EXHIBIT 10.7
THE CORPORATEPLAN
FOR RETIREMENT(SM)
FIDELITY BASIC PLAN DOCUMENT No. 02
THE CORPORATEPLAN
FOR RETIREMENT(SM)
Preamble.
Article 1. Adoption Agreement.
Article 2. Definitions.
2.01. Definitions........................................................................................... 1
2.02. Pronouns.............................................................................................. 13
2.03. Special Effective Dates............................................................................... 13
Article 3. Service.
3.01. Crediting of Eligibility Service...................................................................... 13
3.02. Re-Crediting of Eligibility Service Following Termination of Employment............................... 13
3.03. Crediting of Vesting Service.......................................................................... 13
3.04. Application of Vesting Service to a Participant's Account Following a Break in Vesting Service........ 14
3.05. Service with Predecessor Employer..................................................................... 14
3.06. Change in Service Crediting........................................................................... 14
Article 4. Participation.
4.01. Date of Participation................................................................................. 15
4.02. Transfers Out of Covered Employment................................................................... 15
4.03. Transfers Into Covered Employment..................................................................... 15
4.04. Resumption of Participation Following Reemployment.................................................... 16
Article 5. Contributions.
5.01. Contributions Subject to Limitations.................................................................. 16
5.02. Compensation Taken into Account in Determining Contributions.......................................... 16
5.03. Deferral Contributions................................................................................ 17
5.04. Employee Contributions................................................................................ 17
5.05. No Deductible Employee Contributions.................................................................. 17
5.06. Rollover Contributions................................................................................ 17
5.07. Qualified Nonelective Employer Contributions.......................................................... 18
5.08. Matching Employer Contributions....................................................................... 20
5.09. Qualified Matching Employer Contributions............................................................. 20
5.10. Nonelective Employer Contributions.................................................................... 20
5.11. Vested Interest in Contributions...................................................................... 22
5.12. Time for Making Contributions......................................................................... 23
5.13. Return of Employer Contributions...................................................................... 24
Article 6. Limitations on Contributions.
6.01. Special Definitions................................................................................... 24
6.02. Code Section 402 (g) Limit on Deferral Contributions.................................................. 32
6.03. Additional Limit on Deferral Contributions ........................................................... 32
6.04. Allocation and Distribution of "Excess Contributions"................................................. 33
6.05. Reductions in Deferral Contributions to Meet Code Requirements ....................................... 34
6.06. Limit on Matching Employer Contributions and Employee Contributions................................... 34
6.07. Allocation, Distribution, and Forfeiture of "Excess Aggregate Contributions" ......................... 35
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6.08. Aggregate Limit on "Contribution Percentage Amounts" and "Includable Contributions" ................... 36
6.09. Income or Loss on Distributable Contributions.......................................................... 36
6.10. Deemed Satisfaction of "ADP" Test...................................................................... 37
6.11. Deemed Satisfaction of "ACP" Test With Respect to Matching Employer Contributions...................... 38
6.12. Code Section 415 Limitations........................................................................... 38
Article 7. Participants' Accounts.
7.01. Individual Accounts................................................................................... 42
7.02. Valuation of Accounts................................................................................. 42
Article 8. Investment of Contributions.
8.01. Manner of Investment.................................................................................. 42
8.02. Investment Decisions.................................................................................. 42
8.03. Participant Directions to Trustee..................................................................... 44
Article 9. Participant Loans.
9.01. Special Definitions................................................................................... 44
9.02. Participant Loans..................................................................................... 44
9.03. Separate Loan Procedures.............................................................................. 44
9.04. Availability of Loans................................................................................. 44
9.05. Limitation on Loan Amount............................................................................. 45
9.06. Interest Rate......................................................................................... 45
9.07. Level Amortization.................................................................................... 45
9.08. Security.............................................................................................. 45
9.09. Transfer and Distribution of Loan Amounts from Permissible Investments................................ 46
9.10. Default............................................................................................... 46
9.11. Effect of Termination Where Participant has Outstanding Loan Balance.................................. 46
9.12. Deemed Distributions Under Code Section 72(p)......................................................... 46
9.13. Determination of Account Value Upon Distribution Where Plan Loan is Outstanding....................... 47
Article 10. In-Service Withdrawals.
10.01. Availability of In-Service Withdrawals................................................................ 47
10.02. Withdrawal of Employee Contributions.................................................................. 48
10.03. Withdrawal of Rollover Contributions.................................................................. 48
10.04. Age 59 1/2 Withdrawals................................................................................ 48
10.05. Hardship Withdrawals.................................................................................. 48
10.06. Preservation of Prior Plan In-Service Withdrawal Rules................................................ 49
10.07. Restrictions on In-Service Withdrawals................................................................ 51
10.08. Distribution of Withdrawal Amounts.................................................................... 51
Article 11. Right to Benefits.
11.01. Normal or Early Retirement............................................................................ 51
11.02. Late Retirement....................................................................................... 51
11.03. Disability Retirement................................................................................. 51
11.04. Death................................................................................................. 52
11.05. Other Termination of Employment....................................................................... 52
11.06. Application for Distribution.......................................................................... 52
11.07. Application of Vesting Schedule Following Partial Distribution........................................ 53
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11.08. Forfeitures........................................................................................... 53
11.09. Application of Forfeitures............................................................................ 53
11.10. Reinstatement of Forfeitures.......................................................................... 54
11.11. Adjustment for Investment Experience.................................................................. 54
Article 12. Distributions.
12.01. Restrictions on Distributions......................................................................... 55
12.02. Timing of Distribution Following Retirement or Termination of Employment.............................. 55
12.03. Participant Consent to Distribution................................................................... 55
12.04. Required Commencement of Distribution to Participants................................................. 56
12.05. Required Commencement of Distribution to Beneficiaries................................................ 56
12.06. Whereabouts of Participants and Beneficiaries......................................................... 57
Article 13. Form of Distribution.
13.01. Normal Form of Distribution Under Profit Sharing Plan................................................. 58
13.02. Cash Out Of Small Accounts............................................................................ 59
13.03. Minimum Distributions................................................................................. 59
13.04. Direct Rollovers...................................................................................... 60
13.05. Notice Regarding Timing and Form of Distribution...................................................... 61
13.06. Determination of Method of Distribution............................................................... 62
13.07. Notice to Trustee..................................................................................... 62
Article 14. Superseding Annuity Distribution Provisions.
14.01. Special Definitions................................................................................... 62
14.02. Applicability......................................................................................... 63
14.03. Annuity Form of Payment............................................................................... 63
14.04. "Qualified Joint and Survivor Annuity" and "Qualified Preretirement Survivor Annuity Requirements".... 64
14.05. Waiver of the "Qualified Joint and Survivor Annuity" and/or "Qualified Preretirement Survivor
Annuity Rights"....................................................................................... 65
14.06. Spouse's Consent to Waiver........................................................................... 65
14.07. Notice Regarding "Qualified Joint and Survivor Annuity"............................................... 66
14.08. Notice Regarding "Qualified Preretirement Survivor Annuity"........................................... 66
14.09. Former Spouse......................................................................................... 67
Article 15. Top-Heavy Provisions.
15.01. Definitions........................................................................................... 67
15.02. Application........................................................................................... 69
15.03. Minimum Contribution.................................................................................. 69
15.04. Modification of Allocation Provisions to Meet Minimum Contribution Requirements....................... 70
15.05. Adjustment to the Limitation on Contributions and Benefits............................................ 72
15.06. Accelerated Vesting................................................................................... 72
15.07. Exclusion of Collectively-Bargained Employees......................................................... 72
Article 16. Amendment and Termination.
16.01. Amendments by the Employer that do Not Affect Prototype Status........................................ 73
16.02. Amendments by the Employer that Affect Prototype Status............................................... 73
16.03. Amendment by the Mass Submitter Sponsor and the Prototype Sponsor..................................... 73
16.04. Amendments Affecting Vested and/or Accrued Benefits................................................... 74
16.05. Retroactive Amendments................................................................................ 74
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16.06. Termination........................................................................................... 74
16.07. Distribution upon Termination of the Plan............................................................. 75
16.08. Merger or Consolidation of Plan; Transfer of Plan Assets.............................................. 75
Article 17. Amendment and Continuation of Prior Plan; Transfer of Funds to or from Other Qualified Plans.
17.01. Amendment and Continuation of Prior Plan.............................................................. 75
17.02. Transfer of Funds from an Existing Plan............................................................... 76
17.03. Acceptance of Assets by Trustee....................................................................... 78
17.04. Transfer of Assets from Trust......................................................................... 78
Article 18. Miscellaneous.
18.01. Communication to Participants......................................................................... 79
18.02. Limitation of Rights.................................................................................. 80
18.03. Nonalienability of Benefits........................................................................... 80
18.04. Qualified Domestic Relations Orders Procedures........................................................ 80
18.05. Additional Rules for Paired Plans..................................................................... 81
18.06. Application of Plan Provisions in Multiple Employer Plans ............................................ 81
18.07. Veterans Reemployment Rights.......................................................................... 82
18.08. Facility of Payment................................................................................... 82
18.09. Information between Employer and Trustee.............................................................. 82
18.10. Effect of Failure to Qualify Under Code............................................................... 82
18.11. Directions, Notices and Disclosure.................................................................... 82
18.12. Governing Law......................................................................................... 83
Article 19. Plan Administration.
19.01. Powers and Responsibilities of the Administrator...................................................... 83
19.02. Nondiscriminatory Exercise of Authority............................................................... 83
19.03. Claims and Review Procedures.......................................................................... 84
19.04. Named Fiduciary....................................................................................... 84
19.05. Costs of Administration............................................................................... 84
Article 20. Trust Agreement.
20.01. Acceptance of Trust Responsibilities.................................................................. 85
20.02. Establishment of Trust Fund........................................................................... 85
20.03. Exclusive Benefit..................................................................................... 85
20.04. Powers of Trustee..................................................................................... 85
20.05. Accounts.............................................................................................. 87
20.06. Approval of Accounts.................................................................................. 87
20.07. Distribution from Trust Fund.......................................................................... 88
20.08. Transfer of Amounts from Qualified Plan............................................................... 88
20.09. Transfer of Assets from Trust......................................................................... 88
20.10. Separate Trust or Fund for Existing Plan Assets....................................................... 88
20.11. Self-Directed Brokerage Option........................................................................ 89
20.12. Employer Stock Investment Option...................................................................... 90
20.13. Voting; Delivery of Information....................................................................... 96
20.14. Compensation and Expenses of Trustee.................................................................. 96
20.15. Reliance by Trustee on Other Persons.................................................................. 97
20.16. Indemnification by Employer........................................................................... 97
20.17. Consultation by Trustee with Counsel.................................................................. 97
20.18. Persons Dealing with the Trustee...................................................................... 98
20.19. Resignation or Removal of Trustee..................................................................... 98
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20.20. Fiscal Year of the Trust.............................................................................. 98
20.21. Discharge of Duties by Fiduciaries.................................................................... 98
20.22. Amendment............................................................................................. 98
20.23. Plan Termination...................................................................................... 99
20.24. Permitted Reversion of Funds to Employer.............................................................. 99
20.25. Governing Law......................................................................................... 99
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PREAMBLE.
This prototype plan consists of three parts: (1) an Adoption Agreement that is a
separate document incorporated by reference into this Basic Plan Document; (2)
this Basic Plan Document; and (3) a Trust Agreement that is a part of this Basic
Plan Document and is found in Article 20. Each part of the prototype plan
contains substantive provisions that are integral to the operation of the plan.
The Adoption Agreement is the means by which an adopting Employer elects the
optional provisions that shall apply under its plan. The Basic Plan Document
describes the standard provisions elected in the Adoption Agreement. The Trust
Agreement describes the powers and duties of the Trustee with respect to plan
assets.
The prototype plan is intended to qualify under Code Section 401(a). Depending
upon the Adoption Agreement completed by an adopting Employer, the prototype
plan may be used to implement a money purchase pension plan, a profit sharing
plan, or a profit sharing plan with a cash or deferred arrangement intended to
qualify under Code Section 401(k).
ARTICLE 1. ADOPTION AGREEMENT.
ARTICLE 2. DEFINITIONS.
2.01. DEFINITIONS. Wherever used herein, the following terms have the meanings
set forth below, unless a different meaning is clearly required by the context:
(a) "ACCOUNT" means an account established for the purpose of
recording any contributions made on behalf of a Participant and any
income, expenses, gains, or losses incurred thereon. The Administrator
shall establish and maintain sub-accounts within a Participant's
Account as necessary to depict accurately a Participant's interest
under the Plan.
(b) "ACTIVE PARTICIPANT" means any Eligible Employee who has met
the requirements of Article 4 to participate in the Plan and who may be
entitled to receive allocations under the Plan.
(c) "ADMINISTRATOR" means the Employer adopting this Plan, as
listed in Subsection 1.02(a) of the Adoption Agreement, or any other
person designated by the Employer in Subsection 1.01(c) of the Adoption
Agreement.
(d) "ADOPTION AGREEMENT" means Article 1, under which the Employer
establishes and adopts, or amends the Plan and Trust and designates the
optional provisions selected by the Employer, and the Trustee accepts
its responsibilities under Article 20. The provisions of the Adoption
Agreement shall be an integral part of the Plan.
(e) "ANNUITY STARTING DATE" means the first day of the first
period for which an amount is payable as an annuity or in any other
form permitted under the Plan.
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(f) 'BASIC PLAN DOCUMENT" means this Fidelity prototype plan
document, qualified with the National Office of the Internal Revenue
Service as Basic Plan Document No. 02.
(g) "BENEFICIARY" means the person or persons (including a trust)
entitled under Section 11.04 or 14.04 to receive benefits under the
Plan upon the death of a Participant; provided, however, that for
purposes of Section 13.03 such term shall be applied in accordance with
Code Section 401(a)(9) and the regulations thereunder.
(h) "BREAK IN VESTING SERVICE" means a 12-consecutive-month period
beginning on an Employee's Severance Date or any anniversary thereof in
which the Employee is not credited with an Hour of Service.
Notwithstanding the foregoing, the following special rules
apply in determining whether an Employee who is on leave has incurred a
Break in Vesting Service:
(1) If an individual is absent from work because of
"maternity/ paternity leave" beyond the first anniversary of
his Severance Date, the 12-consecutive-month period beginning
on the individual's Severance Date shall not constitute a
Break in Vesting Service. For purposes of this paragraph,
"maternity/paternity leave" means a leave of absence (A) by
reason of the pregnancy of the individual, (B) by reason of
the birth of a child of the individual, (C) by reason of the
placement of a child with the individual in connection with
the adoption of such child by the individual, or (D) for
purposes of caring for a child for the period beginning
immediately following such birth or placement.
(2) If an individual is absent from work because of "FMLA
leave" and returns to employment with the Employer or a
Related Employer following such "FMLA leave", he shall not
incur a Break in Vesting Service during any
12-consecutive-month period beginning on his Severance Date or
anniversaries thereof in which he is absent because of such
"FMLA leave". For purposes of this paragraph, "FMLA leave"
means an approved leave of absence pursuant to the Family and
Medical Leave Act of 1993.
(i) "CODE" means the Internal Revenue Code of 1986, as amended
from time to time.
(j) "COMPENSATION" means wages as defined in Code Section 3401(a)
and all other payments of compensation to an Eligible Employee by the
Employer (in the course of the Employer's trade or business) for
services to the Employer while employed as an Eligible Employee for
which the Employer is required to furnish the Eligible Employee a
written statement under Code Sections 6041(d) and 6051(a)(3).
Compensation must be determined without regard to any rules under Code
Section 3401 (a) that limit the remuneration included in wages based on
the nature or location of the employment or the services performed
(such as the exception for agricultural labor in Code Section 3401 (a)
(2)).
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For any Self-Employed Individual, Compensation means Earned
Income; provided, however, that if the Employer elects to exclude
specified items from Compensation, such Earned Income shall be adjusted
in a similar manner so that it is equivalent under regulations issued
under Code Section 414(s) to Compensation for Participants who are not
Self-Employed Individuals.
Compensation shall generally be based on the amount actually
paid to the Eligible Employee during the Plan Year or, for purposes of
Articles 5 and Article 15 if so elected by the Employer in Subsection
1.05(c) of the Adoption Agreement, during that portion of the Plan Year
during which the Eligible Employee is an Active Participant.
Notwithstanding the preceding sentence, Compensation for purposes of
Section 6.12 (Code Section 415 Limitations) shall be based on the
amount actually paid or made available to the Participant during the
Limitation Year.
If the initial Plan Year of a new plan consists of fewer than
12 months, calculated from the Effective Date listed in Subsection
1.01(g)(1) of the Adoption Agreement through the end of such initial
Plan Year, Compensation for such initial Plan Year shall be determined
as follows:
(1) If the Plan is a profit sharing plan, for purposes of
allocating Nonelective Employer Contributions under Section
1.11 of the Adoption Agreement (other than Nonelective
Employer Contributions made in accordance with the Safe Harbor
Nonelective Employer Contributions Addendum to the Adoption
Agreement) and determining Highly Compensated Employees under
Subsection 2.01(z), the initial Plan Year shall be the
12-month period ending on the last day of the Plan Year.
(2) For purposes of Section 6.12 (Code Section 415
Limitations) where the Limitation Year is based on the Plan
Year, the Limitation Year shall be the 12-month period ending
on the last day of the Plan Year.
(3) For all other purposes, the initial Plan Year shall be the
period from the Effective Date listed in Subsection 1.01(g)(1)
of the Adoption Agreement through the end of the initial Plan
Year.
The annual Compensation of each Active Participant taken into
account for determining benefits provided under the Plan for any
determination period shall not exceed the annual Compensation limit
under Code Section 401 (a)(17) as in effect on the first day of the
determination period. This limit shall be adjusted by the Secretary to
reflect increases in the cost of living, as provided in Code Section
401(a)(17)(B); provided, however, that the dollar increase in effect on
January 1 of any calendar year is effective for determination periods
beginning in such calendar year. If a Plan determines Compensation over
a determination period that contains fewer than 12 calendar months (a
"short determination period"), then the Compensation limit for such
"short determination period" is equal to the Compensation limit for the
calendar year in which the "short determination period" begins
multiplied by the ratio obtained by dividing the number of full months
in the "short determination period" by 12; provided, however, that such
proration shall not
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apply if there is a "short determination period" because (i) the
Employer elected in Subsection 1.05(c) of the Adoption Agreement to
determine contributions based only on Compensation paid during the
portion of the Plan Year during which an individual was an Active
Participant, (ii) an Employee is covered under the Plan less than a
full Plan Year, or (iii) Deferral Contributions and/or Matching
Employer Contributions are contributed for each pay period during the
Plan Year and are based on Compensation for that pay period.
(k) "CONTRIBUTION PERIOD" means the period for which Matching
Employer and Nonelective Employer Contributions are made and
calculated. The Contribution Period for additional Matching Employer
Contributions, as described in Subsection 1.10(b) of the Adoption
Agreement and Nonelective Employer Contributions is the Plan Year. The
Contribution Period for basic Matching Employer Contributions, as
described in Subsection 1.10(a)of the Adoption Agreement, is the period
specified by the Employer in Subsection 1.10(c) of the Adoption
Agreement.
(1) "DEFERRAL CONTRIBUTION" means any contribution made to the
Plan by the Employer in accordance with the provisions of Section 5.03.
(m) "EARLY RETIREMENT AGE" means the early retirement age
specified in Subsection 1.13(b) of the Adoption Agreement, if any.
(n) "EARNED INCOME" means the net earnings of a Self-Employed
Individual derived from the trade or business with respect to which the
Plan is established and for which the personal services of such
individual are a material income-providing factor, excluding any items
not included in gross income and the deductions allocated to such
items, except that net earnings shall be determined with regard to the
deduction allowed under Code Section 164(f), to the extent applicable
to the Employer. Net earnings shall be reduced by contributions of the
Employer to any qualified plan, to the extent a deduction is allowed to
the Employer for such contributions under Code Section 404.
(o) "EFFECTIVE DATE" means the effective date specified by the
Employer in Subsection 1.01(g)(1) or (2) of the Adoption Agreement with
respect to the Plan, if this is a new plan, or with respect to the
amendment and restatement, if this is an amendment and restatement of
the Plan. The Employer may select special Effective Dates with respect
to specified Plan provisions, as set forth in Section (a) of the
Special Effective Dates Addendum to the Adoption Agreement. In the
event that another plan is merged into and made a part of the Plan, the
effective date of the merger shall be reflected in Section (b) of the
Special Effective Dates Addendum to the Adoption Agreement.
If this is an amendment and restatement of the Plan, and the Plan was
not amended prior to the effective date specified by the Employer in
Subsection 1.01(g)(2) of the Adoption Agreement to comply with the
requirements of the Acts specified in the Snap Off Addendum to the
Adoption Agreement, the
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effective dates specified in such Snap Off Addendum shall apply with
respect to those provisions specified therein. Such effective dates may
be earlier than the date specified in Subsection 1.01(g)(2) of the
Adoption Agreement.
(p) "ELIGIBILITY COMPUTATION PERIOD" means each 12-consecutive-
month period beginning with an Employee's Employment Commencement Date
and each anniversary thereof or, in the case of an Employee who
terminates employment with the Employer and all Related Employers
before completing the eligibility requirements set forth in Subsection
1.04(b) of the Adoption Agreement and thereafter returns to the employ
of the Employer or a Related Employer, each 12-consecutive-month period
beginning with his Reemployment Commencement Date and each anniversary
thereof.
(q) "ELIGIBILITY SERVICE" means an Employee's service that is
taken into account in determining his eligibility to participate in the
Plan as may be required under Subsection 1.04(b) of the Adoption
Agreement. Eligibility Service shall be credited in accordance with
Article 3.
(r) "ELIGIBLE EMPLOYEE" means any Employee of the Employer who is
in the class of Employees eligible to participate in the Plan. The
Employer must specify in Subsection 1.04(c) of the Adoption Agreement
any Employee or class of Employees not eligible to participate in the
Plan. If Article 1 of the Employer's Plan is a Non-Standardized
Adoption Agreement, regardless of the Employer's selection in
Subsection 1.04(c) of the Adoption Agreement, the following Employees
are automatically excluded from eligibility to participate in the Plan:
(1) any individual who is a signatory to a contract,
letter of agreement, or other document that acknowledges his
status as an independent contractor not entitled to benefits
under the Plan or who is not otherwise classified by the
Employer as a common law employee and with respect to whom the
Employer does not withhold income taxes and file Form W-2 (or
any replacement Form), with the Internal Revenue Service and
does not remit Social Security payments to the Federal
government, even if such individual is later adjudicated to be
a common law employee; and
(2) any Employee who is a resident of Puerto Rico.
If the Employer elects to exclude collective bargaining
employees from the eligible class, the exclusion applies to any
Employee of the Employer included in a unit of Employees covered by an
agreement which the Secretary of Labor finds to be a collective
bargaining agreement between employee representatives and one or more
employers, unless the collective bargaining agreement requires the
Employee to be covered under the Plan. The term "employee
representatives" does not include any organization more than half the
members of which are owners, officers, or executives of the Employer.
If the Employer does not elect to exclude Leased Employees
from the eligible class, contributions or benefits provided by the
leasing organization which are attributable to services performed for
the Employer
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shall be treated as provided by the Employer and there shall be no
duplication of benefits under this Plan.
(s) "EMPLOYEE" means any common law employee of the Employer or a
Related Employer, any Self-Employed Individual, and any Leased
Employee. Notwithstanding the foregoing, a Leased Employee shall not be
considered an Employee if Leased Employees do not constitute more than
20 percent of the Employer's non-highly compensated work-force (taking
into account all Related Employers) and the Leased Employee is covered
by a money purchase pension plan maintained by the leasing organization
and providing (1) a nonintegrated employer contribution rate of at
least 10 percent of compensation, as defined for purposes of Code
Section 415(c) (3), but including amounts contributed pursuant to a
salary reduction agreement which are excludable from gross income under
Code Section 125, 132 (f) (4), 402(e) (3), 402(h) or 403(b), (2) full
and immediate vesting, and (3) immediate participation by each employee
of the leasing organization.
(t) "EMPLOYEE CONTRIBUTION" means any after-tax contribution made
by an Active Participant to the Plan.
(u) "EMPLOYER" means the employer named in Subsection 1.02 (a) of
the Adoption Agreement and any Related Employer included as an Employer
under this Subsection 2.01(u). If Article 1 of the Employer's Plan is
a Standardized Adoption Agreement, the term "Employer" includes all
Related Employers; provided, however, that if an employer becomes a
Related Employer as a result of an asset or stock acquisition, merger
or other similar transaction, the term "Employer" shall not include
such employer for periods prior to the earlier of (1) the date as of
which Subsection 1.02(b) of the Adoption Agreement is amended to name
such employer or (2) the first day of the second Plan Year beginning
after the date of such transaction. If Article 1 of the Employer's Plan
is a Non-Standardized Adoption Agreement, the term "Employer" includes
only those Related Employers designated in Subsection 1.02(b) of the
Adoption Agreement.
If the organization or other entity named in the Adoption
Agreement is a sole proprietor or a professional corporation and the
sole proprietor of such proprietorship or the sole shareholder of the
professional corporation dies, then the legal representative of such
sole proprietor or shareholder shall be deemed to be the Employer until
such time as, through the disposition of such sole proprietor's or sole
shareholder's estate or otherwise, any organization or other entity
succeeds to the interests of the sole proprietor in the proprietorship
or the sole shareholder in the professional corporation. The legal
representative of a sole proprietor or shareholder shall be (1) the
person appointed as such by the sole proprietor or shareholder prior to
his death under a legally enforceable power of attorney, or, if none,
(2) the executor or administrator of the sole proprietor's or
shareholder's estate.
If one of the Employers designated in Subsection 1.02(b) of
the Adoption Agreement is not a Related Employer, the term "Employer"
includes such un-Related Employer and the provisions of Section 18.06
shall apply.
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(v) "EMPLOYMENT COMMENCEMENT DATE" means the date on which an
Employee first performs an Hour of Service.
(w) "ENTRY DATE" means the date specified by the Employer in
Subsection 1.04(d) or (e) of the Adoption Agreement as of which an
Eligible Employee who has met the applicable eligibility requirements
begins to participate in the Plan. The Employer may specify different
Entry Dates for purposes of eligibility to participate in the Plan by
(1) making Deferral Contributions and (2) receiving allocations of
Matching and/or Nonelective Employer Contributions.
(x) "ERISA" means the Employee Retirement Income Security Act of
1974, as from time to time amended.
(y) "FUND SHARE" means the share, unit, or other evidence of
ownership in a Permissible Investment.
(z) 'HIGHLY COMPENSATED EMPLOYEE" means both highly compensated
active Employees and highly compensated former Employees.
A highly compensated active Employee includes any Employee who
performs service for the Employer during the "determination year" and
who (1) at any time during the "determination year" or the "look-back
year" was a five percent owner or (2) received Compensation from the
Employer during the "look-back year" in excess of $80,000 (as adjusted
pursuant to Code Section 415 (d)) and, if elected by the Employer in
Section 1.06 of the Adoption Agreement, was a member of the top-paid
group for such year.
For this purpose, the "determination year" shall be the Plan
Year. The "look-back year" shall be the twelve-month period immediately
preceding the "determination year", unless the Employer has elected in
Section 1.06 of the Adoption Agreement to make the "look-back year" the
calendar year beginning within the preceding Plan Year.
A highly compensated former Employee includes any Employee who
separated from service (or was deemed to have separated) prior to the
"determination year", performs no service for the Employer during the
"determination year", and was a highly compensated active Employee for
either the separation year or any "determination year" ending on or
after the Employee's 55th birthday, as determined under the rules in
effect for determining Highly Compensated Employees for such separation
year or "determination year".
The determination of who is a Highly Compensated Employee,
including the determinations of the number and identity of Employees in
the top-paid group, shall be made in accordance with Code Section 414
(q) and the Treasury Regulations issued thereunder.
For purposes of this Subsection 2.01(z), Compensation shall
include amounts that are not includable in the gross income of an
Employee under a
7
salary reduction agreement by reason of the application of Code Section
125, 132(f)(4), 402(e)(3), 402(h), or 403 (b).
(aa) "HOUR OF SERVICE", with respect to any individual, means:
(1) Each hour for which the individual is directly or
indirectly paid, or entitled to payment, for the performance
of duties for the Employer or a Related Employer, each such
hour to be credited to the individual for the Eligibility
Computation Period in which the duties were performed;
(2) Each hour for which the individual is directly or
indirectly paid, or entitled to payment, by the Employer or a
Related Employer (including payments made or due from a trust
fund or insurer to which the Employer contributes or pays
premiums) 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, disability, layoff, jury duty, military
duty, or leave of absence, each such hour to be credited to
the individual for the Eligibility Computation Period in which
such period of time occurs, subject to the following rules:
(A) No more than 501 Hours of Service shall be
credited under this paragraph (2) on account of any
single continuous period during which the individual
performs no duties, unless the individual performs no
duties because of military duty, the individual's
employment rights are protected by law, and the
individual returns to employment with the Employer or
a Related Employer during the period that his
employment rights are protected under Federal law;
(B) Hours of Service shall not be credited under
this paragraph (2) for a payment which solely
reimburses the individual for medically- related
expenses, or which is made or due under a plan
maintained solely for the purpose of complying with
applicable worker's compensation, unemployment
compensation or disability insurance laws; and
(C) If the period during which the individual
performs no duties falls within two or more
Eligibility Computation Periods and if the payment
made on account of such period is not calculated on
the basis of units of time, the Hours of Service
credited with respect to such period shall be
allocated between not more than the first two such
Eligibility Computation Periods on any reasonable
basis consistently applied with respect to similarly
situated individuals;
(3) Each hour not counted under paragraph (1) or (2) for
which he would have been scheduled to work for the Employer or
a Related Employer during the period that he is absent from
work because of military duty, provided the individual's
employment rights are protected under Federal law and the
individual returns to work with the Employer or a Related
Company during the period that his employment rights are
protected, each such
8
hour to be credited to the individual for the Eligibility
Computation Period for which he would have been scheduled to
work; and
(4) Each hour not counted under paragraph (1), (2), or
(3) for which back pay, irrespective of mitigation of damages,
has been either awarded or agreed to be paid by the Employer
or a Related Employer, shall be credited to the individual for
the Eligibility Computation Period to which the award or
agreement pertains rather than the Eligibility Computation
Period in which the award, agreement, or payment is made.
For purposes of paragraphs (2) and (4) above, Hours of Service
shall be calculated in accordance with the provisions of Section
2530.200b-2 (b) of the Department of Labor regulations, which are
incorporated herein by reference.
Notwithstanding any other provision of this Subsection to the
contrary, the Employer may elect to credit Hours of Service in
accordance with any of the equivalencies set forth in paragraphs (d),
(e), or (f) of Department of Labor Regulations Section 2530.200b-3.
(bb) "INACTIVE PARTICIPANT" means any individual who was an Active
Participant, but is no longer an Eligible Employee and who has an
Account under the Plan.
(cc) "LEASED EMPLOYEE" means any individual who provides services
to the Employer or a Related Employer (the "recipient") but is not
otherwise an employee of the recipient if (1) such services are
provided pursuant to an agreement between the recipient and any other
person (the "leasing organization"), (2) such individual has performed
services for the recipient (or for the recipient and any related
persons within the meaning of Code Section 414 (n) (6)) on a
substantially full-time basis for at least one year, and (3) such
services are performed under primary direction of or control by the
recipient. The determination of who is a Leased Employee shall be made
in accordance with any rules and regulations issued by the Secretary of
the Treasury or his delegate.
(dd) "LIMITATION YEAR" means the 12-consecutive-month period
designated by the Employer in Subsection 1.01(f) of the Adoption
Agreement. If no other Limitation Year is designated by the Employer,
the Limitation Year shall be the calendar year. All qualified plans of
the Employer and any Related 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.
(ee) "MATCHING EMPLOYER CONTRIBUTION" means any contribution made
by the Employer to the Plan in accordance with Section 5.08 or 5.09 on
account of an Active Participant's Deferral Contributions.
(ff) "MASS SUBMITTER SPONSOR" means Fidelity Management & Research
Company or its successor.
9
(gg) "NONELECTIVE EMPLOYER CONTRIBUTION" means any contribution
made by the Employer to the Plan in accordance with Section 5.10.
(hh) "NON-HIGHLY COMPENSATED EMPLOYEE" means any Employee who is
not a Highly Compensated Employee.
(ii) "NORMAL RETIREMENT AGE" means the normal retirement age
specified in Subsection 1.13(a) of the Adoption Agreement. If the
Employer enforces a mandatory retirement age in accordance with Federal
law, the Normal Retirement Age is the lesser of that mandatory age or
the age specified in Subsection 1.13(a) of the Adoption Agreement.
(jj) "PARTICIPANT" means any individual who is either an Active
Participant or an Inactive Participant.
(kk) "PERMISSIBLE INVESTMENT" means the investments specified by
the Employer as available for investment of assets of the Trust and
agreed to by the Trustee and the Prototype Sponsor. The Permissible
Investments under the Plan shall be listed in the Service Agreement.
(11) "PLAN" means the plan established by the Employer in the form
of the prototype plan, as set forth herein as a new plan or as an
amendment to an existing plan, by executing the Adoption Agreement,
together with any and all amendments hereto.
(mm) "PLAN YEAR" means the 12-consecutive-month period ending on
the date designated by the Employer in Subsection 1.01(d) of the
Adoption Agreement, except that the initial Plan Year of a new Plan may
consist of fewer than 12 months, calculated from the Effective Date
listed in Subsection 1.01(g) (1) of the Adoption Agreement through the
end of such initial Plan Year, in which event Compensation for such
initial Plan Year shall be treated as provided in Subsection 2.01(j).
(nn) "PROTOTYPE SPONSOR" means Fidelity Management & Research
Company or its successor.
(oo) "QUALIFIED MATCHING EMPLOYER CONTRIBUTION" means any
contribution made by the Employer to the Plan on account of Deferral
Contributions or Employee Contributions made by or on behalf of Active
Participants in accordance with Section 5.09, that may be included in
determining whether the Plan meets the "ADP" test described in Section
6.03.
(pp) "QUALIFIED NONELECTIVE EMPLOYER CONTRIBUTION" means any
contribution made by the Employer to the Plan on behalf of Non-Highly
Compensated Employees in accordance with Section 5.07, that may be
included in determining whether the Plan meets the "ADP" test described
in Section 6.03 or the "ACP" test described in Section 6.06.
10
(qq) "REEMPLOYMENT COMMENCEMENT DATE" means the date on which an
Employee who terminates employment with the Employer and all Related
Employers first performs an Hour of Service following such termination
of employment.
(rr) "RELATED EMPLOYER" means any employer other than the Employer
named in Subsection 1.02(a) of the Adoption Agreement if the Employer
and such other employer are members of a controlled group of
corporations (as defined in Code Section 414(b)) or an affiliated
service group (as defined in Code Section 414(m)), or are trades or
businesses (whether or not incorporated) which are under common control
(as defined in Code Section 414 (c) ), or such other employer is
required to be aggregated with the Employer pursuant to regulations
issued under Code Section 414 (o); provided, however, that if Article 1
of the Employer's Plan is a Standardized Adoption Agreement, for
purposes of Subsection 1.02(b) of the Adoption Agreement, the term
"Related Employer" shall not include any employer that becomes a
Related Employer as a result of an asset or stock acquisition, merger
or other similar transaction with respect to any period prior to the
earlier of (1) the date as of which Subsection 1.02(b) of the Adoption
Agreement is amended to name such employer or (2) the first day of the
second Plan Year beginning after the date of such transaction.
(ss) "REQUIRED BEGINNING DATE" means:
(1) for a Participant who is not a five percent owner,
April 1 of the calendar year following the calendar year in
which occurs the later of (1) the Participant's retirement or
(ii) the Participant's attainment of age 70 1/2; provided,
however, that a Participant may elect to have his Required
Beginning Date determined without regard to the provisions of
clause (i).
(2) for a Participant who is a five percent owner, April
1 of the calendar year following the calendar year in which
the Participant attains age 70 1/2.
Once the Required Beginning Date of a five percent
owner or a Participant who has elected to have his Required Beginning
Date determined in accordance with the provisions of Section
2.01(ss)(1)(ii) has occurred, such Required Beginning Date shall not be
re-determined, even if the Participant ceases to be a five percent
owner in a subsequent year or continues in employment with the Employer
or a Related Employer.
For purposes of this Subsection 2.01(ss), a Participant is
treated as a five percent owner if such Participant is a five 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 70 1/2.
(tt) "ROLLOVER CONTRIBUTION" means any distribution from a
qualified plan (or an individual retirement account holding only assets
allocable to a
11
distribution from a qualified plan) that an Employee elects to
contribute to the Plan in accordance with the provisions of Section
5.06.
(uu) "SELF-EMPLOYED INDIVIDUAL" means an individual who has Earned
Income for the taxable year from the Employer or who would have had
Earned Income but for the fact that the trade or business had no net
profits for the taxable year, including, but not limited to, a partner
in a partnership, a sole proprietor, a member in a limited liability
company or a shareholder in a subchapter S corporation.
(vv) "SERVICE AGREEMENT" means the agreement between the Employer
and the Prototype Sponsor (or an agent or affiliate of the Prototype
Sponsor) relating to the provision of investment and other services to
the Plan and shall include any addendum to the agreement and any other
separate written agreement between the Employer and the Prototype
Sponsor (or an agent or affiliate of the Prototype Sponsor) relating to
the provision of services to the Plan.
(ww) "SEVERANCE DATE" means the earlier of (i) the date an Employee
retires, dies, quits, or is discharged from employment with the
Employer and all Related Employers or (ii) the 12-month anniversary of
the date on which the Employee was otherwise first absent from
employment; provided, however, that if an individual terminates or is
absent from employment with the Employer and all Related Employers
because of military duty, such individual shall not incur a Severance
Date if his employment rights are protected under Federal law and he
returns to employment with the Employer or a Related Employer within
the period during which he retains such employment rights, but, if he
does not return to such employment within such period, his Severance
Date shall be the earlier of (1) the anniversary of the date his
absence commenced or (2) the last day of the period during which he
retains such employment rights.
(xx) "TRUST" means the trust created by the Employer in accordance
with the provisions of Section 20.01.
(yy) "TRUST AGREEMENT" means the agreement between the Employer and
the Trustee, as set forth in Article 20, under which the assets of the
Plan are held, administered, and managed.
(zz) "TRUSTEE" means Fidelity Management Trust Company or its
successor. The term Trustee shall include any delegate of the Trustee
as may be provided in the Trust Agreement.
(aaa) "TRUST FUND" means the property held in Trust by the Trustee
for the Accounts of Participants and their Beneficiaries.
(bbb) "VESTING SERVICE" means an Employee's service that is taken
into account in determining his vested interest in his Matching
Employer and Nonelective Employer Contributions Accounts as may be
required under Section
12
1.15 of the Adoption Agreement. Vesting Service shall be credited in
accordance with Article 3.
2.02. PRONOUNS. Pronouns used in the Plan are in the masculine gender but
include the feminine gender unless the context clearly indicates otherwise.
2.03. SPECIAL EFFECTIVE DATES. Some provisions of the Plan are only effective
beginning as of a specified date or until a specified date. Any such special
effective dates are specified within Plan text where applicable and are
exceptions to the general Plan Effective Date as defined in Section 2.01(o).
ARTICLE 3. SERVICE.
3.01. CREDITING OF ELIGIBILITY SERVICE. If the Employer has selected an
Eligibility Service requirement in Subsection 1.04(b) of the Adoption Agreement
for an Eligible Employee to become an Active Participant, Eligibility Service
shall be credited to an Employee as follows:
(a) If the Employer has selected the one or two year(s) of
Eligibility Service requirement described in Subsection 1.04(b)(1) (C)
or (D) of the Adoption Agreement, an Employee shall be credited with a
year of Eligibility Service for each Eligibility Computation Period
during which the Employee has been credited with at least 1,000 Hours
of Service.
(b) If the Employer has selected the months of Eligibility Service
requirement described in Subsection 1.04(b)(1)(B) of the Adoption
Agreement, an Employee shall be credited with Eligibility Service for
the aggregate of the periods beginning with the Employee's Employment
Commencement Date (or Reemployment Commencement Date) and ending on his
subsequent Severance Date; provided, however, that an Employee who has
a Reemployment Date within the 12-consecutive-month period following
the earlier of the first date of his absence or his Severance Date
shall be credited with Eligibility Service for the period between his
Severance Date and his Reemployment Date. Months of Eligibility Service
shall be measured from the Employee's Employment Commencement Date or
Reemployment Commencement Date to the coinciding date in the applicable
following month.
3.02. RE-CREDITING OF ELIGIBILITY SERVICE FOLLOWING TERMINATION OF EMPLOYMENT.
AN Employee whose employment with the Employer and all Related Employers
terminates and who is subsequently reemployed by the Employer or a Related
Employer shall be re-credited upon reemployment with his Eligibility Service
earned prior to his termination of employment.
3.03. CREDITING OF VESTING SERVICE. If the Plan provides for Matching Employer
and/or Nonelective Employer Contributions that are not 100 percent vested when
made, Vesting Service shall be credited to an Employee for the aggregate of the
periods beginning with the Employee's Employment Commencement Date (or
Reemployment Commencement Date) and ending on his subsequent Severance Date;
provided, however, that an Employee who has a Reemployment Date within the 12-
13
consecutive-month period following the earlier of the first date of his absence
or his Severance Date shall be credited with Vesting Service for the period
between his Severance Date and his Reemployment Date. Fractional periods of a
year shall be expressed in terms of days.
3.04. APPLICATION OF VESTING SERVICE TO A PARTICIPANT'S ACCOUNT FOLLOWING A
BREAK IN VESTING SERVICE. The following rules describe how Vesting Service
earned before and after a Break in Vesting Service shall be applied for purposes
of determining a Participant's vested interest in his Matching Employer and
Nonelective Employer Contributions Accounts.
(a) If a Participant incurs five-consecutive Breaks in Vesting
Service, all years of Vesting Service earned by the Employee after such
Breaks in Service shall be disregarded in determining the Participant's
vested interest in his Matching Employer and Nonelective Employer
Contributions Account balances attributable to employment before such
Breaks in Vesting Service. However, Vesting Service earned both before
and after such Breaks in Vesting Service shall be included in
determining the Participant's vested interest in his Matching Employer
and Nonelective Employer Contributions Account balances attributable to
employment after such Breaks in Vesting Service.
(b) If a Participant incurs fewer than five-consecutive Breaks in
Vesting Service, Vesting Service earned both before and after such
Breaks in Vesting Service shall be included in determining the
Participant's vested interest in his Matching Employer and Nonelective
Employer Contributions Account balances attributable to employment both
before and after such Breaks in Vesting Service.
3.05. SERVICE WITH PREDECESSOR EMPLOYER. If the Plan is the plan of a
predecessor employer, an Employee's Eligibility and Vesting Service shall
include years of service with such predecessor employer. In any case in which
the Plan is not the plan maintained by a predecessor employer, service for such
predecessor employer shall be treated as Eligibility and Vesting Service if so
specified in Section 1.16 of the Adoption Agreement.
3.06. CHANGE IN SERVICE CREDITING. If an amendment to the Plan or a transfer
from employment as an Employee covered under another qualified plan maintained
by the Employer or a Related Employer results in a change in the method of
crediting Eligibility and/or Vesting Service with respect to a Participant
between the Hours of Service crediting method set forth in Section 2530.200b-2
of the Department of Labor Regulations and the elapsed-time crediting method set
forth in Section 1.410(a)-7 of the Treasury Regulations, each Participant with
respect to whom the method of crediting Eligibility and/or Vesting Service is
changed shall be treated in the manner set forth in Section 1.410 (a)-7(f)(1)
of the Treasury Regulations which are incorporated herein by reference.
ARTICLE 4. PARTICIPATION.
14
4.01. DATE OF PARTICIPATION. If the Plan is an amendment and restatement of a
prior plan, all Eligible Employees who were active participants in the Plan
immediately prior to the Effective Date shall continue as Active Participants on
the Effective Date. All Eligible Employees who are in the service of the
Employer on the Effective Date (and, if this is an amendment and restatement of
a prior plan, were not active participants in the prior plan immediately prior
to the Effective Date) shall become Active Participants on the date elected by
the Employer in Subsection 1.04(f) of the Adoption Agreement. Any other Eligible
Employee shall become an Active Participant in the Plan on the Entry Date
coinciding with or immediately following the date on which he first satisfies
the eligibility requirements set forth in Subsections 1.04(a) and 1.04(b) of the
Adoption Agreement.
The Employer may elect different Eligibility Service requirements for
purposes of eligibility (a) to make Deferral Contributions and (b) to receive
Nonelective and/or Matching Employer Contributions. Any Eligibility Service
requirement that the Employer elects to apply in determining an Eligible
Employee's eligibility to make Deferral Contributions shall also apply in
determining an Eligible Employee's eligibility to make Employee Contributions,
if Employee Contributions are permitted under the Plan, and to receive Qualified
Nonelective Employer Contributions. If an Employer elects to have different
Eligibility Service requirements apply, an Eligible Employee who has met the
eligibility requirements with respect to certain contributions, but who has not
met the eligibility requirements with respect to other contributions, shall
become an Active Participant in accordance with the provisions of the preceding
paragraph, but only with respect to the contributions for which he has met the
eligibility requirements.
4.02. TRANSFERS OUT OF COVERED EMPLOYMENT. If any Active Participant ceases to
be an Eligible Employee, but continues in the employ of the Employer or a
Related Employer, such Employee shall cease to be an Active Participant, but
shall continue as an Inactive Participant until his entire Account balance is
forfeited or distributed. An Inactive Participant shall not be entitled to
receive an allocation of contributions or forfeitures under the Plan for the
period that he is not an Eligible Employee and wages and other payments made to
him by the Employer or a Related Employer for services other than as an Eligible
Employee shall not be included in Compensation for purposes of determining the
amount and allocation of any contributions to the Account of such Inactive
Participant. Such Inactive Participant shall continue to receive credit for
Vesting Service completed during the period that he continues in the employ of
the Employer or a Related Employer.
4.03. TRANSFERS INTO COVERED EMPLOYMENT. If an Employee who is not an Eligible
Employee becomes an Eligible Employee, such Eligible Employee shall become an
Active Participant immediately as of his transfer date if such Eligible Employee
has already satisfied the eligibility requirements and would have otherwise
previously become an Active Participant in accordance with Section 4.01.
Otherwise, such Eligible Employee shall become an Active Participant in
accordance with Section 4.01.
15
Xxxxx and other payments made to an Employee prior to his becoming an
Eligible Employee by the Employer or a Related Employer for services other than
as an Eligible Employee shall not be included in Compensation for purposes of
determining the amount and allocation of any contributions to the Account of
such Eligible Employee.
4.04. RESUMPTION OF PARTICIPATION FOLLOWING REEMPLOYMENT. If a Participant who
terminates employment with the Employer and all Related Employers is reemployed
as an Eligible Employee, he shall again become an Active Participant on his
Reemployment Date. Any other Employee who terminates employment with the
Employer and all Related Employers and is reemployed by the Employer or a
Related Employer shall become an Active Participant as provided in Section 4.01
or 4.03. Any distribution which a Participant is receiving under the Plan at the
time he is reemployed by the Employer or a Related Employer shall cease except
as otherwise required under Section 12.04.
ARTICLE 5. CONTRIBUTIONS.
5.01. CONTRIBUTIONS SUBJECT TO LIMITATIONS. All contributions made to the Plan
under this Article 5 shall be subject to the limitations contained in Article 6.
5.02. COMPENSATION TAKEN INTO ACCOUNT IN DETERMINING CONTRIBUTIONS. In
determining the amount or allocation of any contribution that is based on a
percentage of Compensation, only Compensation paid to a Participant for services
rendered to the Employer while employed as an Eligible Employee shall be taken
into account. Except as otherwise specifically provided in this Article 5, for
purposes of determining the amount and allocation of contributions under this
Article 5, Compensation shall not include reimbursements or other expense
allowances, fringe benefits (cash and non-cash), moving expenses, deferred
compensation, welfare benefits, and any items elected by the Employer with
respect to such contributions in Subsection 1.05 (a) or (b), as applicable, of
the Adoption Agreement, but shall include amounts that are not includable in the
gross income of the Participant under a salary reduction agreement by reason of
the application of Code Section 125, 132(f) (4), 402(e) (3), 402(h), or 403
(b).
If the initial Plan Year of a new plan consists of fewer than 12
months, calculated from the Effective Date listed in Subsection 1.01(g) (1) of
the Adoption Agreement through the end of such initial Plan Year, except as
otherwise provided in this paragraph, Compensation for purposes of determining
the amount and allocation of contributions under this Article 5 for such initial
Plan Year shall include only Compensation for services during the period
beginning on the Effective Date listed in Subsection 1.01(g) (1) of the Adoption
Agreement and ending on the last day of the initial Plan Year. Notwithstanding
the foregoing, if the Plan is a profit sharing plan, Compensation for purposes
of determining the amount and allocation of non-safe harbor Nonelective Employer
Contributions under this Article 5 for such initial Plan Year shall include
Compensation for the full 12-consecutive-month period ending on the last day of
the initial Plan Year.
16
5.03. DEFERRAL CONTRIBUTIONS. If so provided by the Employer in Subsection 1.07
(a) of the Adoption Agreement, each Active Participant may elect to execute a
salary reduction agreement with the Employer to reduce his Compensation by a
specified percentage or dollar amount, not exceeding the percentage specified by
the Employer in Subsection 1.07 (a) (1) of the Adoption Agreement, per payroll
period, subject to any exceptions elected by the Employer in Subsections 1.07
(a) (2) and (3) of the Adoption Agreement, and equal to a whole number multiple
of one percent. If elected by the Employer in Subsection 1.07(a) (1) (A) of the
Adoption Agreement, in lieu of specifying a percentage of Compensation
reduction, an Active Participant may elect to reduce his Compensation by a
specified dollar amount per payroll period, provided that such dollar amount may
not exceed the percentage of Compensation specified by the Employer in
Subsection 1.07(a)(1) of the Adoption Agreement, subject to any exceptions
elected by the Employer in Subsections 1.07(a)(2) and (3) of the Adoption
Agreement.
An Active Participant's salary reduction agreement shall become
effective on the first day of the first payroll period for which the Employer
can reasonably process the request, but not earlier than the later of (a) the
effective date of the provisions permitting Deferral Contributions or (b) the
date the Employer adopts such provisions. The Employer shall make a Deferral
Contribution on behalf of the Participant corresponding to the amount of said
reduction. Under no circumstances may a salary reduction agreement be adopted
retroactively.
An Active Participant may elect to change or discontinue the percentage
or dollar amount by which his Compensation is reduced by notice to the Employer
as provided in Subsection 1.07 (a) (1) (B) or (C) of the Adoption Agreement.
Notwithstanding the Employer's election in Subsection 1.07 (a) (1) (B) or (C) of
the Adoption Agreement, if the Employer has elected one of the safe harbor
contributions in Subsection 1.10 (a) (3) or 1.11 (a) (3) of the Adoption
Agreement, an Active Participant may elect to change or discontinue the
percentage or dollar amount by which his Compensation is reduced by notice to
the Employer within a reasonable period, as specified by the Employer (but not
less than 30 days), of receiving the notice described in Section 6.10.
5.04. EMPLOYEE CONTRIBUTIONS. If the Employer elected to permit Deferral
Contributions in Subsection 1.07 (a) of the Adoption Agreement and if so
provided by the Employer in Subsection 1.08(a)(1) of the Adoption Agreement,
each Active Participant may elect to make non-deductible Employee Contributions
to the Plan in accordance with the rules and procedures established by the
Employer and in an amount not less than one percent of such Participant's
Compensation for the Plan Year.
5.05. NO DEDUCTIBLE EMPLOYEE CONTRIBUTIONS. No deductible Employee Contributions
may be made to the Plan. Deductible Employee Contributions made prior to January
1, 1987 shall be maintained in a separate Account. No part of the deductible
Employee Contributions Account shall be used to purchase life insurance.
5.06. ROLLOVER CONTRIBUTIONS. An Eligible Employee who is or was entitled to
receive an eligible rollover distribution, as defined in Code Section 402(c)(4)
and Treasury Regulations issued thereunder, from a qualified plan (or an
17
individual retirement account holding only assets attributable to a distribution
from a qualified plan) may elect to contribute all or any portion of such
distribution to the Trust directly from such qualified plan or individual
retirement account or within 60 days of receipt of such distribution to the
Eligible Employee. Rollover Contributions shall only be made in the form of
cash, allowable Fund Shares, or, if and to the extent permitted by the Employer
with the consent of the Trustee, promissory notes evidencing a plan loan to the
Eligible Employee; provided, however, that Rollover Contributions shall only be
permitted in the form of promissory notes if the Plan otherwise provides for
loans.
An Eligible Employee who has not yet become an Active Participant in
the Plan in accordance with the provisions of Article 4 may make a Rollover
Contribution to the Plan. Such Eligible Employee shall be treated as a
Participant under the Plan for all purposes of the Plan, except eligibility to
have Deferral Contributions made on his behalf and to receive an allocation of
Matching Employer or Nonelective Employer Contributions.
The Administrator shall develop such procedures and require such
information from Eligible Employees as it deems necessary to ensure that amounts
contributed under this Section 5.06 meet the requirements for tax-deferred
rollovers established by this Section 5.06 and by Code Section 402 (c). No
Rollover Contributions may be made to the Plan until approved by the
Administrator.
If a Rollover Contribution made under this Section 5.06 is later
determined by the Administrator not to have met the requirements of this Section
5.06 or of the Code or Treasury regulations, the Trustee shall, within a
reasonable time after such determination is made, and on instructions from the
Administrator, distribute to the Employee the amounts then held in the Trust
attributable to such Rollover Contribution.
A Participant's Rollover Contributions Account shall be subject to the
terms of the Plan, including Article 14, except as otherwise provided in this
Section 5.06.
Notwithstanding any other provision of this Section 5.06, the Employer
may direct the Trustee not to accept Rollover Contributions.
5.07. QUALIFIED NONELECTIVE EMPLOYER CONTRIBUTIONS. The Employer may, in its
discretion, make a Qualified Nonelective Employer Contribution for the Plan Year
in any amount necessary to satisfy or help to satisfy the "ADP" test, described
in Section 6.03, and/or the "ACP" test, described in Section 6.06. Qualified
Nonelective Employer Contributions shall be made and allocated based on
Participants' "testing compensation", as defined in Subsection 6.01(t), rather
than Compensation, as defined in Subsection 2.01(j). Any Qualified Nonelective
Employer Contribution shall be allocated among the Accounts of Non-Highly
Compensated Employees who are Active Participants at any time during the Plan
Year as follows:
18
(a) Unless the Employer elects the allocation formula in
Subsection 1.09 (a) (1) of the Adoption Agreement, the Qualified
Nonelective Employer Contribution shall be allocated at the election of
the Employer either
(1) in the ratio that each eligible Active Participant's
"testing compensation", as defined in Subsection 6.01(t), for
the Plan Year bears to the total "testing compensation" paid
to all eligible Active Participants for the Plan Year; or
(2) as a uniform flat dollar amount for each eligible
Active Participant for the Plan Year.
(b) If the Employer elects the allocation formula in Subsection
1.09(a) (1) of the Adoption Agreement, the Qualified Nonelective
Employer Contribution shall be allocated as follows:
(1) The eligible Active Participant with the least
"testing compensation", as defined in Subsection 6.01(t), for
the Plan Year shall receive an allocation equal to the lowest
of:
(A) the maximum amount that may be contributed
on the eligible Active Participant's behalf under
Code Section 415, taking into account all other
contributions made by or on behalf of the eligible
Active Participant to plans maintained by the
Employer or a Related Employer that are includable as
"annual additions", as defined in Subsection 6.01(b);
or
(B) the full amount of the Qualified Nonelective
Employer Contribution.
(2) The eligible Active Participant with the next lowest
"testing compensation", as defined in Subsection 6.01(t), for
the Plan Year shall receive an allocation equal to the lowest
of:
(A) the maximum amount that may be contributed
on the eligible Active Participant's behalf under
Code Section 415, taking into account all other
contributions made by or on behalf of the eligible
Active Participant to plans maintained by the
Employer or a Related Employer that are includable as
"annual additions", as defined in Subsection 6.01(b);
or
(B) the balance of any Qualified Nonelective
Employer Contribution remaining after allocation is
made as provided in Subsection 5.07 (b) (1) above.
(3) The allocation in Subsection 5.07(b) (2) shall be
applied individually to each remaining eligible Active
Participant, in ascending order of "testing compensation",
until the Qualified Nonelective Employer Contribution is fully
allocated. Once the Qualified Nonelective Employer
19
Contribution is fully allocated, no further allocation shall
be made to the remaining eligible Active Participants.
Active Participants shall not be required to satisfy any Hours of
Service or employment requirement for the Plan Year in order to receive an
allocation of Qualified Nonelective Employer Contributions.
Qualified Nonelective Employer Contributions shall be distributable
only in accordance with the distribution provisions that are applicable to
Deferral Contributions; provided, however, that a Participant shall not be
permitted to take a hardship withdrawal of amounts credited to his Qualified
Nonelective Employer Contributions Account after the later of December 31, 1988
or the last day of the Plan Year ending before July 1, 1989.
5.08. MATCHING EMPLOYER CONTRIBUTIONS. If so provided by the Employer in Section
1.10 of the Adoption Agreement, the Employer shall make a Matching Employer
Contribution on behalf of each eligible Active Participant, as determined in
accordance with Subsection 1.10(d) and Section 1.12 of the Adoption Agreement,
who had Deferral Contributions made on his behalf during the Contribution
Period. The amount of the Matching Employer Contribution shall be determined in
accordance with Subsection 1.10 (a) and/or (b) and/or the Safe Harbor Matching
Employer Contribution Addendum to the Adoption Agreement, as applicable.
5.09. QUALIFIED MATCHING EMPLOYER CONTRIBUTIONS. If so provided by the Employer
in Subsection 1.10(e) of the Adoption Agreement, prior to making its Matching
Employer Contribution (other than any safe harbor Matching Employer
Contribution) to the Plan, the Employer may designate all or a portion of such
Matching Employer Contribution as a Qualified Matching Employer Contribution.
The Employer shall notify the Trustee of such designation at the time it makes
its Matching Employer Contribution. Qualified Matching Employer Contributions
shall be distributable only in accordance with the distribution provisions that
are applicable to Deferral Contributions; provided, however, that a Participant
shall not be permitted to take a hardship withdrawal of amounts credited to his
Qualified Matching Employer Contributions Account after the later of December
31, 1988 or the last day of the Plan Year ending before July 1, 1989.
If the amount of an Employer's Qualified Matching Employer Contribution is
determined based on a Participant's Compensation, and the Qualified Matching
Employer Contribution is necessary to satisfy the "ADP" test described in
Section 6.03, the compensation used in determining the amount of the Qualified
Matching Employer Contribution shall be "testing compensation", as defined in
Subsection 6.01(t). If the Qualified Matching Employer Contribution is not
necessary to satisfy the "ADP" test described in Section 6.03, the compensation
used to determine the amount of the Qualified Matching Employer Contribution
shall be Compensation as defined in Subsection 2.01(j), modified as provided in
Section 5.02.
5.10. NONELECTIVE EMPLOYER CONTRIBUTIONS. If so provided by the Employer in
Section 1.11 of the Adoption Agreement, the Employer shall make Nonelective
20
Employer Contributions to the Trust in accordance with Subsection 1.11(a)and/or
(b) of the Adoption Agreement to be allocated as follows:
(a) If the Plan is a money purchase pension plan or the Employer
has elected a fixed contribution formula, Nonelective Employer
Contributions shall be allocated among eligible Active Participants, as
determined in accordance with Subsection l.ll(c) and Section 1.12 of
the Adoption Agreement, in the manner specified in Subsection 1.11 (a)
or the Safe Harbor Nonelective Employer Contribution Addendum to the
Adoption Agreement, as applicable.
(b) If the Employer has elected a discretionary contribution
amount, Nonelective Employer Contributions shall be allocated among
eligible Active Participants, as determined in accordance with
Subsection l.ll(c) and Section 1.12 of the Adoption Agreement, as
follows:
(1) If the non-integrated formula is elected in
Subsection l.ll(b) (1) of the Adoption Agreement, Nonelective
Employer Contributions shall be allocated to eligible Active
Participants in the ratio that each eligible Active
Participant's Compensation bears to the total Compensation
paid to all eligible Active Participants for the Plan Year;
provided, however, that if the Plan is or is deemed to be a
"top-heavy plan", as defined in Subsection 15.01(f), for any
Plan Year, these allocation provisions shall be modified as
provided in Section 15.04; or
(2) If the integrated formula is elected in Subsection
l.ll(b) (2) of the Adoption Agreement, Nonelective Employer
Contributions shall be allocated in the following steps:
(A) First, to each eligible Active Participant
in the same ratio that the sum of the eligible Active
Participant's Compensation and "excess Compensation"
for the Plan Year bears to the sum of the
Compensation and "excess Compensation" of all
eligible Active Participants for the Plan Year. This
allocation as a percentage of the sum of each
eligible Active Participant's Compensation and
"excess Compensation" shall not exceed the "permitted
disparity limit", as defined in Section 1.11 of the
Adoption Agreement.
Notwithstanding the foregoing, if in any
Plan Year an eligible Active Participant has reached
the "cumulative permitted disparity limit", such
eligible Active Participant shall receive an
allocation under this Subsection 5.10(b)(2)(A) based
on two times his Compensation for the Plan Year,
rather than the sum of his Compensation and "excess
Compensation" for the Plan Year. If an Active
Participant did not benefit under a qualified defined
benefit plan or target benefit plan for any Plan Year
beginning on or after January 1, 1994, the Active
Participant shall have no "cumulative disparity
limit".
(B) Second, if any Nonelective Employer
Contributions remain after the allocation in
Subsection 5.10(b) (2) (A), the remaining
21
Nonelective Employer Contributions shall be allocated
to each eligible Active Participant in the same ratio
that the eligible Active Participant's Compensation
for the Plan Year bears to the total Compensation of
all eligible Active Participants for the Plan Year.
Notwithstanding the provisions of Subsections
5.10(b)(2)(A) and (B) above, if in any Plan Year an eligible
Active Participant benefits under another qualified plan or
simplified employee pension, as defined in Code Section
408(k), that provides for or imputes permitted disparity, the
Nonelective Employer Contributions for the Plan Year allocated
to such eligible Active Participant shall be in the ratio that
his Compensation for the Plan Year bears to the total
Compensation paid to all eligible Active Participants.
If the Plan is or is deemed to be a "top-heavy plan",
as defined in Subsection 15.01(f), for any Plan Year, the
allocation steps in Subsections 5.10(b) (2) (A) and (B) shall
be modified as provided in Section 15.04.
For purposes of this Subsection 5.10(b) (2), the
following definitions shall apply:
(C) "CUMULATIVE PERMITTED DISPARITY LIMIT" means
35 multiplied by the sum of an Active Participant's
annual permitted disparity fractions, as defined in
Sections 1.401(1)-5(b) (3) through (b) (7) of the
Treasury Regulations, attributable to the Active
Participant's total years of service under the Plan
and any other qualified plan or simplified employee
pension, as defined in Code Section 408 (k),
maintained by the Employer or a Related Employer. For
each Plan Year commencing prior to January 1, 1989,
the annual permitted disparity fraction shall be
deemed to be one, unless the Participant never
accrued a benefit under any qualified plan or
simplified employee pension maintained by the
Employer or a Related Employer during any such Plan
Year. In determining the annual permitted disparity
fraction for any Plan Year, the Employer may elect to
assume that the full disparity limit has been used
for such Plan Year.
(D) "EXCESS COMPENSATION" means Compensation in
excess of the "integration level" specified by the
Employer in Subsection l.ll(b)(2) of the Adoption
Agreement.
5.11. VESTED INTEREST IN CONTRIBUTIONS. A Participant's vested interest in the
following sub-accounts shall be 100 percent:
(a) his Deferral Contributions Account;
(b) his Qualified Nonelective Contributions Account;
(c) his Qualified Matching Employer Contributions Account;
22
(d) his Nonelective Employer Contributions Account attributable to
Nonelective Employer Contributions made in accordance with the Safe
Harbor Nonelective Employer Contribution Addendum to the Adoption
Agreement that are intended to satisfy the safe harbor contribution
requirement for deemed satisfaction of the "ADP" test described in
Section 6.03;
(e) his Matching Employer Contributions Account attributable to
Matching Employer Contributions made in accordance with the Safe Harbor
Matching Employer Contribution Addendum to the Adoption Agreement that
are intended to satisfy the safe harbor contribution requirement for
deemed satisfaction of the "ADP" test described in Section 6.03;
(f) his Rollover Contributions Account;
(g) his Employee Contributions Account; and
(h) his deductible Employee Contributions Account.
A Participant's vested interest in his Nonelective Employer
Contributions Account attributable to Nonelective Employer Contributions other
than those described in Subsection 5.11(d) above, shall be determined in
accordance with the vesting schedule elected by the Employer in Subsection
1.15(b)(1) of the Adoption Agreement. A Participant's vested interest in his
Matching Employer Contributions Account attributable to Matching Employer
Contributions other than those described in Subsection 5.11(e) above, shall be
determined in accordance with the vesting schedule elected by the Employer in
Subsection 1.15(b)(2) of the Adoption Agreement.
5.12. TIME FOR MAKING CONTRIBUTIONS. The Employer shall pay its contribution for
each Plan Year not later than the time prescribed by law for filing the
Employer's Federal income tax return for the fiscal (or taxable) year with or
within which such Plan Year ends (including extensions thereof).
The Employer shall remit any safe harbor Matching Employer
Contributions made during a Plan Year quarter to the Trustee no later than the
last day of the immediately following Plan Year quarter.
The Employer should remit Employee Contributions and Deferral
Contributions to the Trustee as of the earliest date on which such contributions
can reasonably be segregated from the Employer's general assets, but not later
than the 15th business day of the calendar month following the month in which
such amount otherwise would have been paid to the Participant, or within such
other time frame as may be determined by applicable regulation or legislation.
The Trustee shall have no authority to inquire into the correctness of
the amounts contributed and paid over to the Trustee, to determine whether any
contribution is payable under this Article 5, or to enforce, by suit or
otherwise, the Employer's obligation, if any, to make a contribution to the
Trustee.
23
5.13. RETURN OF EMPLOYER CONTRIBUTIONS. The Trustee shall, upon request by the
Employer, return to the Employer the amount (if any) determined under Section
20.24. Such amount shall be reduced by amounts attributable thereto which have
been credited to the Accounts of Participants who have since received
distributions from the Trust, except to the extent such amounts continue to be
credited to such Participants' Accounts at the time the amount is returned to
the Employer. Such amount shall also be reduced by the losses of the Trust
attributable thereto, if and to the extent such losses exceed the gains and
income attributable thereto, but shall not be increased by the gains and income
of the Trust attributable thereto, if and to the extent such gains and income
exceed the losses attributable thereto. To the extent such gains exceed losses,
the gains shall be forfeited and applied as provided in Section 11.09. In no
event shall the return of a contribution hereunder cause the balance of the
individual Account of any Participant to be reduced to less than the balance
which would have been credited to the Account had the mistaken amount not been
contributed.
ARTICLE 6. LIMITATIONS ON CONTRIBUTIONS.
6.01. SPECIAL DEFINITIONS. For purposes of this Article, the following
definitions shall apply:
(a) "AGGREGATE LIMIT" means the greater of (1) or (2) where (1) is
the sum of (A) 125 percent of the greater of the average "deferral
ratio" of the Active Participants who are Non-Highly Compensated
Employees for the "testing year" or the average "contribution
percentage" of Active Participants who are Non-Highly Compensated
Employees for the "testing year" beginning with or within the "testing
year" of the cash or deferred arrangement and (B) the lesser of 200
percent or two plus the lesser of such average "deferral ratio" or
average "contribution percentage" and where (2) is the sum of (A) 125
percent of the lesser of the average "deferral ratio" of the Active
Participants who are Non-Highly Compensated Employees for the "testing
year" or the average "contribution percentage" of the Active
Participants who are Non-Highly Compensated Employees for the "testing
year" beginning with or within the "testing year" of the cash or
deferred arrangement and (B) the lesser of 200 percent or two plus the
greater of such average "deferral ratio" or average "contribution
percentage".
(b) "ANNUAL ADDITIONS" mean the sum of the following amounts
allocated to an Active Participant for a Limitation Year:
(1) all employer contributions allocated to an Active
Participant's account under qualified defined contribution
plans maintained by the "415 employer", including amounts
applied to reduce employer contributions as provided under
Section 11.09;
(2) all employee contributions allocated to an Active
Participant's account under a qualified defined contribution
plan or a qualified
24
defined benefit plan maintained by the "415 employer" if
separate accounts are maintained with respect to such Active
Participant under the defined benefit plan;
(3) all forfeitures allocated to an Active Participant's
account under a qualified defined contribution plan maintained
by the "415 employer";
(4) all amounts allocated, after March 31, 1984, to an
"individual medical benefit account" which is part of a
pension or annuity plan maintained by the "415 employer";
(5) all amounts derived from contributions paid or
accrued after December 31, 1985, in taxable years ending after
such date, which are attributable to post-retirement medical
benefits allocated to the separate account of a key employee,
as defined in Code Section 419A(d)(3), under a "welfare
benefit fund" maintained by the "415 employer"; and
(6) all allocations to an Active Participant under a
"simplified employee pension".
(c) "CONTRIBUTION PERCENTAGE" means the ratio (expressed as a
percentage) of (1) the "contribution percentage amounts" allocated to
an "eligible participant's" accounts for the Plan Year to (2) the
"eligible participant's" "testing compensation" for the Plan Year.
(d) "CONTRIBUTION PERCENTAGE AMOUNTS" mean:
(1) any Employee Contributions made by an "eligible
participant" to the Plan;
(2) any Matching Employer Contributions, but excluding
(A) Qualified Matching Employer Contributions that are taken
into account in satisfying the "ADP" test described in Section
6.03 (except that such exclusion shall not apply for any Plan
Year in which the "ADP" test described in Section 6.03 is
deemed satisfied pursuant to Section 6.10) and (B) Matching
Employer Contributions 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";
(3) at the election of the Employer, Qualified
Nonelective Employer Contributions, excluding Qualified
Nonelective Employer Contributions that are taken into account
in satisfying the "ADP" test described in Section 6.03; and
(4) at the election of the Employer, Deferral
Contributions, excluding Deferral Contributions that are taken
into account in satisfying the "ADP" test described in Section
6.03.
25
Notwithstanding the foregoing, for any Plan Year in which the
"ADP" test described in Section 6.03 is deemed satisfied pursuant to
Section 6.10, "contribution percentage amounts" shall not include the
following:
(5) any Deferral Contributions; and
(6) if the requirements described in Section 6.11 for
deemed satisfaction of the "ACP" test with respect to Matching
Employer Contributions are met, any Matching Employer
Contributions; or if the requirements described in Section
6.11 for deemed satisfaction of the "ACP" test with respect to
Matching Employer Contributions are not met, any Matching
Employer Contributions made on behalf of an "eligible
participant" for the Plan Year that do not exceed four percent
of the "eligible participant's" Compensation for the Plan
Year.
To be included in determining an "eligible participant's"
"contribution percentage" for a Plan Year, Employee Contributions must
be made to the Plan before the end of such Plan Year and other
"contribution percentage amounts" must be allocated to the "eligible
participant's" Account as of a date within such Plan Year and made
before the last day of the 12-month period immediately following the
Plan Year to which the "contribution percentage amounts" relate. If an
Employer has elected the prior year testing method described in
Subsection 1.06(a)(2) of the Adoption Agreement, "contribution
percentage amounts" that are taken into account for purposes of
determining the "contribution percentages" of Non-Highly Compensated
Employees for the prior year relate to such prior year. Therefore, such
"contribution percentage amounts" must be made before the last day of
the Plan Year being tested.
Effective for Plan Years beginning on or after January 1,
1999, if an Employer elects to change from the current year testing
method described in Subsection 1.06(a)(1) of the Adoption Agreement to
the prior year testing method described in Subsection 1.06(a)(2) of
the Adoption Agreement, the following shall not be considered
"contribution percentage amounts" for purposes of determining the
"contribution percentages" of Non-Highly Compensated Employees for the
prior year immediately preceding the Plan Year in which the change is
effective:
(7) Qualified Matching Employer Contributions that were
taken into account in satisfying the "ADP" test described in
Section 6.03 for such prior year;
(8) Qualified Nonelective Employer Contributions that
were taken into account in satisfying the "ADP" test described
in Section 6.03 or the "ACP" test described in Section 6.06
for such prior year; and
(9) all Deferral Contributions.
(e) "DEFERRAL RATIO" means the ratio (expressed as a percentage)
of (1) the amount of "includable contributions" made on behalf of an
Active Participant
26
for the Plan Year to (2) the Active Participant's "testing
compensation" for such Plan Year. An Active Participant who does not
receive "includable contributions" for a Plan Year shall have a
"deferral ratio" of zero.
(f) "DEFINED BENEFIT FRACTION" means a fraction, the numerator of
which is the sum of the Active Participant's annual benefits (adjusted
to an actuarially equivalent straight life annuity if such benefit is
expressed in a form other than a straight life annuity or qualified
joint and survivor annuity) under all the defined benefit plans
(whether or not terminated) maintained by the "415 employer", each such
annual benefit computed on the assumptions that the Active Participant
shall remain in employment until the normal retirement age under each
such plan (or the Active Participant's current age, if later) and that
all other factors used to determine benefits under such plan shall
remain constant for all future Limitation Years, 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)(1)(A) and 415(d)
or 140 percent of the Active Participant's highest average Compensation
for three consecutive calendar years of service during which the Active
Participant was active in each such plan, including any adjustments
under Code Section 415(b). However, if the Active Participant was a
participant as of the first day of the first Limitation Year beginning
after December 31, 1986, in one or more defined benefit plans
maintained by the "415 employer" which were in existence on May 6, 1986
then the denominator of the "defined benefit fraction" shall not be
less than 125 percent of the Active Participant's total accrued benefit
as of the close of the last Limitation Year beginning before January 1,
1987, disregarding any changes in the terms and conditions of such
plans made after May 5, 1986, under all such defined benefit plans that
met, individually and in the aggregate, the requirements of Code
Section 415 for all Limitation Years beginning before January 1, 1987.
(g) "DEFINED CONTRIBUTION FRACTION" means a fraction, the
numerator of which is the sum of all "annual additions" credited to an
Active Participant for the current Limitation Year and all prior
Limitation Years and the denominator of which is the sum of the
"maximum permissible amounts" for the current Limitation Year and all
prior Limitation Years during which the Participant was an Employee
(regardless of whether the "415 employer" maintained a defined
contribution plan in any such Limitation Year).
If the Active Participant was a participant as of the first
day of the first Limitation Year beginning after December 31, 1986, in
one or more defined contribution plans maintained by the "415 employer"
which were in existence on May 6, 1986, then the numerator of the
"defined contribution fraction" shall be adjusted if the sum of this
fraction and the "defined benefit fraction" would otherwise exceed 1.0
under the terms of the Plan. Under the adjustment an amount equal to
the product of (1) the excess of the sum of the fractions over 1.0 and
(2) the denominator of this fraction shall 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 January 1, 1987, and disregarding
27
any changes in the terms and conditions of the plans made after May 6,
1986, but using the Section 415 limitation applicable to the first
Limitation Year beginning on or after January 1, 1987.
For purposes of determining the "defined contribution
fraction", the "annual additions" for Limitation Years beginning before
January 1, 1987 shall not be recomputed to treat all employee
contributions as "annual additions".
(h) "DETERMINATION YEAR" means (1) for purposes of determining
income or loss with respect to "excess deferrals", the calendar year in
which the "excess deferrals" were made and (2) for purposes of
determining income or loss with respect to "excess contributions", and
"excess aggregate contributions", the Plan Year in which such "excess
contributions" or "excess aggregate contributions" were made.
(i) "ELECTIVE DEFERRALS" mean all employer contributions, other
than Deferral Contributions, made on behalf of a Participant pursuant
to an election to defer under any qualified CODA 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 behalf of a Participant pursuant to a salary
reduction agreement for the purchase of an annuity contract under Code
Section 403(b). "Elective deferrals" shall not include any deferrals
properly distributed as excess "annual additions".
(j) "ELIGIBLE PARTICIPANT" means any Active Participant who is
eligible to make Employee Contributions, or Deferral Contributions (if
the Employer takes such contributions into account in calculating
"contribution percentages"), or to receive a Matching Employer
Contribution. Notwithstanding the foregoing, the term "eligible
participant" shall not include any Active Participant who is included
in a unit of Employees covered by an agreement which the Secretary of
Labor finds to be a collective bargaining agreement between employee
representatives and one or more employers.
(k) "EXCESS AGGREGATE CONTRIBUTIONS" with respect to any Plan Year
mean the excess of
(1) The aggregate "contribution percentage amounts"
actually taken into account in computing the average
"contribution percentages" of "eligible participants" who are
Highly Compensated Employees for such Plan Year, over
(2) The maximum amount of "contribution percentage
amounts" permitted to be made on behalf of Highly Compensated
Employees under Section 6.06 (determined by reducing
"contribution percentage amounts" made for the Plan Year on
behalf of "eligible participants" who are Highly Compensated
Employees in order of their "contribution percentages"
beginning with the highest of such "contribution
percentages").
28
"Excess aggregate contributions" shall be determined after first
determining "excess deferrals" and then determining "excess contributions".
(1) "EXCESS CONTRIBUTIONS" with respect to any Plan Year mean the
excess of
(1) The aggregate amount of "includable contributions"
actually taken into account in computing the average "deferral
percentage" of Active Participants who are Highly Compensated
Employees for such Plan Year, over
(2) The maximum amount of "includable contributions"
permitted to be made on behalf of Highly Compensated Employees
under Section 6.03 (determined by reducing "includable
contributions" made for the Plan Year on behalf of Active
Participants who are Highly Compensated Employees in order of
their "deferral ratios", beginning with the highest of such
"deferral ratios").
(m) "EXCESS DEFERRALS" mean those Deferral Contributions and/or
"elective deferrals" that are includable in a Participant's gross
income under Code Section 402(g) to the extent such Participant's
Deferral Contributions and/or "elective deferrals" for a calendar year
exceed the dollar limitation under such Code Section for such calendar
year.
(n) "EXCESS 415 AMOUNT" means the excess of an Active
Participant's "annual additions" for the Limitation Year over the
"maximum permissible amount".
(o) "415 EMPLOYER" means the Employer and any other employers
which constitute a controlled group of corporations (as defined in Code
Section 414(b) as modified by Code Section 415(h)) or which constitute
trades or businesses (whether or not incorporated) which are under
common control (as defined in Code Section 414(c) as modified by Code
Section 415(h)) or which constitute an affiliated service group (as
defined in Code Section 414(m)) and any other entity required to be
aggregated with the Employer pursuant to regulations issued under Code
Section 414(o).
(p) "INCLUDABLE CONTRIBUTIONS" mean:
(1) any Deferral Contributions made on behalf of an
Active Participant, including "excess deferrals" of Highly
Compensated Employees, but excluding (a) "excess deferrals" of
Non-Highly Compensated Employees that arise solely from
Deferral Contributions made under the Plan or plans maintained
by the Employer or a Related Employer and (b) Deferral
Contributions that are taken into account in satisfying the
"ACP" test described in Section 6.06;
(2) at the election of the Employer, Qualified
Nonelective Employer Contributions, excluding Qualified
Nonelective Employer Contributions that are taken into account
in satisfying the "ACP" test described in Section 6.06; and
29
(3) at the election of the Employer, Qualified Matching
Employer Contributions; provided, however, that the Employer
may not elect to treat Qualified Matching Employer
Contributions as "includable contributions" for any Plan Year
in which the "ADP" test described in Section 6.03 is deemed
satisfied pursuant to Section 6.10.
To be included in determining an Active Participant's
"deferral ratio" for a Plan Year, "includable contributions" must be
allocated to the Participant's Account as of a date within such Plan
Year and made before the last day of the 12-month period immediately
following the Plan Year to which the "includable contributions" relate.
If an Employer has elected the prior year testing method described in
Subsection 1.06(a)(2) of the Adoption Agreement, "includable
contributions" that are taken into account for purposes of determining
the "deferral ratios" of Non-Highly Compensated Employees for the prior
year relate to such prior year. Therefore, such "includable
contributions" must be made before the last day of the Plan Year being
tested.
Effective for Plan Years beginning on or after January 1,
1999, if an Employer elects to change from the current year testing
method described in Subsection 1.06(a)(1) of the Adoption Agreement to
the prior year testing method described in Subsection 1.06(a)(2) of
the Adoption Agreement, the following shall not be considered
"includable contributions" for purposes of determining the "deferral
ratios" of Non-Highly Compensated Employees for the prior year
immediately preceding the Plan Year in which the change is effective:
(4) Deferral Contributions that were taken into account
in satisfying the "ACP" test described in Section 6.06 for
such prior year;
(5) Qualified Nonelective Employer Contributions that
were taken into account in satisfying the "ADP" test described
in Section 6.03 or the "ACP" test described in Section 6.06
for such prior year; and
(6) all Qualified Matching Employer Contributions.
(q) "INDIVIDUAL MEDICAL BENEFIT ACCOUNT" means an individual
medical benefit account as defined in Code Section 415(1)(2).
(r) "MAXIMUM PERMISSIBLE AMOUNT" means for a Limitation Year with
respect to any Active Participant the lesser of (1) $30,000 (adjusted
as provided in Code Section 415(d)) or (2) 25 percent of the Active
Participant's Compensation for the Limitation Year. If a short
Limitation Year is created because of an amendment changing the
Limitation Year to a different 12-consecutive-month period, the dollar
limitation specified in clause (1) above shall be adjusted by
multiplying it by a fraction the numerator of which is the number of
months in the short Limitation Year and the denominator of which is 12.
30
The Compensation limitation specified in clause (2) above
shall not apply to any contribution for medical benefits within the
meaning of Code Section 401 (h) or 419A(f) (2) after separation from
service which is otherwise treated as an "annual addition" under Code
Section 419A(d)(2) or 415(1)(1).
(s) "SIMPLIFIED EMPLOYEE PENSION" means a simplified employee
pension as defined in Code Section 408(k).
(t) "TESTING COMPENSATION" means compensation as defined in Code
Section 414(s). "Testing compensation" shall be based on the amount
actually paid to a Participant during the "testing year" or, at the
option of the Employer, during that portion of the "testing year"
during which the Participant is an Active Participant; provided,
however, that if the Employer elected different Eligibility Service
requirements for purposes of eligibility to make Deferral Contributions
and to receive Matching Employer Contributions, then "testing
compensation" must be based on the amount paid to a Participant during
the full "testing year".
The annual "testing compensation" of each Active Participant
taken into account in applying the "ADP" test described in Section 6.03
and the "ACP" test described in Section 6.06 for any "testing year"
shall not exceed the annual compensation limit under Code Section
401(a)(17) as in effect on the first day of the "testing year". This
limit shall be adjusted by the Secretary to reflect increases in the
cost of living, as provided in Code Section 401(a)(17)(B) ; provided,
however, that the dollar increase in effect on January 1 of any
calendar year is effective for "testing years" beginning in such
calendar year. If a Plan determines "testing compensation" over a
period that contains fewer than 12 calendar months (a "short
determination period"), then the Compensation limit for such "short
determination period" is equal to the Compensation limit for the
calendar year in which the "short determination period" begins
multiplied by the ratio obtained by dividing the number of full months
in the "short determination period" by 12; provided, however, that such
proration shall not apply if there is a "short determination period"
because (1) the Employer elected in accordance with any rules and
regulations issued by the Secretary of the Treasury or his delegate to
apply the "ADP" test described in Section 6.03 and/or the "ACP" test
described in Section 6.06 based only on Compensation paid during the
portion of the "testing year" during which an individual was an Active
Participant or (2) an Employee is covered under the Plan for fewer than
12 calendar months.
(u) "TESTING YEAR" means
(1) if the Employer has elected the current year testing
method in Subsection 1.06(a)(1) of the Adoption Agreement,
the Plan Year being tested.
(2) if the Employer has elected the prior year testing
method in Subsection 1.06(a)(2) of the Adoption Agreement,
the Plan Year immediately preceding the Plan Year being
tested.
31
(v) "WELFARE BENEFIT FUND" means a welfare benefit fund as defined
in Code Section 419(e).
6.02. CODE SECTION 402(g) LIMIT ON DEFERRAL CONTRIBUTIONS. In no event shall
the amount of Deferral Contributions made under the Plan for a calendar year,
when aggregated with the "elective deferrals" made under any other plan
maintained by the Employer or a Related Employer, exceed the dollar limitation
contained in Code Section 402(g) in effect at the beginning of such calendar
year.
A Participant may assign to the Plan any "excess deferrals" made during
a calendar year by notifying the Administrator on or before March 15 following
the calendar year in which the "excess deferrals" were made of the amount of the
"excess deferrals" to be assigned to the Plan. A Participant is deemed to notify
the Administrator of any "excess deferrals" that arise by taking into account
only those Deferral Contributions made to the Plan and those "elective
deferrals" made to any other plan maintained by the Employer or a Related
Employer. Notwithstanding any other provision of the Plan, "excess deferrals",
plus any income and minus any loss allocable thereto, as determined under
Section 6.09, shall be distributed no later than April 15 to any Participant to
whose Account "excess deferrals" were so assigned for the preceding calendar
year and who claims "excess deferrals" for such calendar year.
Any Matching Employer Contributions attributable to "excess deferrals",
plus any income and minus any loss allocable thereto, as determined under
Section 6.09, shall be forfeited and applied as provided in Section 11.09.
"Excess deferrals" shall be treated as "annual additions" under the Plan,
unless such amounts are distributed no later than the first April 15 following
the close of the calendar year in which the "excess deferrals" were made.
6.03. ADDITIONAL LIMIT ON DEFERRAL CONTRIBUTIONS ("ADP" TEST). Notwithstanding
any other provision of the Plan to the contrary, the Deferral Contributions made
with respect to a Plan Year on behalf of Active Participants who are Highly
Compensated Employees for such Plan Year may not result in an average "deferral
ratio" for such Active Participants that exceeds the greater of:
(a) the average "deferral ratio" for the "testing year" of Active
Participants who are Non-Highly Compensated Employees for the "testing year"
multiplied by 1.25; or
(b) the average "deferral ratio" for the "testing year" of Active
Participants who are Non-Highly Compensated Employees for the "testing year"
multiplied by two, provided that the average "deferral ratio" for Active
Participants who are Highly Compensated Employees for the Plan Year being tested
does not exceed the average "deferral ratio" for Participants who are Non-Highly
Compensated Employees for the "testing year" by more than two percentage points.
For the first Plan Year in which the Plan provides a cash or deferred
arrangement, the average "deferral ratio" for Active Participants who are Non-
32
Highly Compensated Employees used in determining the limits applicable under
Subsections 6.03(a) and(b) shall be either three percent or the actual average
"deferral ratio" for such Active Participants for such first Plan Year, as
elected by the Employer in Section 1.06(b) of the Adoption Agreement.
The deferral ratios of Active Participants who are included in a unit
of Employees covered by an agreement which the Secretary of Labor finds to be a
collective bargaining agreement shall be disaggregated from the "deferral
ratios" of other Active Participants and the provisions of this Section 6.03
shall be applied separately with respect to each group.
The "deferral ratio" for any Active Participant who is a Highly
Compensated Employee for the Plan Year being tested and who is eligible to have
"includable contributions" allocated to his accounts under two or more cash or
deferred arrangements described in Code Section 401(k) that are maintained by
the Employer or a Related Employer, shall be determined as if such "includable
contributions" were made under a single arrangement. If a Highly Compensated
Employee participates in two or more cash or deferred arrangements that have
different plan years, all cash or deferred arrangements ending with or within
the same calendar year shall be treated as a single arrangement. Notwithstanding
the foregoing, certain plans shall be treated as separate if mandatorily
disaggregated under regulations under Code Section 401(k).
If this Plan satisfies the requirements of Code Section 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
aggregated with this Plan, then this Section 6.03 shall be applied by
determining the "deferral ratios" of Employees as if all such plans were a
single plan. Plans may be aggregated in order to satisfy Code Section 401 (k)
only if they have the same plan year.
The Employer shall maintain records sufficient to demonstrate
satisfaction of the "ADP" test and the amount of Qualified Nonelective and/or
Qualified Matching Employer Contributions used in such test.
6.04. ALLOCATION AND DISTRIBUTION OF "EXCESS CONTRIBUTIONS". Notwithstanding any
other provision of this Plan, the "excess contributions" allocable to the
Account of a Participant, plus any income and minus any loss allocable thereto,
as determined under Section 6.09, shall be distributed to the Participant no
later than the last day of the Plan Year immediately following the Plan Year in
which the "excess contributions" were made. If such excess amounts are
distributed more than 2 1/2 months after the last day of the Plan Year in which
the "excess contributions" were made, a ten percent excise tax shall be imposed
on the Employer maintaining the Plan with respect to such amounts.
The "excess contributions" allocable to a Participant's Account shall
be determined by reducing the "includable contributions" made for the Plan Year
on behalf of Active Participants who are Highly Compensated Employees in order
of the dollar amount of such "includable contributions", beginning with the
highest such dollar amount.
33
"Excess contributions" shall be treated as "annual additions".
Any Matching Employer Contributions attributable to "excess
contributions", plus any income and minus any loss allocable thereto, as
determined under Section 6.09, shall be forfeited and applied as provided in
Section 11.09.
6.05. REDUCTIONS IN DEFERRAL CONTRIBUTIONS TO MEET CODE REQUIREMENTS. IF the
Administrator anticipates that the Plan will not satisfy the "ADP" and/or "ACP"
test for the year, the Administrator may objectively reduce the rate of Deferral
Contributions of Participants who are Highly Compensated Employees to an amount
determined by the Administrator to be necessary to satisfy the "ADP" and/or
"ACP" test.
6.06. LIMIT ON MATCHING EMPLOYER CONTRIBUTIONS AND EMPLOYEE CONTRIBUTIONS ("ACP"
TEST). The provisions of this Section 6.06 shall not apply to Active
Participants who are included in a unit of Employees covered by an agreement
which the Secretary of Labor finds to be a collective bargaining agreement
between employee representatives and one or more employers.
Notwithstanding any other provision of the Plan to the contrary,
Matching Employer Contributions and Employee Contributions made with respect to
a Plan Year by or on behalf of "eligible participants" who are Highly
Compensated Employees for such Plan Year may not result in an average
"contribution percentage" for such "eligible participants" that exceeds the
greater of:
(a) the average "contribution percentage" for the "testing year"
of "eligible participants" who are Non-Highly Compensated Employees for
the "testing year" multiplied by 1.25; or
(b) the average "contribution percentage" for the "testing year"
of "eligible participants" who are Non-Highly Compensated Employees for
the "testing year" multiplied by two, provided that the average
"contribution percentage" for the Plan Year being tested of "eligible
participants" who are Highly Compensated Employees does not exceed the
average "contribution percentage" for the "testing year" of "eligible
participants" who are Non-Highly Compensated Employees for the
"testing year" by more than two percentage points.
For the first Plan Year in which the Plan provides for "contribution
percentage amounts" to be made, the "ACP" for "eligible participants" who are
Non-Highly Compensated Employees used in determining the limits applicable under
paragraphs (a) and (b) of this Section 6.06 shall be either three percent or the
actual "ACP" of such eligible participants for such first Plan Year, as elected
by the Employer in Section 1.06(b).
The "contribution percentage" for any "eligible participant" who is a
Highly Compensated Employee for the Plan Year and who is eligible to have
"contribution percentage amounts" allocated to his accounts under two or more
plans described in Code Section 401(a) that are maintained by the Employer or a
Related Employer,
34
shall be determined as if such "contribution percentage amounts" were
contributed under a single plan. If a Highly Compensated Employee participates
in two or more such plans that have different plan years, all plans ending with
or within the same calendar year shall be treated as a single plan.
Notwithstanding the foregoing, certain plans shall be treated as separate if
mandatorily disaggregated under Treasury Regulations issued under Code Section
401(m).
If this Plan satisfies the requirements of Code Section 401(m),
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
aggregated with this Plan, then this Section 6.06 shall be applied by
determining the "contribution percentages" of Employees as if all such plans
were a single plan. Plans may be aggregated in order to satisfy Code Section
401(m) only if they have the same plan year.
The Employer shall maintain records sufficient to demonstrate
satisfaction of the "ACP" test and the amount of Deferral Contributions,
Qualified Nonelective Employer Contributions, and/or Qualified Matching Employer
Contributions used in such test.
6.07. ALLOCATION, DISTRIBUTION, AND FORFEITURE OF "EXCESS AGGREGATE
CONTRIBUTIONS". Notwithstanding any other provision of the Plan, the "excess
aggregate contributions" allocable to the Account of a Participant, plus any
income and minus any loss allocable thereto, as determined under Section 6.09,
shall be forfeited, if forfeitable, or if not forfeitable, distributed to the
Participant no later than the last day of the Plan Year immediately following
the Plan Year in which the "excess aggregate contributions" were made. If such
excess amounts are distributed more than 2 1/2 months after the last day of the
Plan Year in which such "excess aggregate contributions" were made, a ten
percent excise tax shall be imposed on the Employer maintaining the Plan with
respect to such amounts.
The "excess aggregate contributions" allocable to a Participant's
Account shall be determined by reducing the "contribution percentage amounts"
made for the Plan Year on behalf of "eligible participants" who are Highly
Compensated Employees in order of the dollar amount of such "contribution
percentage amounts", beginning with the highest such dollar amount.
"Excess aggregate contributions" shall be treated as "annual
additions".
"Excess aggregate contributions" shall be forfeited or distributed from
a Participant's Employee Contributions Account, Matching Employer Contributions
Account and if applicable, the Participant's Deferral Contributions Account
and/or Qualified Nonelective Employer Contributions Account in the order
prescribed by the Employer, who shall direct the Trustee, and which order shall
be uniform with respect to all Participants and non-discriminatory.
Forfeitures of "excess aggregate contributions" shall be applied as
provided in Section 11.09.
35
6.08. AGGREGATE LIMIT ON "CONTRIBUTION PERCENTAGE AMOUNTS" AND "INCLUDABLE
CONTRIBUTIONS". The sum of the average "deferral ratio" and the average
"contribution percentage" of those Active Participants who are Highly
Compensated Employees during the Plan Year shall not exceed the "aggregate
limit". The average "deferral ratio" and average "contribution percentage" of
such Active Participants shall be determined after any corrections required to
meet the "ADP" test, described in Section 6.03, and the "ACP" test, described in
Section 6.06, have been made. Notwithstanding the foregoing, the "aggregate
limit" shall not be exceeded if either the average "deferral ratio" or the
average "contribution percentage" of such Active Participants for the Plan Year
does not exceed 1.25 multiplied by the average "deferral ratio" or the average
"contribution percentage", as applicable, for the "testing year" of the Active
Participants who are Non-Highly Compensated Employees for the "testing year".
If the "aggregate limit" would be exceeded for any Plan Year, then the
limit shall be met by reducing the "contribution percentage amounts" contributed
for the Plan Year on behalf of the Active Participants who are Highly
Compensated Employees for such Plan Year (in order of their "contribution
percentages", beginning with the highest such "contribution percentage").
"Contribution percentage amounts" that are reduced as provided herein shall be
treated as "excess aggregate contributions". If for any Plan Year in which the
"ADP" test described in Section 6.03 is deemed satisfied pursuant to Section
6.10, the average "deferral ratio" of those Active Participants who are Highly
Compensated Employees during the Plan Year does not meet the "aggregate limit"
after reducing the "contribution percentage amounts" contributed on behalf of
such Active Participants to zero, no further reduction shall be required under
this Section 6.08.
6.09. INCOME OR LOSS ON DISTRIBUTABLE CONTRIBUTIONS. The income or loss
allocable to "excess deferrals", "excess contributions", and "excess aggregate
contributions" shall be determined under one of the following methods:
(a) the income or loss for the "determination year" allocable to
the Participant's Account to which such contributions were made
multiplied by a fraction, the numerator of which is the amount of the
distributable contributions and the denominator of which is the balance
of the Participant's Account to which such contributions were made,
determined without regard to any income or loss occurring during the
"determination year"; or
(b) the income or loss for the "determination year" determined
under any other reasonable method, provided that such method is used
consistently for all Participants in determining the income or loss
allocable to distributable contributions hereunder for the Plan Year,
and is used by the Plan in allocating income or loss to Participants'
Accounts.
Income or loss allocable to the period between the end of the "determination
year" and the date of distribution shall be disregarded in determining income or
loss.
36
6.10. DEEMED SATISFACTION OF "ADP" TEST. Notwithstanding any other provision of
this Article 6 to the contrary, for any Plan Year beginning on or after January
1, 1999, if the Employer has elected one of the safe harbor contributions in
Subsection 1.10 (a) (3) or 1.11 (a) (3) of the Adoption Agreement and complies
with the notice requirements described herein for such Plan Year, the Plan shall
be deemed to have satisfied the "ADP" test described in Section 6.03. The
Employer shall provide a notice to each Active Participant during the Plan Year
describing the following:
(a) the formula used for determining the amount of the safe harbor
contribution to be made on behalf of Active Participants for the Plan
Year or a statement that the Plan may be amended during the Plan Year
to provide for a safe harbor Nonelective Employer Contribution for the
Plan Year equal to at least three percent of each Active Participant's
Compensation for the Plan Year;
(b) any other employer contributions provided under the Plan and
any requirements that Active Participants must satisfy to be entitled
to receive such employer contributions;
(c) the type and amount of Compensation that may be deferred under
the Plan as Deferral Contributions;
(d) the procedures for making a cash or deferred election under
the Plan and the periods during which such elections may be made or
changed; and
(e) the withdrawal and vesting provisions applicable to
contributions under the Plan.
The descriptions required in (b) through (e) may be provided by cross
references to the relevant sections of an up to date summary plan description.
Such notice shall be written in a manner calculated to be understood by the
average Active Participant. The Employer shall provide the notice to each Active
Participant within one of the following periods, whichever is applicable:
(f) if the employee is an Active Participant 90 days before the
beginning of the Plan Year, within the period beginning 90 days and
ending 30 days before the first day of the Plan Year; or
(g) if the employee becomes an Active Participant after the date
described in paragraph (f) above, within the period beginning 90 days
before and ending on the date he becomes an Active Participant;
provided, however, that such notice shall not be required to be provided to an
Active Participant earlier than is required under any guidance published by the
Internal Revenue Service.
If an Employer that provides notice that the Plan may be amended to
provide a safe harbor Nonelective Employer Contribution for the Plan Year does
amend the Plan to provide such contribution, the Employer shall provide a
supplemental
37
notice to all Active Participants stating that a safe harbor Nonelective
Employer Contribution in the specified amount shall be made for the Plan Year.
Such supplemental notice shall be provided to Active Participants at least 30
days before the last day of the Plan Year.
6.11. DEEMED SATISFACTION OF "ACP" TEST WITH RESPECT TO MATCHING EMPLOYER
CONTRIBUTIONS. A Plan that satisfies the requirements of Section 6.10 shall also
be deemed to have satisfied the "ACP" test described in Section 6.06 with
respect to Matching Employer Contributions, if Matching Employer Contributions
to the Plan for the Plan Year meet all of the following requirements: (a) the
percentage of Deferral Contributions matched does not increase as the percentage
of Compensation contributed increases; (b) Highly Compensated Employees are not
provided a greater percentage match than Non-Highly Compensated Employees; (c)
Deferral Contributions matched do not exceed six percent of a Participant's
Compensation; and (d) if the Employer elected in Subsection 1.10(a)(2) or
1.10(b) of the Adoption Agreement to provide discretionary Matching Employer
Contributions, the Employer also elected in Subsection 1.10(a)(2)(A) or
l.ll(b)(1) of the Adoption Agreement, as applicable, to limit the dollar amount
of such discretionary Matching Employer Contributions allocated to a Participant
for the Plan Year to no more than four percent of such Participant's
Compensation for the Plan Year.
If such Plan provides for Employee Contributions, the "ACP" test
described in Section 6.06 must be applied with respect to such Employee
Contributions. For purposes of applying the "ACP" test with respect to Employee
Contributions, Matching Employer Contributions and Nonelective Employer
Contributions that satisfy the vesting and distribution requirements applicable
to safe harbor contributions, but which are not required to comply with the safe
harbor contribution requirements may be taken into account.
6.12. CODE SECTION 415 LIMITATIONS. Notwithstanding any other provisions of the
Plan, the following limitations shall apply:
(a) Employer Maintains Single Plan: If the "415 employer" does not
maintain any other qualified defined contribution plan or any "welfare
benefit fund", "individual medical benefit account", or "simplified
employee pension" in addition to the Plan, the provisions of this
Subsection 6.12(a) shall apply.
(1) If a Participant does not participate in, and has
never participated in any other qualified defined contribution
plan, "welfare benefit fund", "individual medical benefit
account", or "simplified employee pension" maintained by the
"415 employer", which provides an "annual addition", the
amount of "annual additions" to the Participant's Account for
a Limitation Year shall not exceed the lesser of the "maximum
permissible amount" or any other limitation contained in the
Plan. If a 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 shall
be reduced so that the "annual additions" for the Limitation
Year shall equal the "maximum permissible amount".
38
(2) Prior to the determination of a Participant's actual
Compensation for a Limitation Year, the "maximum permissible
amount" may be determined on the basis of a reasonable
estimation of the Participant's Compensation for such
Limitation Year, uniformly determined for all Participants
similarly situated. Any Employer contributions based on
estimated annual Compensation shall be reduced by any "excess
415 amounts" carried over from prior Limitation Years.
(3) As soon as is administratively feasible after the end
of the Limitation Year, the "maximum permissible amount" for
such Limitation Year shall be determined on the basis of the
Participant's actual Compensation for such Limitation Year.
(4) If there is an "excess 415 amount" with respect to a
Participant for a Limitation Year as a result of the
estimation of the Participant's Compensation for the
Limitation Year, the allocation of forfeitures to the
Participant's Account, or a reasonable error in determining
the amount of Deferral Contributions that may be made on
behalf of the Participant under the limits of this Section
6.12, such "excess 415 amount" shall be disposed of as
follows:
(A) Any Employee Contributions shall be reduced
to the extent necessary to reduce the "excess 415
amount".
(B) If after application of Subsection 6.12(a)
(4)(A) an "excess 415 amount" still exists, any
Deferral Contributions that have not been matched
shall be reduced to the extent necessary to reduce
the "excess 415 amount".
(C) If after application of Subsection
6.12(a)(4)(B) an "excess 415 amount" still exists,
any Deferral Contributions that have been matched and
the Matching Employer Contributions attributable
thereto shall be reduced to the extent necessary to
reduce the "excess 415 amount".
(D) If after the application of Subsection 6.12
(a)(4)(C) an "excess 415 amount" still exists, any
Nonelective Employer Contributions shall be reduced
to the extent necessary to reduce the "excess 415
amount".
(E) If after the application of Subsection 6.12
(a)(4)(D) an "excess 415 amount" still exists, any
Qualified Nonelective Employer Contributions shall be
reduced to the extent necessary to reduce the "excess
415 amount".
Employee Contributions and Deferral Contributions
that are reduced as provided above shall be returned to the
Participant. Any income allocable to returned Employee
Contributions or Deferral Contributions shall also be returned
or shall be treated as additional "annual
39
additions" for the Limitation Year in which the excess
contributions to which they are allocable were made.
If Matching Employer, Nonelective Employer, or
Qualified Nonelective Employer Contributions to a
Participant's Account are reduced as an "excess 415 amount",
as provided above, and the individual is still an Active
Participant at the end of the Limitation Year, then such
"excess 415 amount" shall be reapplied to reduce future
Employer contributions under the Plan for the next Limitation
Year (and for each succeeding Limitation Year, as necessary)
for such Participant, so that in each such Limitation Year the
sum of the actual Employer contributions made on behalf of
such Participant plus the reapplied amount shall equal the
amount of Employer contributions which would otherwise be made
to such Participant's Account. If the individual is not an
Active Participant at the end of a Limitation Year, then such
"excess 415 amount" shall be held unallocated in a suspense
account. The suspense account shall be applied to reduce
future Employer contributions for all remaining Active
Participants in the next Limitation Year and each succeeding
Limitation Year if necessary.
If a suspense account is in existence at any time
during the Limitation Year pursuant to this Subsection 6.12
(a)(4), it shall participate in the allocation of the Trust
Fund's investment gains and losses. All amounts in the
suspense account must be allocated to the Accounts of Active
Participants before any Employer contribution may be made for
the Limitation Year.
Except as otherwise specifically provided in this
Subsection 6.12, "excess 415 amounts" may not be distributed
to Participants.
(b) Employer Maintains Multiple Defined Contribution Type Plans:
Unless the Employer specifies another method for limiting "annual
additions" in the 415 Correction Addendum to the Adoption Agreement, if
the "415 employer" maintains any other qualified defined contribution
plan or any "welfare benefit fund", "individual medical benefit
account", or "simplified employee pension" in addition to the Plan, the
provisions of this Subsection 6.12(b) shall apply.
(1) If a Participant is covered under any other qualified
defined contribution plan or any "welfare benefit fund",
"individual medical benefit account", or "simplified employee
pension" maintained by the "415 employer", that provides an
"annual addition", the amount of "annual additions" to the
Participant's Account for a Limitation Year shall not exceed
the lesser of
(A) the "maximum permissible amount", reduced by
the sum of any "annual additions" to the
Participant's accounts for the same Limitation Year
under such other qualified defined contribution plans
and "welfare benefit funds", "individual medical
benefit accounts", and "simplified employee
pensions", or
40
(B) any other limitation contained in the Plan.
If the "annual additions" with respect to a
Participant under other qualified defined contribution plans,
"welfare benefit funds", "individual medical benefit
accounts", and "simplified employee pensions" maintained by
the "415 employer" are less than the "maximum permissible
amount" and a contribution that would otherwise be contributed
or allocated to the Participant's Account under the Plan would
cause the "annual additions" for the Limitation Year to exceed
the "maximum permissible amount", the amount to be contributed
or allocated shall be reduced so that the "annual additions"
for the Limitation Year shall equal the "maximum permissible
amount". If the "annual additions" with respect to the
Participant under such other qualified defined contribution
plans, "welfare benefit funds", "individual medical benefit
accounts", and "simplified employee pensions" in the aggregate
are equal to or greater than the "maximum permissible amount",
no amount shall be contributed or allocated to the
Participant's Account under the Plan for the Limitation Year.
(2) Prior to the determination of a Participant's actual
Compensation for the Limitation Year, the amounts referred to
in Subsection 6.12(b)(1)(A) above may be determined on the
basis of a reasonable estimation of the Participant's
Compensation for such Limitation Year, uniformly determined
for all Participants similarly situated. Any Employer
contribution based on estimated annual Compensation shall be
reduced by any "excess 415 amounts" carried over from prior
Limitation Years.
(3) As soon as is administratively feasible after the end
of the Limitation Year, the amounts referred to in Subsection
6.12(b)(1)(A) shall be determined on the basis of the
Participant's actual Compensation for such Limitation Year.
(4) Notwithstanding the provisions of any other plan
maintained by a "415 employer", if there is an "excess 415
amount" with respect to a Participant for a Limitation Year as
a result of estimation of the Participant's Compensation for
the Limitation Year, the allocation of forfeitures to the
Participant's account under any qualified defined contribution
plan maintained by the "415 employer", or a reasonable error
in determining the amount of Deferral Contributions that may
be made on behalf of the Participant to the Plan or any other
qualified defined contribution plan maintained by the "415
employer" under the limits of this Subsection 6.12(b), such
"excess 415 amount" shall be deemed to consist first of the
"annual additions" allocated to this Plan and shall be reduced
as provided in Subsection 6.12(a)(4); provided, however, that
if the "415 employer" maintains both a profit sharing plan and
a money purchase pension plan under this Basic Plan Document,
"annual additions" to the money purchase pension plan shall be
reduced only after all "annual additions" to the profit
sharing plan have been reduced.
41
(c) Employer Maintains or Maintained Defined Benefit Plan: For
Limitation Years beginning prior to January 1, 2000, if the "415
employer" maintains, or at any time maintained, a qualified defined
benefit plan, the sum of any Participant's "defined benefit plan
fraction and "defined contribution plan fraction" shall not exceed the
combined plan limitation of 1.00 in any such Limitation Year. The
combined plan limitation shall be met by reducing "annual additions"
under the Plan, unless otherwise provided in the qualified defined
benefit plan.
(d) Adjustment to Compensation: Compensation for purposes of this
Section 6.12 shall include amounts that are not includable in the gross
income of the Participant under a salary reduction agreement by reason
of the application of Code Section 125, 132(f)(4), 402(e)(3),
402(h), or 403(b).
ARTICLE 7. PARTICIPANTS' ACCOUNTS.
7.01. INDIVIDUAL ACCOUNTS. The Administrator shall establish and maintain an
Account for each Participant that shall reflect Employer and Employee
contributions made on behalf of the Participant and earnings, expenses, gains
and losses attributable thereto, and investments made with amounts in the
Participant's Account. The Administrator shall establish and maintain such other
accounts and records as it decides in its discretion to be reasonably required
or appropriate in order to discharge its duties under the Plan. The
Administrator shall notify the Trustee of all Accounts established and
maintained under the Plan.
7.02. VALUATION OF ACCOUNTS. Participant Accounts shall be valued at their fair
market value at least annually as of a date specified by the Administrator in
accordance with a method consistently followed and uniformly applied, and on
such date earnings, expenses, gains and losses on investments made with amounts
in each Participant's Account shall be allocated to such Account. Participants
shall be furnished statements of their Account values at least once each Plan
Year.
ARTICLE 8. INVESTMENT OF CONTRIBUTIONS.
8.01. MANNER OF INVESTMENT. All contributions made to the Accounts of
Participants shall be held for investment by the Trustee. Except as otherwise
specifically provided in Section 20.10, the Accounts of Participants shall be
invested and reinvested only in Permissible Investments selected by the Employer
and designated in the Service Agreement.
8.02. INVESTMENT DECISIONS. Investments shall be directed by the Employer or by
each Participant or both, in accordance with the Employer's election in
Subsection 1.23 of the Adoption Agreement. Pursuant to Section 20.04, the
Trustee shall have no discretion or authority with respect to the investment of
the Trust Fund.
42
(a) With respect to those Participant Accounts for which Employer
investment direction is elected, the Employer (in its capacity as a
named fiduciary under XXXXX) has the right to direct the Trustee in
writing with respect to the investment and reinvestment of assets
comprising the Trust Fund in the Permissible Investments designated in
the Service Agreement.
(b) With respect to those Participant Accounts for which
Participant investment direction is elected, each Participant shall
direct the investment of his Account among the Permissible Investments
designated in the Service Agreement. The Participant shall file initial
investment instructions with the Administrator, on such form as the
Administrator may provide, selecting the Permissible Investments in
which amounts credited to his Account shall be invested.
(1) Except as provided in this Section 8.02, only
authorized Plan contacts and the Participant shall have access
to a Participant's Account. While any balance remains in the
Account of a Participant after his death, the Beneficiary of
the Participant shall make decisions as to the investment of
the Account as though the Beneficiary were the Participant. To
the extent required by a qualified domestic relations order as
defined in Code Section 414(p), an alternate payee shall make
investment decisions with respect to any segregated account
established in the name of the alternate payee as provided in
Section 18.04.
(2) If the Trustee receives any contribution under the
Plan as to which investment instructions have not been
provided, the Trustee shall promptly notify the Administrator
and the Administrator shall take steps to elicit instructions
from the Participant. The Trustee shall credit any such
contribution to the Participant's Account and such amount
shall be invested in the Permissible Investment selected by
the Employer for such purposes or, absent Employer selection,
in the most conservative Permissible Investment designated in
the Service Agreement, until investment instructions have been
received by the Trustee.
If the Employer elects to allow Participants to direct the
investment of their Account in Subsection 1.23(b) or (c) of the
Adoption Agreement, the Plan is intended to constitute a plan described
in ERISA Section 404 (c) and regulations issued thereunder. The
fiduciaries of the Plan shall be relieved of liability for any losses
that are the direct and necessary result of investment instructions
given by the Participant, his Beneficiary, or an alternate payee under
a qualified domestic relations order. The Employer shall not be
relieved of fiduciary responsibility for the selection and monitoring
of the Permissible Investments under the Plan.
(c) All dividends, interest, gains and distributions of any nature
received in respect of Fund Shares shall be reinvested in additional
shares of that Permissible Investment.
(d) Expenses attributable to the acquisition of investments shall
be charged to the Account of the Participant for which such investment
is made.
43
8.03. PARTICIPANT DIRECTIONS TO TRUSTEE. The method and frequency for change of
investments shall be determined under (a) the rules applicable to the
Permissible Investments selected by the Employer and designated in the Service
Agreement and (b) any additional rules of the Employer limiting the frequency of
investment changes, which are included in a separate written administrative
procedure adopted by the Employer and accepted by the Trustee. The Trustee shall
have no duty to inquire into the investment decisions of a Participant or to
advise him regarding the purchase, retention, or sale of assets credited to his
Account.
ARTICLE 9. PARTICIPANT LOANS.
9.01. SPECIAL DEFINITIONS. For purposes of this Article, the following special
definitions shall apply:
(A) A "PARTICIPANT" is any Participant or Beneficiary, including
an alternate payee under a qualified domestic relations order, as
defined in Code Section 414(p), who is a party-in-interest (as
determined under ERISA Section 3(14)) with respect to the Plan.
(b) An "OWNER-EMPLOYEE" is, if the Employer is a sole
proprietorship for Federal income tax purposes (regardless of its
characterization under state law), the individual who is the sole
proprietor or sole member, as applicable; if the Employer is a
partnership for Federal income tax purposes (regardless of its
characterization under state law), a partner or member, as applicable,
who owns more than 10 percent of either the capital interest or the
profits interest of the partnership.
(c) A "SHAREHOLDER-EMPLOYEE" is an employee or officer of an
electing small business (Subchapter S) corporation who owns (or is
considered as owning within the meaning of Code Section 318 (a) (1)),
on any day during the taxable year of such corporation, more than five
percent of the outstanding stock of the corporation.
9.02. PARTICIPANT LOANS. If so provided by the Employer in Section 1.17 of the
Adoption Agreement, the Administrator shall allow "participants" to apply for a
loan from their Accounts under the Plan, subject to the provisions of this
Article 9.
9.03. SEPARATE LOAN PROCEDURES. All Plan loans shall be made and administered in
accordance with separate loan procedures that are hereby incorporated into the
Plan by reference.
9.04. AVAILABILITY OF LOANS. Loans shall be made available to all "participants"
on a reasonably equivalent basis. Notwithstanding the preceding sentence, no
loans shall be made to (a) an Eligible Employee who makes a Rollover
Contribution in accordance with Section 5.06, but who has not satisfied the
requirements of Section 4.01 to become an Active Participant or (b) a
"shareholder-employee" or "owner-employee".
44
Loans shall not be made available to "participants" who are Highly
Compensated Employees in an amount greater than the amount made available to
other "participants".
9.05. LIMITATION ON LOAN AMOUNT. No loan to any "participant" shall be made to
the extent that such loan when added to the outstanding balance of all other
loans to the "participant" would exceed the lesser of (a) $50,000 reduced by the
excess (if any) of the highest outstanding balance of plan loans during the one-
year period ending on the day before the loan is made over the outstanding
balance of plan loans on the date the loan is made, or (b) one-half the present
value of the "participant's" vested interest in his Account. For purposes of the
above limitation, plan loans include all loans from all plans maintained by the
Employer and any Related Employer.
9.06. INTEREST RATE. All loans shall bear a reasonable rate of interest as
determined by the Administrator based on the prevailing interest rates charged
by persons in the business of lending money for loans which would be made under
similar circumstances. The determination of a reasonable rate of interest must
be based on appropriate regional factors unless the Plan is administered on a
national basis in which case the Administrator may establish a uniform
reasonable rate of interest applicable to all regions.
9.07. LEVEL AMORTIZATION. All loans shall by their terms require that repayment
(principal and interest) be amortized in level payments, not less than
quarterly, over a period not extending beyond five years from the date of the
loan unless such loan is for the purchase of a "participant's" primary
residence. Notwithstanding the foregoing, the amortization requirement may be
waived for a period not exceeding one year during which a "participant" is on a
leave of absence from employment with the Employer and any Related Employer
either without pay or at a rate of pay which, after withholding for employment
and income taxes, is less than the amount of the installment payments required
under the terms of the loan. Installment payments must resume after such leave
of absence ends or, if earlier, after the first year of such leave of absence,
in an amount that is not less than the amount of the installment payments
required under the terms of the original loan. No waiver of the amortization
requirements shall extend the period of the loan beyond five years from the date
of the loan, unless the loan is for purchase of the "participant's" primary
residence.
9.08. SECURITY. Loans must be secured by the "participant's" vested interest in
his Account not to exceed 50 percent of such vested interest. If the provisions
of Section 14.04 apply to a Participant, a Participant must obtain the consent
of his or her spouse, if any, to use his vested interest in his Account as
security for the loan. Spousal consent shall be obtained no earlier than the
beginning of the 90-day period that ends on the date on which the loan is to be
so secured. The consent must be in writing, 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 with respect to that loan.
45
9.09. TRANSFER AND DISTRIBUTION OF LOAN AMOUNTS FROM PERMISSIBLE INVESTMENTS.
THE Employer shall confirm the order in which the Permissible Investments shall
be liquidated in order that the loan amount can be transferred and distributed.
9.10. DEFAULT. The Administrator shall treat a loan in default if
(a) any scheduled repayment remains unpaid at the end of the
period specified in the separate loan procedures (unless payment is not
made due to a waiver of the amortization schedule for a "participant"
who is on a leave of absence, as described in Section 9.07), or
(b) there is an outstanding principal balance existing on a loan
after the last scheduled repayment date.
Upon default, the entire outstanding principal and accrued interest
shall be immediately due and payable. If a distributable event (as defined by
the Code) has occurred, the Administrator shall direct the Trustee to foreclose
on the promissory note and offset the "participant's" vested interest in his
Account by the outstanding balance of the loan. If a distributable event has not
occurred, the Administrator shall direct the Trustee to foreclose on the
promissory note and offset the "participant's" vested interest in his Account as
soon as a distributable event occurs. The Trustee shall have no obligation to
foreclose on the promissory note and offset the outstanding balance of the loan
except as directed by the Administrator.
9.11. EFFECT OF TERMINATION WHERE PARTICIPANT HAS OUTSTANDING LOAN BALANCE. IF a
Participant has an outstanding loan balance at the time his employment
terminates, the entire outstanding principal and accrued interest shall be
immediately due and payable. Any outstanding loan amounts that are immediately
due and payable hereunder shall be treated in accordance with the provisions of
Sections 9.10 and 9.12 as if the Participant had defaulted on the outstanding
loan.
9.12. DEEMED DISTRIBUTIONS UNDER CODE SECTION 72(p). Notwithstanding the
provisions of Section 9.10, if a "participant's" loan is in default, the
"participant" shall be treated as having received a taxable "deemed
distribution" for purposes of Code Section 72 (p), whether or not a
distributable event has occurred. The amount of a loan that is a deemed
distribution ceases to be an outstanding loan for purposes of Code Section 72,
except as otherwise specifically provided herein, and a Participant shall not be
treated as having received a taxable distribution when the Participant's Account
is offset by the outstanding balance of the loan amount as provided in Section
9.10. In addition, interest that accrues on a loan after it is deemed
distributed shall not be treated as an additional loan to the Participant and
shall not be included in the income of the Participant as a deemed distribution.
Notwithstanding the foregoing, unless a Participant repays a loan that has been
deemed distributed, with interest thereon, the amount of such loan, with
interest, shall be considered an outstanding loan under Code Section 72(p) for
purposes of determining the applicable limitation on subsequent loans under
Section 9.05.
46
If a Participant makes payments on a loan that has been deemed
distributed, payments made on the loan after the date it was deemed distributed
shall be treated as Employee Contributions to the Plan for purposes of
increasing the Participant's tax basis in his Account, but shall not be treated
as Employee Contributions for any other purpose under the Plan, including
application of the "ACP" test described in Section 6.06 and application of the
Code Section 415 limitations described in Section 6.12.
The provisions of this Section 9.12 regarding treatment of loans that
are deemed distributed shall be effective as of
(a) the Effective Date, if the Plan is a new plan or is an
amendment and restatement of a plan that administered loans in
accordance with the provisions of Q & A 19 and 20 of Section 1.72(p)-l
of the Proposed Treasury Regulations immediately prior to the Effective
Date or
(b) as of the January 1 coinciding with or immediately following
the Effective Date, in any other case.
Any loan that was deemed distributed prior to the date the provisions of this
Section 9.12 are effective shall be administered in accordance with the
provisions of this Section 9.12 to the extent such administration is consistent
with the transition rules in Q & A 21(c)(2) of Section 1.72(p)-l of the
Proposed Treasury Regulations.
9.13. DETERMINATION OF ACCOUNT VALUE UPON DISTRIBUTION WHERE PLAN LOAN IS
OUTSTANDING. Notwithstanding any other provision of the Plan, the portion of a
"participant's" vested interest in his Account that is held by the Plan as
security for a loan outstanding to the "participant" in accordance with the
provisions of this Article shall reduce the amount of the Account payable at the
time of death or distribution, but only if the reduction is used as repayment of
the loan. If less than 100 percent of a "participant's" vested interest in his
Account (determined without regard to the preceding sentence) is payable to the
"participant's" surviving spouse or other Beneficiary, then the Account shall be
adjusted by first reducing the "participant's" vested interest in his Account by
the amount of the security used as repayment of the loan, and then determining
the benefit payable to the surviving spouse or other Beneficiary.
ARTICLE 10. IN-SERVICE WITHDRAWALS.
10.01. AVAILABILITY OF IN-SERVICE WITHDRAWALS. Except as otherwise permitted
under Section 11.02 with respect to Participants who continue in employment past
Normal Retirement Age, or as required under Section 12.04 with respect to
Participants who continue in employment past their Required Beginning Date, a
Participant shall not be permitted to make a withdrawal from his Account under
the Plan prior to retirement or termination of employment with the Employer and
all Related Employers, if any, except as provided in this Article.
47
10.02. WITHDRAWAL OF EMPLOYEE CONTRIBUTIONS. A Participant may elect to
withdraw, in cash, up to 100 percent of the amount then credited to his Employee
Contributions Account. Such withdrawals may be made at any time, unless the
Employer elects in Subsection 1.18(c) (1) (A) of the Adoption Agreement to limit
the frequency of such withdrawals.
10.03. WITHDRAWAL OF ROLLOVER CONTRIBUTIONS. A Participant may elect to
withdraw, in cash, up to 100 percent of the amount then credited to his Rollover
Contributions Account. Such withdrawals may be made at any time.
10.04. AGE 59 1/2 WITHDRAWALS. If so provided by the Employer in Subsection
1.18(b) or the Protected In-Service Withdrawals Addendum to the Adoption
Agreement, a Participant who continues in employment as an Employee and who has
attained the age of 59 1/2 is permitted to withdraw upon request all or any
portion of the Accounts specified by the Employer in Subsection 1.18(b) or the
Protected In-Service Withdrawals Addendum to the Adoption Agreement, as
applicable.
10.05. HARDSHIP WITHDRAWALS. If so provided by the Employer in Subsection
1.18(a) of the Adoption Agreement, a Participant who continues in employment as
an Employee may apply to the Administrator for a hardship withdrawal of all or
any portion of his Deferral Contributions Account (excluding any earnings
thereon accrued after the later of December 31, 1988 or the last day of the last
Plan Year ending before July 1, 1989) and, if so provided by the Employer in
Subsection 1.18(d)(2), such other Accounts as may be specified in Subsection (c)
of the Protected In-Service Withdrawals Addendum to the Adoption Agreement. The
minimum amount that a Participant may withdraw because of hardship is $500.
For purposes of this Section 10.05, a withdrawal is made on account of
hardship if made on account of an immediate and heavy financial need of the
Participant where such Participant lacks other available resources.
Determinations with respect to hardship shall be made by the Administrator and
shall be conclusive for purposes of the Plan, and shall be based on the
following special rules:
(a) The following are the only financial needs considered
immediate and heavy:
(1) expenses incurred or necessary for medical care
(within the meaning of Code Section 213(d)) of the
Participant, the Participant's spouse, children, or
dependents;
(2) the purchase (excluding mortgage payments) of a
principal residence for the Participant;
(3) payment of tuition, related educational fees, and
room and board for the next 12 months of post-secondary
education for the Participant, the Participant's spouse,
children or dependents;
48
(4) the need to prevent the eviction of the Participant
from, or a foreclosure on the mortgage of, the Participant's
principal residence; or
(5) any other financial need determined to be immediate
and heavy under rules and regulations issued by the Secretary
of the Treasury or his delegate.
(b) A distribution shall be considered as necessary to satisfy an
immediate and heavy financial need of the Participant only if:
(1) The Participant has obtained all distributions, other
than the hardship withdrawal, and all nontaxable (at the time
of the loan) loans currently available under all plans
maintained by the Employer or any Related Employer;
(2) The Participant suspends Deferral Contributions and
Employee Contributions to the Plan for the 12-month period
following the date of his hardship withdrawal. The suspension
must also apply to all elective contributions and employee
contributions to all other qualified plans and non-qualified
plans maintained by the Employer or any Related Employer,
other than any mandatory employee contribution portion of a
defined benefit plan, including stock option, stock purchase,
and other similar plans, but not including health and welfare
benefit plans (other than the cash or deferred arrangement
portion of a cafeteria plan);
(3) The withdrawal amount is not in excess of the amount
of an immediate and heavy financial need (including amounts
necessary to pay any Federal, state or local income taxes or
penalties reasonably anticipated to result from the
distribution); and
(4) The Participant agrees to limit Deferral
Contributions (and "elective deferrals", as defined in
Subsection 6.01(i)) to the Plan and any other qualified plan
maintained by the Employer or a Related Employer for the
calendar year immediately following the calendar year in which
the Participant received the hardship withdrawal to the
applicable limit under Code Section 402(g) for such calendar
year less the amount of the Participant's Deferral
Contributions (and "elective deferrals") for the calendar year
in which the Participant received the hardship withdrawal.
10.06. PRESERVATION OF PRIOR PLAN IN-SERVICE WITHDRAWAL RULES. As indicated by
the Employer in Subsection 1.18(d) of the Adoption Agreement, to the extent
required under Code Section 411(d) (6), in-service withdrawals that were
available under a prior plan shall be available under the Plan.
(a) If the Plan is a profit sharing plan, the following provisions
shall apply to preserve prior in-service withdrawal provisions.
(1) If the Plan is an amendment and restatement of a
prior plan or is a transferee plan of a prior plan that
provided for in-service withdrawals from a Participant's
Matching Employer and/or Nonelective Employer
49
Contributions Accounts of amounts that have been held in such
Accounts for a specified period of time, a Participant shall
be entitled to withdraw at any time prior to his termination
of employment, subject to any restrictions applicable under
the prior plan that the Employer elects in Subsection 1.18(d)
(1) (A) (i) of the Adoption Agreement to continue under the
Plan as amended and restated hereunder (other than any
mandatory suspension of contributions restriction), any vested
amounts held in such Accounts for the period of time specified
by the Employer in Subsection 1.18(d)(1)(A) of the Adoption
Agreement.
(2) If the Plan is an amendment and restatement of a
prior plan or is a transferee plan of a prior plan that
provided for in-service withdrawals from a Participant's
Matching Employer and/or Nonelective Employer Contributions
Accounts by Participants with at least 60 months of
participation, a Participant with at least 60 months of
participation shall be entitled to withdraw at any time prior
to his termination of employment, subject to any restrictions
applicable under the prior plan that the Employer elects in
Subsection 1.18(d)(1)(B)(i) of the Adoption Agreement to
continue under the Plan as amended and restated hereunder
(other than any mandatory suspension of contributions
restriction), any vested amounts held in such Accounts.
(3) If the Plan is an amendment and restatement of a
prior plan or is a transferee plan of a prior plan that
provided for in-service withdrawals from a Participant's
Matching Employer and/or Nonelective Employer Contributions
Accounts under any other circumstances, a Participant who has
met any applicable requirements, as set forth in the Protected
In-Service Withdrawals Addendum to the Adoption Agreement,
shall be entitled to withdraw at any time prior to his
termination of employment any vested amounts held in such
Accounts, subject to any restrictions applicable under the
prior plan that the Employer elects to continue under the Plan
as amended and restated hereunder, as set forth in the
Protected In-Service Withdrawal Addendum to the Adoption
Agreement.
(b) If the Plan is a money purchase pension plan that is an
amendment and restatement of a prior profit sharing plan or is a
transferee plan of a prior profit sharing plan that provided for
in-service withdrawals from any portion of a Participant's Account
other than his Employee Contributions and/or Rollover Contributions
Accounts, a Participant who has met any applicable requirements, as set
forth in the Protected in-Service Withdrawals Addendum to the Adoption
Agreement, shall be entitled to withdraw at any time prior to his
termination of employment his vested interest in amounts attributable
to such prior profit sharing accounts, subject to any restrictions
applicable under the prior plan that the Employer elects to continue
under the Plan as amended and restated hereunder (other than any
mandatory suspension of contributions restriction), as set forth in the
Protected In-Service Withdrawal Addendum to the Adoption Agreement.
50
10.07. RESTRICTIONS ON IN-SERVICE WITHDRAWALS. The following restrictions apply
to any in-service withdrawal made from a Participant's Account under this
Article:
(a) If the provisions of Section 14.04 apply to a Participant's
Account, the Participant must obtain the consent of his spouse, if any,
to obtain an in- service withdrawal.
(b) In-service withdrawals shall be made in a lump sum payment,
except that if the provisions of Section 14.04 apply to a Participant's
Account, the Participant may receive the in-service withdrawal in the
form of a "qualified joint and survivor annuity", as defined in
Subsection 14.01(a).
(c) Notwithstanding any other provision of the Plan to the
contrary other than the provisions of Section 11.02, a Participant
shall not be permitted to make an in-service withdrawal from his
Account of amounts attributable to contributions made to a money
purchase pension plan, except employee and/or rollover contributions
that were held in a separate account (s) under such plan.
10.08. DISTRIBUTION OF WITHDRAWAL AMOUNTS. The Employer shall confirm the order
in which the Permissible Investments shall be liquidated in order that the
withdrawal amount can be distributed.
ARTICLE 11. RIGHT TO BENEFITS.
11.01. NORMAL OR EARLY RETIREMENT. Each Participant who continues in employment
as an Employee until his Normal Retirement Age or, if so provided by the
Employer in Subsection 1.13(b) of the Adoption Agreement, Early Retirement Age,
shall have a vested interest in his Account of 100 percent regardless of any
vesting schedule elected in Section 1.15 of the Adoption Agreement. If a
Participant retires upon the attainment of Normal or Early Retirement Age, such
retirement is referred to as a normal retirement.
11.02. LATE RETIREMENT. If a Participant continues in employment as an Employee
after his Normal Retirement Age, he shall continue to have a 100 percent vested
interest in his Account and shall continue to participate in the Plan until the
date he establishes with the Employer for his late retirement. Until he retires,
he has a continuing election to receive all or any portion of his Account.
11.03. DISABILITY RETIREMENT. If so provided by the Employer in Subsection
1.13(c) of the Adoption Agreement, a Participant who becomes disabled while
employed as an Employee shall have a 100 percent vested interest in his Account
regardless of any vesting schedule elected in Section 1.15 of the Adoption
Agreement. An Employee is considered disabled if he satisfies any of the
requirements for disability retirement selected by the Employer in Section 1.14
of the Adoption Agreement and terminates his employment with the Employer. Such
termination of employment is referred to as a disability retirement.
Determinations with respect to disability shall be made by the Administrator.
51
11.04. DEATH. If a Participant who is employed as an Employee dies, his Account
shall become 100 percent vested and his designated Beneficiary shall be entitled
to receive the balance of his Account, plus any amounts thereafter credited to
his Account. If a Participant whose employment as an Employee has terminated
dies, his designated Beneficiary shall be entitled to receive the Participant's
vested interest in his Account.
A copy of the death notice or other sufficient documentation must be
filed with and approved by the Administrator. If upon the death of the
Participant there is, in the opinion of the Administrator, no designated
Beneficiary for part or all of the Participant's Account, such amount shall be
paid to his surviving spouse or, if none, to his estate (such spouse or estate
shall be deemed to be the Beneficiary for purposes of the Plan). If a
Beneficiary dies after benefits to such Beneficiary have commenced, but before
they have been completed, and, in the opinion of the Administrator, no person
has been designated to receive such remaining benefits, then such benefits shall
be paid in a lump sum to the deceased Beneficiary's estate.
Subject to the requirements of Section 14.04, a Participant may
designate a Beneficiary, or change any prior designation of Beneficiary by
giving notice to the Administrator on a form designated by the Administrator. If
more than one person is designated as the Beneficiary, their respective
interests shall be as indicated on the designation form. In the case of a
married Participant, the Participant's spouse shall be deemed to be the
designated Beneficiary unless the Participant's spouse has consented to another
designation in the manner described in Section 14.06.
11.05. OTHER TERMINATION OF EMPLOYMENT. If a Participant terminates his
employment with the Employer and all Related Employers, if any, for any reason
other than death or normal, late, or disability retirement, he shall be entitled
to a termination benefit equal to the sum of (a) his vested interest in the
balance of his Matching Employer and/or Nonelective Employer Contributions
Account (s), other than the balance attributable to safe harbor Matching
Employer and/or safe harbor Nonelective Employer Contributions elected by the
Employer in Subsection 1.10 (a) (3) or 1.11(a) (3) of the Adoption Agreement,
such vested interest to be determined in accordance with the vesting schedule
(s) selected by the Employer in Section 1.15 of the Adoption Agreement, and (b)
the balance of his Deferral, Employee, Qualified Nonelective Employer, Qualified
Matching Employer, and Rollover Contributions Accounts, and the balance of his
Matching Employer or Nonelective Employer Contributions Account that is
attributable to safe harbor Matching Employer and/or safe harbor Nonelective
Employer Contributions.
11.06. APPLICATION FOR DISTRIBUTION. Unless a Participant's Account is cashed
out as provided in Section 13.02, a Participant (or his Beneficiary, if the
Participant has died) who is entitled to a distribution hereunder must make
application, in a form acceptable to the Administrator, for a distribution from
his Account. No distribution shall be made hereunder without proper application
therefor, except as otherwise provided in Section 13.02.
52
11.07. APPLICATION OF VESTING SCHEDULE FOLLOWING PARTIAL DISTRIBUTION. If a
distribution from a Participant's Matching Employer and/or Nonelective Employer
Contributions Account has been made to him at a time when he is less than 100
percent vested in such Account balance, the vesting schedule(s) in Section 1.15
of the Adoption Agreement shall thereafter apply only to the balance of his
Account attributable to Matching Employer and/or Nonelective Employer
Contributions allocated after such distribution. The balance of the Account from
which such distribution was made shall be transferred to a separate account
immediately following such distribution.
At any relevant time prior to a forfeiture of any portion thereof under
Section 11.08, a Participant's vested interest in such separate account shall be
equal to P (AB + (RxD))- (RxD), where P is the Participant's vested interest at
the relevant time determined under Section 11.05; AB is the account balance of
the separate account 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. Following a forfeiture of any portion of such
separate account under Section 11.08 below, any balance in the Participant's
separate account shall remain 100 percent vested.
11.08. FORFEITURES. If a Participant terminates his employment with the Employer
and all Related Employers before he is 100 percent vested in his Matching
Employer and/or Nonelective Employer Contributions Accounts, the non-vested
portion of his Account (including any amounts credited after his termination of
employment) shall be forfeited by him as follows:
(a) If the Inactive Participant elects to receive distribution of
his entire vested interest in his Account, the non-vested portion of
his Account shall be forfeited upon the complete distribution of such
vested interest, subject to the possibility of reinstatement as
provided in Section 11.10. For purposes of this Subsection, if the
value of an Employee's vested interest in his Account balance is zero,
the Employee shall be deemed to have received a distribution of his
vested interest immediately following termination of employment.
(b) If the Inactive Participant elects not to receive distribution
of his vested interest in his Account following his termination of
employment, the non-vested portion of his Account shall be forfeited
after the Participant has incurred five consecutive Breaks in Vesting
Service.
No forfeitures shall occur solely as a result of a Participant's
withdrawal of Employee Contributions.
11.09. APPLICATION OF FORFEITURES. Any forfeitures occurring during a Plan Year
shall be applied to reduce the contributions of the Employer, unless the
Employer has elected in Subsection 1.15(d)(3) of the Adoption Agreement that
such remaining forfeitures shall be allocated among the Accounts of Active
Participants who are eligible to receive allocations of Nonelective Employer
Contributions for the Plan Year in which the forfeiture occurs. Forfeitures that
53
are allocated among the Accounts of eligible Active Participants shall be
allocated in the same manner as Nonelective Employer Contributions. If the plan
is a money purchase pension plan or the Employer has elected a fixed Nonelective
Employer Contribution rate rather than a discretionary rate, forfeitures shall
incrementally increase the amount allocated to the Accounts of eligible Active
Participants. Notwithstanding any other provision of the Plan to the contrary,
forfeitures may first be used to pay administrative expenses under the Plan, as
directed by the Employer. To the extent that forfeitures are not used to reduce
administrative expenses under the Plan, as directed by the Employer, forfeitures
will be applied in accordance with this Section 11.09.
Pending application, forfeitures shall be held in the Permissible
Investment selected by the Employer for such purpose or, absent Employer
selection, in the most conservative Permissible Investment designated by the
Employer in the Service Agreement.
Notwithstanding any other provision of the Plan to the contrary, in no
event may forfeitures be used to reduce the Employer's obligation to remit to
the Trust (or other appropriate Plan funding vehicle) loan repayments made
pursuant to Article 9, Deferral Contributions or Employee Contributions.
11.10. REINSTATEMENT OF FORFEITURES. If a Participant forfeits any portion of
his Account under Subsection 11.08 (a) because of distribution of his complete
vested interest in his Account, but again becomes an Employee, then the amount
so forfeited, without any adjustment for the earnings, expenses, losses, or
gains of the assets credited to his Account since the date forfeited, shall be
recredited to his Account (or to a separate account as described in Section
11.07, if applicable) if he meets all of the following requirements:
(a) he again becomes an Employee before the date he incurs
five-consecutive Breaks in Vesting Service following the date complete
distribution of his vested interest was made to him; and
(b) he repays to the Plan the amount previously distributed to
him, without interest, within five years of his Reemployment Date. If
an Employee is deemed to have received distribution of his complete
vested interest as provided in Section 11.08, the Employee shall be
deemed to have repaid such distribution on his Reemployment Date.
Upon such an actual or deemed repayment, the provisions of the Plan
(including Section 11.07) shall thereafter apply as if no forfeiture had
occurred. The amount to be recredited pursuant to this paragraph shall be
derived first from the forfeitures, if any, which as of the date of recrediting
have yet to be applied as provided in Section 11.09 and, to the extent such
forfeitures are insufficient, from a special contribution to be made by the
Employer.
11.11. ADJUSTMENT FOR INVESTMENT EXPERIENCE. If any distribution under this
Article 11 is not made in a single payment, the amount retained by the Trustee
after the distribution shall be subject to adjustment until distributed to
reflect the income and gain or loss on the investments in which such amount is
54
invested and any expenses properly charged under the Plan and Trust to such
amounts.
ARTICLE 12. DISTRIBUTIONS.
12.01. RESTRICTIONS ON DISTRIBUTIONS. A Participant, or his Beneficiary, may not
receive a distribution from his Deferral Contributions, Qualified Nonelective
Employer Contributions, Qualified Matching Employer Contributions, safe harbor
Matching Employer Contributions or safe harbor Nonelective Employer
Contributions Accounts earlier than upon the Participant's separation from
service with the Employer and all Related Employers, death, or disability,
except as otherwise provided in Article 10, Section 11.02 or Section 12.04.
Notwithstanding the foregoing, amounts may also be distributed from such
Accounts, in the form of a lump sum only, upon
(a) Termination of the Plan without establishment of another
defined contribution plan, other than an employee stock ownership plan
(as defined in Code Section 4975 (e) or 409) or a simplified employee
pension plan as defined in Code Section 408 (k).
(b) The disposition by a corporation to an unrelated corporation
of substantially all of the assets (within the meaning of Code Section
409(d) (2)) used in a trade or business of such corporation if such
corporation continues to maintain the Plan after the disposition, but
only with respect to former Employees who continue employment with the
corporation acquiring such assets.
(c) The disposition by a corporation to an unrelated entity of
such corporation's interest in a subsidiary (within the meaning of Code
Section 409(d)(3)) if such corporation continues to maintain this Plan,
but only with respect to former Employees who continue employment with
such subsidiary.
12.02. TIMING OF DISTRIBUTION FOLLOWING RETIREMENT OR TERMINATION OF EMPLOYMENT.
Except as otherwise elected by the Employer in Subsection 1.20(b) and provided
in the Postponed Distribution Addendum to the Adoption Agreement, the balance of
a Participant's vested interest in his Account shall be distributable upon his
termination of employment with the Employer and all Related Employers, if any,
because of death, normal, early, or disability retirement (as permitted under
the Plan), or other termination of employment. Notwithstanding the foregoing, a
Participant whose vested interest in his Account exceeds $5,000 as determined
under Section 13.02 (or such larger amount as may be specified in Code Section
417 (e) (1)) may elect to postpone distribution of his Account until his
Required Beginning Date. A Participant who elects to postpone distribution has a
continuing election to receive such distribution prior to the date as of which
distribution is required, unless such Participant is reemployed as an Employee.
12.03. PARTICIPANT CONSENT TO DISTRIBUTION. If a Participant's vested interest
in his Account exceeds $5,000 as determined under Section 13.02 (or such larger
amount as may be specified in Code Section 417 (e) (1)), no distribution shall
be made to the Participant before he reaches his Normal Retirement Age (or age
62,
55
if later), unless the consent of the Participant has been obtained. Such consent
shall be made within the 90-day period ending on the Participant's Annuity
Starting Date.
The consent of the Participant's spouse must also be obtained if the
Participant's Account is subject to the provisions of Section 14.04, unless the
distribution shall be made in the form of a "qualified joint and survivor
annuity" as defined in Section 14.01. A spouse's consent to early distribution,
if required, must satisfy the requirements of Section 14.06.
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 the Plan
if it does not offer an annuity option (purchased from a commercial provider)
and if the Employer or any Related Employer does not maintain another defined
contribution plan (other than an employee stock ownership plan as defined in
Code Section 4975 (e) (7)) the Participant's Account shall, without the
Participant's consent, be distributed to the Participant. However, if any
Related Employer maintains another defined contribution plan (other than an
employee stock ownership plan as defined in Code Section 4975 (e) (7)) then the
Participant's Account shall be transferred, without the Participant's consent,
to the other plan if the Participant does not consent to an immediate
distribution.
12.04. REQUIRED COMMENCEMENT OF DISTRIBUTION TO PARTICIPANTS. In no event shall
distribution to a Participant commence later than the earlier of the dates
described in (a) and (b) below:
(a) unless the Participant (and his spouse, if appropriate) elects
otherwise, the 60th day after the close of the Plan Year in which
occurs the latest of (i) the date on which the Participant attains
Normal Retirement Age, or age 65, if earlier, (ii) the date on which
the Participant's employment with the Employer and all Related
Employers ceases, or (iii) the 10th anniversary of the year in which
the Participant commenced participation in the Plan; and
(b) the Participant's Required Beginning Date.
Notwithstanding the provisions of Subsection 12.04 (a) above, the
failure of a Participant (and the Participant's spouse, if applicable) to
consent to a distribution as required under Section 12.03, shall be deemed to be
an election to defer commencement of payment as provided in Subsection 12.04(a)
above.
12.05. REQUIRED COMMENCEMENT OF DISTRIBUTION TO BENEFICIARIES. If a Participant
dies before his Annuity Starting Date, the Participant's Beneficiary shall
receive distribution of the Participant's vested interest in his Account in the
form provided under Article 13 or 14, as applicable, beginning as soon as
reasonably practicable following the date the Beneficiary's application for
distribution is filed with the Administrator. Unless distribution is to be made
over the life or over a period certain not greater than the life expectancy of
the Beneficiary, distribution of the Participant's entire vested interest shall
56
be made to the Beneficiary no later than the end of the fifth calendar year
beginning after the Participant's death. If distribution is to be made over the
life or over a period certain no greater than the life expectancy of the
Beneficiary, distribution shall commence no later than:
(a) If the Beneficiary is not the Participant's spouse, the end of the
first calendar year beginning after the Participant's death; or
(b) If the Beneficiary is the Participant's spouse, the later of (i)
the end of the first calendar year beginning after the Participant's
death or (ii) the end of the calendar year in which the Participant
would have attained age 70 1/2.
If distribution is to be made to a Participant's spouse, it shall be
made available within a reasonable period of time after the Participant's death
that is no less favorable than the period of time applicable to other
distributions. In the event such spouse dies prior to the date distribution
commences, he shall be treated for purposes of this Section 12.05 (other than
Subsection 12.05(b) above) as if he were the Participant. Any amount paid to a
child of the Participant shall be treated as if it had been paid to the
surviving spouse if the amount becomes payable to the surviving spouse when the
child reaches the age of majority.
If the Participant has not designated a Beneficiary, or the Participant
or Beneficiary has not effectively selected a method of distribution,
distribution of the Participant's benefit shall be completed by the close of the
calendar year in which the fifth anniversary of the death of the Participant
occurs.
If a Participant dies on or after his Annuity Starting Date, but before
his entire vested interest in his Account is distributed, his Beneficiary shall
receive distribution of the remainder of the Participant's vested interest in
his Account beginning as soon as reasonably practicable following the
Participant's date of death in a form that provides for distribution at least as
rapidly as under the form in which the Participant was receiving distribution.
12.06. WHEREABOUTS OF PARTICIPANTS AND BENEFICIARIES. The Administrator shall at
all times be responsible for determining the whereabouts of each Participant or
Beneficiary who may be entitled to benefits under the Plan and shall at all
times be responsible for instructing the Trustee in writing as to the current
address of each such Participant or Beneficiary. The Trustee shall be entitled
to rely on the latest written statement received from the Administrator as to
such addresses. The Trustee shall be under no duty to make any distributions
under the Plan unless and until it has received written instructions from the
Administrator satisfactory to the Trustee containing the name and address of the
distributee, the time when the distribution is to occur, and the form which the
distribution shall take.
Notwithstanding the foregoing, if the Trustee attempts to make a
distribution in accordance with the Administrator's instructions but is unable
to make such distribution because the whereabouts of the distributee is unknown,
the Trustee
57
shall notify the Administrator of such situation and thereafter the Trustee
shall be under no duty to make any further distributions to such distributee
until it receives further written instructions from the Administrator.
If the Administrator is unable after diligent attempts to locate a
Participant or Beneficiary who is entitled to a benefit under the Plan, the
benefit otherwise payable to such Participant or Beneficiary shall be forfeited
and applied as provided in Section 11.09. If a benefit is forfeited because the
Administrator determines that the Participant or Beneficiary cannot be found,
such benefit shall be reinstated by the Employer if a claim is filed by the
Participant or Beneficiary with the Administrator and the Administrator confirms
the claim to the Employer. Notwithstanding the above, forfeiture of a
Participant's or Beneficiary's benefit may occur only if a distribution could be
made to the Participant or Beneficiary without obtaining the Participant's or
Beneficiary's consent in accordance with the requirements of Section 1.411(a)-11
of the Treasury Regulations.
ARTICLE 13. FORM OF DISTRIBUTION.
13.01. NORMAL FORM OF DISTRIBUTION UNDER PROFIT SHARING PLAN. Unless the Plan is
a money purchase pension plan subject to the requirements of Article 14, or a
Participant's Account is otherwise subject to the requirements of Section 14.03
or 14.04, distributions to a Participant or to the Beneficiary of the
Participant shall be made in a lump sum in cash or, if elected by the
Participant (or the Participant's Beneficiary, if applicable) and provided by
the Employer in Section 1.19 of the Adoption Agreement, under a systematic
withdrawal plan (installments). A Participant (or the Participant's Beneficiary,
if applicable) who is receiving distribution under a systematic withdrawal plan
may elect to accelerate installment payments or to receive a lump sum
distribution of the remainder of his Account balance. Distribution may also be
made hereunder in any non-annuity form that is a protected benefit and is
provided by the Employer in Section 1.19(d) of the Adoption Agreement.
Even if the Plan does not otherwise provide for distributions under a
systematic withdrawal plan, if a Participant elects to have his Required
Beginning Date determined under the provisions of Subsection 2.01(ss) (1) (ii)
or his Required Beginning Date occurs under the provisions of Subsection
2.01(ss) (2) while he is still employed by the Employer or a Related Employer on
or after his Required Beginning Date, the Participant may elect to receive
distributions during the period that he continues employment with the Employer
or a Related Employer made under a systematic withdrawal plan that provides the
minimum distributions required under Code Section 401(a)(9), as determined under
Section 13.03 of the Plan. Minimum required distributions to a Participant
described in the preceding sentence shall only continue to such Participant
through the calendar year in which the Participant retires or otherwise
terminates employment. Distributions for calendar years following the calendar
year in which the Participant retires shall be made in one of the forms of
payment otherwise available under the Plan, as provided in Section 1.19 and the
Forms of Payment Addendum to the Adoption Agreement.
58
Distributions shall be made in cash, except that distributions may be
made in Fund Shares of marketable securities (as defined in Code Section 731(c)
(2)), other than Fund Shares of Employer Stock, at the election of the
Participant, pursuant to the qualifying rollover of such distribution to a
Fidelity Investments(R) individual retirement account. A distribution may be
made in the form of Fund Shares of Employer Stock or an in-kind distribution of
Plan investments that are not marketable securities only if and to the extent
provided in Section 1.19(d) of the Adoption Agreement; provided, however, that
notwithstanding any other provision of the Plan to the contrary, the right of a
Participant to receive a distribution in the form of Fund Shares of Employer
Stock or an in-kind distribution of Plan investments that are not marketable
securities applies only to that portion of the Participant's Account invested in
such form at the time of distribution.
13.02. CASH OUT OF SMALL ACCOUNTS. Notwithstanding any other provision of the
Plan to the contrary, if a Participant's vested interest in his Account is
$5,000 (or such larger amount as may be specified in Code Section 417 (e)(1))
or less, the Participant's vested interest in his Account shall be distributed
in a lump sum as soon as practicable following the Participant's termination of
employment because of retirement, disability, death or other termination of
employment. For purposes of this Section, until final Treasury Regulations are
issued to the contrary, if either (a) a Participant has commenced distribution
of his Account under a systematic withdrawal plan or (b) his Account is subject
to the provisions of Section 14.04 and the Participant's Annuity Starting Date
has occurred with respect to amounts currently held in his Account, the
Participant's vested interest in his Account shall be deemed to exceed $5,000
(or such larger amount as may be specified in Code Section 417 (e)(1)) if the
Participant's vested interest in such amounts exceeded such dollar amount on the
Participant's Annuity Starting Date.
Notwithstanding the provisions of this Section 13.02, the Employer may
determine not to cash out Participant Accounts in accordance with the foregoing
provisions, provided that such determination is uniform with respect to all
Participants and non-discriminatory.
13.03. MINIMUM DISTRIBUTIONS. This Section applies to distributions under a
systematic withdrawal plan that are made on or after a Participant's Required
Beginning Date or his date of death, if earlier. This Section shall be
interpreted and applied in accordance with the regulations under Code Section
401(a)(9), including the minimum distribution incidental benefit requirement
of Section 1.401(a)(9)-2 of the Proposed Treasury Regulations, or any successor
regulations of similar import.
Distribution must be made in substantially equal annual, or more
frequent, installments, in cash, over a period certain which does not extend
beyond the life expectancy or joint life expectancies of the Participant and his
Beneficiary or, if the Participant dies prior to the commencement of
distributions from his Account, the life expectancy of the Participant's
Beneficiary. The amount to be distributed for each calendar year for which a
minimum distribution is required shall be at least an amount equal to the
quotient obtained by dividing the
59
Participant's interest in his Account by the life expectancy of the Participant
or Beneficiary or the joint life and last survivor expectancy of the Participant
and his Beneficiary, whichever is applicable. The amount to be distributed for
each calendar year shall not be less than an amount equal to the quotient
obtained by dividing the Participant's interest in his Account by the lesser of
(a) the applicable life expectancy, or (b) if a Participant's Beneficiary is not
his spouse, the applicable divisor determined under Section 1.401(a)(9)-2, Q&A
4 of the Proposed Treasury Regulations, or any successor regulations of similar
import. Distributions after the death of the Participant shall be made using the
applicable life expectancy under (a) above, without regard to Section 1.401(a)
(9)-2 of such regulations. For purposes of this Section 13.03, life expectancy
and joint life and last survivor expectancy shall be computed by use of the
expected return multiples in Table V and VI of Section 1.72-9 of the Treasury
Regulations.
For purposes of this Section 13.03, the life expectancy of a
Participant or a Beneficiary who is the Participant's surviving spouse shall be
recalculated annually unless the Participant or the Participant's spouse
irrevocably elects otherwise prior to the time distributions are required to
begin. If not recalculated in accordance with the foregoing, life expectancy
shall be calculated using the attained age of the Participant or Beneficiary,
whichever is applicable, as of such individual's birth date in the first year
for which a minimum distribution is required reduced by one for each elapsed
calendar year since the date life expectancy was first calculated.
If the Participant dies after distribution of his benefits has begun,
distributions to the Participant's Beneficiary shall be made at least as rapidly
as under the method of distribution being used as of the date of the
Participant's death.
A Participant's interest in his Account for purposes of this Section
13.03 shall be determined as of the last valuation date in the calendar year
immediately preceding the calendar year for which a minimum distribution is
required, increased by the amount of any contributions allocated to, and
decreased by any distributions from, such Account after the valuation date. Any
distribution for the first year for which a minimum distribution is required
made after the close of such year shall be treated as if made prior to the close
of such year.
The Administrator shall notify the Trustee in writing whenever a
distribution is necessary in order to comply with the minimum distribution rules
set forth in this Section 13.03.
13.04. DIRECT ROLLOVERS. Notwithstanding any other provision of the Plan to the
contrary, a "distributee" may elect, at the time and in the manner prescribed by
the Administrator, to have any portion or all of an "eligible rollover
distribution" paid directly to an "eligible retirement plan" specified by the
"distributee" in a direct rollover; provided, however, that this provision shall
not apply if the total "eligible rollover distribution" that the "distributee"
is reasonably expected to receive for the calendar year is less than $200 and
that a
60
"distributee" may not elect a direct rollover with respect to a portion of an
"eligible rollover distribution" if such portion totals less than $500. For
purposes of this Section 13.04, the following definitions shall apply:
(a) "Distributee" means a Participant , the Participant's
surviving spouse, and the Participant's spouse or former spouse who is
the alternate payee under a qualified domestic relations order, who is
entitled to receive a distribution from the Participant's vested
interest in his Account.
(b) "Eligible retirement plan" means an individual retirement
account described in Code Section 408(a), an individual retirement
annuity described in Code Section 408(b), an annuity plan described in
Code Section 403(a), or a qualified trust described in Code Section
401(a), that accepts "eligible rollover distributions". However, in the
case of an "eligible rollover distribution" to a surviving spouse, an
"eligible retirement plan" means an individual retirement account or
individual retirement annuity.
(c) "Eligible rollover distribution" means any distribution of all
or any portion of the balance to the credit of the "distributee",
except that an "eligible rollover distribution" does not include the
following:
(1) any distribution that is one of a series of
substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the
"distributee" or the joint lives (or joint life expectancies)
of the "distributee" and the "distributee's" designated
beneficiary, or for a specified period of ten years or more;
(2) any distribution to the extent such distribution is
required under Code Section 401(a)(9);
(3) the portion of any distribution that is not
includable in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to
employer securities);
(4) any hardship withdrawal of Deferral Contributions
made in accordance with the provisions of Section 10.05 or the
Protected In-Service Withdrawals Addendum to the Adoption
Agreement.
13.05. NOTICE REGARDING TIMING AND FORM OF DISTRIBUTION. Within the period
beginning 90 days before a Participant's Annuity Starting Date and ending 30
days before such date, the Administrator shall provide such Participant with
written notice containing a general description of the material features and an
explanation of the relative values of the forms of benefit available under the
Plan and informing the Participant of his right to defer receipt of the
distribution until his Required Beginning Date and his right to make a direct
rollover.
Distribution may commence fewer than 30 days after such notice is
given, provided that:
61
(a) the 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);
(b) the Participant, after receiving the notice, affirmatively
elects a distribution, with his spouse's written consent, if necessary;
(c) if the Participant's Account is subject to the requirements of
Section 14.04, the following additional requirements apply:
(1) the Participant is permitted to revoke his
affirmative distribution election at any time prior to the
later of (A) his Annuity Starting Date or (B) the expiration
of the seven-day period beginning the day after such notice is
provided to him; and
(2) distribution does not begin to such Participant until
such revocation period ends.
13.06. DETERMINATION OF METHOD OF DISTRIBUTION. Subject to Section 13.02, the
Participant shall determine the method of distribution of benefits to himself
and may determine the method of distribution to his Beneficiary. Such
determination shall be made prior to the time benefits become payable under the
Plan. If the Participant does not determine the method of distribution to his
Beneficiary or if the Participant permits his Beneficiary to override his
determination, the Beneficiary, in the event of the Participant's death, shall
determine the method of distribution of benefits to himself as if he were the
Participant. A determination by the Beneficiary must be made no later than the
close of the calendar year in which distribution would be required to begin
under Section 12.05 or, if earlier, the close of the calendar year in which the
fifth anniversary of the death of the Participant occurs.
13.07. NOTICE TO TRUSTEE. The Administrator shall notify the Trustee in any
medium acceptable to the Trustee, which may be specified in the Service
Agreement, whenever any Participant or Beneficiary is entitled to receive
benefits under the Plan. The Administrator's notice shall indicate the form of
payment of benefits that such Participant or Beneficiary shall receive, (in the
case of distributions to a Participant) the name of any designated Beneficiary
or Beneficiaries, and such other information as the Trustee shall require.
ARTICLE 14. SUPERSEDING ANNUITY DISTRIBUTION PROVISIONS.
14.01. SPECIAL DEFINITIONS. For purposes of this Article, the following special
definitions shall apply:
(a) "QUALIFIED JOINT AND SURVIVOR ANNUITY" means (1) if the
Participant is not married on his Annuity Starting Date, an immediate
annuity payable for the life of the Participant or (2) if the
Participant is married on his Annuity Starting Date, an immediate
annuity for the life of the Participant
62
with a survivor annuity for the life of the Participant's spouse (to
whom the Participant was married on the Annuity Starting Date) which is
equal to at least 50 percent of the amount of the annuity which is
payable during the joint lives of the Participant and such spouse,
provided that the survivor annuity shall not be payable to a
Participant's spouse if such spouse is not the same spouse to whom the
Participant was married on his Annuity Starting Date.
(b) "QUALIFIED PRERETIREMENT SURVIVOR ANNUITY" means an annuity
purchased with at least 50 percent of a Participant's vested interest
in his Account that is payable for the life of a Participant's
surviving spouse. The Employer shall specify that portion of a
Participant's vested interest in his Account that is to be used to
purchase the "qualified preretirement survivor annuity" in Section 1.19
of the Adoption Agreement.
14.02. APPLICABILITY. The provisions of this Article shall apply to a
Participant's Account if:
(a) the Plan is a money purchase pension plan;
(b) the Plan is an amendment and restatement of a plan that
provided an annuity form of payment and such form of payment has not
been eliminated pursuant to Subsection 1.19(e) and the Forms of Payment
Addendum to the Adoption Agreement;
(c) the Participant's Account contains assets attributable to
amounts directly or indirectly transferred from a plan that provided an
annuity form of payment and such form of payment has not been
eliminated pursuant to Subsection 1.19(e) and the Forms of Payment
Addendum to the Adoption Agreement.
14.03. ANNUITY FORM OF PAYMENT. To the extent provided in Section 1.19 of the
Adoption Agreement, a Participant may elect distributions made in whole or in
part in the form of an annuity contract. Any annuity contract distributed under
the Plan shall be subject to the provisions of this Section 14.03 and, to the
extent provided therein, Sections 14.04 through 14.09.
(a) At the direction of the Administrator, the Trustee shall
purchase the annuity contract on behalf of a Participant or Beneficiary
from an insurance company. Such annuity contract shall be
nontransferable.
(b) The terms of the annuity contract shall comply with the
requirements of the Plan and distributions under such contract shall be
made in accordance with Code Section 401(a)(9) and the regulations
thereunder.
(c) The annuity contract may provide for payment over the life of
the Participant and, upon the death of the Participant, may provide a
survivor annuity continuing for the life of the Participant's
designated Beneficiary. Such an annuity may provide for an annuity
certain feature for a period not exceeding the life expectancy of the
Participant or, if the annuity is
63
payable to the Participant and a designated Beneficiary, the joint life
and last survivor expectancy of the Participant and such Beneficiary.
If the Participant dies prior to his Annuity Starting Date, the annuity
contract distributed to the Participant's Beneficiary may provide for
payment over the life of the Beneficiary, and may provide for an
annuity certain feature for a period not exceeding the life expectancy
of the Beneficiary. The types of annuity contracts provided under the
Plan shall be limited to the types of annuities described in Section
1.19 and the Forms of Payment Addendum to the Adoption Agreement.
(d) The annuity contract must provide for nonincreasing payments.
14.04. "QUALIFIED JOINT AND SURVIVOR ANNUITY" AND "QUALIFIED PRERETIREMENT
SURVIVOR ANNUITY" REQUIREMENTS. The requirements of this Section 14.04 apply to
a Participant's Account if:
(a) the Plan is a money purchase pension plan;
(b) the Plan is a profit sharing plan and the Employer has
selected distribution in the form of a life annuity as the normal form
of distribution with respect to such Participant's Account in
Subsection 1.19(c)(2)(B) of the Adoption Agreement; or
(c) the Plan is a profit sharing plan and the Employer has
specified distribution in the form of a life annuity as the normal form
of distribution in Subsection (c)(2)(B) of the Forms of Payment
Addendum to the Adoption Agreement and the Participant's Annuity
Starting Date occurs prior to the date specified in Subsection (c)(4)
of the Forms of Payment Addendum to the Adoption Agreement;
(d) the Participant is permitted to elect and has elected
distribution in the form of an annuity contract payable over the life
of the Participant.
If a Participant's Account is subject to the requirements of this Section 14.04,
distribution shall be made to the Participant in the form of a "qualified joint
and survivor annuity" (with a survivor annuity in the percentage amount
specified by the Employer in Subsection 1.19 of the Adoption Agreement), unless
the Participant waives the "qualified joint and survivor annuity" as provided in
Section 14.05. If the Participant dies prior to his Annuity Starting Date,
distribution shall be made to the Participant's surviving spouse, if any, in the
form of a "qualified preretirement survivor annuity", unless the Participant
waives the "qualified preretirement survivor annuity" as provided in Section
14.05, or the Participant's surviving spouse elects in writing to receive
distribution in one of the other forms of payment provided under the Plan. If
the Employer has specified in Section 1.19 of the Adoption Agreement that less
than 100 percent of a Participant's Account shall be used to purchase the
"qualified preretirement survivor annuity", distribution of the balance of the
Participant's vested interest in his Account that is not used to purchase the
"qualified preretirement survivor annuity" shall be distributed to the
Participant's
64
designated Beneficiary in accordance with the provisions of Sections 11.04 and
12.05.
14.05. WAIVER OF THE "QUALIFIED JOINT AND SURVIVOR ANNUITY" AND/OR "QUALIFIED
PRERETIREMENT SURVIVOR ANNUITY" RIGHTS. A Participant may waive the "qualified
joint and survivor annuity" described in Section 14.04 and elect another form of
distribution permitted under the Plan at any time during the 90-day period
ending on his Annuity Starting Date; provided, however, that if the Participant
is married, his spouse must consent in writing to such election as provided in
Section 14.06. Spousal consent is not required if the Participant elects
distribution in the form of a different "qualified joint and survivor annuity".
A Participant may waive the "qualified preretirement survivor annuity"
and designate a non-spouse Beneficiary at any time during the "applicable
election period"; provided, however, that the Participant's spouse must consent
in writing to such election as provided in Section 14.06. The "applicable
election period" begins on the later of (1) the date the Participant's Account
becomes subject to the requirements of Section 14.04 or (2) the first day of the
Plan Year in which the Participant attains age 35 or, if he terminates
employment prior to such date, the date he terminates employment with the
Employer and all Related Employers. The "applicable election period" ends on the
earlier of the Participant's Annuity Starting Date or the date of the
Participant's death. A Participant whose employment has not terminated may elect
to waive the "qualified preretirement survivor annuity" prior to the Plan Year
in which he attains age 35, provided that any such waiver shall cease to be
effective as of the first day of the Plan Year in which the Participant attains
age 35.
If the Employer has specified in Section 1.19 of the Adoption Agreement
that less than 100 percent of a Participant's Account shall be used to purchase
the "qualified preretirement survivor annuity", the Participant may designate a
non-spouse Beneficiary for the balance of the Participant's vested interest in
his Account that is not used to purchase the "qualified preretirement survivor
annuity". Such designation shall not be subject to the spousal consent
requirements of Section 14.06.
14.06. SPOUSE' S CONSENT TO WAIVER. A spouse's written consent to a
Participant's waiver of the "qualified joint and survivor annuity" or "qualified
preretirement survivor annuity" forms of distribution must acknowledge the
effect of the Participant's election and must be witnessed by a Plan
representative or a notary public. In addition, the spouse's written consent
must either (a) specify the form of distribution elected instead of the
"qualified joint and survivor annuity", if applicable, and that such form may
not be changed (except to a "qualified joint and survivor annuity") without
written spousal consent and specify any non-spouse Beneficiary designated by the
Participant, if applicable, and that such designation may not be changed without
written spousal consent or (b) acknowledge that the spouse has the right to
limit consent as provided in clause (a) above, but permit the Participant to
change the form of distribution elected or the designated Beneficiary without
the spouse's further consent.
65
A Participant's spouse shall be deemed to have given written consent to
a Participant's waiver if the Participant establishes to the satisfaction of a
Plan representative that spousal consent cannot be obtained because the spouse
cannot be located or because of other circumstances set forth in Code Section
401(a)(11) and Treasury Regulations issued thereunder.
Any written consent given or deemed to have been given by a
Participant's spouse hereunder shall be irrevocable and shall be effective only
with respect to such spouse and not with respect to any subsequent spouse.
A spouse's consent to a Participant's waiver shall be valid only if the
applicable notice described in Section 14.07 or 14.08 has been provided to the
Participant.
14.07. NOTICE REGARDING "QUALIFIED JOINT AND SURVIVOR ANNUITY". The notice
provided to a Participant under Section 14.05 shall include a written
explanation of (a) the terms and conditions of the "qualified joint and survivor
annuity" provided herein, (b) the Participant's right to make, and the effect
of, an election to waive the "qualified joint and survivor annuity", (c) the
rights of the Participant's spouse under Section 14.06, and (d) the
Participant's right to revoke an election to waive the "qualified joint and
survivor annuity" prior to his Annuity Starting Date.
14.08. NOTICE REGARDING "QUALIFIED PRERETIREMENT SURVIVOR ANNUITY". IF A
Participant's Account is subject to the requirements of Section 14.04, the
Administrator shall provide the Participant with a written explanation of the
"qualified preretirement survivor annuity" comparable to the written explanation
provided with respect to the "qualified joint and survivor annuity", as
described in Section 14.07. Such explanation shall be furnished within whichever
of the following periods ends last:
(a) the period beginning with the first day of the Plan Year in
which the Participant reaches age 32 and ending with the end of the
Plan Year preceding the Plan Year in which he reaches age 35;
(b) a reasonable period ending after the Employee becomes an
Active Participant;
(c) a reasonable period ending after Section 14.04 first becomes
applicable to the Participant's Account; or
(d) in the case of a Participant who separates from service before
age 35, a reasonable period ending after such separation from service.
For purposes of the preceding sentence, the two-year period beginning
one year prior to the date of the event described in Subsection 14.08(b), (c) or
(d) above, whichever is applicable, and ending one year after such date shall be
considered reasonable, provided, that in the case of a Participant who separates
from service under Subsection 14.08(d) above and subsequently recommences
66
employment with the Employer, the applicable period for such Participant shall
be redetermined in accordance with this Section 14.08.
14.09. FORMER SPOUSE. For purposes of this Article, a former spouse of a
Participant shall be treated as the spouse or surviving spouse of the
Participant, and a current spouse shall not be so treated, to the extent
required under a qualified domestic relations order, as defined in Code Section
414(p).
ARTICLE 15. TOP-HEAVY PROVISIONS.
15.01. DEFINITIONS. For purposes of this Article, the following special
definitions shall apply:
(a) "DETERMINATION DATE" means, for any Plan Year subsequent to
the first Plan Year, the last day of the preceding Plan Year. For the
first Plan Year of the Plan, "determination date" means the last day of
that Plan Year.
(b) "DETERMINATION PERIOD" means the Plan Year containing the
"determination date" and the four preceding Plan Years.
(c) "KEY EMPLOYEE" means any Employee or former Employee (and the
Beneficiary of any such Employee) who at any time during the
"determination period" was (1) an officer of the Employer or a Related
Employer whose annual Compensation exceeds 50 percent of the dollar
limitation under Code Section 415(b)(1)(A), (2) one of the ten
Employees whose annual Compensation from the Employer or a Related
Employer exceeds the dollar limitation under Code Section 415(c)(1)
(A) and who owns (or is considered as owning under Code Section 318)
one of the largest interests in the Employer and all Related Employers,
(3) a five percent owner of the Employer and all Related Employers, or
(4) a one percent owner of the Employer and all Related Employers whose
annual Compensation exceeds $150,000. The determination of who is a
"key employee" shall be made in accordance with Code Section 416(i)(1)
and regulations issued thereunder.
(d) "PERMISSIVE AGGREGATION GROUP" means the "required aggregation
group" plus any other qualified plans of the Employer or a Related
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.
(e) "REQUIRED AGGREGATION GROUP" means:
(1) Each qualified plan of the Employer or Related
Employer in which at least one "key employee" participates, or
has participated at any time during the "determination period"
(regardless of whether the plan has terminated), and
(2) any other qualified plan of the Employer or Related
Employer which enables a plan described in Subsection 15.01(e)
(1) above to meet the requirements of Code Section 401 (a) (4)
or 410.
67
(f) "TOP-HEAVY PLAN" means a plan in which any of the following
conditions exists:
(1) the "top-heavy ratio" for the plan exceeds 60 percent
and the Plan is not part of any "required aggregation group"
or "permissive aggregation group";
(2) the plan is a part of a "required aggregation group"
but not part of a "permissive aggregation group" and the
"top-heavy ratio" for the "required aggregation group" exceeds
60 percent; or
(3) the plan is a part of a "required aggregation group"
and a "permissive aggregation group" and the "top-heavy ratio"
for both groups exceeds 60 percent.
(g) "TOP-HEAVY RATIO" means:
(1) With respect to the Plan, or with respect to any
"required aggregation group" or "permissive aggregation group"
that consists solely of defined contribution plans (including
any simplified employee pension, as defined in Code Section
408(k)) , a fraction, the numerator of which is the sum of the
account balances of all "key employees" under the plans as of
the "determination date" (including any part of any account
balance distributed during the five-year period ending on the
"determination date"), and the denominator of which is the sum
of all account balances (including any part of any account
balance distributed during the five-year period ending on the
"determination date") of all participants under the plans as
of the "determination date". Both the numerator and
denominator of the "top-heavy ratio" shall be increased, to
the extent required by Code Section 416, to reflect any
contribution which is due but unpaid as of the "determination
date".
(2) With respect to any "required aggregation group" or
"permissive aggregation group" that includes one or more
defined benefit plans which, during the five-year period
ending on the "determination date", has covered or could cover
an Active Participant in the Plan, a fraction, the numerator
of which is the sum of the account balances under the defined
contribution plans for all "key employees" and the present
value of accrued benefits under the defined benefit plans for
all "key employees", and the denominator of which is the sum
of the account balances under the defined contribution plans
for all participants and the present value of accrued benefits
under the defined benefit plans for all participants. Both the
numerator and denominator of the "top-heavy ratio" shall be
increased for any distribution of an account balance or an
accrued benefit made during the five-year period ending on the
"determination date" and any contribution due but unpaid as of
the "determination date".
For purposes of Subsections 15.01(g)(1) and (2) above, the
value of accounts and the present value of accrued benefits shall be
determined as of
68
the most recent "determination date", except as provided in Code
Section 416 and the regulations issued thereunder for the first and
second plan years of a defined benefit plan. When aggregating plans,
the value of accounts and accrued benefits shall be calculated with
reference to the "determination dates" that fall within the same
calendar year. The present value of accrued benefits shall be
determined using the interest rate and mortality table specified in
Subsection 1.21(b) of the Adoption Agreement.
The accounts and accrued benefits of a Participant who is not
a "key employee" but who was a "key employee" in a prior year, or who
has not performed services for the Employer or any Related Employer at
any time during the five-year period ending on the "determination
date", shall be disregarded. The calculation of the "top-heavy ratio",
and the extent to which distributions, rollovers, and transfers are
taken into account, shall be made in accordance with Code Section 416
and the regulations issued thereunder. Deductible employee
contributions shall not be taken into account for purposes of computing
the "top-heavy ratio".
For purposes of determining if the Plan, or any other plan
included in a "required aggregation group" of which the Plan is a part,
is a "top-heavy plan", the accrued benefit in a defined benefit plan of
an Employee other than a "key employee" shall be determined under the
method, if any, that uniformly applies for accrual purposes under all
plans maintained by the Employer or a Related Employer, or, if there is
no such method, as if such benefit accrued not more rapidly than the
slowest accrual rate permitted under the fractional accrual rate of
Code Section 411(b)(1)(C).
15.02. APPLICATION. If the Plan is or becomes a "top-heavy plan" in any Plan
Year or is automatically deemed to be a "top-heavy plan" in accordance with the
Employer's selection in Subsection 1.21(a) (1) of the Adoption Agreement, the
provisions of this Article shall apply and shall supersede any conflicting
provision in the Plan.
15.03. MINIMUM CONTRIBUTION. Except as otherwise specifically provided in this
Section 15.03, the Nonelective Employer Contributions made for the Plan Year on
behalf of any Active Participant who is not a "key employee" shall not be less
than the lesser of three percent (or such other percentage selected by the
Employer in Subsection 1.21(c) of the Adoption Agreement) of such Participant's
Compensation for the Plan Year or, in the case where neither the Employer nor
any Related Employer maintains a defined benefit plan which uses the Plan to
satisfy Code Section 401(a) (4) or 410, the largest percentage of Employer
contributions made on behalf of any "key employee" for the Plan Year, expressed
as a percentage of the "key employee's" Compensation for the Plan Year, unless
the Employer has provided in Subsection 1.21(c) of the Adoption Agreement that
the minimum contribution requirement shall be met under the other plan or plans
of the Employer.
The minimum contribution required under this Section 15.03 shall be
made to the Account of an Active Participant even though, under other Plan
provisions, the Active Participant would not otherwise be entitled to receive a
contribution,
69
or would have received a lesser contribution for the Plan Year, because (a) the
Active Participant failed to complete the Hours of Service requirement selected
by the Employer in Subsection 1.10(d) or l.ll(c) of the Adoption Agreement, or
(b) the Participant's Compensation was less than a stated amount; provided,
however, that no minimum contribution shall be made for a Plan Year to the
Account of an Active Participant who is not employed by the Employer or a
Related Employer on the last day of the Plan Year.
The minimum contribution for the Plan Year made on behalf of each
Active Participant who is not a "key employee" and who is a participant in a
defined benefit plan maintained by the Employer or a Related Employer shall not
be less than five percent of such Participant's Compensation for the Plan Year,
unless the Employer has provided in Subsection 1.21(c) of the Adoption Agreement
that the minimum contribution requirement shall be met under the other plan or
plans of the Employer.
That portion of a Participant's Account that is attributable to minimum
contributions required under this Section 15.03, to the extent required to be
nonforfeitable under Code Section 416(b), may not be forfeited under Code
Section 411(a)(3)(B) .
Notwithstanding any other provision of the Plan to the contrary, for
purposes of this Article, Compensation shall include amounts that are not
includable in the gross income of the Participant under a salary reduction
agreement by reason of the application of Code Section 125, 132(f)(4), 402(e)
(3), 402(h), or 403(b) . Compensation shall generally be based on the amount
actually paid to the Eligible Employee during the Plan Year or during that
portion of the Plan Year during which the Eligible Employee is an Active
Participant, as elected by the Employer in Subsection 1.05(c) of the Adoption
Agreement.
15.04. MODIFICATION OF ALLOCATION PROVISIONS TO MEET MINIMUM CONTRIBUTION
REQUIREMENTS. If the Employer elected a discretionary Nonelective Employer
Contribution in Subsection l.ll(b) of the Adoption Agreement, the provisions for
allocating Nonelective Employer Contributions described in Subsection 5.10(b)
shall be modified as provided herein to meet the minimum contribution
requirements of Section 15.03.
(a) If the Employer selected the non-integrated formula in
Subsection l.ll(b)(1) of the Adoption Agreement, Nonelective Employer
Contributions shall be allocated as follows:
(1) Nonelective Employer Contributions shall be allocated
to each eligible Active Participant, as determined under this
Section 15.04, who is not a "key employee" in the same ratio
that the eligible Active Participant's Compensation for the
Plan Year bears to the total Compensation of all such eligible
Active Participants for the Plan Year; provided, however that
such ratio shall not exceed three percent of a Participant's
Compensation for the Plan Year (or such other percentage
selected by the Employer in Subsection 1.21(c) of the Adoption
Agreement).
70
(2) If any Nonelective Employer Contributions remain
after the allocation in Subsection 15.04(a)(1) above, the
remaining Nonelective Employer Contributions shall be
allocated to each eligible Active Participant, as determined
under this Section 15.04, who is a "key employee" in the same
ratio that the eligible Active Participant's Compensation for
the Plan Year bears to the total Compensation of all such
eligible Active Participants for the Plan Year; provided,
however that such ratio shall not exceed three percent of a
Participant's Compensation for the Plan Year (or such other
percentage selected by the Employer in Subsection 1.21(c) of
the Adoption Agreement).
(3) If any Nonelective Employer Contributions remain
after the allocation in Subsection 15.04(a)(2) above, the
remaining Nonelective Employer Contributions shall be
allocated to each eligible Active Participant, as determined
under this Section 15.04, in the same ratio that the eligible
Active Participant's Compensation for the Plan Year bears to
the total Compensation of all such eligible Active
Participants for the Plan Year.
(b) If the Employer selected the integrated formula in Subsection
l.ll(b)(2) of the Adoption Agreement, the "permitted disparity limit",
as defined in Subsection l.ll(b)(2) of the Adoption Agreement, shall
be reduced by the percentage allocated under Subsection 15.04(b)(1) or
(2) below, and the allocation steps in Subsection 5.10(b)(2) shall be
preceded by the following steps:
(1) Nonelective Employer Contributions shall be allocated
to each eligible Active Participant, as determined under this
Section 15.04, who is not a "key employee" in the same ratio
that the eligible Active Participant's Compensation for the
Plan Year bears to the total Compensation of all such eligible
Active Participants for the Plan Year; provided, however that
such ratio shall not exceed three percent of a Participant's
Compensation for the Plan Year (or such other percentage
selected by the Employer in Subsection 1.21(c) of the Adoption
Agreement).
(2) If any Nonelective Employer Contributions remain
after the allocation in Subsection 15.04(b) (1) above, the
remaining Nonelective Employer Contributions shall be
allocated to each eligible Active Participant, as determined
under this Section 15.04, who is a "key employee" in the same
ratio that the eligible Active Participant's Compensation for
the Plan Year bears to the total Compensation of all such
eligible Active Participants for the Plan Year; provided,
however that such ratio shall not exceed three percent of a
Participant's Compensation for the Plan Year (or such other
percentage selected by the Employer in Subsection 1.21(c) of
the Adoption Agreement).
(3) If any Nonelective Employer Contributions remain
after the allocation in Subsection 15.04(b) (2) above, the
remaining Nonelective
71
Employer Contributions shall be allocated to each eligible
Active Participant in the same ratio that the eligible Active
Participant's Excess Compensation for the Plan Year bears to
the total Excess Compensation of all eligible Participants for
the Plan Year; provided, however, that such ratio shall not
exceed three percent (or such other percentage selected by the
Employer in Subsection 1.21(c) of the Adoption Agreement).
15.05. ADJUSTMENT TO THE LIMITATION ON CONTRIBUTIONS AND BENEFITS. For
Limitation Years beginning prior to January 1, 2000, if the Plan is a "top-heavy
plan", the number 100 shall be substituted for the number 125 in determining the
"defined benefit fraction", as defined in Subsection 6.01(f) and the "defined
contribution fraction", as defined in Subsection 6.01(g). However, this
substitution shall not take effect with respect to the Plan in any Plan Year in
which the following requirements are satisfied:
(a) The Employer contributions for such Plan Year made on behalf
of each eligible Active Participant, as determined under Section 15.03,
who is not a "key employee" and who is a participant in a defined
benefit plan maintained by the Employer or a Related Employer is not
less than 7 1/2 percent of such eligible Active Participant's
Compensation.
(b) The "top-heavy ratio" for the Plan (or the "required
aggregation group" or "permissible aggregation group", as applicable)
does not exceed 90 percent.
The substitutions of the number 100 for 125 shall not take effect in
any Limitation Year with respect to any Participant for whom no benefits are
accrued or contributions made for the Limitation Year.
15.06. ACCELERATED VESTING. For any Plan Year in which the Plan is or is deemed
to be a "top-heavy plan" and all Plan Years thereafter, the top-heavy vesting
schedule selected by the Employer in Subsection 1.21(d) of the Adoption
Agreement shall automatically apply to the Plan. The top-heavy vesting schedule
applies to all benefits within the meaning of Code Section 411(a)(7) except
those already subject to a vesting schedule which vests at least as rapidly in
all cases as the schedule elected in Subsection 1.21(d) of the Adoption
Agreement, including benefits accrued before the Plan becomes a "top-heavy
plan". Notwithstanding the foregoing provisions of this Section 15.06, the
top-heavy vesting schedule does not apply to the Account of any Participant who
does not have an Hour of Service after the Plan initially becomes or is deemed
to have become a "top-heavy plan" and such Employee's Account attributable to
Employer Contributions shall be determined without regard to this Section 15.06.
15.07. EXCLUSION OF COLLECTIVELY-BARGAINED EMPLOYEES. Notwithstanding any other
provision of this Article 15, Employees who are included in a unit covered by an
agreement which the Secretary of Labor finds to be a collective bargaining
agreement between employee representatives and one or more employers shall not
be included in determining whether or not the Plan is a "top-heavy plan". In
addition, such Employees shall not be entitled to a minimum contribution under
72
Section 15.03 or accelerated vesting under Section 15.06, unless otherwise
provided in the collective bargaining agreement.
ARTICLE 16. AMENDMENT AND TERMINATION.
16.01. AMENDMENTS BY THE EMPLOYER THAT DO NOT AFFECT PROTOTYPE STATUS. The
Employer reserves the authority through a board of directors' resolution or
similar action, subject to the provisions of Article 1 and Section 16.04, to
amend the Plan as provided herein, and such amendment shall not affect the
status of the Plan as a prototype plan.
(a) The Employer may amend the Adoption Agreement to make a change
or changes in the provisions previously elected by it. Such amendment
may be made either by (1) completing an amended Adoption Agreement on
which the Employer has indicated the change or changes, or (2) adopting
an amendment, executed by the Employer only, in the form provided by
the Prototype Sponsor, that provides replacement pages to be inserted
into the Adoption Agreement, which pages include the change or changes.
Any such amendment must be filed with the Trustee.
(b) The Employer may make a separate amendment to the Plan as
necessary to satisfy Code Section 415 or 416 because of the required
aggregation of multiple plans by completely overriding the Basic Plan
Document provisions.
(c) The Employer may adopt certain model amendments published by
the Internal Revenue Service which specifically provide that their
adoption shall not cause the Plan to be treated as an individually
designed plan.
16.02. AMENDMENTS BY THE EMPLOYER THAT AFFECT PROTOTYPE STATUS. The Employer
reserves the authority through a board of directors' resolution or similar
action, subject to the provisions of Section 16.04, to amend the Plan in a
manner other than that provided in Section 16.01. However, upon making such
amendment, including, if the Plan is a money purchase pension plan, a waiver of
the minimum funding requirement under Code Section 412(d), the Employer may no
longer participate in this prototype plan arrangement and shall be deemed to
have an individually designed plan. Following such amendment, the Trustee may
transfer the assets of the Trust to the trust forming part of such newly adopted
plan upon receipt of sufficient evidence (such as a determination letter or
opinion letter from the Internal Revenue Service or an opinion of counsel
satisfactory to the Trustee) that such trust shall be a qualified trust under
the Code.
16.03. AMENDMENT BY THE MASS SUBMITTER SPONSOR AND THE PROTOTYPE SPONSOR. The
Mass Submitter Sponsor may in its discretion amend the mass submitter prototype
plan at any time, subject to the provisions of Article 1 and Section 16.04, and
provided that the Mass Submitter Sponsor mails a copy of such amendment to each
Prototype Sponsor that maintains the prototype plan or a minor modifier of the
prototype plan. Each Prototype Sponsor shall provide a copy of such amendment to
each Employer adopting its prototype plan at the Employer's last known address
as shown on the books maintained by the Prototype Sponsor or its affiliates.
73
The Prototype Sponsor may, in its discretion, amend the Plan or the
Adoption Agreement, subject to the provisions of Article 1 and Section 16.04,
and provided that such amendment does not change the Plan's status as a word for
word adoption of the mass submitter prototype plan or a minor modifier of the
mass submitter prototype plan, unless such Prototype Sponsor elects no longer to
be a sponsoring organization with respect to the mass submitter prototype plan.
The Prototype Sponsor shall provide a copy of such amendment to each Employer
adopting its prototype plan at the Employer's last known address as shown on the
books maintained by the Prototype Sponsor or its affiliates.
16.04. AMENDMENTS AFFECTING VESTED AND/OR ACCRUED BENEFITS. Except as permitted
by Section 16.05, Section 1.19(e) and the Forms of Payment Addendum to the
Adoption Agreement, and/or Code Section 411(d)(6) and regulations issued
thereunder, no amendment to the Plan shall be effective to the extent that it
has the effect of decreasing a Participant's Account or eliminating an optional
form of benefit with respect to benefits attributable to service before the
amendment. Furthermore, if the vesting schedule of the Plan is amended, the
nonforfeitable interest of a Participant in his Account, determined as of the
later of the date the amendment is adopted or the date it becomes effective,
shall not be less than the Participant's nonforfeitable interest in his Account
determined without regard to such amendment.
If the Plan is a money purchase pension plan, no amendment to the Plan
that provides for a significant reduction in contributions to the Plan shall be
made unless notice has been furnished to Participants and alternate payees under
a qualified domestic relations order as provided in ERISA Section 204(h).
If the Plan's vesting schedule is amended because of a change to
"top-heavy plan" status, as described in Subsection 15.01(f), the accelerated
vesting provisions of Section 15.06 shall continue to apply for all Plan Years
thereafter, regardless of whether the Plan is a "top-heavy plan" for such Plan
Year.
If the Plan's vesting schedule is amended and an Employee's vested
interest, as calculated by using the amended vesting schedule, is less in any
year than the Employee's vested interest calculated under the Plan's vesting
schedule immediately prior to the amendment, the amended vesting schedule shall
apply only to Employees hired on or after the effective date of the change in
vesting schedule.
16.05. RETROACTIVE AMENDMENTS MADE BY MASS SUBMITTER OR PROTOTYPE SPONSOR. An
amendment made by the Mass Submitter Sponsor or Prototype Sponsor in accordance
with Section 16.03 may be made effective on a date prior to the first day of the
Plan Year in which it is adopted if, in published guidance, the Internal Revenue
Service either permits or requires such an amendment to be made to enable the
Plan and Trust to satisfy the applicable requirements of the Code and all
requirements for the retroactive amendment are satisfied.
16.06. TERMINATION. The Employer has adopted the Plan with the intention and
expectation that contributions shall be continued indefinitely. However, said
74
Employer has no obligation or liability whatsoever to maintain the Plan for any
length of time and may amend the Plan to discontinue contributions under the
Plan or terminate the Plan at any time without any liability hereunder for any
such discontinuance or termination. The Employer may terminate the Plan by
written notice delivered to the Trustee.
16.07. DISTRIBUTION UPON TERMINATION OF THE PLAN. Upon termination or partial
termination of the Plan or complete discontinuance of contributions thereunder,
each Participant (including a terminated Participant with respect to amounts not
previously forfeited by him) who is affected by such termination or partial
termination or discontinuance shall have a vested interest in his Account of 100
percent. Subject to Section 12.01 aid Article 14, upon receipt of written
instructions from the Administrator, the Trustee shall distribute to each
Participant or other person entitled to distribution the balance of the
Participant's Account in a single lump sum payment. In the absence of such
instructions, the Trustee shall notify the Administrator of such situation and
the Trustee shall be under no duty to make any distributions under the Plan
until it receives written instructions from the Administrator. Upon the
completion of such distributions, the Trust shall terminate, the Trustee shall
be relieved from all liability under the Trust, and no Participant or other
person shall have any claims thereunder, except as required by applicable law.
If distribution is to be made to a Participant or Beneficiary who
cannot be located, the Administrator shall give written instructions to the
Trustee to (a) escheat the distributable amount to the State or Commonwealth of
the distributee's last known address or (b) draw a check in the distributable
amount and mail it to the distributee's last known address. In the absence of
such instructions, the Trustee shall make distribution to the distributee by
drawing a check in the distributable amount and mailing it to the distributee's
last known address.
16.08. MERGER OR CONSOLIDATION OF PLAN; TRANSFER OF PLAN ASSETS. In case of any
merger or consolidation of the Plan with, or transfer of assets and liabilities
of the Plan to, any other plan, provision must be made so that each Participant
would, if the Plan then terminated, receive a benefit immediately after the
merger, consolidation or transfer which is equal to or greater than the benefit
he would have been entitled to receive immediately before the merger,
consolidation or transfer if the Plan had then terminated.
ARTICLE 17. AMENDMENT AND CONTINUATION OF PRIOR PLAN; TRANSFER OF FUNDS TO OR
FROM OTHER QUALIFIED PLANS.
17.01. AMENDMENT AND CONTINUATION OF PRIOR PLAN. In the event the Employer has
previously established a plan (the "prior plan") which is a defined contribution
plan under the Code and which on the date of adoption of the Plan meets the
applicable requirements of Code Section 401 (a), the Employer may, in accordance
with the provisions of the prior plan, amend and restate the prior plan in the
form of the Plan and become the Employer hereunder, subject to the following:
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(a) Subject to the provisions of the Plan, each individual who was
a Participant in the prior plan immediately prior to the effective date
of such amendment and restatement shall become a Participant in the
Plan.
(b) Except as provided in Section 16.04, no election may be made
under the vesting provisions of the Adoption Agreement if such election
would reduce the benefits of a Participant under the Plan to less than
the benefits to which he would have been entitled if he voluntarily
separated from the service of the Employer immediately prior to such
amendment and restatement.
(c) No amendment to the Plan shall decrease a Participant's
accrued benefit or eliminate an optional form of benefit, except as
permitted under Section 1.19(e) and the Forms of Payment Addendum to
the Adoption Agreement.
(d) The amounts standing to the credit of a Participant's account
immediately prior to such amendment and restatement which represent the
amounts properly attributable to (1) contributions by the Participant
and (2) contributions by the Employer and forfeitures shall constitute
the opening balance of his Account or Accounts under the Plan.
(e) Amounts being paid to an Inactive Participant or to a
Beneficiary in accordance with the provisions of the prior plan shall
continue to be paid in accordance with such provisions.
(f) Any election and waiver of the "qualified preretirement
survivor annuity", as defined in Section 14.01, in effect after August
23, 1984, under the prior plan immediately before such amendment and
restatement shall be deemed a valid election and waiver of Beneficiary
under Section 14.04 if such designation satisfies the requirements of
Sections 14.05 and 14.06, unless and until the Participant revokes such
election and waiver under the Plan.
(g) Unless the Employer and the Trustee agree otherwise, all
assets of the predecessor trust shall be deemed to be assets of the
Trust as of the effective date of such amendment. Such assets shall be
invested by the Trustee as soon as reasonably practicable pursuant to
Article 8. The Employer agrees to assist the Trustee in any way
requested by the Trustee in order to facilitate the transfer of assets
from the predecessor trust to the Trust Fund.
17.02. TRANSFER OF FUNDS FROM AN EXISTING PLAN. The Employer may from time to
time direct the Trustee, in accordance with such rules as the Trustee may
establish, to accept cash, allowable Fund Shares or participant loan promissory
notes transferred for the benefit of Participants from a trust forming part of
another qualified plan under the Code, provided such plan is a defined
contribution plan. Such transferred assets shall become assets of the Trust as
of the date they are received by the Trustee. Such transferred assets shall be
credited to Participants' Accounts in accordance with their respective interests
immediately upon receipt by the Trustee. A Participant's interest under the Plan
in transferred assets which were fully vested and nonforfeitable under the
transferring plan or which were transferred to the Plan in a manner intended to
76
satisfy the requirements of subsection (b) of this Section 17.02 shall be fully
vested and nonforfeitable at all times. A Participant's interest under the Plan
in transferred assets which were transferred to the Plan in a manner intended to
satisfy the requirements of subsection (a) of this Section 17.02 shall be
determined in accordance with the terms of the Plan unless the transferor plan's
vesting schedule is more favorable. Such transferred assets shall be invested by
the Trustee in accordance with the provisions of Subsection 17.01(g) as if such
assets were transferred from a prior plan. Except as otherwise provided below,
no transfer of assets in accordance with this Section 17.02 may cause a loss of
an accrued or optional form of benefit protected by Code Section 411(d)(6).
Effective for transfers made on or after January 1, 2002, the terms of
the Plan as in effect at the time of the transfer shall apply to the amounts
transferred regardless of whether such application would have the effect of
eliminating or reducing an optional form of benefit protected by Code Section
411(d)(6) which was previously available with respect to any amount transferred
to the Plan pursuant to this Section 17.02, provided that such transfer
satisfies the requirements set forth in either (a) or (b):
(a) (1) The transfer is conditioned upon a voluntary, fully
informed election by the Participant to transfer his entire account
balance to the Plan. As an alternative to the transfer, the Participant
is offered the opportunity to retain the form of benefit previously
available to him (or, if the transferor plan is terminated, to receive
any optional form of benefit for which the participant is eligible
under the transferor plan as required by Code Section 411(d)(6));
(2) If the defined contribution plan from which the
transfer is made is a money purchase pension plan, the Plan is
a money purchase plan or, if the defined contribution plan
from which the transfer is made includes a qualified cash or
deferred arrangement, the Plan includes a cash or deferred
arrangement; and
(3) The transfer is made either in connection with an
asset or stock acquisition, merger or other similar
transaction involving a change in employer of the employees of
a trade or business (i.e., an acquisition or disposition
within the meaning of Section 1.410(b)-2 (f)) or in connection
with the participant's change in employment status such that
the participant is not entitled to additional allocations
under the transferor plan.
(b) (1) The transfer satisfies the requirements of subsection (a)
(1) of this Section 17.02;
(2) The transfer occurs at a time when the Participant is
eligible, under the terms of the transferor plan, to receive
an immediate distribution of his account;
(3) If the transfer occurs on or after January 1, 2002,
the transfer occurs at a time when the participant is not
eligible to receive an
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immediate distribution of his entire nonforfeitable account
balance in a single sum distribution that would consist
entirely of an eligible rollover distribution within the
meaning of Code Section 401 (a) (31) (C); and
(4) The amount transferred, together with the amount of
any contemporaneous Code Section 401 (a) (31) direct rollover
to the Plan, equals the entire nonforfeitable account of the
participant whose account is being transferred.
It is the Employer's obligation to ensure that all assets of the Plan,
other than those maintained in a separate trust or fund pursuant to the
provisions of Section 20.10, are transferred to the Trustee. The Trustee shall
have no liability for and no duty to inquire into the administration of such
transferred assets for periods prior to the transfer.
17.03. ACCEPTANCE OF ASSETS BY TRUSTEE. The Trustee shall not accept assets
which are not either in a medium proper for investment under the Plan, as set
forth in the Plan and the Service Agreement, or in cash. Such assets shall be
accompanied by instructions in writing (or such other medium as may be
acceptable to the Trustee) showing separately the respective contributions by
the prior employer and by the Participant, and identifying the assets
attributable to such contributions. The Trustee shall establish such accounts as
may be necessary or appropriate to reflect such contributions under the Plan.
The Trustee shall hold such assets for investment in accordance with the
provisions of Article 8, and shall in accordance with the written instructions
of the Employer make appropriate credits to the Accounts of the Participants for
whose benefit assets have been transferred.
17.04. TRANSFER OF ASSETS FROM TRUST. Effective on or after January 1, 2002, the
Employer may direct the Trustee to transfer all or a specified portion of the
Trust assets to any other plan or plans maintained by the Employer or the
employer or employers of an Inactive Participant or Participants, provided that
the Trustee has received evidence satisfactory to it that such other plan meets
all applicable requirements of the Code, subject to the following:
(a) The assets so transferred shall be accompanied by instructions
in writing (or such other medium as may be acceptable to the Trustee)
from the Employer naming the persons for whose benefit such assets have
been transferred, showing separately the respective contributions by
the Employer and by each Inactive Participant, if any, and identifying
the assets attributable to the various contributions. The Trustee shall
not transfer assets hereunder until all applicable filing requirements
are met. The Trustee shall have no further liabilities with respect to
assets so transferred.
(b) A transfer of assets made pursuant to this Section 17.04 may
result in the elimination or reduction of an optional form of benefit
protected by Code Section 411(d)(6), provided that the transfer
satisfies the requirements set forth in either (1) or (2) :
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(1) (i) The transfer is conditioned upon a voluntary,
fully informed election by the Participant to transfer his
entire Account to the other defined contribution plan. As an
alternative to the transfer, the Participant is offered the
opportunity to retain the form of benefit previously available
to him (or, if the Plan is terminated, to receive any optional
form of benefit for which the Participant is eligible under
the Plan as required by Code Section 411(d)(6));
(ii) If the Plan is a money purchase pension
plan, the defined contribution plan to which the
transfer is made must be a money purchase pension
plan and if the Plan includes a qualified cash or
deferred arrangement under Code Section 401 (k), the
defined contribution plan to which the transfer is
made must include a qualified cash or deferred
arrangement; and
(iii) The transfer is made either in connection
with an asset or stock acquisition, merger or other
similar transaction involving a change in employer of
the employees of a trade or business (i.e., an
acquisition or disposition within the meaning of
Section 1.410(b)-2 (f)) or in connection with the
Participant's change in employment status such that
the Participant becomes an Inactive Participant.
(2) (i) The transfer satisfies the requirements of
subsection (1) (i) of this Section 17.04;
(ii) The transfer occurs at a time when the
Participant is eligible, under the terms of the Plan,
to receive an immediate distribution of his benefit;
(iii) If the transfer occurs on or after January
1, 2002, the transfer occurs at a time when the
Participant is not eligible to receive an immediate
distribution of his entire nonforfeitable Account in
a single sum distribution that would consist entirely
of an eligible rollover distribution within the
meaning of Code Section 401 (a) (31) (C);
(iv) The Participant is fully vested in the
transferred amount in the transferee plan; and
(v) The amount transferred, together with the
amount of any contemporaneous Code Section 401 (a)
(31) direct rollover to the transferee plan, equals
the entire nonforfeitable Account of the Participant
whose Account is being transferred.
ARTICLE 18. MISCELLANEOUS.
18.01. COMMUNICATION TO PARTICIPANTS. The Plan shall be communicated to all
Eligible Employees by the Employer promptly after the Plan is adopted.
79
18.02. LIMITATION OF RIGHTS. Neither the establishment of the Plan and the
Trust, nor any amendment thereof, nor the creation of any fund or account, nor
the payment of any benefits, shall be construed as giving to any Participant or
other person any legal or equitable right against the Employer, Administrator or
Trustee, except as provided herein; and in no event shall the terms of
employment or service of any Participant be modified or in any way affected
hereby. It is a condition of the Plan, and each Participant expressly agrees by
his participation herein, that each Participant shall look solely to the assets
held in the Trust for the payment of any benefit to which he is entitled under
the Plan.
18.03. NONALIENABILITY OF BENEFITS. Except as provided in Code Sections 401 (a)
(13) (C) and (D) (relating to offsets ordered or required under a criminal
conviction involving the Plan, a civil judgment in connection with a violation
or alleged violation of fiduciary responsibilities under XXXXX, or a settlement
agreement between the Participant and the Department of Labor in connection with
a violation or alleged violation of fiduciary responsibilities under ERISA),
Section 1.401(a)-13 (b) (2) of the Treasury Regulations (relating to Federal tax
levies), or as otherwise required by law, the benefits provided hereunder shall
not be subject to alienation, assignment, garnishment, attachment, execution or
levy of any kind, either voluntarily or involuntarily, and any attempt to cause
such benefits to be so subjected shall not be recognized. The preceding sentence
shall also apply to the creation, assignment, or recognition of a right to any
benefit payable with respect to a Participant pursuant to a domestic relations
order, unless such order is determined by the Administrator to be a qualified
domestic relations order, as defined in Code Section 414 (p), or any domestic
relations order entered before January 1, 1985.
18.04. QUALIFIED DOMESTIC RELATIONS ORDERS PROCEDURES. The Administrator must
establish reasonable procedures to determine the qualified status of a domestic
relations order. Upon receiving a domestic relations order, the Administrator
shall promptly notify the Participant and any alternate payee named in the
order, in writing, of the receipt of the order and the Plan's procedures for
determining the qualified status of the order. Within a reasonable period of
time after receiving the domestic relations order, the Administrator must
determine the qualified status of the order and must notify the Participant and
each alternate payee, in writing, of its determination. The Administrator shall
provide such notice by mailing to the individual's address specified in the
domestic relations order, or in a manner consistent with the Department of Labor
regulations.
If any portion of the Participant's Account is payable during the
period the Administrator is making its determination of the qualified status of
the domestic relations order, the Administrator must make a separate accounting
of the amounts payable. If the Administrator determines the order is a qualified
domestic relations order within 18 months of the date amounts first are payable
following receipt of the order, the Administrator shall direct the Trustee to
distribute the payable amounts in accordance with the order. If the
Administrator does not make his determination of the qualified status of the
order within the 18-month determination period, the Administrator shall direct
the Trustee to distribute the payable amounts in the manner the Plan would
distribute if the order did not
80
exist and shall apply the order prospectively if the Administrator later
determines the order is a qualified domestic relations order.
The Trustee shall set up segregated accounts for each alternate payee
when properly notified by the Administrator.
A domestic relations order shall not fail to be deemed a qualified
domestic relations order merely because it requires the distribution or
segregation of all or part of a Participant's Account with respect to an
alternate payee prior to the Participant's earliest retirement age (as defined
in Code Section 414(p)) under the Plan. A distribution to an alternate payee
prior to the Participant's attainment of the earliest retirement age is
available only if (a) the order specifies distribution at that time and (b) if
the present value of the alternate payee's benefits under the Plan exceeds
$5,000 as determined under Section 13.02 (or such larger amount as may be
specified in Code Section 417(e)(1)), and the order requires, and the alternate
payee consents to, a distribution occurring prior to the Participant's
attainment of earliest retirement age.
18.05. ADDITIONAL RULES FOR PAIRED PLANS. If the Employer has adopted both a
money purchase pension plan and a profit sharing plan under this Basic Plan
Document which are to be considered paired plans, the elections in Section 1.04
of the Adoption Agreement must be identical with respect to both plans. When the
paired plans are "top-heavy plans", as defined in Subsection 15.01(f), or are
deemed to be "top-heavy plans", the money purchase pension plan shall provide
the minimum contribution required under Section 15.03, unless contributions
under the money purchase pension plan are frozen.
18.06. APPLICATION OF PLAN PROVISIONS IN MULTIPLE EMPLOYER PLANS.
Notwithstanding any other provision of the Plan to the contrary, if one of the
Employers designated in Subsection 1.02(b) of the Adoption Agreement is not a
Related Employer, the Prototype Sponsor reserves the right to take any or all of
the following actions:
(a) treat the Plan as a multiple employer plan;
(b) permit the Employer to amend the Plan to exclude the
un-Related Employer from participation in the Plan; or
(c) treat the Employer as having amended the Plan in the manner
described in Section 16.02 such that the Employer may no longer
participate in this prototype plan arrangement.
For the period, if any, that the Prototype Sponsor elects to treat the
Plan as a multiple employer plan, each un-Related Employer shall be treated as a
separate Employer for purposes of contributions, application of the "ADP" and
"ACP" tests described in Sections 6.03 and 6.06, application of the Code Section
415 limitations described in Section 6.12, top-heavy determinations and
application of the top-heavy requirements under Article 15, and application of
such other Plan provisions as the Employers determine to be appropriate. For any
such period, the Prototype Sponsor shall continue to treat the Employer as
81
participating in this prototype plan arrangement for purposes of Plan
administration, notices or other communications in connection with the Plan, and
other Plan-related services; provided, however, that if the Employer applies to
the Internal Revenue Service for a determination letter, the multiple employer
plan shall be filed on the form appropriate for multiple employer plans. The
Administrator shall be responsible for administering the Plan as a multiple
employer plan.
18.7. VETERANS REEMPLOYMENT RIGHTS. Notwithstanding any other provision of the
Plan to the contrary, contributions, benefits, and service credit with respect
to qualified military service shall be provided in accordance with Code Section
414(u). The Administrator shall notify the Trustee of any Participant with
respect to whom additional contributions are made because of qualified military
service.
18.8. FACILITY OF PAYMENT. In the event the Administrator determines, on the
basis of medical reports or other evidence satisfactory to the Administrator,
that the recipient of any benefit payments under the Plan is incapable of
handling his affairs by reason of minority, illness, infirmity or other
incapacity, the Administrator may direct the Trustee to disburse such payments
to a person or institution designated by a court which has jurisdiction over
such recipient or a person or institution otherwise having the legal authority
under state law for the care and control of such recipient. The receipt by such
person or institution of any such payments shall be complete acquittance
therefore, and any such payment to the extent thereof, shall discharge the
liability of the Trust for the payment of benefits hereunder to such recipient.
18.9. INFORMATION BETWEEN EMPLOYER AND TRUSTEE. The Employer agrees to furnish
the Trustee, and the Trustee agrees to furnish the Employer, with such
information relating to the Plan and Trust as may be required by the other in
order to carry out their respective duties hereunder, including without
limitation information required under the Code and any regulations issued or
forms adopted by the Treasury Department thereunder or under the provisions of
ERISA and any regulations issued or forms adopted by the Department of Labor
thereunder.
18.10. EFFECT OF FAILURE TO QUALIFY UNDER CODE. Notwithstanding any other
provision contained herein, if the Employer fails to obtain or retain approval
of the Plan by the Internal Revenue Service as a qualified Plan under the Code,
the Employer may no longer participate in this prototype Plan arrangement and
shall be deemed to have an individually designed plan.
18.11. DIRECTIONS, NOTICES AND DISCLOSURE. Any notice or other communication in
connection with this Plan shall be deemed delivered in writing if addressed as
provided below and if either actually delivered at said address or, in the case
of a letter, three business days shall have elapsed after the same shall have
been deposited in the United States mails, first-class postage prepaid and
registered or certified:
82
(a) If to the Employer or Administrator, to it at the address set
forth in the Adoption Agreement, and, if to the Employer, to the
attention of the contact specified in Subsection 1.02(a) of the
Adoption Agreement;
(b) If to the Trustee, to it at the address set forth in
Subsection 1.03(a) the Adoption Agreement;
or, in each case at such other address as the addressee shall have specified by
written notice delivered in accordance with the foregoing to the addressor's
then effective notice address.
Any direction, notice or other communication provided to the Employer,
the Administrator or the Trustee by another party which is stipulated to be in
written form under the provisions of this Plan may also be provided in any
medium which is permitted under applicable law or regulation. Any written
communication or disclosure to Participants required under the provisions of
this Plan may be provided in any other medium (electronic, telephone or
otherwise) that is permitted under applicable law or regulation.
18.12. GOVERNING LAW. The Plan and the accompanying Adoption Agreement shall be
construed, administered and enforced according to ERISA, and to the extent not
preempted thereby, the laws of the Commonwealth of Massachusetts.
Nothing contained in Sections 8.02, 19.01 or 19.05 or this Section
18.13 shall be construed in a manner which subjects a governmental plan (as
defined in Code Section 414(d)) or a non-electing church plan (as described in
Code Section 410(d)) to the fiduciary provisions of Title I of ERISA.
ARTICLE 19. PLAN ADMINISTRATION.
19.1. POWERS AND RESPONSIBILITIES OF THE ADMINISTRATOR. The Administrator has
the full power and the full responsibility to administer the Plan in all of its
details, subject, however, to the requirements of ERISA. In addition to the
powers and authorities expressly conferred upon it in the Plan, the
Administrator shall have all such powers and authorities as may be necessary to
carry out the provisions of the Plan, including the discretionary power and
authority to interpret and construe the provisions of the Plan, such
interpretation to be final and conclusive on all persons claiming benefits under
the Plan; to make benefit determinations; to utilize the correction programs or
systems established by the Internal Revenue Service (such as the Employee Plans
Compliance and Resolution System) or the Department of Labor; and to resolve any
disputes arising under the Plan. The Administrator may, by written instrument,
allocate and delegate its fiduciary responsibilities in accordance with ERISA
Section 405, including allocation of such responsibilities to an administrative
committee formed to administer the Plan.
19.2. NONDISCRIMINATORY EXERCISE OF AUTHORITY. Whenever, in the administration
of the Plan, any discretionary action by the Administrator is required, the
Administrator shall exercise its authority in a nondiscriminatory manner so that
all persons similarly situated shall receive substantially the same treatment.
83
19.03. CLAIMS AND REVIEW PROCEDURES. Except to the extent that the provisions of
any collective-bargaining agreement provide another method of resolving claims
for benefits under the Plan, the provisions of this Section 19.03 shall control
with respect to the resolution of such claims; provided, however, that the
Employer may institute alternative claims procedures that are more restrictive
on the Employer and more generous with respect to persons claiming a benefit
under the Plan.
(a) Claims Procedure. Whenever a request for benefits under the
Plan is wholly or partially denied, the Administrator shall notify the
person claiming such benefits of its decision in writing. Such
notification shall contain (1) specific reasons for the denial of the
claim, (2) specific reference to pertinent Plan provisions, (3) a
description of any additional material or information necessary for
such person to perfect such claim and an explanation of why such
material or information is necessary, and (4) information as to the
steps to be taken if the person wishes to submit a request for review.
Such notification shall be given within 90 days after the claim is
received by the Administrator (or within 180 days, if special
circumstances require an extension of time for processing the claim,
and if written notice of such extension and circumstances is given to
such person within the initial 90-day period). If such notification is
not given within such period, the claim shall be considered denied as
of the last day of such period and such person may request a review of
his claim.
(b) Review Procedure. Within 60 days after the date on which a
person receives a written notice of a denied claim (or, if applicable,
within 60 days after the date on which such denial is considered to
have occurred) , such person (or his duly authorized representative)
may (1) file a written request with the Administrator for a review of
his denied claim and of pertinent documents and (2) submit written
issues and comments to the Administrator. The Administrator shall
notify such person of its decision in writing. Such notification shall
be written in a manner calculated to be understood by such person and
shall contain specific reasons for the decision as well as specific
references to pertinent Plan provisions. The decision on review shall
be made within 60 days after the request for review is received by the
Administrator (or within 120 days, if special circumstances require an
extension of time for processing the request, such as an election by
the Administrator to hold a hearing, and if written notice of such
extension and circumstances is given to such person within the initial
60-day period). If the decision on review is not made within such
period, the claim shall be considered denied.
19.4. NAMED FIDUCIARY. The Administrator is a "named fiduciary" for purposes of
ERISA Section 402 (a) (1) and has the powers and responsibilities with respect
to the management and operation of the Plan described herein.
19.5. COSTS OF ADMINISTRATION. Unless some or all are paid by the Employer, all
reasonable costs and expenses (including legal, accounting, and employee
communication fees) incurred by the Administrator and the Trustee in
84
administering the Plan and Trust may be paid from the forfeitures (if any)
resulting under Section 11.08, or from the remaining Trust Fund. All such costs
and expenses paid from the Trust Fund shall, unless allocable to the Accounts of
particular Participants, be charged against the Accounts of all Participants on
a pro rata basis or in such other reasonable manner as may be directed by the
Employer and accepted by the Trustee.
ARTICLE 20. TRUST AGREEMENT.
20.01. ACCEPTANCE OF TRUST RESPONSIBILITIES. By executing the Adoption
Agreement, the Employer establishes a trust to hold the assets of the Plan that
are invested in Permissible Investments. By executing the Adoption Agreement,
the Trustee agrees to accept the rights, duties and responsibilities set forth
in this Article. If the Plan is an amendment and restatement of a prior plan,
the Trustee shall have no liability for and no duty to inquire into the
administration of the assets of the Plan for periods prior to the date such
assets are transferred to the Trust.
20.02. ESTABLISHMENT OF TRUST FUND. A trust is hereby established under the
Plan. The Trustee shall open and maintain a trust account for the Plan and, as
part thereof, Accounts for such individuals as the Employer shall from time to
time notify the Trustee are Participants in the Plan. The Trustee shall accept
and hold in the Trust Fund such contributions on behalf of Participants as it
may receive from time to time from the Employer. The Trust Fund shall be fully
invested and reinvested in accordance with the applicable provisions of the Plan
in Fund Shares or as otherwise provided in Section 20.10.
The Trust is intended to qualify as a domestic trust in accordance with
Code Section 7701 (a) (30) (E) and any regulations issued thereunder.
Accordingly, only United States persons (as defined in Code Section 7701 (a)
(30) may have the authority to control all substantial decisions regarding the
Trust (including decisions to appoint, retain or replace the Trustee), unless
the Plan filed a domestic trust election pursuant to Treasury Regulation Section
301.7701-7 (f) or any subsequent guidance issued by the Internal Revenue
Service, or except as otherwise provided in applicable regulation or
legislation.
20.3. EXCLUSIVE BENEFIT. The Trustee shall hold the assets of the Trust Fund for
the exclusive purpose of providing benefits to Participants and Beneficiaries
and defraying the reasonable expenses of administering the Plan. No assets of
the Plan shall revert to the Employer except as specifically permitted by the
terms of the Plan.
20.4. POWERS OF TRUSTEE. The Trustee shall have no discretion or authority with
respect to the investment of the Trust Fund but shall act solely as a directed
trustee of the funds contributed to it. In addition to and not in limitation of
such powers as the Trustee has by law or under any other provisions of the Plan,
the Trustee shall have the following powers, each of which the Trustee exercises
solely as directed Trustee in accordance with the written direction of the
Employer except to the extent a Plan asset is subject to Participant direction
of
85
investment and provided that no such power shall be exercised in any manner
inconsistent with the provisions of ERISA:
(a) to deal with all or any part of the Trust Fund and to invest
all or a part of the Trust Fund in Permissible Investments, without
regard to the law of any state regarding proper investment;
(b) to transfer to and invest all or any part of the Trust in any
collective investment trust which is then maintained by a bank or trust
company (or any affiliate) and which is tax-exempt pursuant to Code
Section 501 (a) and Rev. Rul. 81-100; provided that such collective
investment trust is a Permissible Investment; and provided, further,
that the instrument establishing such collective investment trust, as
amended from time to time, shall govern any investment therein, and is
hereby made a part of the Plan and this Trust Agreement to the extent
of such investment therein;
(c) to retain uninvested such cash as it may deem necessary or
advisable, without liability for interest thereon, for the
administration of the Trust;
(d) to sell, lease, convert, redeem, exchange, or otherwise
dispose of all or any part of the assets constituting the Trust Fund;
(e) to borrow funds from a bank or other financial institution not
affiliated with the Trustee in order to provide sufficient liquidity to
process Plan transactions in a timely fashion, provided that the cost
of borrowing shall be allocated in a reasonable fashion to the
Permissible Investment(s) in need of liquidity;
(f) to enforce by suit or otherwise, or to waive, its rights on
behalf of the Trust, and to defend claims asserted against it or the
Trust, provided that the Trustee is indemnified to its satisfaction
against liability and expenses;
(g) to employ such agents and counsel as may be reasonably
necessary in collecting, managing, administering, investing,
distributing and protecting the Trust Fund or the assets thereof and to
pay them reasonable compensation;
(h) to compromise, adjust and settle any and all claims against or
in favor of it or the Trust;
(i) to oppose, or participate in and consent to the
reorganization, merger, consolidation, or readjustment of the finances
of any enterprise, to pay assessments and expenses in connection
therewith, and to deposit securities under deposit agreements;
(j) to apply for or purchase annuity contracts in accordance with
Article 14;
(k) to hold securities unregistered, or to register them in its
own name or in the name of nominees;
86
(1) to appoint custodians to hold investments within the
jurisdiction of the district courts of the United States and to deposit
securities with stock clearing corporations or depositories or similar
organizations;
(m) to make, execute, acknowledge and deliver any and all
instruments that it deems necessary or appropriate to carry out the
powers herein granted;
(n) generally to exercise any of the powers of an owner with
respect to all or any part of the Trust Fund; and
(o) to take all such actions as may be necessary under the Trust
Agreement, to the extent consistent with applicable law.
The Employer specifically acknowledges and authorizes that affiliates
of the Trustee may act as its agent in the performance of ministerial,
nonfiduciary duties under the Trust. The expenses and compensation of such agent
shall be paid by the Trustee.
The Trustee shall provide the Employer with reasonable notice of any
claim filed against the Plan or Trust or with regard to any related matter, or
of any claim filed by the Trustee on behalf of the Plan or Trust or with regard
to any related matter.
20.5. ACCOUNTS. The Trustee shall keep full accounts of all receipts and
disbursements and other transactions hereunder. Within 120 days after the close
of each Plan Year, within 90 days after termination of the Trust, and at such
other times as may be appropriate, the Trustee shall determine the then net fair
market value of the Trust Fund as of the close of the Plan Year, as of the
termination of the Trust, or as of such other time, whichever is applicable, and
shall render to the Employer and Administrator an account of its administration
of the Trust during the period since the last such accounting, including all
allocations made by it during such period.
20.6. APPROVAL OF ACCOUNTS. To the extent permitted by law, the written approval
of any account by the Employer or Administrator shall be final and binding, as
to all matters and transactions stated or shown therein, upon the Employer,
Administrator, Participants and all persons who then are or thereafter become
interested in the Trust. The failure of the Employer or Administrator to notify
the Trustee within six months after the receipt of any account of its objection
to the account shall, to the extent permitted by law, be the equivalent of
written approval. If the Employer or Administrator files any objections within
such six month period with respect to any matters or transactions stated or
shown in the account, and the Employer or Administrator and the Trustee cannot
amicably settle the question raised by such objections, the Trustee shall have
the right to have such questions settled by judicial proceedings. Nothing herein
contained shall be construed so as to deprive the Trustee of the right to have
judicial settlement of its accounts. In any proceeding for a judicial settlement
of any account or for instructions, the only necessary parties shall be the
Trustee, the Employer and the Administrator.
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20.7. DISTRIBUTION FROM TRUST FUND. The Trustee shall make such distributions
from the Trust Fund as the Employer or Administrator may direct (in writing or
such other medium as may be acceptable to the Trustee) , consistent with the
terms of the Plan and either for the exclusive benefit of Participants or their
Beneficiaries, or for the payment of expenses of administering the Plan.
20.8. TRANSFER OF AMOUNTS FROM QUALIFIED PLAN. If amounts are to be transferred
to the Plan from another qualified plan or trust under Code Section 401(a), such
transfer shall be made in accordance with the provisions of the Plan and with
such rules as may be established by the Trustee. The Trustee shall only accept
assets which are in a medium proper for investment under this Trust Agreement or
in cash, and that are accompanied in a timely manner, as agreed to by the
Administrator and the Trustee, by instructions in writing (or such other medium
as may be acceptable to the Trustee) showing separately the respective
contributions by the prior employer and the transferring Employee, the records
relating to such contributions, and identifying the assets attributable to such
contributions. The Trustee shall hold such assets for investment in accordance
with the provisions of this Trust Agreement.
20.9. TRANSFER OF ASSETS FROM TRUST. Subject to the provisions of the Plan, the
Employer may direct the Trustee to transfer all or a specified portion of the
Trust assets to any other plan or plans maintained by the Employer or the
employer or employers of an Inactive Participant or Participants, provided that
the Trustee has received evidence satisfactory to it that such other plan meets
all applicable requirements of the Code. The assets so transferred shall be
accompanied by written instructions from the Employer naming the persons for
whose benefit such assets have been transferred, showing separately the
respective contributions by the Employer and by each Participant, if any, and
identifying the assets attributable to the various contributions. The Trustee
shall have no further liabilities with respect to assets so transferred.
20.10. SEPARATE TRUST OR FUND FOR EXISTING PLAN ASSETS. With the consent of the
Trustee, the Employer may maintain a trust or fund (including a group annuity
contract) under this prototype plan document separate from the Trust Fund for
Plan assets purchased prior to the adoption of this prototype plan document
which are not Permissible Investments listed in the Service Agreement. The
Trustee shall have no authority and no responsibility for the Plan assets held
in such separate trust or fund. The Employer shall be responsible for assuring
that such separate trust or fund is maintained pursuant to a separate trust
agreement signed by the Employer and the trustee. The duties and
responsibilities of the trustee of a separate trust shall be provided by the
separate trust agreement, between the Employer and the trustee.
Notwithstanding the preceding paragraph, the Trustee or an affiliate of
the Trustee may agree in writing to provide ministerial recordkeeping services
for guaranteed investment contracts held in the separate trust or fund. The
guaranteed investment contract(s) shall be valued as directed by the Employer or
the trustee of the separate trust.
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The trustee of the separate trust (hereafter referred to as "trustee")
shall be the owner of any insurance contract purchased prior to the adoption of
this prototype plan document. The insurance contract(s) must provide that
proceeds shall be payable to the trustee; provided, however, that the trustee
shall be required to pay over all proceeds of the contract (s) to the
Participant's designated Beneficiary in accordance with the distribution
provisions of this Plan. A Participant's spouse shall be the designated
Beneficiary of the proceeds in all circumstances unless a qualified election has
been made in accordance with Article 14. Under no circumstances shall the trust
retain any part of the proceeds. In the event of any conflict between the terms
of the Plan and the terms of any insurance contract purchased hereunder, the
Plan provisions shall control.
Any life insurance contracts held in the Trust Fund or in the separate
trust are subject to the following limits:
(a) Ordinary life - For purposes of these incidental insurance
provisions, ordinary life insurance contracts are contracts with both
nondecreasing death benefits and nonincreasing premiums. If such
contracts are held, less than 1/2 of the aggregate employer
contributions allocated to any Participant shall be used to pay the
premiums attributable to them.
(b) Term and universal life - No more than 1/4 of the aggregate
employer contributions allocated to any participant shall be used to
pay the premiums on term life insurance contracts, universal life
insurance contracts, and all other life insurance contracts which are
not ordinary life.
(c) Combination - The sum of 1/2 of the ordinary life insurance
premiums and all other life insurance premiums shall not exceed 1/4 of
the aggregate employer contributions allocated to any Participant.
20.11. SELF-DIRECTED BROKERAGE OPTION. If one of the Permissible Investments
under the Plan is the self-directed brokerage option, the Employer hereby
directs the Trustee to use Fidelity Brokerage Services LLC, Member NYSE, SIPC or
any of the Trustee's affiliates or subsidiaries (collectively, "FBS"), an
affiliate of the Trustee, to purchase or sell individual securities for
Participant Accounts in accordance with investment directions provided by such
Participants. The provision of brokerage services by FBS shall be subject to the
following:
(a) The Trustee shall provide the Employer with an annual report
which summarizes brokerage transactions and transaction-related charges
incurred by the Plan.
(b) Any successor organization of FBS, through reorganization,
consolidation, merger, or otherwise, shall, upon consummation of such
transaction, become the successor broker in accordance with the terms
of this direction provision.
(c) The Trustee and FBS shall continue to rely on this direction
provision until notified to the contrary. The Employer reserves the
right to terminate
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this direction upon sixty (60) days written notice to FBS (or its
successor) and the Trustee, and such termination shall also have the
effect of terminating the self-directed brokerage option for the Plan.
(d) The Trustee shall provide the Employer with a list of the
types of securities that may not be purchased or held under this
self-directed brokerage option. The Trustee shall provide the Employer
with administrative procedures and fees governing investment in and
withdrawals or exchanges from the self-directed brokerage option. The
Trustee shall have no liability in the event a Participant purchases a
restricted security.
(e) Participants may authorize the use of an agent to have limited
trading authority over assets in their Accounts invested under the
self-directed brokerage option provided that the Participant completes
and files with FBS a limited trading authorization and indemnification
form in the form prescribed by FBS.
(f) FBS shall provide all proxies and other shareholder materials
to each Participant with such securities allocated to his or her
Account under the self-directed brokerage option. The Participant shall
have the authority to direct the exercise of all shareholder rights
attributable to the securities allocated to his or her Account and it
is intended that all such Participant directions shall be subject to
ERISA Section 404(c). The Trustee shall not exercise any such
shareholder rights in the absence of a direction from the Participant.
(g) Self-directed brokerage accounts held under the Plan are
subject to fees as more fully described in the related self-directed
brokerage documents provided to the Employer. If there are insufficient
funds to cover the self- directed brokerage account trades and
expenses, a liquidation may be made to cover the debit balance and, in
doing so, the Trustee shall not be deemed to have exercised any
discretion.
20.12. EMPLOYER STOCK INVESTMENT OPTION. If one of the Permissible Investments
is equity securities issued by the Employer or a Related Employer ("Employer
Stock"), such Employer Stock must be publicly traded and "qualifying employer
securities" within the meaning of Section 401(d)(5) of ERISA. Plan investments
in Employer Stock shall be made via the Employer Stock Investment Fund (the
"Stock Fund") which shall consist of either (i) the shares of Employer Stock
held for each Participant who participates in the Stock Fund (a "Share
Accounting Stock Fund"), or (ii) a combination of shares of Employer Stock and
short-term liquid investments, consisting of mutual fund shares or commingled
money market pool units as agreed to by the Employer and the Trustee, which are
necessary to satisfy the Stock Fund's cash needs for transfers and payments (a
"Unitized Stock Fund"). Dividends received by the Stock Fund are reinvested in
additional shares of Employer Stock or, in the case of a Unitized Stock Fund, in
short-term liquid investments. The determination of whether each Participant's
interest in the Stock Fund is administered on a share-accounting or a unitized
basis shall be determined by the Employer's election in the Service Agreement.
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In the case of a Unitized Stock Fund, such units shall represent a proportionate
interest in all assets of the Unitized Stock Fund, which includes shares of
Employer Stock, short-term investments, and at times, receivables for dividends
and/or Employer Stock sold and payables for Employer Stock purchased. A net
asset value per unit shall be determined daily for each cash unit outstanding of
the Unitized Stock Fund. The return earned by the Unitized Stock Fund shall
represent a combination of the dividends paid on the shares of Employer Stock
held by the Unitized Stock Fund, gains or losses realized on sales of Employer
Stock, appreciation or depreciation in the market price of those shares owned,
and interest on the short-term investments held by the Unitized Stock Fund. A
target range for the short-term liquid investments shall be maintained for the
Unitized Stock Fund. The Named Fiduciary shall, after consultation with the
Trustee, establish and communicate to the Trustee in writing such target range
and a drift allowance for such short-term liquid investments. Such target range
and drift allowance may be changed by the Named Fiduciary, after consultation
with the Trustee, provided any such change is communicated to the Trustee in
writing. The Trustee is responsible for ensuring that the actual short-term
liquid investments held in the Unitized Stock Fund fall within the agreed upon
target range over time, subject to the Trustee's ability to execute open-market
trades in Employer Stock or to otherwise trade with the Employer.
Investments in Employer Stock shall be subject to the following
limitations:
(a) Acquisition Limit. Pursuant to the Plan, the Trust may be
invested in Employer Stock to the extent necessary to comply with
investment directions under Section 8.02 of the Plan. Notwithstanding
the foregoing, effective for Deferral Contributions made for Plan Years
beginning on or after January 1, 1999, the portion of a Participant's
Deferral Contributions that the Employer may require to be invested in
Employer Stock for a Plan Year cannot exceed one percent of such
Participant's Compensation for the Plan Year.
(b) Fiduciary Duty of Named Fiduciary. The Administrator or any
person designated by the Administrator as a named fiduciary under
Section 19.01 (the "named fiduciary") shall continuously monitor the
suitability under the fiduciary duty rules of ERISA Section 404 (a) (1)
(as modified by ERISA Section 404 (a) (2)) of acquiring and holding
Employer Stock. The Trustee shall not be liable for any loss, or by
reason of any breach, which arises from the directions of the named
fiduciary with respect to the acquisition and holding of Employer
Stock, unless it is clear on their face that the actions to be taken
under those directions would be prohibited by the foregoing fiduciary
duty rules or would be contrary to the terms of the Plan or this Trust
Agreement.
(c) Execution of Purchases and Sales. Purchases and sales of
Employer Stock shall be made on the open market on the date on which
the Trustee receives in good order all information and documentation
necessary to accurately effect such purchases and sales or (i) if
later, in the case of purchases, the date on which the Trustee has
received a transfer of the funds necessary to make such purchases, (ii)
as otherwise provided in the Service Agreement, or (iii)
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as provided in Subsection (d) below. Such general rules shall not apply
in the following circumstances:
(1) If the Trustee is unable to determine the number of
shares required to be purchased or sold on such day;
(2) If the Trustee is unable to purchase or sell the
total number of shares required to be purchased or sold on
such day as a result of market conditions; or
(3) If the Trustee is prohibited by the Securities and
Exchange Commission, the New York Stock Exchange, or any other
regulatory body from purchasing or selling any or all of the
shares required to be purchased or sold on such day.
In the event of the occurrence of the circumstances described
in (1), (2), or (3) above, the Trustee shall purchase or sell such
shares as soon as possible thereafter and, in the case of a Share
Accounting Stock Fund, shall determine the price of such purchases or
sales to be the average purchase or sales price of all such shares
purchased or sold, respectively.
(d) Purchases and Sales from or to Employer. If directed by the
Employer in writing prior to the trading date, the Trustee may purchase
or sell Employer Stock from or to the Employer if the purchase or sale
is for adequate consideration (within the meaning of ERISA Section
3(18)) and no commission is charged. If Employer contributions or
contributions made by the Employer on behalf of the Participants under
the Plan are to be invested in Employer Stock, the Employer may
transfer Employer Stock in lieu of cash to the Trust. In such case, the
shares of Employer Stock to be transferred to the Trust will be valued
at a price that constitutes adequate consideration (within the meaning
of ERISA Section 3(18)).
(e) Use of Broker to Purchase Employer Stock. The Employer hereby
directs the Trustee to use Fidelity Capital Markets, Inc., an affiliate
of the Trustee, or any other affiliate or subsidiary of the Trustee
(collectively, "Capital Markets"), to provide brokerage services in
connection with all market purchases and sales of Employer Stock for
the Stock Fund, except in circumstances where the Trustee has
determined, in accordance with its standard trading guidelines or
pursuant to Employer direction, to seek expedited settlement of trades.
The Trustee shall provide the Employer with the commission schedule for
such transactions, a copy of Capital Markets' brokerage placement
practices, and an annual report which summarizes all securities
transaction-related charges incurred by the Plan. The following shall
apply as well:
(1) Any successor organization of Capital Markets through
reorganization, consolidation, merger, or similar
transactions, shall, upon consummation of such transaction,
become the successor broker in accordance with the terms of
this provision.
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(2) The Trustee shall continue to rely on this Employer
direction until notified to the contrary. The Employer
reserves the right to terminate this authorization upon sixty
(60) days written notice to Capital Markets (or its successor)
and the Trustee and the Employer and the Trustee shall decide
on a mutually-agreeable alternative procedure for handling
brokerage transactions on behalf of the Stock Fund.
(f) Securities Law Reports. The named fiduciary shall be
responsible for filing all reports required under Federal or state
securities laws with respect to the Trust's ownership of Employer
Stock; including, without limitation, any reports required under
Section 13 or 16 of the Securities Exchange Act of 1934 and shall
immediately notify the Trustee in writing of any requirement to stop
purchases or sales of Employer Stock pending the filing of any report.
The Trustee shall provide to the named fiduciary such information on
the Trust's ownership of Employer Stock as the named fiduciary may
reasonably request in order to comply with Federal or state securities
laws .
(g) Voting and Tender Offers. Notwithstanding any other provision
of the Trust Agreement the provisions of this Subsection shall govern
the voting and tendering of Employer Stock. For purposes of this
Subsection, each Participant shall be designated as a named fiduciary
under ERISA with respect to shares of Employer Stock that reflect that
portion, if any, of the Participant's interest in the Stock Fund not
acquired at the direction of the Participant in accordance with ERISA
Section 404 (c) .
The Employer, after consultation with the Trustee, shall
provide and pay for all printing, mailing, tabulation and other costs
associated with the voting and tendering of Employer Stock, except as
required by law. The Trustee, after consultation with the Employer,
shall prepare the necessary documents associated with the voting and
tendering of Employer Stock, unless the Employer directs the Trustee
not to do so.
(1) Voting.
(A) When the issuer of the Employer Stock
prepares for any annual or special meeting, the
Employer shall notify the Trustee thirty (30) days in
advance of the intended record date and shall cause a
copy of all proxy solicitation materials to be sent
to the Trustee. If requested by the Trustee, the
Employer shall certify to the Trustee that the
aforementioned materials represent the same
information that is distributed to shareholders of
Employer Stock. Based on these materials the Trustee
shall prepare a voting instruction form. At the time
of mailing of notice of each annual or special
stockholders' meeting of the issuer of the Employer
Stock, the Employer shall cause a copy of the notice
and all proxy solicitation materials to be sent to
each Participant with an interest in Employer Stock
held in the Trust, together with the foregoing voting
instruction form to be returned to the Trustee or its
designee. The form shall show the proportional
interest in the
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number of full and fractional shares of Employer
Stock credited to the Participant's Sub-Accounts held
in the Stock Fund. The Employer shall provide the
Trustee with a copy of any materials provided to the
Participants and shall (if the mailing is not handled
by the Trustee) notify the Trustee that the materials
have been mailed or otherwise sent to Participants.
(B) Each Participant with an interest in the
Stock Fund shall have the right to direct the Trustee
as to the manner in which the Trustee is to vote
(including not to vote) that number of shares of
Employer Stock that is credited to his Account, if
the Plan uses share accounting, or, if accounting is
by units of participation, that reflects such
Participant's proportional interest in the Stock Fund
(both vested and unvested). Directions from a
Participant to the Trustee concerning the voting of
Employer Stock shall be communicated in writing, or
by such other means mutually acceptable to the
Trustee and the Employer. These directions shall be
held in confidence by the Trustee and shall not be
divulged to the Employer, or any officer or employee
thereof, or any other person, except to the extent
that the consequences of such directions are
reflected in reports regularly communicated to any
such persons in the ordinary course of the
performance of the Trustee's services hereunder. Upon
its receipt of the directions, the Trustee shall vote
the shares of Employer Stock that reflect the
Participant's interest in the Stock Fund as directed
by the Participant. The Trustee shall not vote shares
of Employer Stock that reflect a Participant's
interest in the Stock Fund for which the Trustee has
received no direction from the Participant, except as
required by law.
(2) Tender Offers.
(A) Upon commencement of a tender offer for any
securities held in the Trust that are Employer Stock,
the Employer shall timely notify the Trustee in
advance of the intended tender date and shall cause a
copy of all materials to be sent to the Trustee. The
Employer shall certify to the Trustee that the
aforementioned materials represent the same
information distributed to shareholders of Employer
Stock. Based on these materials, and after
consultation with the Employer, the Trustee shall
prepare a tender instruction form and shall provide a
copy of all tender materials to be sent to each
Participant with an interest in the Stock Fund,
together with the foregoing tender instruction form,
to be returned to the Trustee or its designee. The
tender instruction form shall show the number of full
and fractional shares of Employer Stock credited to
the Participant's Account, if the Plan uses share
accounting, or, if accounting is by units of
participation, that reflect the Participant's
proportional interest in the Stock Fund (both vested
and unvested). The Employer shall notify each
Participant with an interest in such Employer Stock
of the tender offer and utilize its best efforts to
timely distribute or cause to be distributed to the
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Participant the tender materials and the tender
instruction form described herein. The Employer shall
provide the Trustee with a copy of any materials
provided to the Participants and shall (if the
mailing is not handled by the Trustee) notify the
Trustee that the materials have been mailed or
otherwise sent to Participants.
(B) Each Participant with an interest in the
Stock Fund shall have the right to direct the Trustee
to tender or not to tender some or all of the shares
of Employer Stock that are credited to his Account,
if the Plan uses share accounting, or, if accounting
is by units of participation, that reflect such
Participant's proportional interest in the Stock Fund
(both vested and unvested). Directions from a
Participant to the Trustee concerning the tender of
Employer Stock shall be communicated in writing, or
by such other means as is agreed upon by the Trustee
and the Employer under the preceding paragraph. These
directions shall be held in confidence by the Trustee
and shall not be divulged to the Employer, or any
officer or employee thereof, or any other person,
except to the extent that the consequences of such
directions are reflected in reports regularly
communicated to any such persons in the ordinary
course of the performance of the Trustee's services
hereunder. The Trustee shall tender or not tender
shares of Employer Stock as directed by the
Participant. Except as otherwise required by law, the
Trustee shall not tender shares of Employer Stock
that are credited to a Participant's Account, if the
Plan uses share accounting, or, if accounting is by
units of participation, that reflect a Participant's
proportional interest in the Stock Fund for which the
Trustee has received no direction from the
Participant.
(C) A Participant who has directed the Trustee
to tender some or all of the shares of Employer Stock
that reflect the Participant's proportional interest
in the Stock Fund may, at any time prior to the
tender offer withdrawal date, direct the Trustee to
withdraw some or all of such tendered shares, and the
Trustee shall withdraw the directed number of shares
from the tender offer prior to the tender offer
withdrawal deadline. A Participant shall not be
limited as to the number of directions to tender or
withdraw that the Participant may give to the
Trustee.
(D) A direction by a Participant to the Trustee
to tender shares of Employer Stock that reflect the
Participant's proportional interest in the Stock Fund
shall not be considered a written election under the
Plan by the Participant to withdraw, or have
distributed, any or all of his withdrawable shares.
If the Plan uses share accounting, the Trustee shall
credit to the Participant's Account the proceeds
received by the Trustee in exchange for the shares of
Employer Stock tendered from the Participant's
Account. If accounting is by units of participation,
the Trustee shall credit to each proportional
interest of the Participant from which the tendered
shares were taken the proceeds received by the
Trustee in exchange for the
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shares of Employer Stock tendered from that interest.
Pending receipt of direction (through the
Administrator) from the Participant or the named
fiduciary, as provided in the Plan, as to which of
the remaining Permissible Investments the proceeds
should be invested in, the Trustee shall invest the
proceeds in the Permissible Investment specified for
such purposes in the Service Agreement or, if no such
Permissible Investment has been specified, the most
conservative Permissible Investment designated by the
Employer in the Service Agreement.
(h) Shares Credited. If accounting with respect to the Stock Fund
is by units of participation, then for all purposes of this Section
20.12, the number of shares of Employer Stock deemed "reflected" in a
Participant's proportional interest shall be determined as of the last
preceding valuation date. The trade date is the date the transaction is
valued.
(i) General. With respect to all rights other than the right to
vote, the right to tender, and the right to withdraw shares previously
tendered, in the case of Employer Stock credited to a Participant's
Account or proportional interest in the Stock Fund, the Trustee shall
follow the directions of the Participant and if no such directions are
received, the directions of the named fiduciary. The Trustee shall have
no duty to solicit directions from Participants.
(j) Conversion. All provisions in this Section 20.12 shall also
apply to any securities received as a result of a conversion to
Employer Stock.
20.13. VOTING; DELIVERY OF INFORMATION. The Trustee shall deliver, or cause to
be executed and delivered, to the Employer or Administrator all notices,
prospectuses, financial statements, proxies and proxy soliciting materials
received by the Trustee relating to securities held by the Trust or, if
applicable, deliver these materials to the appropriate Participant or the
Beneficiary of a deceased Participant. The Trustee shall not vote any securities
held by the Trust except in accordance with the instructions of the Employer,
Participant, or the Beneficiary of the Participant if the Participant is
deceased; provided, however, that the Trustee may, in the absence of
instructions, vote "present" for the sole purpose of allowing such shares to be
counted for establishment of a quorum at a shareholders' meeting. The Trustee
shall have no duty to solicit instructions from Participants, Beneficiaries, or
the Employer.
20.14. COMPENSATION AND EXPENSES OF TRUSTEE. The Trustee's fee for performing
its duties hereunder shall be such reasonable amounts as the Trustee may from
time to time specify in the Service Agreement or any other written agreement
with the Employer. Such fee, any taxes of any kind which may be levied or
assessed upon or with respect to the Trust Fund, and any and all expenses,
including without limitation legal fees and expenses of administrative and
judicial proceedings, reasonably incurred by the Trustee in connection with its
duties and responsibilities hereunder shall, unless some or all have been paid
by said Employer, be paid either from forfeitures resulting under Section 11.08,
or from
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the remaining Trust Fund and shall, unless allocable to the Accounts of
particular Participants, be charged against the respective Accounts of all
Participants, in such reasonable manner as the Trustee may determine.
20.15. RELIANCE BY TRUSTEE ON OTHER PERSONS. The Trustee may rely upon and act
upon any writing from any person authorized by the Employer or the Administrator
pursuant to the Service Agreement or any other written direction to give
instructions concerning the Plan and may conclusively rely upon and be protected
in acting upon any written order from the Employer or the Administrator or upon
any other notice, request, consent, certificate, or other instructions or paper
reasonably believed by it to have been executed by a duly authorized person, so
long as it acts in good faith in taking or omitting to take any such action. The
Trustee need not inquire as to the basis in fact of any statement in writing
received from the Employer or the Administrator.
The Trustee shall be entitled to rely on the latest certificate it has
received from the Employer or the Administrator as to any person or persons
authorized to act for the Employer or the Administrator hereunder and to sign on
behalf of the Employer or the Administrator any directions or instructions,
until it receives from the Employer or the Administrator written notice that
such authority has been revoked.
Notwithstanding any provision contained herein, the Trustee shall be
under no duty to take any action with respect to any Participant's Account
(other than as specified herein) unless and until the Employer or the
Administrator furnishes the Trustee with written instructions on a form
acceptable to the Trustee, and the Trustee agrees thereto in writing. The
Trustee shall not be liable for any action taken pursuant to the Employer's or
the Administrator's written instructions (nor for the collection of
contributions under the Plan, nor the purpose or propriety of any distribution
made thereunder).
20.16. INDEMNIFICATION BY EMPLOYER. The Employer shall indemnify and save
harmless the Trustee, and all affiliates, employees, agents and sub-contractors
of the Trustee, from and against any and all liability or expense (including
reasonable attorneys' fees) to which the Trustee, or such other individuals or
entities, may be subjected by reason of any act or conduct being taken in the
performance of any Plan-related duties, including those described in this Trust
Agreement and the Service Agreement, unless such liability or expense results
from the Trustee's, or such other individuals' or entities', negligence or
willful misconduct.
20.17. CONSULTATION BY TRUSTEE WITH COUNSEL. The Trustee may consult with legal
counsel (who may be but need not be counsel for the Employer or the
Administrator) concerning any question which may arise with respect to its
rights and duties under the Plan and Trust, and the opinion of such counsel
shall, to the extent permitted by law, be full and complete protection in
respect of any action taken or omitted by the Trustee hereunder in good faith
and in accordance with the opinion of such counsel.
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20.18. PERSONS DEALING WITH THE TRUSTEE. No person dealing with the Trustee
shall be bound to see to the application of any money or property paid or
delivered to the Trustee or to inquire into the validity or propriety of any
transactions.
20.19. RESIGNATION OR REMOVAL OF TRUSTEE. The Trustee may resign at any time by
written notice to the Employer, which resignation shall be effective 60 days
after delivery to the Employer. The Trustee may be removed by the Employer by
written notice to the Trustee, which removal shall be effective 60 days after
delivery to the Trustee or such shorter period as may be mutually agreed upon by
the Employer and the Trustee.
Except in the case of Plan termination, upon resignation or removal of
the Trustee, the Employer shall appoint a successor trustee. Any such successor
trustee shall, upon written acceptance of his appointment, become vested with
the estate, rights, powers, discretion, duties and obligations of the Trustee
hereunder as if he had been originally named as Trustee in this Agreement.
Upon resignation or removal of the Trustee, the Employer shall no
longer participate in this prototype plan and shall be deemed to have adopted an
individually designed plan. In such event, the Employer shall appoint a
successor trustee within said 60-day period and the Trustee shall transfer the
assets of the Trust to the successor trustee upon receipt of sufficient evidence
(such as a determination letter or opinion letter from the Internal Revenue
Service or an opinion of counsel satisfactory to the Trustee) that such trust
shall be a qualified trust under the Code.
The appointment of a successor trustee shall be accomplished by
delivery to the Trustee of written notice that the Employer has appointed such
successor trustee, and written acceptance of such appointment by the successor
trustee. The Trustee may, upon transfer and delivery of the Trust Fund to a
successor trustee, reserve such reasonable amount as it shall deem necessary to
provide for its fees, compensation, costs and expenses, or for the payment of
any other liabilities chargeable against the Trust Fund for which it may be
liable. The Trustee shall not be liable for the acts or omissions of any
successor trustee.
20.20. FISCAL YEAR OF THE TRUST. The fiscal year of the Trust shall coincide
with the Plan Year.
20.21. DISCHARGE OF DUTIES BY FIDUCIARIES. The Trustee and the Employer and any
other fiduciary shall discharge their duties under the Plan and this Trust
Agreement solely in the interests of Participants and their Beneficiaries in
accordance with the requirements of ERISA.
20.22. AMENDMENT. In accordance with provisions of the Plan, and subject to the
limitations set forth therein, this Trust Agreement may be amended by an
instrument in writing signed by the Employer and the Trustee. No amendment to
this Trust Agreement shall divert any part of the Trust Fund to any purpose
other than as provided in Section 20.03.
98
20.23. PLAN TERMINATION. Upon termination or partial termination of the Plan or
complete discontinuance of contributions thereunder, the Trustee shall make
distributions to the Participants or other persons entitled to distributions as
the Employer or Administrator directs in accordance with the provisions of the
Plan. In the absence of such instructions and unless the Plan otherwise
provides, the Trustee shall notify the Employer or Administrator of such
situation and the Trustee shall be under no duty to make any distributions under
the Plan until it receives written instructions from the Employer or
Administrator. Upon the completion of such distributions, the Trust shall
terminate, the Trustee shall be relieved from all liability under the Trust, and
no Participant or other person shall have any claims thereunder, except as
required by applicable law.
20.24. PERMITTED REVERSION OF FUNDS TO EMPLOYER. If it is determined by the
Internal Revenue Service that the Plan does not initially qualify under Code
Section 401, all assets then held under the Plan shall be returned by the
Trustee, as directed by the Administrator, to the Employer, but only if the
application for determination is made by the time prescribed by law for filing
the Employer's return for the taxable year in which the Plan was adopted or such
later date as may be prescribed by regulations. Such distribution shall be made
within one year after the date the initial qualification is denied. Upon such
distribution the Plan shall be considered to be rescinded and to be of no force
or effect.
Contributions under the Plan are conditioned upon their deductibility
under Code Section 404. In the event the deduction of a contribution made by the
Employer is disallowed under Code Section 404, such contribution (to the extent
disallowed) must be returned to the Employer within one year of the disallowance
of the deduction.
Any contribution made by the Employer because of a mistake of fact must
be returned to the Employer within one year of the contribution.
20.25. GOVERNING LAW. This Trust Agreement shall be construed, administered and
enforced according to ERISA and, to the extent not preempted thereby, the laws
of the Commonwealth of Massachusetts.
Nothing contained in Sections 20.04, 20.13 or 20.21 or this Section
20.25 shall be construed in a manner which subjects a governmental plan (as
defined in Code Section 414(d)) or a non-electing church plan (as described in
Code Section 410(d)) to the fiduciary provisions of Title I of ERISA.
99
ADDENDUM
IRS Model Amendment for Proposed Regulations Under Section 401 (a)(9) of the
Internal Revenue Code
Distributions for Calendar Years Beginning on or After 2002.
With respect to distributions under the Plan for calendar
years beginning on or after January 1, 2002, the Plan will
apply the minimum distribution requirements of section 401
(a)(9) of the Internal Revenue Code in accordance with the
regulations under section 401(a)(9) that were proposed on
January 17, 2001, notwithstanding any provision of the Plan to
the contrary. This amendment shall continue in effect until
the end of the last calendar year beginning before the
effective date of final regulations under section 401 (a)(9)
or such other date as may be specified in guidance published
by the Internal Revenue Service.
THE CORPORATEPLAN FOR RETIREMENT(SM)
ADDENDUM
RE: ECONOMIC GROWTH AND TAX RELIEF RECONCILIATION ACT OF 2001
("EGTRRA")
AMENDMENTS FOR FIDELITY BASIC PLAN DOCUMENT NO. 02
PREAMBLE
ADOPTION AND EFFECTIVE DATE OF AMENDMENT. This amendment of the Plan is adopted
to reflect certain provisions of the Economic Growth and Tax Relief
Reconciliation Act of 2001 ("EGTRRA"). This amendment is intended as good faith
compliance with the requirements of EGTRRA and is to be construed in accordance
with EGTRRA and guidance issued thereunder. Except as otherwise provided below,
this amendment shall be effective as of the first day of the first plan year
beginning after December 31, 2001.
SUPERSESSION OF INCONSISTENT PROVISIONS. This amendment shall supersede the
provisions of the Plan to the extent those provisions are inconsistent with the
provisions of this amendment.
1. Section 2.01(j), "Compensation," is hereby amended by adding the following
paragraph to the end thereof:
Notwithstanding anything herein to the contrary, the annual
Compensation of each Participant taken into account in
determining allocations for any Plan Year beginning after
December 31, 2001, shall not exceed $200,000, as adjusted for
cost-of-living increases in accordance with Code Section
401(a)(17)(B). Annual Compensation means Compensation during
the Plan Year or such other consecutive 12-month period over
which Compensation is otherwise determined under the Plan (the
determination period). The cost-of-living adjustment in effect
for a calendar year applies to annual Compensation for the
determination period that begins with or within such calendar
year.
2. Section 2.01(1), "Deferral Contribution," is hereby amended by replacing the
period with a semicolon and adding the following to the end thereof:
provided, however, that the term 'Deferral Contribution' shall
exclude all catch-up contributions as described in Section
5.03(b)(l) for purposes of Matching Employer Contributions as
described in Section 1.10 of the Adoption Agreement, unless
otherwise elected by the Employer in Section (c) of the EGTRRA
Amendments Addendum to the Adoption Agreement.
3. Section 2.01(tt) "Rollover Contribution" is hereby amended as follows:
'Rollover Contribution' means any distribution from an
eligible retirement plan as defined in Section 5.06 that an
Employee elects to contribute to the Plan in accordance with
the terms of such Section 5.06.
4. The existing text of Section 5.03 is hereby redesignated as Section 5.03(a),
and a new Section 5.03(b) is hereby added to read as follows
(b) CATCH-UP CONTRIBUTIONS.
(1) If elected by the Employer in Section (a) of
the EGTRRA Amendments Addendum to the
Adoption Agreement, all Participants who are
eligible to make Deferral Contributions
under the Plan and who are projected to
attain age 50 before the close of the
calendar year shall be eligible to make
catch-up contributions in accordance with,
and subject to the limitations of, Code
Section 414(v). Such catchup contributions
shall not be taken into account for purposes
of the provisions of the Plan implementing
the required limitations of Code Sections
402(g) and 415. The Plan shall not be
treated as failing to satisfy the provisions
of the Plan implementing the requirements of
Code Section
1
401(k)(3), 401(k)(l1), 401(k)(12), 410(b),
or 416, as applicable, by reason of the
making of such catch-up contributions.
(2) Unless otherwise elected by the Employer in
Section (b) of the EGTRRA Amendments
Addendum to the Adoption Agreement, if the
Plan permits catch-up contributions, as
described in paragraph (1) above on April 1,
2002, then, notwithstanding anything herein
to the contrary, effective April 1, 2002,
the limit on Deferral Contributions, as
otherwise provided in Section 1.07(a)(l)
(the "Plan Limit") shall be 60% of
Compensation for the payroll period in
question, provided, however, that this
Section 5.03(b)(2) shall be inapplicable if
the Plan's Section 1.01(g)(2)(B) Amendment
Effective Date is after April 1, 2002.
(3) In the event that the Plan Limit is changed
during the Plan Year, for purposes of
determining catch-up contributions for the
Plan Year, as described in paragraph (1)
above, the Plan Limit shall be determined
pursuant to the time-weighted average method
described in Proposed Income Tax Regulation
Section 1.414(v)-l(b)(2)(i).
5. Section 5.06 is hereby amended to add the following paragraph to the end
thereof:
Unless otherwise elected by the Employer in Section (e) of the
EGTRRA Amendments Addendum to the Adoption Agreement, the Plan
will accept Participant Rollover Contributions and/or direct
rollovers of distributions made after December 31, 2001
(including Rollover Contributions received by the Participant
as a surviving spouse, or a spouse or former spouse who is an
alternate payee under a qualified domestic relations order),
from the following types of plans:
(a) a qualified plan described in Code Section 401 (a) or
403(a), including after-tax employee contributions
(provided, however, that any such after-tax employee
contributions must be contributed in a direct
rollover);
(b) an annuity contract described in Code Section 403(b),
excluding after-tax employee contributions;
(c) an eligible plan under Code Section 457(b) that is
maintained by a state, political subdivision of a
state, or any agency or instrumentality of a state or
political subdivision of a state; and
(d) Participant Rollover Contributions of the portion of
a distribution from an individual retirement account
or annuity described in Code Section 408(a) or 408(b)
that is eligible to be rolled over and would
otherwise be includible in gross income, provided,
however, that the Plan will in no event accept a
rollover contribution consisting of nondeductible
individual retirement account or annuity
contributions.
6. The first paragraph of Section 6.02 is hereby amended by replacing the first
sentence thereof with the following:
In no event shall the amount of Deferral Contributions made
under the Plan for a calendar year, when aggregated with the
'elective deferrals' made under any other plan maintained by
the Employer or a Related Employer, exceed the dollar
limitation contained in Code Section 402(g) in effect at the
beginning of such calendar year, except to the extent
permitted under Section 5.03(b)(l) and Code Section 414(v), if
applicable.
7. Section 6.08 is hereby amended by adding the following sentence to the end
thereof:
Notwithstanding anything herein to the contrary, the multiple
use test described in Treasury Regulation Section 1.401(m)-2
and this Section 6.08 shall not apply for Plan Years beginning
after December 31, 2001.
8. Section 6.12 is hereby amended by adding a new subsection 6.12(e) thereto as
follows:
(e) Maximum Annual Additions for Limitation Years
Beginning After December 31, 2001. Notwithstanding
anything herein to the contrary, this subsection (e)
shall be effective for Limitation Years beginning
after December 31, 2001. Except to the extent
permitted under Section 5.03(b)(l) and Code Section
414(v),
2
if applicable, the 'annual additions' that may be
contributed or allocated to a Participant's Account
under the Plan for any Limitation Year shall not
exceed the lesser of:
(1) $40,000, as adjusted for increases in the
cost-of-living under Code Section 415(d), or
(2) 100 percent of the Participant's
compensation, within the meaning of Code
Section 415(c)(3), for the Limitation Year.
The compensation limit referred to in (2) shall not
apply to any contribution for medical benefits after
separation from service (within the meaning of Code
Section 40l(h) or 419A(f)(2)) that is otherwise
treated as an 'annual addition'.
9. Section 9.04 is hereby amended by replacing the final period in the first
paragraph with a semi-colon and adding the following to the end thereof:
provided, however, that notwithstanding anything herein to the
contrary, effective for Plan loans made after December 31,
2001, Plan provisions prohibiting loans to any
'owner-employee' or 'shareholder-employee' shall cease to
apply.
10. Section 10.05(b)(2) is hereby amended by replacing the semicolon with a
period and adding the following to the end thereof:
Notwithstanding anything herein to the contrary, the rule in
this Section 10.05(b)(2) shall be applied to a Participant who
receives a distribution after December 31, 2001, on account of
hardship, by substituting the phrase 'the 6-month period' for
the phrase 'the 12-month period'.
11. Section 10.05(b)(4) is hereby amended by adding the following phrase to the
beginning thereof:
Effective for calendar years beginning before January 1, 2002,
for a Participant who received a hardship distribution before
January 1, 2001,
12. The existing text of Section 11.05 is hereby redesignated as Section
11.05(a), and a new Section 11.05(b) is hereby added to read as follows:
(b) VESTING OF MATCHING EMPLOYER CONTRIBUTIONS.
Notwithstanding anything herein to the contrary, the
vesting schedule elected by the Employer in Section
(d)(l) of the EGTRRA Amendments Addendum to the
Adoption Agreement shall apply to all accrued
benefits derived from Matching Employer Contributions
for Participants who complete an Hour of Service in a
Plan Year beginning after December 31, 2001, except
as otherwise elected by the Employer in Section
(d)(2) or Section (d)(3) of the EGTRRA Amendments
Addendum to the Adoption Agreement. With respect to
Participants covered by a collective bargaining
agreement, the vesting schedule elected in Section
(d)(l) of the EGTRRA Amendments Addendum to the
Adoption Agreement shall take effect on a later date
if so elected in Section (d)(2). If so elected in
Section (d)(3) of the EGTRRA Amendments Addendum to
the Adoption Agreement, the vesting schedule elected
in Section (d)(l) shall apply only to the accrued
benefits derived from Matching Employer Contributions
made with respect to Plan Years beginning after
December 31, 2001 (or such later date as may be
provided in Section (d)(2) for Participants covered
by a collective bargaining agreement).
13. The existing text of Section 12.01 is hereby redesignated as Section
12.01(a), current subsections (a), (b), and (c) thereof are redesignated as
paragraphs (1), (2), and (3), respectively, and the first sentence thereof
is replaced with the following:
Subject to the application of Section 12.01(b), a Participant
or his Beneficiary may not receive a distribution from his
Deferral Contributions, Qualified Nonelective Employer
Contributions, Qualified Matching Employer Contributions, safe
harbor Matching Employer Contributions or safe harbor
Nonelective Employer Contributions Accounts earlier than upon
the Participant's separation from service with the Employer
and all Related Employers, death, or disability, except as
otherwise provided in Article 10 or Section 12.04.
3
14. Section 12.01 is hereby amended by adding a new subsection (b) to the end
thereof:
(b) If elected by the Employer in Section (f) of the EGTRRA
Amendments Addendum to the Adoption Agreement, notwithstanding
subsection (a) of this Section 12.01, a Participant, or his
Beneficiary, may receive a distribution after December 31,
2001 (or such later date as specified therein), from his
Deferral Contributions, Qualified Nonelective Employer
Contributions, Qualified Matching Employer Contributions, safe
harbor Matching Employer Contributions or safe harbor
Nonelective Employer Contributions Accounts on account of the
Participant's severance from employment occurring after the
dates specified in Section (f) of the EGTRRA Amendments
Addendum to the Adoption Agreement.
15. Section 13.04 is hereby amended by adding the following paragraph to the end
thereof:
Notwithstanding anything herein to the contrary, the following
provisions shall apply to distributions made after December
31, 2001:
(i) Modification of definition of eligible retirement
plan. For purposes of this Section 13.04, an
'eligible retirement plan' shall also mean an annuity
contract described in Code Section 403(b) and an
eligible deferred compensation plan under Code
Section 457(b) that is maintained by a state,
political subdivision of a state, or any agency or
instrumentality of a state or political subdivision
of a state and which agrees to separately account for
amounts transferred into such plan from this Plan.
The definition of 'eligible retirement plan' shall
also apply in the case of a distribution to a
surviving spouse, or to a spouse or former spouse who
is the alternate payee under a qualified domestic
relations order, as defined in Code Section 414(p).
(ii) Modification of definition of eligible rollover
distribution to exclude hardship distributions. For
purposes of this Section 13.04, any amount that is
distributed on account of hardship shall not be an
'eligible rollover distribution' and the
'distributee' may not elect to have any portion of
such a distribution paid directly to an 'eligible
retirement plan.'
(iii) Modification of definition of eligible rollover
distribution to include after-tax Employee
Contributions. For purposes of this Section 13.04, a
portion of a distribution shall not fail to be an
"eligible rollover distribution" merely because the
portion consists of after-tax Employee Contributions
which are not includible in gross income. However,
such portion may be transferred only to an individual
retirement account or annuity described in Code
Section 408(a) or (b), or to a qualified defined
contribution plan described in Code Section 401 (a)
or 403(a) that agrees to separately account for
amounts so transferred, including separately
accounting for the portion of such distribution which
is includible in gross income and the portion of such
distribution which is not so includible.
16. Article 15 is hereby amended by adding a new Section 15.08 at the end
thereof as follows:
15.08. MODIFICATION OF TOP-HEAVY PROVISIONS. Notwithstanding
anything herein to the contrary, this Section 15.08 shall
apply for purposes of determining whether the Plan is a
top-heavy plan under Code Section 416(g) for Plan Years
beginning after December 31, 2001, and whether the Plan
satisfies the minimum benefits requirements of Code Section
416(c) for such years. This Section modifies the rules in this
Article 15 of the Plan for Plan Years beginning after December
31, 2001.
(a) Determination of top-heavy status.
(1) Key employee. Key employee means any Employee or
former Employee (including any deceased Employee) who at any
time during the Plan Year that includes the determination date
was an officer of the Employer having annual compensation
greater than $130,000 (as adjusted under Code Section
416(i)(l) for Plan Years beginning after December 31, 2002), a
5-percent owner of the Employer, or a 1-percent owner of the
Employer having annual compensation of more than $150,000. For
this purpose, annual compensation means compensation within
the meaning of Code Section 415(c)(3). The determination of
who is a key employee will
4
be made in accordance with Code Section 416(i)(l) and the
applicable regulations and other guidance of general
applicability issued thereunder.
(2) Determination of present values and amounts. This
Section 15.08(a)(2) shall apply for purposes of determining
the present values of accrued benefits and the amounts of
account balances of Employees as of the determination date.
(A) Distributions during year ending on the
determination date. The present values of accrued benefits and
the amounts of account balances of an Employee as of the
determination date shall be increased by the distributions
made with respect to the Employee under the Plan and any plan
aggregated with the Plan under Code Section 416(g)(2) during
the 1-year period ending on the determination date. The
preceding sentence shall also apply to distributions under a
terminated plan which, had it not been terminated, would have
been aggregated with the Plan under Code Section
416(g)(2)(A)(i). In the case of a distribution made for a
reason other than separation from service, death, or
disability, this provision shall be applied by substituting
the phrase "5-year period" for the phrase " 1-year period."
(B) Employees not performing services during
year ending on the determination date. The accrued benefits
and accounts of any individual who has not performed services
for the Employer during the 1-year period ending on the
determination date shall not be taken into account.
(b) Minimum benefits.
(l) Matching contributions. Matching Employer
Contributions shall be taken into account for
purposes of satisfying the minimum contribution
requirements of Code Section 416(c)(2) and the Plan.
The preceding sentence shall apply with respect to
Matching Employer Contributions under the Plan or,
if the Plan provides that the minimum contribution
requirement shall be met in another plan, such other
plan. Matching Employer Contributions that are used
to satisfy the minimum contribution requirements
shall be treated as matching contributions for
purposes of the actual contribution percentage test
and other requirements of Code Section 401(m).
(2) Contributions under other plans. The Employer may
provide in the Adoption Agreement that the minimum
benefit requirement shall be met in another plan
(including another plan that consists solely of a
cash or deferred arrangement which meets the
requirements of Code Section 401(k)(12) and matching
contributions with respect to which the requirements
of Code Section 401(m)(l1) are met).
(c) Other Modifications. The top-heavy requirements of
Code Section 416 and this Article 15 shall not apply in any
year beginning after December 31, 2001, in which the Plan
consists solely of a cash or deferred arrangement which meets
the requirements of Code Section 401(k)(12) and Matching
Employer Contributions with respect to which the requirements
of Code Section 401(m)(l1) are met.
5
