment thereof,
(b) making distributions from the Fund in accordance with written instructions
received from an authorized representative of the Employer, and
(c) keeping accurate and detailed records of all contributions, receipts,
investments, distributions, disbursements and all other transactions with
respect to each account (in the case of Employee Investment Direction) or the
Fund (in the case of Employer Investment Direction). Periodically (not less
than annually), the Trustee shall provide a transcript of all activity in the
account or in the Fund (which may consist of regularly issued statements from
the Service Company). In the case of Employee Investment Direction, each such
transcript will be provided to the Participant. In the case of Employer
Investment Direction. each such transcript will be provided to the Employer.
Each such transcript shall be the sole accounting required of the Trustee.
Unless the Participant or Employer files a written objection to tile
transcript within 60 days following the date it is furnished, he shall be
deemed to have consented to the accounting, and the Trustee and Service
Company shall be forever released and discharged from all liability and
accountability to anyone with respect to its acts, transactions, duties,
obligations or responsibilities as shown in, or reflected by the transcript.
(d) employing such agents, attorneys or other professionals as the Trustee may
deem necessary or advisable in the performance of its duties.
The Trustee's duties shall be limited to those described above. The Employer
shall be responsible for any other administrative duties required under the Plan
or by applicable law.
11.3 Administrative Fees And Expenses
All reasonable costs, charges and expenses incurred by the Trustee and Service
Company in connection with the administration of the Fund and all reasonable
costs, charges and expenses incurred by the Plan Administrator in connection
with the administration of the Plan (including fees for legal services rendered
to the Trustee and Service Company or Plan Administrator) may be paid by the
Employer, but if not paid by the Employer when due, shall be paid from the Fund.
Such reasonable compensation to the Trustee and Service Company as may be agreed
upon from time to time between the Employer and the Trustee and Service Company
and such reasonable compensation to the Plan Administrator as may be agreed upon
from time to time between the Employer and Plan Administrator and the
compensation of the Service Company in accordance with its fee schedule as in
effect at the applicable time, may be paid by the Employer, but if not paid by
the Employer when due shall be paid by the Fund. The Trustee and Service Company
shall have the right to liquidate trust assets to cover its fees.
Notwithstanding the foregoing, no compensation other than reimbursement for
expenses shall be paid to a Plan Administrator who is the Employer or a full-
time Employee of the Employer. In the event any part of the Trust becomes
subject to tax, all taxes incurred will be paid from the Fund unless the Plan
Administrator advises the Trustee not to pay such tax.
11.4 Duties And Indemnification
(a) The Trustee shall have the authority and discretion to manage and govern
the Fund to the extent provided in this instrument, but does not
40
guarantee the Fund in any manner against investment loss or depreciation in
asset value, or guarantee the adequacy of the Fund to meet and discharge all or
any liabilities of the Plan.
(b) The Trustee shall not be liable for the making, retention or sale of any
investment or reinvestment made by it, as herein provided, or for any loss to,
or diminution of the Fund, or for any other loss or damage which may result
from the discharge of its duties hereunder except to the extent it is
judicially determined that tile Trustee has failed to exercise the care,
skill, prudence and diligence under the circumstances then prevailing that a
prudent person acting in a like capacity and familiar with such matters would
use in the conduct of an enterprise of a like character with like aims.
(c) The Employer warrants that all directions issued to the Trustee by it or
the Plan Administrator will be in accordance with the terms of the Plan and
not contrary to the provisions of the Employee Retirement Income Security Act
of 1974 and regulations issued thereunder.
(d) The Trustee shall not be answerable for any action taken pursuant to any
direction, consent, certificate, or other paper or document on the belief that
the same is genuine and signed by the proper person. All directions by the
Employer, Participant or the Plan Administrator shall be given in a manner and
form prescribed by the Trustee and approved by the Service Company. The
Employer shall deliver to the Trustee certificates evidencing the individual
or individuals authorized to act as set forth in the Adoption Agreement or as
the Employer may subsequently inform the Trustee in writing and shall deliver
to the Trustee specimens of their signatures.
(e) The duties and obligations of the Trustee shall be limited to those
expressly imposed upon it by this instrument or subsequently agreed upon by
the parties. Responsibility for administrative duties required under the Plan
or applicable law not expressly imposed upon or agreed to by the Trustee shall
rest solely with the Employer.
(f) The Trustee shall be indemnified and saved harmless by the Employer from
and against any and all liability to which the Trustee may be subjected,
including all expenses reasonably incurred in its defense, for any action or
failure to act resulting from compliance with the instructions of the
Employer, the employees or agents of the Employer, the Plan Administrator, or
any other fiduciary to the Plan, and for any liability arising from the
actions or non-actions of any predecessor Trustee or fiduciary or other
fiduciaries of the Plan.
(g) The Trustee shall not be responsible in any way for the application of any
payments it is directed to make or for the adequacy of the Fund to meet and
discharge any and all liabilities under the Plan.
(h) With respect to non-mutual fund investments, the Trustee in administering
the Trust Fund is authorized and empowered to exercise generally, any of the
powers which a trustee might customarily exercise in connection with
investments held by the Trust Fund and to do all other acts that the Trustee
may deem necessary or proper to carry out any of the powers and duties set
forth in this Article XI.
11.5 Special Provisions Concerning The Service Company
(a) To the full extent permitted under ERISA, the Code, any other applicable
federal or state law, the regulations, rules and interpretations thereunder,
and subject to any written instrument executed by the Trustee and the Service
Company allocating responsibilities between them, all ministerial functions
assigned to the Trustee under the Plan shall be delegated to the Service
Company. All instructions required to be given to the Trustee under the Plan
will be effective if given to the Service Company in the manner prescribed by
the Service Company. To the extent the Service Company is performing a
function assigned to the Trustee under the Plan, the Service Company shall
have the benefit of all of the limitations of the scope of the Trustee's
duties and liabilities, all rights of indemnification granted to the Trustee
and all other protections of any nature afforded the Trustee under the Plan.
(b) It is understood and agreed that while the Service Company will perform
certain ministerial duties (such as custodial, reporting, recording, and
bookkeeping functions) with respect to Plan assets, such duties do not involve
the exercise of
41
any discretionary authority or other authority to manage or control Plan assets.
(c) With respect to any transaction which the service Company is directed to
engage in, the employer, the Trustee, the Named Investment Fiduciary and the
person directing the transaction shall be responsible for making sure that the
transaction does not violate any applicable provision of law or disqualify the
Plan under the Code, and the Service Company shall have no responsibility
therefor.
(d) The Employer and, where the Service Company is following the directions or
instructions of a Participant, the Trustee, Plan Administrator or the Named
Investment Fiduciary, such Participant, the Trustee, Plan Administrator or the
Named Investment Fiduciary (as the case may be) shall at all times fully
indemnify and save harmless the Service Company from any liability which may
arise in connection with this Plan, except liability arising from the gross
negligence or willful misconduct of the Service Company. For purposes of this
Section 11.5, "liability" shall include, without limitation, taxes, expenses,
claims, damages, actions, suits, attorneys; fees, expenses of litigation or
preparation for threatened litigation, and any other charges. The Service
Company shall be liable for its own gross negligence or willful misconduct in
the performance of the duties expressly assumed by it under the Plan.
ARTICLE XII - TRUST FUND
12.1 The Fund
The Fund shall consist of all contributions made under Article III and Article
IV of the Plan and the investment thereof and earnings thereon. All
contributions and the earnings thereon less payments made under the terms of the
Plan, shall constitute the Fund. The Fund shall be administered as provided in
this document.
12.2 Control Of Plan Assets
The assets of the Fund or evidence of ownership shall be held by the Trustee
under the terms of the Plan and Trust. If the assets represent amounts
transferred from another trustee under a former Plan, the Trustee named
hereunder shall not be responsible for the propriety of any investment under the
former plan.
12.3 Exclusive Benefit Rules
No part of the Fund shall be used for, or diverted to, purposes other than for
the exclusive benefit of Participants, former Participants with a vested
interest, and the beneficiary or beneficiaries of deceased Participants having a
vested interest in the Fund at death.
12.4 Assignment And Alienation Of Benefits
No right or claim to, or interest in, any part of the Fund, or any payment from
the Fund, shall be assignable, transferable, or subject to sale, mortgage,
pledge, hypothecation, commutation, anticipation. garnishment, attachment,
execution, or levy of any kind. The Trustee shall not recognize any attempt to
assign, transfer, sell, mortgage, pledge, hypothecate, commute, or anticipate
the same, except to the extent required by law. The preceding sentences shall
also apply to the creation, assignment, or recognition of a right to any benefit
payable with respect to a Participant pursuant to a domestic relations order,
unless such order is determined to be a qualified domestic relations order, as
defined in Code Section 414(p). or any domestic relations order entered before
January 1, 1985 which the Plan attorney and Plan Administrator deem to be
qualified.
12.5 Determination Of Qualified Domestic Relations Order (QDRO)
A Domestic Relations Order shall specifically state all of the following in
order to be deemed a Qualified Domestic Relations Order ("QDRO"):
(a) The name and last known mailing address (if any) of the Participant and of
each alternate payee covered by the QDRO. However, if the QDRO does not
specify the current mailing address of the alternate payee, but the Plan
Administrator has independent knowledge of that address, the QDRO will still
be valid.
(b) The dollar amount or percentage of the Participant's benefit to be paid by
the Plan to each alternate payee, or the manner in which the amount or
percentage will be determined.
(c) The number of payments or period for which the order applies.
(d) The specific plan (by name) to which the Domestic Relations Order
applies.
The Domestic Relations Order shall not be deemed a QDRO if it requires the Plan
to provide:
42
(e) any type or form of benefit, or any option not already provided for in the
Plan;
(f) increased benefits, or benefits in excess of the Participant's vested
rights;
(g) payment of a benefit earlier than allowed by the Plan's earliest
retirement provisions or in the case of a profit-sharing plan, prior to the
allowability of in-service withdrawals, or
(h) payment of benefits to an alternate payee which are required to be paid to
another alternate payee under another QDRO.
Promptly, upon receipt of a Domestic Relations Order ("Order") which may or may
not be "Qualified", the Plan Administrator shall notify the Participant and any
alternate payee(s) named in the Order of such receipt, and include a copy of
this paragraph 12.5. The Plan Administrator shall then forward the Order to the
Plan?s legal counsel for an opinion as to whether or not the Order is in fact
"Qualified" as defined in Code Section 414(p). Within a reasonable time after
receipt of the Order, not to exceed 60 days, the Plan's legal counsel shall make
a determination as to its "Qualified" status and the Participant and any
alternate payee(s) shall be promptly notified in writing of the determination.
If the "Qualified" status of the Order is in question, there will be a delay in
any payout to any payee including the Participant, until the status is resolved.
In such event, the Plan Administrator shall segregate the amount that would have
been payable to the alternate payee(s) if the Order had been deemed a QDRO. If
the Order is not Qualified, or the status is not resolved (for example, it has
been sent back to the Court for clarification or modification) within 18 months
beginning with the date the first payment would have to be made under the Order,
the Plan Administrator shall pay the segregated amounts plus interest to the
person(s) who would have been entitled to the benefits had there been no Order.
If a determination as to the Qualified status of the Order is made after the 18
month period described above, then the Order shall only be applied on a
prospective basis. If the Order is determined to be a QDRO, the Participant and
alternate payee(s) shall again be notified promptly after such determination.
Once an Order is deemed a QDRO, the Plan Administrator shall pay to the
alternate payee(s) all the amounts due under the QDRO, including segregated
amounts plus interest which may have accrued during a dispute as to the Order's
qualification.
Unless specified otherwise in the Adoption Agreement, the earliest retirement
age with regard to the Participant against whom the order is entered shall be
the date the order is determined to be qualified. This will only allow payouts
to alternate payee(s) and not the Participant.
ARTICLE XIII - INVESTMENTS
13.1 Fiduciary Standards
The Trustee shall invest and reinvest income in the same Fund in accordance with
the investment objectives established by the Employer, provided that:
(a) such investments are prudent under the Employee Retirement Income Security
Act of 1974 and the regulations promulgated thereunder,
(b) such investments are sufficiently diversified or otherwise insured or
guaranteed to minimize the risk of large losses, and
(c) such investments are similar to those which would be purchased by another
professional money manager for a like plan with similar investment objectives.
13.2 No Investment Discretion
The Plan Sponsor and the Trustee shall have no discretion to direct any
investments of the Trust and are authorized solely to make and hold investments
only as directed pursuant to Section 13.3.
13.3 Investment Directions
(a) Responsibility for directing the Trustee with respect to the investment of
the Trust Fund shall be allocated to the Employer, or a named fiduciary
appointed by the Employer for that purpose (the "Named Investment Fiduciary"),
the Participants, or any investment manager (an "Investment Manager"), who
meets the requirements of Section 3(38) of the Employee Retirement Income
Security Act of 1974 (ERISA) appointed by the Named Investment Fiduciary, all
as provided in the Plan (including the Adoption Agreement). To the extent
investment responsibility is allocated to the Participant, the
43
Designated Beneficiary of a deceased Participant shall discharge the
responsibility subsequent to the Participant?s death and any reference to the
Participant in any provision of the Plan pertaining to investment directions
shall in such event be construed as a reference to the Designated Beneficiary.
(b) Investment directions shall be given in a manner and form prescribed by
the Trustee and shall be subject to such limitations, including limitations as
to the frequency with which any standing investment instructions may be
changed and funds may be moved among investment choices, as the Employer or
other Named Investment Fiduciary shall prescribe. If Investment responsibility
is allocated to Participants, to the extent permitted by the Trustee,
investment directions may be given directly to the Service Company in a manner
and form prescribed by the Service Company.
(c) Cash for which no investments are directed shall be automatically invested
in such investment or investments as the Employer or other Named Investment
Fiduciary shall select from the investments the Service Company makes
available for that purpose unless and until the person responsible for giving
directions directs otherwise. Such automatic investment shall be made at
regular intervals and pursuant to procedures provided by the Service Company
(which procedures may, without limitation, provide for more frequent intervals
only if reinvested balances exceed a stated amount). Absent a contrary
direction in accordance with the preceding provisions of Section 13.2 the
Service Company is hereby directed to make such automatic investments.
Notwithstanding other provisions of the Plan to the contrary, if another
qualified plan is amended and restated in the form of this Plan, the Employer or
the named investment fiduciary shall have the power to prescribe rules regarding
the investment of the assets held under the other qualified plan until such time
as any resulting reconciliation of Participant Accounts is completed and the
assets may be reinvested in investments permitted under Section 13.4 of the
Plan.
13.4 Permitted Investments
Except as Section 13.9 may apply, all amounts held n the Trust Fund under the
Plan shall be invested in mutual fund shares and annuities which are offered
through the Service Company, and such other investments as shall be accepted in
writing by the Service Company for availability under the Plan.
All dividends, including capital gain dividends, paid by any mutual fund shall
be reinvested in full and fractional shares of the mutual fund paying the
dividend in the manner specified in the prospectus of the mutual fund, and such
dividends shall be credited to the Trust Fund.
Each of the mutual funds in which the Plan may invest carries its own fees and
expenses, which may include management fees, Rule 12b-1 fees and/or other fees
and expenses, which are described in detail in each fund's prospectus.
Participants who invest in these mutual funds will, as shareholders of those
funds, bear their prorata portion of each fund's fees and expenses. Employer
acknowledges that Prudential Mutual Fund Distributors (PMFD) and Prudential
Securities Incorporated (PSI) may act as distributor of each fund's shares and
that PSI, PMFD and Prusec Securities Corporation (Prusec) are subsidiaries of
The Prudential Insurance Company of America (Prudential) (through which the
Guaranteed Interest Account is offered) and are each affiliated with the Funds
as described in each fund?s prospectus. Employer acknowledges that Prudential,
PMFD, PSI and Prusec are not fiduciaries to the Plan, have no obligation to the
Plan or the Participants and are acting solely in their own interest. Employer
further acknowledges that Prudential, PMFD, PSI and Prusec may be deemed to
benefit from advisory and other fees paid to it or its affiliates in connection
with the management and operation of the mutual funds in which the Participants
may invest, from sales charges and contingent deferred sales charges imposed as
described in the prospectus and from fees paid to The Prudential Insurance
Company of America in connection with the Guaranteed Interest Account.
13.5 Shareholder Rights
The Trustee shall exercise any rights of a shareholder (including voting rights)
with respect to any securities held, but only in accordance with the
instructions of the Participant or the Designated Beneficiary of a deceased
Participant subject to and except as permitted by any applicable rules of the
Securities and Exchange Commission and any national securities exchange.
44
13.6 Liquidation Of Assets
If the Trustee must liquidate assets in order to make distributions, transfer
assets, or pay fees, expenses or taxes assessed against all or a part of the
Fund, and the Trustee is not instructed as to the liquidation of such assets,
assets will be liquidated in accordance with the rules and procedures
customarily followed by the Service Company, which rules shall be formulated in
a manner to eliminate the potential for exercise of discretion by the Service
Company in the liquidation of assets and shall be applied consistently with
respect to all similarly situated plans in the form of the Prototype Plan;
provided that if a contribution is being made to an affected subaccount as of
the date the Trustee would otherwise be liquidating assets pursuant to this
section, the Trustee may withdraw the necessary amount of cash and invest the
remainder of the contribution in investments in the same proportion as would
have resulted had the withdrawal not been made. The Trustee is expressly
authorized to liquidate assets in order to satisfy the Trust Fund's obligation
to pay the Trustee's compensation if such compensation is not paid on a timely
basis.
13.7 Arbitration
This Plan requires that certain controversies be arbitrated as provided below.
In this regard it is to be noted that:
(a) Arbitration is final and binding on the parties.
(b) The parties are waiving their right to seek remedies in court including
the right to jury trial.
(c) Pre-arbitration discovery is generally more limited than and different
from court proceedings.
(d) The arbitrator's award is not required to include factual findings or
legal reasoning and any party's right to appeal or to seek modification of
rulings by the arbitrators is strictly limited.
(e) The panel of arbitrators will typically include a minority of arbitrators
who were or are affiliated with the securities industry.
Unless the following procedure for the resolution of controversies is not
enforceable under ERISA, any controversy arising out of or relating to the Plan,
or with respect to transactions of any kind executed by, through or with the
Service Company or otherwise pertaining to the Plan shall be settled by
arbitration. The arbitration may be before either the National Association of
Securities Dealers, Inc. (NASD) or the New York Stock Exchange, Inc., as
Employer/Employee, as the case may be, may elect and shall be governed by the
laws of the State of New York. If Employer/Employee does not make the above
election by registered mail addressed to PSI at its main office within 5
business days after demand by PSI that Employer/Employee make such election,
then PSI shall have the right to elect the arbitration tribunal of its choice.
Notice preliminary to, in conjunction with or incident to arbitration, may be
sent to Employer/Employee by mail and personal service is hereby waived.
Judgment upon any award rendered by the arbitrators may be entered in any court
having jurisdiction thereof, without notice to Employer/Employee.
No person shall bring a putative or certified class action to arbitration, nor
seek to enforce any pre-dispute arbitration agreement against any person who has
initiated in court a putative class action; or who is a member of a putative
class who has not opted out of the class with respect to any claims encompassed
by the putative class action until: (i) the class certification is denied; or
(ii) the class is decertified; or (iii) the customer is excluded from the class
by the court. Such forbearance to enforce an agreement to arbitrate shall not
constitute a waiver of any rights under this agreement except to the extent
stated herein.
13.8 Participant Loans
Unless otherwise specified in the Adoption Agreement, Participant Loans will not
be permitted. If permitted by the Adoption Agreement, a Participant may make
application to the Employer requesting a loan from the Fund. Loans shall be made
available to all Participants on a reasonably equivalent basis and shall not be
made available to highly compensated employees who are Participants in amounts
greater than made available to all other Participants. The Employer will
administer all Participant Loans unless the Trustee otherwise agrees in writing
to accept these duties. Loan administration duties shall include, but are not
limited to. approving or disapproving loan applications from Participants, loan
origination and closing, providing proper disclosures to Participant borrowers
under applicable federal and state lending laws, notifying Participant borrowers
of default, and col-
45
lecting current and past due payments on such XXXans. The Employer will notify
the Trustee of any XXXans to be made from the Fund. The Trustee will reflect the
amount of each such loan and its repayments on records of the Fund. Any loan
granted hereunder shall be made subject to the following liens:
(a) No loan when aggregated with any outstanding Participant loan(s), shall
exceed the lesser of (i) $50,000 reduced by the excess, if any, of the highest
outstanding balance of loans during the one year period ending on the day
before the loan is made, over the outstanding balance of loans from the Plan
on the date the loan is made or (ii) one-half of the fair market value of a
Participant's vested account balance built up from Employer Contributions,
Voluntary Contributions, and Rollover Contributions. For the purpose of the
above limitation, all loans from all plans of the Employer and other members
of a group of employers described in Code Sections 414(b), 414(c), and 414(m)
are aggregated. An assignment or pledge of any portion of the Participant?s
interest in the Plan and a loan, pledge, or assignment with respect to any
insurance contract purchased under the Plan, will be treated as a loan under
this paragraph.
(b) All applications must be made on forms provided by the Employer and must
be signed by the Participant.
(c) Any loan granted hereunder shall bear interest at a rate reasonable at the
time of application, considering the purpose of the loan and the rate being
charged by representative commercial banks in the local area for a similar
loan unless the Employer sets forth a different method for determining loan
interest rates in its loan procedures. The loan agreement shall also provide
that the payment of principal and interest be amortized in level payments not
less frequently than quarterly.
(d) The term of such loan shall not exceed five years except in the case of a
loan for the purpose of acquiring any house, apartment, condominium, or mobile
home (not used on a transient basis) which is used or is to be used within a
reasonable time as the principal residence of the Participant. The term of
such loan shall be determined by the Employer considering the maturity dates
quoted by representative commercial banks in the local area for a similar
loan.
(e) The principal and interest paid by a Participant on his or her loan shall
be credited to the Fund in the same manner as for any other Plan investment.
Loans will be treated as segregated investments of the individual
Participants.
(f) If a Participant's loan application is approved by the Employer, such
Participant shall be required to sign a note, loan agreement, and assignment
of one-half of his or her interest in the Fund as collateral for the loan. The
Participant, except in the case of a profit-sharing plan satisfying the
requirements of paragraph 8.7, must obtain the consent of his or her Spouse,
if any, within the 90 day period before the time his or her account balance is
used as security for the loan. A new consent is required if the account
balance is used for any renegotiation, extension, renewal or other revision of
the loan, including an increase in the amount thereof. The consent must be
written, must acknowledge the effect of the loan, and must be witnessed by a
plan representative or notary public. Such consent shall thereafter be binding
with respect to the consenting Spouse or any subsequent Spouse.
(g) If a valid Spousal consent has been obtained, then, notwithstanding any
other provision of this Plan, the portion of the Participant's vested account
balance used as a security interest held by the Plan by reason of a loan
outstanding to the Participant shall be taken into account for purposes of
determining the amount of the account balance payable at the time of death or
distribution, but only if the reduction is used as repayment of the loan. If
less than 100% of the Participant's vested account balance (determined without
regard to the preceding sentence) is payable to the surviving Spouse, then the
account balance shall be adjusted by first reducing the vested account balance
by the amount of the security used as repayment of the loan, and then
determining the benefit payable to the Surviving Spouse.
(h) The Employer may also require additional collateral in order to adequately
secure the loan.
(i) A Participant's loan shall immediately become due and payable if such
Participant terminates
46
employment for any reason or fails to make a principal and/or interest payment
as provided in the loan agreement. If such Participant terminates employment,
the Employer shall immediately request payment of principal and interest on
the loan. If the Participant refuses payment following termination, the
Employer shall reduce the Participant's vested account balance by the
remaining principal and interest on his or her loan. If the Participant's
vested account balance is less than the amount due, the Employer shall take
whatever steps are necessary to collect the balance due directly from the
Participant. However, no foreclosure on the Participant's note or attachment
of the Participant's account balance will occur until a distributable event
occurs in the Plan.
(j) No loans will be made to Owner-Employees (as defined in paragraph 1.50) or
Shareholder-Employees (as defined in paragraph 1.74), unless an exemption from
the prohibited transactions rules is first obtained from the Department of
Labor.
(k) If a Participant requests a loan, the funds to be loaned will be taken
from the subaccount or subaccounts specified by the Participant or, in the
absence of such a specification, form the subaccounts in the order specified
in Section 6.10 pertaining to withdrawals. If specific assets of the Trust
Fund are allocable to individual Participants' Accounts, such assets equal in
value to the amount of the loan shall be sold at the direction of the
Participant to provide the funds to be loaned.
13.9 Insurance Policies
Unless otherwise specified in the Adoption Agreement, the insurance provisions
of this Section 13.9 shall not be applicable. If agreed upon by the Trustee and
approved by the Employer in the Adoption Agreement, Employees may elect the
purchase of life insurance policies under the Plan. If elected, the maximum
annual premium for a whole life policy shall not exceed 50% of the aggregate
cumulative Employer contributions allocated to the account of a Participant.
Whole life policies are policies with both nondecreasing death benefits and
nonincreasing premiums. The maximum annual premium for term contracts or
universal life policies and all other policies which are not whole life shall
not exceed 25% of aggregate Employer contributions allocated to the account of a
Participant. The maximum annual premiums for a Participant with both a whole
life and a term contract or universal life policies shall be limited to one-half
of the whole life premiums plus the term premium but shall not exceed 25% of the
aggregate Employer contributions allocated to the account of a Participant. It
may also be elected to have policies purchased on behalf of a Participant's
spouse, their dependents, or any individual in whom the Participant has an
insurable interest. If any policy is maintained on the joint lives of a
Participant and another individual, it may not be maintained under the Plan
should the other individual predecease the Participant. Any policies purchased
under this Plan shall be held subject to the following rules:
(a) The Trustee shall be applicant and owner of any policies issued.
(b) All policies or contracts purchased shall be endorsed as nontransferable,
and must provide that proceeds will be payable to the Trustee; however, the
Trustee shall be required to pay over all proceeds of the contracts to the
Participant's Designated Beneficiary in accordance with the distribution
provisions of this Plan. Under no circumstances shall the Trust retain any
part of the proceeds.
(c) Each Participant shall be entitled to designate a beneficiary under the
terms of any contract issued; however, such designation will be given to the
Trustee which must be the named beneficiary on any policy. Such designation
shall remain in force, until revoked by the Participant, by filing a new
beneficiary form with the Trustee. A Participant's Spouse will be the
Designated Beneficiary of the proceeds in all circumstances unless a Qualified
Election has been made in accordance with paragraph 8.4. The beneficiary of a
deceased Participant shall receive, in addition to the proceeds of the
Participant's policy or policies, the amount credited to such Participant's
investment account.
(d) A Participant who is uninsurable or insurable at substandard rates, may
elect to receive a reduced amount of insurance, if available, or may waive the
purchase of any insurance.
(e) At the discretion of the Participant, any dividends or credits earned on a
life insurance con-
47
tract shall, either be allocated to the Participant's account in the Fund,
applied in reduction of any premiums thereon, or, if no premiums are due.
applied to increase the proceeds of the life insurance contract.
(f) If Employer contributions are inadequate to pay all premiums on all
insurance policies, the Trustee may, at the option of the Employer, utilize
other amounts remaining in each Participant's account to pay the premiums on
his or her respective policy or policies, allow the policies to lapse, reduce
the policies to a level at which they may be maintained, or borrow against the
policies on a prorated basis, provided that the borrowing does not
discriminate in favor of the policies on the lives of Officers, Shareholders,
and highly compensated Employees.
(g) On retirement or termination of employment of a Participant, the Employer
shall direct the Trustee to cash surrender the Participant's policy and credit
the proceeds to his or her account for distribution under the terms of the
Plan. However, before so doing, the Trustee shall first offer to distribute
the policy to the Participant as a part of the benefit distribution. If a
Participant on whose life an insurance policy is held under the Plan does not
make a timely direction regarding the policy under this Section (g), the
Participant shall be deemed to have directed that the policy be converted into
cash to be distributed in the manner in which the balance of the Participant's
Account is to be distributed. All distributions resulting from the application
of this paragraph shall be subject to the Joint and Survivor Annuity Rules of
Article VIII, if applicable.
(h) The Employer shall be solely responsible to see that these insurance
provisions are administered properly and that if there is any conflict between
the provisions of this Plan and any insurance contracts issued that the terms
of this Plan will control.
ARTICLE XIV - TOP-HEAVY PROVISIONS
14.1 Applicability Of Rules
If the Plan is or becomes Top-Heavy in any Plan Year beginning after 1983, the
provisions of this Article will supersede any conflicting provisions in the Plan
or Adoption Agreement.
14.2 Minimum Contribution
Notwithstanding any other provision in the Employer's Plan, for any Plan Year in
which the Plan is Top-Heavy or Super Top-Heavy, the aggregate Employer
contributions and forfeitures allocated on behalf of any Participant (without
regard to any Social Security contribution) under this Plan and any other
Defined Contribution Plan of the Employer shall be lesser of 3% of such
Participant's Compensation or the largest percentage of Employer contributions
and forfeitures, as a percentage of the Key Employee?s annual Compensation
allocated on behalf of any Key Employee for that year.
Each Participant who is employed by the Employer on the last day of the Plan
Year shall be entitled to receive an allocation of the Employer's minimum
contribution for such Plan Year. The minimum allocation applies even though
under other Plan provisions the Participant would not otherwise be entitled to
receive an allocation, or would have received a lesser allocation for the year
because the Participant fails to make Mandatory Contributions to the Plan, the
Participant's Compensation is less than a stated amount, or the Participant
fails to complete 1,000 Hours of Service (or such lesser number designated by
the Employer in the Adoption Agreement) during the Plan Year. A Paired profit-
sharing plan designated to provide the minimum Top-Heavy contribution must do so
regardless of profits. An Employer may make the minimum Top-Heavy contribution
available to all Participants or just non-Key Employees.
For purposes of computing the minimum allocation, Compensation shall mean
Compensation as defined in the second paragraph of paragraph 1.12 of the Plan.
The Top-Heavy minimum contribution does not apply to any Participant to the
extent the Participant is covered under any other plan(s) of the Employer and
the Employer has provided in Section 11 of the Adoption Agreement that the
minimum allocation or benefit requirements applicable to Top-Heavy Plans will be
met in the other plan(s).
If a Key Employee makes an Elective Deferral or has an allocation of Matching
Contributions made to his or her account, a Top-Heavy minimum will be required
for non-Key Employees who are Participants, however, neither Elective Deferrals
by nor Matching Contributions to non-Key Employees
48
may be taken into account for purposes of satisfying the Top-Heavy Minimum
Contribution requirement.
14.3 Minimum Vesting
For any Plan Year in which this Plan is Top-Heavy, the minimum vesting schedule
elected by the Employer in the Adoption Agreement will automatically apply to
the Plan. If the vesting schedule selected by the Employer in the Adoption
Agreement is less liberal than the allowable schedule, the schedule will
automatically be modified. If the vesting schedule under the Employer's Plan
shifts in or out of the Top-Heavy schedule for any Plan Year, such shift is an
amendment to the vesting schedule and the election in paragraph 9.8 of the Plan
applies. The minimum vesting schedule applies to all accrued benefits within the
meaning of Code Section 411(a)(7) except those attributable to Employee
contributions, including benefits accrued before the effective date of Code
Section 416 and benefits accrued before the Plan became Top-Heavy. Further, no
reduction in vested benefits may occur in the event the Plan?s status as Top-
Heavy changes for any Plan Year. However, this paragraph does not apply to the
account balances of any Employee who does not have an Hour of Service after the
Plan initially becomes Top-Heavy and such Employee?s account balance
attributable to Employer contributions and forfeitures will be determined
without regard to this paragraph.
14.4 Limitations On Allocations
In any Plan Year in which the Top-Heavy Ratio exceeds 90% (i.e., the Plan
becomes Super Top-Heavy), the denominators of the Defined Benefit Fraction (as
defined in paragraph 1.15) and Defined Contribution Fraction (as defined in
paragraph 1.18) shall be computed using 100% of the dollar limitation instead of
125%.
ARTICLE XV - AMENDMENT AND TERMINATION
15.1 Amendment By Sponsor
The Sponsor may amend any or all provisions of this Plan and Trust at any time
without obtaining the approval or consent of any Employer which has adopted this
Plan and Trust provided that no amendment shall authorize or permit any part of
the corpus or income of the Fund to be used for or diverted to purposes other
than for the exclusive benefit of Participants and their beneficiaries, or
eliminate an optional form of distribution. In the case of a mass-submitted
plan, the mass-submitter shall amend the Plan on behalf of the Sponsor.
15.2 Amendment By Employer
The Employer may amend any option in the Adoption Agreement, and may include
language as permitted in the Adoption Agreement,
(a) to satisfy Code Section 415, or
(b) to avoid duplication of minimums under Code Section 416, because of
the required aggregation of multiple plans.
The Employer may add certain model amendments published by the Internal Revenue
Service which specifically provide that their adoption will not cause the Plan
to be treated as an individually designed plan for which the Employer must
obtain a separate determination letter.
If the Employer amends the Plan and Trust other than as provided above, the
Employer?s Plan shall no longer participate in this Prototype Plan and will be
considered an individually designed plan.
15.3 Termination
Employers shall have the right to terminate their Plans upon 60 days notice in
writing to the Trustee. If the Plan is terminated, partially terminated, or if
there is a complete discontinuance of contributions under a profit-sharing plan
maintained by the Employer, all amounts credited to the accounts of Participants
shall vest and become nonforfeitable. In the event of a partial termination,
only those who are affected by such partial termination shall be fully vested.
In the event of termination, the Employer shall direct the Trustee with respect
to the distribution of accounts to or for the exclusive benefit of Participants
or their beneficiaries. The Trustee shall dispose of the Fund in accordance with
the written directions of the Plan Administrator, provided that no liquidation
of assets and payment of benefits, (or provision therefor), shall actually be
made by the Trustee until after it is established by the Employer in a manner
satisfactory to the Trustee, that the applicable requirements, if any, of ERISA
and the Internal Revenue Code governing the termination of employee benefit
plans, have been or are being, complied with, or that appropriate
authorizations, waivers, exemptions, or variances have been, or are being
obtained.
49
15.4 Qualification Of Employer's Plan
If the adopting Employer fails to attain or retain Internal Revenue Service
qualification, such Employer's Plan shall no longer participate in this
Prototype Plan and will be considered an individually designed plan.
15.5 Mergers And Consolidations
(a) In the case of any merger or consolidation of the Employer's Plan with, or
transfer of assets or liabilities of the Employer's Plan to, any other plan.
Participants in the Employer's Plan shall be entitled to receive benefits
immediately after the merger, consolidation, or transfer which are equal to or
greater than the benefits they would have been entitled to receive immediately
before the merger, consolidation, or transfer if the Plan had then terminated.
(b) Any corporation into which tile Trustee or any successor trustee may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Trustee or any successor trustee may
be a party, or any corporation to which all or substantially all the trust
business of the Trustee or any successor trustee may be transferred, shall be
the successor of such Trustee without the filing of any instrument or
performance of any further act, before any court.
15.6 Resignation And Removal
The Trustee may resign by written notice to the Employer which shall be
effective 60 days after delivery. The Employer may discontinue its participation
in this Prototype Plan and Trust effective upon 60 days written notice to the
Sponsor. In such event the Employer shall, prior to the effective date thereof,
amend the Plan to eliminate any reference to this Prototype Plan and Trust and
appoint a successor trustee or arrange for another funding agent. The Trustee
shall deliver the Fund to its successor on the effective date of the resignation
or removal, or as soon thereafter as practicable, provided that this shall not
waive any lien the Trustee may have upon the Fund for its compensation or
expenses. If the Employer fails to amend the Plan and appoint a successor
trustee, or other funding agent within the said 60 days, or such longer period
as the Trustee may specify in writing, the Plan shall be deemed individually
designed and the Employer shall be deemed the successor trustee. The Employer
must then obtain its own determination letter.
15.7 Qualification Of Prototype
The Sponsor intends that this Prototype Plan will meet the requirements of the
Code as a qualified Prototype Retirement Plan and Trust. Should the Commissioner
of Internal Revenue or any delegate of the Commissioner at any time determine
that the Plan and Trust fails to meet the requirements of the Code, the Sponsor
will amend the Plan and Trust to maintain its qualified status.
ARTICLE XVI - GOVERNING LAW
Construction, validity and administration of the Prototype Plan and Trust, and
any Employer Plan and Trust as embodied in the Prototype document and
accompanying Adoption Agreement, shall be governed by Federal law to the extent
applicable and to the extent not applicable by the laws of the
State/Commonwealth in which the principal office of the Sponsor is located.
50
Internal Revenue Service Department of the Treasury
Plan Description: Prototype
Standardized Profit Sharing Plan
with CODA
XX FN: 50296321903-001 Case: 9400380 Washington, DC 20224
EIN: 00-0000000
XX PD: 03 Plan: 001 Letter Serial No:
D256803b
Person to Contact: Xx. Xxx
XXXXXXXXXX MUTUAL FUND MANAGEMENT INC
Telephone Number: (000) 000-0000
1 SEAPORT PLAZA
Refer Reply to: CP:E:EP:Q:3
NEW YORK, NY 10292
Date: 03/11/94
Dear Applicant:
In our opinion, the amendment to the form of the plan identified above does not
in and of itself adversely affect the plan's acceptability under section 401 of
the Internal Revenue Code. This opinion relates only to the amendment to the
form of the plan. It is not an opinion as to the acceptability of any other
amendment or of the form of the plan as a whole, or as to the effect of other
Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
Our opinion on the acceptability of the form of the plan is not a ruling or
determination as to whether an employer's plan qualifies under Code section
401(a). An employer who adopts this plan will be considered to have a plan
qualified under Code section 401(a) provided all the terms of the plan are
followed, and the eligibility requirements and contribution or benefit
provisions are not more favorable for highly compensated employees than for
other employees. Except as stated below, the Key District Director will not
issue a determination Letter with regard to this plan.
Our opinion does not apply to the form of the plan for purposes of Code section
401(a)16) if: (1) an employer ever maintained another qualified plan for one or
more employees who are covered by this plan, other than a specified paired plan
within the meaning of section 7 of Rev. Proc. 89-9, 1989-1 c.a. 780; or (2)
after December 31, 1985, the employer maintains a welfare benefit fund defined
in Code section 419(e), which provides post retirement medical benefits
allocated to separate accounts for key employees as defined in Code section
419A(d)(3).
An employer that has adopted a standardized plan may not rely on this opinion
Letter with respect to: (1) whether any amendment or series of amendments to the
plan satisfies the nondiscrimination requirements of section 1.401(a)(4)-5(a) of
the regulations, except with respect to plan amendments granting past service
that meet the safe harbor described in section 1.401(a)(4)-5(a)(5) and are not
part of a pattern of amendments that significantly discriminates in favor of
highly compensated employees; or (2) whether the plan satisfies the effective
availability requirement of section 1.401(a)(4)-4(c) of the regulations with
respect to any benefit, right or feature.
An employer that has adopted a standardized plan as an amendment to a plan other
than a standardized plan may not rely on this opinion letter with respect to
whether a benefit, right or other feature that is prospectively eliminated
satisfies the current availability requirements of section 1.401(a)-4 of the
regulations.
PRUDENTIAL MUTUAL FUND MANAGEMENT INC
FFN: 50296321903-001
Page 2
The employer may request a determination (1) as to whether the plan, considered
with all related qualified plans and, if appropriate, welfare benefit funds,
satisfies the requirements of Code section 401(a)(16) as to Limitations on
benefits and contributions in Code section 415; (2) regarding the
nondiscriminatory effect of grants of past service; and (3) with respect to
whether a prospectively eliminated benefit, right or feature satisfies the
current availability requirements.
Our opinion does not apply to the form of the plan for purposes of section
401(a) of the Code unless the terms of the plan, as adopted or amended, that
pertain to the requirements of sections 401(a)(4), 401(a)(5), 401(a)(17),
401(L), 410(b) and 414(s) of the Code, as amended by the Tax Reform Act of 1986
or subsequent Legislation, (a) are made effective retroactively to the first day
of the first plan year beginning after December ]1, 1988 (or such other date on
which these requirements first became effective with respect to this plan); or
(b) are made effective no Later than the first day on which the employer is no
Longer entitled, under regulations, to rely on a reasonable, good faith
interpretation of these requirements, and the prior provisions of the plan
constitute such an interpretation.
This Letter with respect to the amendment to the form of the plan does not
affect the applicability to the plan of the continued, interim and extended
reliance provisions of sections 13 and 17.03 of Rev. Proc. 89-9, 1989-1 C.B.
780. The applicability of such provisions may be determined by reference to the
initial opinion Letter issued with respect to the plan.
If you, the sponsoring organization, have any questions concerning the IRS
processing of this case, please call the above telephone number. This number is
only for use of the sponsoring organization. Individual participants and/or
adopting employers with questions concerning the plan should contact the
sponsoring organization. The plan's adoption agreement must include the
sponsoring organization's address and telephone number for inquiries by adopting
employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial Number
and File Folder Number shown in the heading Of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely yours,
/s/ ^^SIGNATURE ILLEGIBLE^^
Chief Employee Plans Qualifications Branch
Internal Revenue Service Department of the Treasury
Plan Description: Prototype
Standardized Profit Sharing Plan
with CODA
XX FN: 50296321903-001 Case: 9400380 Washington, DC 20224
EIN: 00-0000000
XX PD: 03 Plan: 001 Letter Serial No:
D256803b
Person to Contact: Xx. Xxx
XXXXXXXXXX MUTUAL FUND MANAGEMENT INC
Telephone Number: (000) 000-0000
1 SEAPORT PLAZA
Refer Reply to: CP:E:EP:Q:3
NEW YORK, NY 10292
Date: 03/11/94
Dear Applicant:
In our opinion, the amendment to the form of the plan identified above does not
in and of itself adversely affect the plan's acceptability under section 401 of
the Internal Revenue Code. This opinion relates only to the amendment to the
form of the plan. It is not an opinion as to the acceptability of any other
amendment or of the form of the plan as a whole, or as to the effect of other
Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
An employer who adopts the amended form of the plan after the date of the
amendment should apply for a determination letter by filing an application with
the Key District Director of Internal Revenue on Form 5307, Short Form
Application for Determination for Employee Benefit Plan.
This letter with respect to the amendment to the form of the plan does not
affect the applicability to the plan of the continued, interim and extended
reliance provisions of sections 13 and 17.03 of Rev. Proc. 89-9, 1989-1 C.B.
780. The applicability of such provisions may be determined by reference to the
initial opinion letter issued with respect to the plan.
If you, the sponsoring organization, have any questions concerning the IRS
processing of this case, please call the above telephone number. This number is
only for use of the sponsoring organization. Individual participants and/or
adopting employers with questions concerning the plan should contact the
sponsoring organization. The plan's adoption agreement must include the
sponsoring organization's address and telephone number for inquiries by adopting
employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial Number
and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely yours,
/s/ ^^SIGNATURE ILLEGIBLE^^
Chief Employee Plans Qualifications Branch
