Exhibit 10.25
HOLLAND & XXXX
DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
AND
TRUST AGREEMENT
Xxxxxxx & Xxxx
Xxxxx 0000
000 00xx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
(000) 000-0000
HOLLAND & XXXX
DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
AND TRUST AGREEMENT
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
1.01 Account.................................................. 1
1.02 Accounting Date.......................................... 1
1.03 Accrued Benefit.......................................... 1
1.04 Adoption Agreement....................................... 1
1.05 Aggregate Contributions.................................. 1
1.06 Annual Additions......................................... 1
1.07 Beneficiary.............................................. 1
1.08 Break in Service......................................... 1
1.09 Cash or Deferred Arrangement............................. 1
1.10 Code..................................................... 2
1.11 Compensation............................................. 2
1.12 Defined Benefit Plan..................................... 2
1.13 Defined Benefit Plan Fraction............................ 2
1.14 Defined Contribution Plan................................ 2
1.15 Defined Contribution Plan Fraction....................... 2
1.16 Determination Date....................................... 2
1.17 Distribution Restrictions................................ 3
1.18 Earned Income............................................ 3
1.19 Effective Date........................................... 3
1.20 Elective Deferrals....................................... 3
1.21 Elective Deferrals Account............................... 3
1.22 Eligible Employee........................................ 3
1.23 Employee................................................. 3
1.24 Employee Contributions Account........................... 3
1.25 Employer................................................. 3
1.26 Employer Contributions Account........................... 3
1.27 Employer Nonelective Contributions....................... 3
1.28 Employment Commencement Date............................. 3
1.29 ERISA.................................................... 3
1.30 Excess Amount............................................ 3
1.31 Excess Aggregate Contributions........................... 3
1.32 Excess Contributions..................................... 3
1.33 Excess Deferrals......................................... 3
1.34 Forfeiture Break in Service.............................. 4
1.35 Highly Compensated Employee.............................. 4
1.36 Highly Compensated Group................................. 5
1.37 Hour of Service.......................................... 5
1.38 Key Employee............................................. 6
1.39 Leased Employee.......................................... 7
1.40 Limitation Year.......................................... 7
i
1.41 Matching Contributions................................... 7
1.42 Matching Contributions Account........................... 7
1.43 Maximum Permissible Amount............................... 7
1.44 Nonforfeitable........................................... 7
1.45 Nonhighly Compensated Employee........................... 7
1.46 Nonhighly Compensated Group.............................. 7
1.47 Non-Key Employee......................................... 7
1.48 Nontransferable Annuity.................................. 7
1.49 Normal Retirement Date................................... 8
1.50 100% Limitation.......................................... 8
1.51 Owner-Employee........................................... 8
1.52 Participant.............................................. 8
1.53 Period of Severance...................................... 8
1.54 Permissive Aggregation Group............................. 8
1.55 Permitted Disparity Level................................ 9
1.56 Plan..................................................... 9
1.57 Plan Administrator....................................... 9
1.58 Plan Entry Date.......................................... 9
1.59 Plan Year................................................ 9
1.60 Profit Sharing Contributions............................. 9
1.61 Profit Sharing Contributions Account..................... 9
1.62 Reemployment Date........................................ 9
1.63 Related Group............................................ 9
1.64 Required Aggregation Group............................... 9
1.65 Required Beginning Date.................................. 9
1.66 Rollover Contributions Account........................... 9
1.67 Self-Employed Individual................................. 10
1.68 Service.................................................. 10
1.69 Service for Predecessor Employer......................... 10
1.70 Shareholder-Employee..................................... 10
1.71 Testing Compensation..................................... 10
1.72 Top Heavy Plan........................................... 11
1.73 Trust.................................................... 12
1.74 Trust Fund............................................... 12
1.75 Trustee.................................................. 12
1.76 Valuation Date........................................... 12
1.77 Voluntary Deductible Employee Contributions Account...... 12
1.78 Voluntary Nondeductible Employee Contributions Account... 13
1.79 Year of Service - Participation.......................... 13
1.80 Year of Service - Vesting................................ 13
ARTICLE II
EMPLOYEES ENTITLED TO PARTICIPATE
2.01 Eligibility.............................................. 14
2.02 Year of Service - Participation.......................... 14
2.03 Break In Service - Participation......................... 14
2.04 Participation Upon Reemployment.......................... 14
ii
2.05 Change in Eligible Employee Status...................... 15
2.06 Election Not to Participate............................. 15
ARTICLE III
CONTRIBUTIONS
3.01 Amount of Employer Contributions........................ 16
3.02 Minimum Employer Contribution........................... 16
3.03 Payment of Employer Contribution........................ 17
3.04 Return of Employer Contributions........................ 17
3.05 Rollover Contributions.................................. 17
3.06 Voluntary Nondeductible Employee Contributions.......... 18
ARTICLE IV
ALLOCATIONS TO ACCOUNTS
4.01 Individual Accounts..................................... 19
4.02 Allocation of Contributions and Forfeitures............. 20
4.03 Allocation of Minimum Contribution...................... 20
4.04 Forfeitures............................................. 20
4.05 Eligibility to Receive Allocation of Employer
Contribution and Forfeitures.......................... 20
4.06 Accounting for Distributions............................ 20
4.07 Value of Participant's Accrued Benefit.................. 20
4.08 Allocation and Distribution of Net Income, Gain, or
Loss.................................................. 21
4.09 Allocation of Voluntary Nondeductible Employee
Contributions......................................... 21
4.10 Limitations on Allocations to Participants' Accounts.... 22
4.11 Code (S) 415 Definitions................................ 23
4.12 Contributions Under a Cash or Deferred Arrangement...... 25
4.13 Voluntary Nondeductible Employee Contributions and
Matching Contributions - Special Discrimination Test.. 28
4.14 Definitions............................................. 31
ARTICLE V
PARTICIPANT VESTING
5.01 Vesting Upon Retirement................................. 34
5.02 Vesting Upon Disability................................. 34
5.03 Vesting Upon Death...................................... 34
5.04 Employee Contribution - Forfeitability.................. 34
5.05 Vesting Schedule........................................ 34
5.06 Year of Service - Vesting............................... 34
5.07 Break in Service - Vesting.............................. 35
5.08 Amendment to Vesting Schedule........................... 35
5.09 Distributions to Partially Vested Participants.......... 35
5.10 Deemed Distributions to 0% Vested Participants.......... 35
5.11 Forfeiture Occurs....................................... 35
5.12 Restoration of Forfeited Accrued Benefit................ 36
5.13 Time and Method of Restoration.......................... 36
iii
ARTICLE VI
DISTRIBUTIONS
6.01 Distributions Not Exceeding $3,500........................... 38
6.02 Distributions Exceeding $3,500............................... 38
6.03 Distributions on Account of Attaining Age 70 1/2............. 39
6.04 Distributions Under Domestic Relations Orders................ 41
6.05 In-Service Distributions 42
6.06 Distribution of Voluntary Employee Contributions............. 43
6.07 Distribution Methods, Consents, and Election................. 43
6.08 Annuity Distributions to Participants and Surviving Spouses.. 44
6.09 Joint and Survivor Annuity................................... 45
6.10 Preretirement Survivor Annuity............................... 45
6.11 Surviving Spouse Elections................................... 45
6.12 Waiver Election - Qualified Joint and Survivor Annuity....... 46
6.13 Waiver Election - Preretirement Survivor Annuity............. 46
6.14 Direct Rollover/Transfer Provisions.......................... 47
ARTICLE VII
PLAN LOANS
7.01 Availability of Participant Loans............................ 49
7.02 Requirements................................................. 49
7.03 Loan Application............................................. 50
7.04 Limitation on Loan Amount.................................... 50
7.05 Evidence of Loan............................................. 50
7.06 Security for Loan............................................ 50
7.07 Loan Treated as Directed Investment.......................... 50
7.08 Loan Policy.................................................. 50
ARTICLE VIII
ADMINISTRATIVE PROVISIONS
8.01 Plan Administrator........................................... 51
8.02 Term......................................................... 51
8.03 Plan Administrator's Powers and Duties....................... 51
8.04 Funding Policy............................................... 52
8.05 Manner of Action............................................. 52
8.06 Unclaimed Account Procedure.................................. 52
8.07 Beneficiary Designation...................................... 53
8.08 No Beneficiary Designation................................... 54
8.09 Information to Plan Administrator............................ 54
8.10 Information to Participants and Beneficiaries................ 54
8.11 Appeal Procedure for Denial of Benefits...................... 55
8.12 Liability and Indemnification................................ 55
iv
ARTICLE IX
AMENDMENT, MERGER AND TERMINATION
9.01 Amendment by Employer................................... 56
9.02 Merger/Direct Transfer.................................. 56
9.03 Termination............................................. 57
ARTICLE X
MISCELLANEOUS
10.01 Exclusive Benefit...................................... 59
10.02 No Responsibility for Employer Action.................. 59
10.03 Fiduciaries Not Insurers............................... 59
10.04 Waiver of Notice....................................... 59
10.05 Word Usage............................................. 59
10.06 State Law.............................................. 59
10.07 Employment Not Guaranteed.............................. 59
10.08 Assignment or Alienation............................... 60
ARTICLE XI
LIFE INSURANCE PROVISIONS
11.01 Insurance Benefit...................................... 61
11.02 Limitation on Life Insurance Protection................ 61
11.03 Definitions............................................ 62
11.04 Dividend Plan.......................................... 63
11.05 Insurance Company Duties and Obligations............... 63
ARTICLE XII
TRUST AGREEMENT
12.01 Acceptance............................................. 64
12.02 Bond................................................... 64
12.03 Receipt of Contribution................................ 64
12.04 Payments From the Trust Fund........................... 64
12.05 Exclusive Benefit...................................... 64
12.06 Trustee Investment Powers.............................. 65
12.07 Trustee Powers, Rights and Duties...................... 66
12.08 Investment Manager..................................... 67
12.09 Investment of the Trust Fund........................... 67
12.10 Employer Direction of Investment....................... 67
12.11 Participant Direction of Investment.................... 68
12.12 Records and Accounts................................... 68
12.13 Valuation of the Trust Fund............................ 68
12.14 Tax Returns............................................ 68
12.15 Fees and Expenses...................................... 68
12.16 Change of Trustee...................................... 68
v
HOLLAND & XXXX
DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
AND TRUST AGREEMENT
By executing an Adoption Agreement to this Defined Contribution Basic Plan
Document and Trust Agreement, the Employer establishes or continues a Plan and
Trust intended to conform to and qualify under Code (S) 401 and (S) 501 for the
exclusive benefit of the Employer's Employees and the Employees' Beneficiaries.
The Employer is establishing or continuing the Plan for the purpose of providing
retirement benefits to Employees.
If the Employer adopts this Plan as a restated Plan in substitution for,
and in amendment of, an existing retirement plan, the provisions of this Plan,
as a restated Plan, shall apply solely to an Employee who performs one Hour of
Service for the Employer on or after the restated Effective Date of the
Employer's Plan. If an earlier effective date for a provision in this restated
Plan applies, the provision shall be effective as of the earlier effective date
notwithstanding the later general Effective Date of the restated Plan.
ARTICLE I
DEFINITIONS
1.01 ACCOUNT shall mean the separate account or one of the separate
accounts which the Trustee shall maintain for a Participant under the Plan.
1.02 ACCOUNTING DATE shall mean the last day of the Plan Year.
1.03 ACCRUED BENEFIT shall mean the total amount in the Participant's
Employer Contributions Account and the Participant's Employee Contributions
Account.
1.04 ADOPTION AGREEMENT shall mean the instrument executed by the Employer
adopting this Defined Contribution Basic Plan Document and Trust Agreement. The
terms of this Defined Contribution Basic Plan Document and Trust Agreement, as
modified by the terms of an adopting Employer's Adoption Agreement, shall
constitute a separate Plan and Trust to be construed as a single agreement.
Each elective provision of the Adoption Agreement shall correspond by section
reference to the section of the Defined Contribution Basic Plan Document and
Trust Agreement which grants the election.
1.05 AGGREGATE CONTRIBUTIONS shall have the meaning assigned to it by
Section 4.14.
1.06 ANNUAL ADDITIONS shall have the meaning assigned to it by Section
4.11.
1.07 BENEFICIARY shall mean a person designated by a Participant who is or
may become entitled to a benefit under the Plan. A Beneficiary who becomes
entitled to a benefit under the Plan shall remain a Beneficiary under the Plan
until the Trustee has fully distributed the Participant's benefit to such
Beneficiary.
1.08 BREAK IN SERVICE shall have the meaning assigned to it by Section 2.03
for purposes of participation and shall have the meaning assigned to it by
Section 5.07 for purposes of vesting.
1.09 CASH OR DEFERRED ARRANGEMENT shall have the meaning assigned to it by
Section 4.14.
1
1.10 CODE shall mean the Internal Revenue Code of 1986, as amended.
1.11 COMPENSATION shall mean Testing Compensation in accordance with the
first paragraph of Section 1.71, except to the extent provided in the Employer's
Adoption Agreement, effective for Plan Years beginning after December 31, 1988.
In the case of a Self-Employed Individual, Compensation shall mean Earned
Income, except to the extent provided in the Employer's Adoption Agreement,
effective for Plan Years beginning after December 31, 1988. However, effective
for Plan Years beginning after December 31, 1988, Compensation shall not include
amounts in excess of $200,000 (or such larger amount as the Commissioner of
Internal Revenue may prescribe). In determining the Compensation of a
Participant for purposes of the $200,000 limitation, the Plan Administrator
shall increase a Participant's Compensation by the Compensation of the
Participant's spouse and any lineal descendants of the Participant who have not
attained age 19 before the close of the Plan Year if the Participant is a more
than 5% owner of the Employer or a Highly Compensated Employee in the group of
the top 10 Employees ranked by Compensation. If the application of the
immediately preceding sentence causes the $200,000 limitation to be exceeded,
then (except for the purpose of determining the portion of Compensation up to
the Permitted Disparity Level if this Plan provides for a Permitted Disparity
Level in Section 3.01 or Section 4.02) the $200,000 limitation shall be prorated
among the family members in proportion to each family member's Compensation as
determined under this Section prior to the application of the $200,000
limitation.
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan Years
beginning on or after January 1, 1994, the annual Compensation of each Employee
taken into account under the Plan shall not exceed the OBRA '93 Annual
Compensation Limit. The OBRA '93 Annual Compensation Limit is $150,000, as
adjusted by the Commissioner for increases in the cost of living in accordance
with Code (S) 401(a)(17)(B). The cost-of-living adjustment in effect for a
calendar year applies to any period, not exceeding 12 months, over which
Compensation is determined (determination period) beginning in such calendar
year. If a determination period consists of fewer than 12 months, the OBRA '93
Annual Compensation Limit will be multiplied by a fraction, the numerator of
which is the number of months in the determination period, and the denominator
of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in this
Plan to the limitation under Code (S) 401(a)(17) shall mean the OBRA '93 Annual
Compensation Limit set forth in this provision.
If Compensation for any prior determination period is taken into account in
determining an Employee's benefits accruing in the current Plan Year, the
Compensation for that prior determination period is subject to the OBRA '93
Annual Compensation Limit in effect for that prior determination period. For
this purpose, for determination periods beginning before the first day of the
first Plan Year beginning on or after January 1, 1994, the OBRA '93 Annual
Compensation Limit is $150,000.
1.12 DEFINED BENEFIT PLAN shall have the meaning assigned to it by Section
4.11.
1.13 DEFINED BENEFIT PLAN FRACTION shall have the meaning assigned to it by
Section 4.11.
1.14 DEFINED CONTRIBUTION PLAN shall have the meaning assigned to it by
Section 4.11.
1.15 DEFINED CONTRIBUTION PLAN FRACTION shall have the meaning assigned to
it by Section 4.11.
1.16 DETERMINATION DATE shall mean the last day of the preceding Plan Year,
except that the Determination Date for the first Plan Year shall be the last day
of the first Plan Year.
2
1.17 DISTRIBUTION RESTRICTIONS shall have the meaning assigned to it by
Section 4.14.
1.18 EARNED INCOME shall mean net earnings from self-employment in the
trade or business with respect to which the Employer has established the Plan if
personal services of the individual are a material income producing factor. The
Plan Administrator shall calculate Earned Income by excluding items not included
in gross income, excluding the deductions allocable to those items, and
subtracting the deductions allowed by Code (S) 404 to the Self-Employed
Individual. For Plan Years beginning after December 31, 1989, the Plan
Administrator shall subtract from Earned Income the deduction allowed to the
Self-Employed Individual by Code (S) 164(f).
1.19 EFFECTIVE DATE shall mean the Effective Date of this document as
stated in the Adoption Agreement.
1.20 ELECTIVE DEFERRALS shall have the meaning assigned to it by Section
4.14.
1.21 ELECTIVE DEFERRALS ACCOUNT shall have the meaning assigned to it by
Section 4.01.
1.22 ELIGIBLE EMPLOYEE shall mean an Employee, except to the extent
specifically excluded under the Adoption Agreement.
1.23 EMPLOYEE shall mean an individual who performs services for the
Employer or the Related Group (including a Self-Employed Individual and a Leased
Employee, but excluding any independent contractor).
1.24 EMPLOYEE CONTRIBUTIONS ACCOUNT shall have the meaning assigned to it
by Section 4.01.
1.25 EMPLOYER shall mean a Corporation, Partnership, or Self-Employed
Individual who executes an Adoption Agreement, and any other Corporation,
Partnership, or Self-Employed Individual that the entity who executed the
Adoption Agreement allows to execute a participation agreement. Solely for
purposes of applying the Code (S) 415 limitations of Article IV, Employer shall
mean the Employer and all members of the Related Group as modified by Code (S)
415(h).
1.26 EMPLOYER CONTRIBUTIONS ACCOUNT shall have the meaning assigned to it
by Section 4.01.
1.27 EMPLOYER NONELECTIVE CONTRIBUTIONS shall have the meaning assigned to
it by Section 4.14.
1.28 EMPLOYMENT COMMENCEMENT DATE shall mean the date on which an Employee
first performs an Hour of Service for the Employer.
1.29 ERISA shall mean the Employee Retirement Income Security Act of 1974,
as amended.
1.30 EXCESS AMOUNT shall have the meaning assigned to it in Section 4.11.
1.31 EXCESS AGGREGATE CONTRIBUTIONS shall have the meaning assigned to it
by Section 4.14.
1.32 EXCESS CONTRIBUTIONS shall have the meaning assigned to it by Section
4.14.
1.33 EXCESS DEFERRALS shall the meaning assigned to it by Section 4.14.
3
1.34 FORFEITURE BREAK IN SERVICE shall mean five consecutive Breaks in
Service (as defined in Section 5.07).
1.35 HIGHLY COMPENSATED EMPLOYEE shall mean any Employee who performs
service for the Employer during the Plan Year who:
(a) owned more than 5% of the Employer;
(b) received Testing Compensation from the Employer in excess of
$75,000 (as adjusted pursuant to Code (S) 414(q)(1)) and is one
of the 100 Employees who received the most Testing Compensation
from the Employer during the Plan Year;
(c) received Testing Compensation from the Employer in excess of
$50,000 (as adjusted pursuant to Code (S) 414(q)(1)), was a
member of the top-paid group for the Plan Year, and is one of the
100 Employees who received the most Testing Compensation from the
Employer during the Plan Year; or
(d) was an officer of the Employer, received Testing Compensation
from the Employer that was greater than 50% of the dollar
limitation in effect under Code (S) 415(b)(1)(A), and is one of
the 100 Employees who received the most Testing Compensation from
the Employer during the Plan Year.
Highly Compensated Employee shall also mean any Employee who performs
Service for the Employer during the preceding Plan Year (or 12 month period
preceding the Plan Year) who:
(a) owned more than 5% of the Employer;
(b) received Testing Compensation from the Employer in excess of
$75,000 (as adjusted pursuant to Code (S) 414(q)(1));
(c) received Testing Compensation from the Employer in excess of
$50,000 (as adjusted pursuant to Code (S) 414(q)(1)) and was a
member of the top-paid group for such Plan Year; or
(d) was an officer of the Employer and received Testing Compensation
from the Employer that was greater than 50% of the dollar
limitation in effect under Code (S) 415(b)(1)(A).
An Employee is a member of the top-paid group for any Plan Year if the
Employee is in the group consisting of the top 20% of the Employees when
ranked on the basis of Testing Compensation paid during the Plan Year.
If no officer received Testing Compensation from the Employer that was
greater than 50% of the dollar limitation in effect under Code (S)
415(b)(1)(A) for the Plan Year or the preceding 12 month period, the Plan
Administrator shall treat the highest paid officer as a Highly Compensated
Employee. The number of officers taken into account shall not exceed the
greater of three or 10% of the total number of Employees (after application
of the Code (S) 414(q) exclusions), but no more than 50 officers.
4
Highly Compensated Employee shall also mean a highly compensated
former Employee. A highly compensated former Employee includes any Employee
who separated or was deemed to have separated from Service prior to the
Plan Year, performs no Service for the Employer during the Plan Year, and
was a Highly Compensated Employee for either the Plan Year in which he or
she separated from Service or any Plan Year ending on or after the
Employee's 55th birthday.
If the spouse, lineal ascendant, lineal descendant, or the spouse of a
lineal ascendant or descendent of a more than 5% owner (who is either an
Employee or a former Employee) or one of the 10 most Highly Compensated
Employees (ranked on the basis of Testing Compensation paid during a Plan
Year) is an Employee, the Plan Administrator shall aggregate the Highly
Compensated Employee and the Highly Compensated Employee's family members
treating them as a single Employee receiving Testing Compensation and Plan
contributions equal to the sum of the Testing Compensation and Plan
contributions for all such family members.
For purposes of this Section, "Employer" shall mean an entity
participating in the Plan and any entity participating in the Plan that is
a member of the same Related Group; Highly Compensated Employees shall be
determined separately with respect to each such Employer. The Plan
Administrator shall administer the requirements of this Section in
accordance with Code (S) 414(q) and the Treasury regulations thereunder.
1.36 HIGHLY COMPENSATED GROUP shall have the meaning assigned to it by
Section 4.14.
1.37 HOUR OF SERVICE shall mean:
(a) Each hour for which the Employer, either directly or indirectly,
pays an Employee, or for which the Employee is entitled to
payment, for the performance of duties during the Plan Year. The
Plan Administrator shall credit Hours of Service under this
paragraph (a) to the Employee for the Plan Year in which the
Employee performs the duties, irrespective of when paid.
(b) Each hour for which the Employer, either directly or indirectly,
pays an Employee, or for which the Employee is entitled to
payment (irrespective of whether the employment relationship is
terminated), for reasons other than for the performance of duties
during a Plan Year, such as leave of absence, vacation, holiday,
sick leave, illness, incapacity (including disability), layoff,
jury duty, or military duty. The Plan Administrator shall not
credit more than 501 Hours of Service under this paragraph (b) to
an Employee on account of any single continuous period during
which the Employee does not perform any duties (whether or not
such period occurs during a single Plan Year). The Plan
Administrator shall credit Hours of Service under this paragraph
(b) in accordance with the rules of paragraphs (b) and (c) of
Labor Reg. (S) 2530.200b-2, which is incorporated herein by this
reference.
(c) Each hour for back pay, irrespective of mitigation of damages, to
which the Employer has agreed or for which the Employee has
received an award. The Plan Administrator shall credit Hours of
Service under this paragraph (c) to the Employee for the Plan
Years to which the award or the agreement pertains rather than
for the Plan Year in which the award, agreement, or payment is
made.
5
The Plan Administrator shall not credit an Hour of Service under more than
one of the above paragraphs. The Plan Administrator shall credit Hours of
Service the Employee completes for members of any Related Group and shall credit
Hours of Service the Employee completes as a Leased Employee. If the Plan
Administrator is to credit Hours of Service to an Employee for the 12 month
period beginning with the Employee's Employment Commencement Date or with an
anniversary of such date, then that 12 month period shall be substituted for the
term "Plan Year" wherever the term "Plan Year" appears in this Section.
Solely for purposes of determining whether the Employee incurs a Break in
Service under any provision of this Plan, the Plan Administrator shall credit
Hours of Service during an Employee's unpaid absence due to maternity or
paternity leave on the basis of the number of Hours of Service the Employee
would receive if the Employee were paid during the absence or, if the Plan
Administrator cannot determine the number of Hours of Service the Employee would
receive, on the basis of eight hours per day during the absence. The Plan
Administrator shall consider an Employee on maternity or paternity leave if the
Employee's absence is due to the Employee's pregnancy, the birth of the
Employee's child, the placement with the Employee of an adopted child, or the
care of the Employee's child immediately following the child's birth or
placement. The Plan Administrator shall credit only the number of Hours of
Service (up to 501 Hours of Service) necessary to prevent the Employee's Break
in Service. The Plan Administrator shall credit all Hours of Service described
in this paragraph to the Plan Year in which the absence begins or, if the
Employee does not need these Hours of Service to prevent a Break in Service in
the Plan Year in which the absence begins, the Plan Administrator shall credit
these Hours of Service to the immediately following Plan Year.
The Employer shall elect in its Adoption Agreement the method the Plan
Administrator shall use in crediting an Employee with Hours of Service.
1.38 KEY EMPLOYEE shall mean any Employee, former Employee, or the
Beneficiary of an Employee or former Employee, if the Employee or former
Employee at any time during the Plan Year which includes the Determination Date
or any of the four preceding Plan Years:
(a) is an officer of the Employer earning Testing Compensation
greater than 50% of the limitation under Code (S) 415(b)(1)(A) in
effect for such Plan Years. No more than 50 Employees, or if
lesser, the greater of three Employees or 10% of the Employees
shall be treated as officers;
(b) is one of the Employees earning Testing Compensation of more than
the dollar limitation under Code (S) 415(c)(1)(A) and owns one of
the 10 largest interests in the Employer;
(c) owns more than 5% of the Employer; or
(d) owns more than 1% of the Employer and earns Testing Compensation
in excess of $150,000.
The constructive ownership rules of Code (S) 318 (or the principles of that
section, in the case of an unincorporated Employer) shall apply to determine
ownership in the Employer. The Plan Administrator shall determine who is a Key
Employee in accordance with Code (S) 416(i)(1) and the Treasury regulations
thereunder.
6
1.39 LEASED EMPLOYEE shall mean an individual (other than a common law
employee of the Employer) who, pursuant to an agreement between the Employer and
a leasing organization, has performed services for the Employer on a
substantially full time basis for a period of at least one year, and the
individual's service is of a type historically performed by common law employees
in the business field of the Employer. The Employer shall treat contributions
or benefits provided to the Leased Employee by the leasing organization as
contributions or benefits provided by the Employer to the extent attributable to
services the Leased Employee performed for the Employer. Notwithstanding the
preceding provisions of this paragraph, the Plan shall not treat an individual
as a Leased Employee if:
(a) the Leased Employee is covered by a money purchase pension plan
providing:
(1) a nonintegrated employer contribution rate of at least 10%
of Testing Compensation (including amounts which are
excludable from the Leased Employee's gross income under
Code (S)(S) 125, 402(a)(8), 402(h), or 403(b)),
(2) immediate participation, and
(3) full and immediate vesting; and
(b) Leased Employees do not constitute more than 20% of the
Employer's Nonhighly Compensated Employees.
1.40 LIMITATION YEAR shall mean the Plan Year, unless otherwise specified
by the Employer in the Adoption Agreement.
1.41 MATCHING CONTRIBUTIONS shall have the meaning assigned to it by
Section 4.14.
1.42 MATCHING CONTRIBUTIONS ACCOUNT shall have the meaning assigned to it
by Section 4.01.
1.43 MAXIMUM PERMISSIBLE AMOUNT shall have the meaning assigned to it by
Section 4.11.
1.44 NONFORFEITABLE shall mean a Participant's or Beneficiary's
unconditional claim, legally enforceable against the Plan, to the Participant's
Accrued Benefit.
1.45 NONHIGHLY COMPENSATED EMPLOYEE shall mean an Employee who is not a
Highly Compensated Employee and who is not a family member aggregated with a
Highly Compensated Employee.
1.46 NONHIGHLY COMPENSATED GROUP shall have the meaning assigned to it by
Section 4.14.
1.47 NON-KEY EMPLOYEE shall mean a Participant who is not a Key Employee
and who is employed by the Employer on the Accounting Date of the Plan Year,
regardless of whether the Participant satisfies the requirements of Section 4.05
during the Plan Year.
1.48 NONTRANSFERABLE ANNUITY shall mean an annuity which by its terms
provides that it may not be sold, assigned, discounted, pledged as collateral
for a loan, or held as security by or to any person other than the insurance
company which issued such annuity.
7
1.49 NORMAL RETIREMENT DATE shall mean the date elected by the Employer in
the Adoption Agreement. If the Employer requires an Employee to retire upon
attaining a certain age, the Employer shall elect a Normal Retirement Date under
its Adoption Agreement which does not exceed that mandatory retirement age.
1.50 100% LIMITATION shall have the meaning assigned to it by Section 4.11.
1.51 OWNER-EMPLOYEE shall mean a Self-Employed Individual who is the sole
proprietor (if the Employer is a sole proprietorship) or a partner who owns more
than 10% of either the capital or profits interest in the partnership (if the
Employer is a partnership). The following special provisions shall apply to
Owner-Employees:
(a) If the Plan provides contributions or benefits for an Owner-Employee
or group of Owner-Employees who control the trade or business with
respect to which this Plan is established, and the Owner-Employee or
Owner-Employees also control as Owner-Employees one or more other
trades or businesses, plans must exist or be established with respect
to all the controlled trades or businesses so that when the plans are
combined they form a single plan which satisfies the requirements of
Code (S) 401(a) and Code (S) 401(d) with respect to the employees of
the controlled trades or businesses.
(b) The Plan shall exclude any Owner-Employee or group of Owner-Employees
if that Owner-Employee or that group controls any other trade or
business, unless the employees of the other controlled trade or
business are included in a plan which satisfies the requirements of
Code (S) 401(a) and Code (S) 401(d). The other qualified plan shall
provide contributions and benefits which are not less favorable than
the contributions and benefits provided for the Owner-Employee or
group of Owner-Employees under this Plan, or if an Owner-Employee is
covered under another qualified plan as an Owner-Employee, then the
plan established with respect to the trade or business the Owner-
Employee does control shall provide contributions or benefits as
favorable as those provided under the most favorable plan of the trade
or business the Owner-Employee does not control.
(c) For purposes of paragraphs (a) and (b) of this Section, an Owner-
Employee or group of Owner-Employees controls a trade or business if
the Owner-Employee or Owner-Employees together (1) own the entire
interest in the unincorporated trade or business, or (2) in the case
of a partnership, own more than 50% of either the capital interest or
the profits interest in the partnership. An Owner-Employee or group
of Owner-Employees shall be treated as owning any interest in a
partnership which is owned, directly or indirectly, by a partnership
which such Owner-Employees or such group of Owner-Employees are
considered to control within the meaning of the preceding sentence.
1.52 PARTICIPANT shall mean any Eligible Employee who has entered the Plan
on a Plan Entry Date in accordance with the provisions of Section 2.01. An
Employee who becomes a Participant shall remain a Participant under the Plan
until the Trustee has fully distributed the Participant's Nonforfeitable Accrued
Benefit. In addition, Participant shall have the meaning assigned to it by
Section 4.14.
1.53 PERIOD OF SEVERANCE shall have the meaning assigned to it by Section
2.02.
1.54 PERMISSIVE AGGREGATION GROUP shall mean the Required Aggregation Group
combined with any other plan maintained by the Employer, but only if such group
would satisfy in the aggregate the
8
requirements of Code (S) 401(a)(4) and Code (S) 410. The Plan Administrator
shall determine which plans to take into account in determining the Permissive
Aggregation Group.
1.55 PERMITTED DISPARITY LEVEL shall mean the dollar amount determined
under the option elected by the Employer in Adoption Agreement Section 3.01 or
4.02, as applicable.
1.56 PLAN shall mean the retirement plan established or continued by the
Employer in the form of the Adoption Agreement and the Defined Contribution
Basic Plan Document and Trust Agreement. All section references within the Plan
are Plan section references unless the context clearly indicates otherwise.
1.57 PLAN ADMINISTRATOR shall mean the Employer or the person designated by
the Employer to hold the position of Plan Administrator. If two or more members
of a Related Group execute the Adoption Agreement or execute a participation
agreement with respect to the Plan, and the Employer does not designate a Plan
Administrator, "Plan Administrator" shall mean the entity executing the first
signature line of the Adoption Agreement.
1.58 PLAN ENTRY DATE shall mean the dates specified by the Employer in the
Adoption Agreement.
1.59 PLAN YEAR shall mean the 12 month period ending on the date elected by
the Employer in the Adoption Agreement.
1.60 PROFIT SHARING CONTRIBUTIONS shall have the meaning assigned to it by
Section 4.14.
1.61 PROFIT SHARING CONTRIBUTIONS ACCOUNT shall have the meaning assigned
to it by Section 4.01.
1.62 REEMPLOYMENT DATE shall mean the date the Employee first performs an
Hour of Service for the Employer subsequent to incurring a Break in Service as
defined in Section 2.03.
1.63 RELATED GROUP shall mean a controlled group of corporations (as
defined in Code (S) 414(b)), trades or businesses (whether or not incorporated)
which are under common control (as defined in Code (S) 414(c)), an affiliated
service group (as defined in Code (S) 414(m)), and any other entity required to
be aggregated with the Employer pursuant to Code (S) 414(o) and the Treasury
regulations thereunder. If the Employer is a member of a Related Group, the
Plan shall treat all Employees of the members of such Related Group as if
employed by a single employer. Solely for purposes of applying the Code (S) 415
limitations of Article IV, the Plan Administrator shall determine any Related
Group by modifying Code (S) 414(b) and (c) in accordance with Code (S) 415(h).
1.64 REQUIRED AGGREGATION GROUP shall mean (a) each qualified plan of the
Employer in which at least one Key Employee participates at any time during the
five Plan Year period ending on the Determination Date (regardless of whether
the Plan has terminated); and (b) any other qualified plan of the Employer which
enables a plan described in (a) to meet the requirements of Code (S) 401(a)(4)
or Code (S) 410.
1.65 REQUIRED BEGINNING DATE shall have the meaning assigned to it by
Section 6.03.
1.66 ROLLOVER CONTRIBUTIONS ACCOUNT shall have the meaning assigned to it
by Section 4.01.
9
1.67 SELF-EMPLOYED INDIVIDUAL shall mean an individual who has Earned
Income for the taxable year from the trade or business for which the Plan is
established. Self-Employed Individual shall also mean an individual who would
have had Earned Income if the trade or business for which the Plan is
established had any net profits.
1.68 SERVICE shall mean any period of time the Employee is in the employ of
the Employer, including any period the Employee is on an unpaid leave of absence
authorized by the Employer under a uniform, nondiscriminatory policy established
by the Employer.
1.69 SERVICE FOR PREDECESSOR EMPLOYER shall mean the extent to which the
Employer shall take into account service with a predecessor employer. If the
Employer maintains the plan of a predecessor employer, the Plan shall treat
service of the Employee with the predecessor employer as service with the
Employer. If the Employer does not maintain the plan of the predecessor
employer, the Employer shall state in its Adoption Agreement the extent to which
the Plan shall take into account service with the predecessor employer.
1.70 SHAREHOLDER-EMPLOYEE shall mean an Employee or officer who, at any
time during the Employer's taxable year, owns more than 5%, either directly or
by attribution under Code (S) 318(a)(1), of the outstanding stock in an Employer
which is a Subchapter S corporation.
1.71 TESTING COMPENSATION shall have the meaning elected by the Employer in
the Adoption Agreement. Amounts included as Compensation are only those amounts
actually paid to a Participant.
Code (S) 415(c)(3) Compensation. If the Employer elects to have the Code
-------------------------------
(S) 415(c)(3) definition apply, Testing Compensation shall mean the
Employee's Earned Income, wages, salaries, fees for professional service,
and other amounts received for personal services actually rendered in the
course of employment with the Employer maintaining the Plan (including, but
not limited to, commissions paid salesmen, compensation for services on the
basis of a percentage of profits, commissions on insurance premiums, tips,
and bonuses) for the Plan Year or Limitation Year. Testing Compensation
shall not include:
(a) Employer contributions to a plan of deferred compensation to the
extent the contributions are not includable in the gross income of the
Employee for the taxable year in which contributed;
(b) distributions from a plan of deferred compensation (except for
distributions from an unfunded nonqualified plan includable in the
Employee's gross income);
(c) amounts realized from the exercise of a nonqualified stock option, or
when restricted stock or property held by an Employee either becomes
freely transferable or is no longer subject to a substantial risk of
forfeiture;
(d) amounts realized from the sale, exchange, or other disposition of
stock acquired under a qualified stock option;
(e) amounts which receive special tax benefits to the extent not
includable in the gross income of the Employee; or
(f) amounts which exceed $200,000 (or such larger indexed amount
determined by the Commissioner of Internal Revenue in accordance with
Code (S) 401(a)(17)).
W-2 Compensation. If the Employer elects to have the W-2 compensation
----------------
definition apply, Testing Compensation shall mean the Employee's Earned
Income and wages within the meaning
10
of Code (S) 3401(a) and all other payments of remuneration to the Employee
by the Employer (in the course of the Employer's trade or business) for
which the Employer is required to furnish the Employee a written statement
under Code (S)(S) 6041(d), 6051(a)(3) and 6052, determined without regard
to any rules under Code (S) 3401(a) that limit the remuneration included in
wages based on the nature or location of the employment or the services
performed. Testing Compensation shall not include amounts which exceed
$200,000 (or such larger indexed amount determined by the Commissioner of
Internal Revenue in accordance with Code (S) 401(a)(17)).
The Employer shall specify in its Adoption Agreement whether Testing
Compensation shall include Employer contributions which are not includable in
the gross income of the Employee under Code (S)(S) 125, 402(a)(8), 402(h), or
403(b). The Employer's election pursuant to the immediately preceding sentence
shall apply to Testing Compensation for purposes of Code (S)(S) 401(m), 401(k),
401(a)(4), and 401(l). For purposes of the Key Employee determination and the
Highly Compensated Employee determination, the Plan Administrator shall apply
the Testing Compensation definition by including Employer contributions which
are not includable in the gross income of the Employee under Code (S)(S) 125,
402(a)(8), 402(h), or 403(b) and by disregarding the Code (S) 401(a)(17)
limitation. For purposes of the Code (S) 415 limitations of Sections 4.10 and
4.11, the Plan Administrator shall apply the Testing Compensation definition by
excluding Employer contributions which are not includable in the gross income of
the Employee under Code (S)(S) 125, 402(a)(8), 402(h), or 403(b). If the Plan
is a profit sharing plan with a Cash or Deferred Arrangement, Testing
Compensation shall also have the meaning assigned to it by Section 4.14(n).
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan Years
beginning on or after January 1, 1994, the annual Testing Compensation of each
Employee taken into account under the Plan shall not exceed the OBRA '93 Annual
Compensation Limit. The OBRA '93 Annual Compensation Limit is $150,000, as
adjusted by the Commissioner for increases in the cost of living in accordance
with Code (S) 401(a)(17)(B). The cost-of-living adjustment in effect for a
calendar year applies to any period, not exceeding 12 months, over which Testing
Compensation is determined (determination period) beginning in such calendar
year. If a determination period consists of fewer than 12 months, the OBRA '93
Annual Compensation Limit will be multiplied by a fraction, the numerator of
which is the number of months in the determination period, and the denominator
of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in this
Plan to the limitation under Code (S) 401(a)(17) shall mean the OBRA '93 Annual
Compensation Limit set forth in this provision.
If Testing Compensation for any prior determination period is taken into
account in determining an Employee's benefits accruing in the current Plan Year,
the Testing Compensation for that prior determination period is subject to the
OBRA '93 Annual Compensation Limit in effect for that prior determination
period. For this purpose, for determination periods beginning before the first
day of the first Plan Year beginning on or after January 1, 1994, the OBRA '93
Annual Compensation Limit is $150,000.
1.72 TOP HEAVY PLAN shall mean that the top heavy ratio for the Plan as of
the Determination Date exceeds 60% for a Plan Year if this Plan is the only
qualified plan maintained by the Employer. The top heavy ratio is a fraction.
The numerator of the fraction is the sum of the present value of Accrued
Benefits of all Key Employees as of the Determination Date (including any
contribution not made as of the Determination Date but which Code (S) 416 and
the Treasury regulations thereunder require the Plan Administrator to take into
account), and distributions made within the five Plan Year period immediately
preceding the Determination Date. The denominator of the fraction is a similar
sum
11
determined for all Employees. The Plan Administrator shall calculate the top
heavy ratio by disregarding the Accrued Benefit attributable to voluntary
deductible Employee contributions, if any, and by disregarding the Accrued
Benefit of any Non-Key Employee who was formerly a Key Employee. The Plan
Administrator shall calculate the top heavy ratio by disregarding the Accrued
Benefit (including distributions, if any, of the Accrued Benefit) of an
individual who has not received credit for at least one Hour of Service with the
Employer during the five Plan Year period ending on the Determination Date. The
Plan Administrator shall calculate the top heavy ratio, including the extent to
which it shall take into account distributions, rollovers, and transfers, in
accordance with Code (S) 416 and the Treasury regulations thereunder.
If the Employer maintains other qualified plans, this Plan is a Top Heavy
Plan only if it is part of a Required Aggregation Group, and the top heavy ratio
for both the Required Aggregation Group and the Permissive Aggregation Group
exceeds 60%. The Plan Administrator shall calculate the top heavy ratio in the
same manner as required by the first paragraph of this Section, taking into
account all plans within the Required Aggregation Group and the Permissive
Aggregation Group. To the extent the Plan Administrator must take into account
distributions to an Employee, the Plan Administrator shall include distributions
from a terminated plan which would have been part of the Required Aggregation
Group if it were in existence on the Determination Date. The Plan Administrator
shall calculate the present value of Accrued Benefits and any other amounts
necessary for this calculation under Defined Benefit Plans included within the
group in accordance with the method elected by the Employer in the Adoption
Agreement, Code (S) 416, and the Treasury regulations thereunder. The accrued
benefit under a Defined Benefit Plan of a Participant other than a Key Employee
shall be determined under the method, if any, that uniformly applies for accrual
purposes under all Defined Benefit Plans maintained by the Employer, or, if
there is no uniform method, as if the Employee's benefit accrued not more
rapidly than the slowest accrual rate permitted under the fractional rule of
accrual of Code (S) 411(b)(1)(C). If an aggregated plan does not have a
valuation date coinciding with the Determination Date, the Plan Administrator
shall value the Accrued Benefits in the aggregated plan as of the most recent
valuation date falling within the 12 month period ending on the Determination
Date, except as Code (S) 416 and the Treasury regulations thereunder require for
the first and second plan year of a Defined Benefit Plan. The Plan
Administrator shall calculate the top heavy ratio with reference to the
Determination Dates that fall within the same calendar year.
1.73 TRUST shall mean the separate trust created by the Employer under the
Defined Contribution Basic Plan Document and Trust Agreement.
1.74 TRUST FUND shall mean all property of every kind held or acquired by
the Trustee under the Plan other than insurance contracts.
1.75 TRUSTEE shall mean the person or persons who execute the Adoption
Agreement as the Trustee, or any person who accepts the position of Trustee in
writing. The Trustee shall maintain the Plan of the Employer as a separate Plan
and as a separate Trust, independent from the plan and trust of any other
corporation, partnership, or self-employed individual who may adopt the Holland
& Xxxx Defined Contribution Basic Plan Document and Trust Agreement.
1.76 VALUATION DATE shall mean each date on which the Trustee values the
Trust Fund.
1.77 VOLUNTARY DEDUCTIBLE EMPLOYEE CONTRIBUTIONS ACCOUNT shall have the
meaning assigned to it by Section 4.01.
12
1.78 VOLUNTARY NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS ACCOUNT shall have the
meaning assigned to it by Section 4.01.
1.79 YEAR OF SERVICE - PARTICIPATION shall have the meaning described in
Section 2.02.
1.80 YEAR OF SERVICE - VESTING shall have the meaning described in Section
5.06.
* * * END OF ARTICLE 1 * * *
13
ARTICLE II
EMPLOYEES ENTITLED TO PARTICIPATE
2.01 ELIGIBILITY. Each Eligible Employee shall become a Participant in the
-----------
Plan in accordance with the method elected by the Employer in the Adoption
Agreement. If this Plan is a restated Plan, each Employee who was a Participant
in the Plan on the day before the Effective Date shall continue as a Participant
in the Plan. If the Employer elects a method in the Adoption Agreement that
requires less than 1 Year of Service, an Employee shall not be required to
complete a minimum number of Hours of Service during the period.
2.02 YEAR OF SERVICE - PARTICIPATION. For purposes of eligibility to
-------------------------------
participate under Section 2.01, the Plan shall count all of an Employee's Years
of Service with the Employer and the Related Group.
If the Employer elects a method other than the elapsed time method under
Section 1.37, Year of Service shall mean a 12 consecutive month period during
which the Employee completes not less than 1,000 Hours of Service, measuring the
beginning of the first 12 month period from the Employment Commencement Date,
and measuring succeeding 12 month periods in accordance with the method elected
by the Employer in its Adoption Agreement.
If the Employer elects the elapsed time method under Section 1.37, the Plan
Administrator shall credit an Employee for the aggregate of all time periods
commencing with the Employee's Employment Commencement Date or Reemployment Date
and ending on the date a Break in Service begins. An Employee shall also
receive credit for any Period of Severance of less than 12 consecutive months.
Fractional periods of a year shall be expressed in terms of days. Period of
Severance shall mean a continuous period of time during which the Employee is
not employed by the Employer. A Period of Severance begins on the date the
Employee retires, quits, or is discharged, or if earlier, the 12 month
anniversary of the date on which the Employee was otherwise first absent from
service. In the case of an individual who is absent from work for maternity or
paternity reasons (as determined under Section 1.37), the 12 consecutive month
period beginning on the first anniversary of the first date of such absence
shall not constitute a Period of Severance.
2.03 BREAK IN SERVICE - PARTICIPATION. If the Employer chooses the two
--------------------------------
year participation option in Adoption Agreement Section 2.01, an Employee shall
incur a "Break in Service" if during a Year of Service (as defined in Section
2.02) the Employee does not complete more than 500 Hours of Service for the
Employer. The Plan shall treat an Employee who incurs a one year Break in
Service and who has never become a Participant as a new Employee on the date the
Employee first performs an Hour of Service for the Employer after the Break in
Service.
2.04 PARTICIPATION UPON REEMPLOYMENT. A Participant whose employment
-------------------------------
terminates shall reenter the Plan as a Participant on the Participant's
Reemployment Date. An Employee who satisfies the Plan's eligibility conditions
but who terminates employment prior to becoming a Participant shall become a
Participant on the later of the Plan Entry Date on which the Employee would have
entered the Plan had he or she not terminated employment or the Participant's
Reemployment Date. An Employee who terminates employment prior to satisfying
the Plan's eligibility conditions shall become a Participant in accordance with
the Plan's eligibility conditions of Adoption Agreement Section 2.01.
14
2.05 CHANGE IN ELIGIBLE EMPLOYEE STATUS. If a Participant does not
----------------------------------
terminate employment, but is not an Eligible Employee or ceases to be an
Eligible Employee by reason of employment within an employment classification
excluded from participation by the Employer under the Adoption Agreement, then
during the period such Participant is not an Eligible Employee, the Plan
Administrator shall not allocate any Employer contributions or forfeitures to
the Participant's Accounts except to the extent the Participant rendered
services for the Employer as an Eligible Employee. However, during such period,
the Participant, without regard to employment classification, shall continue to
receive credit for vesting under Article V for each included Year of Service and
the Participant's Accrued Benefit shall continue to share fully in Trust Fund
allocations under Section 4.08. A Participant who is no longer an Eligible
Employee will participate immediately upon becoming an Eligible Employee. An
Employee who is not an Eligible Employee shall participate immediately upon
becoming an Eligible Employee if the Employee has satisfied the requirements of
Section 2.01 other than being an Eligible Employee.
2.06 ELECTION NOT TO PARTICIPATE. The Employer shall specify in its
---------------------------
Adoption Agreement whether an Eligible Employee shall be permitted to elect not
to participate in the Plan. A Participant shall not be permitted to make such
an election. For an election to be effective for a particular Plan Year, the
Eligible Employee shall file the election in writing with the Plan Administrator
not later than 60 days prior to the Accounting Date of that Plan Year. The
Employer shall not make a contribution under the Plan for the Eligible Employee
for the Plan Year for which the election is effective, nor for any succeeding
Plan Year. The Plan Administrator shall furnish an Eligible Employee any form
required for purposes of an election under this Section. An election timely
filed shall be effective for the entire Plan Year.
* * * END OF ARTICLE 2 * * *
15
ARTICLE III
CONTRIBUTIONS
3.01 AMOUNT OF EMPLOYER CONTRIBUTIONS. For each Plan Year, the Employer
--------------------------------
shall contribute to the Trust the amount determined by application of the
contribution option elected by the Employer in its Adoption Agreement, taking
into account only the Participants who satisfy the conditions for an allocation
of Employer contributions under Section 4.05 and only the Participant's
Compensation taken into account under Section 4.05. A Participant who remains
in the employ of the Employer after attaining the Normal Retirement Date shall
continue to participate in Employer contributions. The Employer, from its
records, shall determine the amount of any contributions to be made by it to the
Trust under the terms of the Plan. The Employer shall not make a contribution
to the Trust for any Plan Year to the extent the contribution would exceed the
limitations imposed by Article IV.
Limitation on Allocations if Employer Maintains a Money Purchase Pension
------------------------------------------------------------------------
Plan and a Defined Benefit Pension Plan. If the Plan is a money purchase
---------------------------------------
pension plan and the Employer maintains a defined benefit plan under which at
least one Participant in this Plan participates, the Employer shall determine
its contribution under this Section by reducing the total contribution, to the
extent necessary, to equal the maximum deductible amount under Code (S)
404(a)(7). If the Employer reduces its contribution under this paragraph, the
Employer shall determine its contribution with respect to each Participant by
adjusting each percentage by the same ratio as the reduced total Employer
contribution for the Plan Year bears to the total Employer contribution
determined without application of Code (S) 404(a)(7).
Contributions Made Pursuant to a Cash or Deferred Arrangement. Subject to
-------------------------------------------------------------
the limitations of Article III and Article IV, any Participant shall be entitled
to make contributions pursuant to a Cash or Deferred Arrangement if the Plan is
a Profit Sharing Plan with a Cash or Deferred Arrangement, and the Employer
permits such contributions in the Adoption Agreement. Contributions made
pursuant to a Cash or Deferred Arrangement shall be limited in a manner which
meets the requirements of Section 4.12.
3.02 MINIMUM EMPLOYER CONTRIBUTION. If this Plan is a Top Heavy Plan in
-----------------------------
any Plan Year, the contribution for each Non-Key Employee shall be at least
equal to a minimum contribution.
If the contribution rate for the Key Employee with the highest contribution
rate is greater than or equal to 3%, the minimum contribution shall be 3% of
Testing Compensation for each Non-Key Employee. If the contribution rate for
the Key Employee with the highest contribution rate is less than 3%, the minimum
contribution for each Non-Key Employee shall equal the highest contribution rate
for a Key Employee.
The contribution rate is the sum of Employer contributions (not including
Employer contributions to Social Security) and forfeitures allocated to the Key
Employee's Account for the Plan Year divided by the Key Employee's Testing
Compensation for the Plan Year. To determine the contribution rate, the Plan
Administrator shall treat all qualified top heavy defined contribution plans
maintained by the Employer as a single plan. For Plan Years beginning after
December 31, 1988, the Plan Administrator shall not treat Elective Deferrals
made to any plan pursuant to a Cash or Deferred Arrangement as Employer
contributions for any Non-Key Employee; however, the Plan Administrator shall
treat Elective Deferrals made to any plan pursuant to a Cash or Deferred
Arrangement as Employer contributions for all Key Employees.
16
Notwithstanding the preceding provisions of this Section, if a Defined
Benefit Plan maintained by the Employer which benefits a Key Employee depends on
this Plan to satisfy the antidiscrimination rules of Code (S) 401(a)(4) or the
coverage rules of Code (S) 410 (or another plan benefiting the Key Employee so
depends on such Defined Benefit Plan), the minimum contribution for a Non-Key
Employee shall be 3% of the Non-Key Employee's Testing Compensation regardless
of the highest contribution rate for any Key Employee.
If the contribution rate for the Plan Year with respect to a Non-Key
Employee is less than the minimum contribution, the Employer shall increase its
contribution for such Non-Key Employee to the extent necessary so that the
contribution rate for the Plan Year shall equal the minimum contribution. If
more than one entity maintains this Plan, each entity shall make the additional
contribution attributable to the Testing Compensation it pays the Non-Key
Employee, unless the members enter into a separate written agreement allocating
the responsibility for the additional contribution in another manner.
If the Employer maintains, or has maintained, other qualified plans or if a
Non-Key Employee participates in another top heavy qualified plan maintained by
the Employer, the Plan Administrator shall administer this Section as modified
by Adoption Agreement Section 3.02.
3.03 PAYMENT OF EMPLOYER CONTRIBUTION. The Employer shall pay all Employer
--------------------------------
contributions to the Trustee not later than the due date, including extensions,
of the Employer's federal income tax return for the year. The Employer shall
make contributions under a Cash or Deferred Arrangement to the Trust within an
administratively reasonable period of time after withholding the corresponding
Compensation from the Participant no later than the time prescribed by the Code
or by Treasury regulations. Contributions under a Cash or Deferred Arrangement
shall be Employer contributions for all purposes under this Plan, except to the
extent the Code or Treasury regulations prohibit the use of these contributions
to satisfy the qualifications requirements of the Code.
3.04 RETURN OF EMPLOYER CONTRIBUTIONS. Upon written request from the
--------------------------------
Employer, the Trustee shall return to the Employer the amount of the Employer's
contribution made by mistake of fact. Any contribution made by the Employer
because of a mistake of fact must be returned to the Employer within one year
after the date when the contribution was made. The Trustee shall not increase
the amount of the Employer contribution to be returned for any earnings
attributable to the contribution, but the Trustee shall decrease the Employer
contribution to be returned for any losses attributable to the contribution. In
the event that the Commissioner of Internal Revenue determines that the Plan is
not initially qualified under the Code, any contribution made contingent upon
that initial qualification by the Employer shall be returned to the Employer
within one year after the date the initial qualification is denied, but only if
the application for the qualification is made by the time prescribed by law for
filing the Employer's return for the taxable year in which the Employer adopted
the Plan, or such later date as the Secretary of the Treasury may prescribe.
3.05 ROLLOVER CONTRIBUTIONS. The Employer shall specify in the Adoption
----------------------
Agreement whether rollover contributions shall be permitted under the Plan. If
so authorized by the Adoption Agreement, any Employee (prior to satisfying the
Plan's eligibility conditions) or Participant, after filing with the Trustee the
form prescribed by the Plan Administrator, may contribute cash or other property
to the Trust other than as a voluntary nondeductible Employee contribution if
the contribution is a "rollover contribution" which the Code permits an Employee
to transfer either directly or indirectly from one qualified plan to another
qualified plan. Before accepting a rollover contribution, the Trustee may
require an Employee to furnish satisfactory evidence that the proposed transfer
is in fact a rollover contribution which the Code permits an Employee to make to
a qualified plan. A rollover contribution shall not be considered an Annual
Addition under Article IV.
17
The Trustee shall invest the rollover contribution in a segregated
investment Account for the Employee's sole benefit subject to Section 4.08
unless the Trustee, in its sole discretion, agrees to invest the rollover
contribution as part of the Trust Fund. The Trustee shall hold, administer, and
distribute a rollover contribution in the same manner as any Employer
contribution made to the Trust. If an Employee makes a rollover contribution to
the Trust prior to satisfying the Plan's eligibility conditions, the Plan
Administrator and Trustee shall treat the Employee as a Participant for all
purposes of the Plan except that the Employee shall not be considered a
Participant for purposes of sharing in Employer contributions or Participant
forfeitures under the Plan until such Employee actually becomes a Participant in
the Plan.
3.06 VOLUNTARY NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS. Subject to the
----------------------------------------------
limitations of Article III and Article IV, any Participant, as of any Accounting
Date, shall be entitled to make voluntary nondeductible Employee contributions
to the Trust if the Employer permits such contributions in the Adoption
Agreement, and the Plan is a Profit Sharing Plan with a Cash or Deferred
Arrangement. A Participant shall make a voluntary nondeductible Employee
contribution for a particular Plan Year not later than 30 days after the
Accounting Date of that Plan Year. The Plan Administrator shall not accept
voluntary deductible Employee contributions after December 31, 1986. Voluntary
nondeductible Employee contributions and matching contributions on such
contributions, if any, for Plan Years beginning after December 31, 1986 shall be
limited in a manner which meets the requirements of Code (S) 401(m) and Section
4.13.
* * * END OF ARTICLE 3 * * *
18
ARTICLE IV
ALLOCATIONS TO ACCOUNTS
4.01 INDIVIDUAL ACCOUNTS. The Plan Administrator shall maintain a separate
-------------------
Account or multiple Accounts in the name of each Participant to reflect the
Participant's Accrued Benefit under the Plan. If a Participant reenters the
Plan subsequent to having a Forfeiture Break in Service, the Plan Administrator
shall maintain a separate Account for the Participant's pre-Forfeiture Break in
Service Accrued Benefit and a separate Account for the Participant's post-
Forfeiture Break in Service Accrued Benefit, unless or until the Participant's
entire Accrued Benefit under the Plan is 100% Nonforfeitable.
Employer Contributions Account. The Plan Administrator shall maintain, or
------------------------------
shall direct the Trustee to maintain, an Employer Contributions Account to
reflect the Participant's Accrued Benefit derived from Employer contributions
and the income, expenses, gains, and losses attributable to the Participant's
Employer contributions, adjusted in accordance with Article IV. If the Plan is
a Profit Sharing Plan with a Cash or Deferred Arrangement, Employer
contributions shall include Elective Deferrals, Matching Contributions, Employer
Nonelective Contributions, and Profit Sharing Contributions, as determined under
Section 3.01; however, the Plan Administrator shall maintain, or shall direct
the Trustee to maintain, separate Accounts in the name of each Participant to
reflect the Participant's Accrued Benefit under the Plan derived from the
following types of Employer contributions.
Profit Sharing Contributions Account. The Plan Administrator shall
------------------------------------
maintain, or shall direct the Trustee to maintain, a separate Account in
the name of each Participant to reflect the Participant's Accrued Benefit
under the Plan derived from the Profit Sharing Contributions.
Elective Deferrals Account. If the Plan permits or has ever permitted
--------------------------
contributions under a Cash or Deferred Arrangement, the Plan Administrator
shall maintain an Elective Deferrals Account in the name of each
Participant to reflect the Participant's Accrued Benefit under the Plan
derived from contributions made under a Cash or Deferred Arrangement and
Employer Nonelective Contributions.
Matching Contributions Account. If the Plan permits or has ever permitted
------------------------------
Matching Contributions under a Cash or Deferred Arrangement, the Plan
Administrator shall maintain a Matching Contributions Account in the name
of each Participant to reflect the Participant's Accrued Benefit under the
Plan derived from Matching Contributions.
Employee Contributions Account. The Plan Administrator shall maintain, or
------------------------------
shall direct the Trustee to maintain, separate Accounts in the name of each
Participant to reflect the Participant's Accrued Benefit under the Plan
derived from the following types of Employee contributions and the income,
expenses, gains, and losses attributable to the Participant's Employee
contributions, adjusted in accordance with Article IV.
Voluntary Deductible Employee Contributions Account. If the Plan permitted
---------------------------------------------------
voluntary deductible Employee contributions for certain Plan Years
beginning prior to January 1, 1987, the Plan Administrator shall maintain a
Voluntary Deductible Employee Contributions Account in the name of each
Participant to reflect the Participant's Accrued Benefit under the Plan
derived from deductible Employee contributions.
Voluntary Nondeductible Employee Contributions Account. If the Plan
------------------------------------------------------
permits or has ever permitted voluntary nondeductible Employee
contributions, the Plan Administrator shall maintain
19
a Voluntary Nondeductible Employee Contributions Account in the name of
each Participant to reflect the Participant's Accrued Benefit under the
Plan derived from nondeductible Employee contributions.
Rollover Contributions Account. If the Plan permits or has ever permitted
------------------------------
rollover contributions in accordance with Section 3.05, the Plan
Administrator shall maintain a Rollover Contributions Account in the name
of each Participant who has contributed a rollover contribution (within the
meaning of Section 3.05).
4.02 ALLOCATION OF CONTRIBUTIONS AND FORFEITURES. After any restoration
-------------------------------------------
allocation required by Article V, the Plan Administrator shall allocate and
credit each annual Employer contribution and forfeitures, if any. The Plan
Administrator shall make all Plan allocations for a particular Plan Year as of
the Accounting Date of that Plan Year. If more than one entity maintains the
Plan, the Plan Administrator shall allocate all Employer contributions and
forfeitures to each Participant in the Plan in accordance with this Article,
without regard to which contributing Employer employs the Participant. A
Participant's Compensation includes Compensation from all participating
Employers, irrespective of which Employers are contributing to the Plan. The
Plan Administrator shall allocate and credit the Employer contributions to the
Participants' Accounts in accordance with the method elected by the Employer in
the Adoption Agreement.
4.03 ALLOCATION OF MINIMUM CONTRIBUTION. The Plan Administrator shall
----------------------------------
allocate any additional contribution to the Employer Contributions Account of
the Non-Key Employee for whom the Employer makes the contribution in accordance
with Section 3.02. If the Plan is a Profit Sharing Plan with a Cash or Deferred
Arrangement, the Plan Administrator shall allocate any minimum contribution to
the Participant's Profit Sharing Contributions Account.
4.04 FORFEITURES. The Plan Administrator shall treat the amount of
-----------
forfeitures arising under Article V in the manner specified by the Employer in
its Adoption Agreement. The Plan Administrator shall subtract all forfeitures
when they occur under Article V from the Participants' Employer Contributions
Accounts which incurred the forfeitures.
4.05 ELIGIBILITY TO RECEIVE ALLOCATION OF EMPLOYER CONTRIBUTION AND
--------------------------------------------------------------
FORFEITURES. If the Employer elects an option in Section 1.37 other than the
-----------
elapsed time method, the Plan Administrator shall determine a Participant's
eligibility to receive an allocation of Employer contributions and forfeitures
in accordance with the method elected by the Employer in the Adoption Agreement.
If the Employer elects the elapsed time method, each Participant shall
share in Employer contributions for the period beginning on the date the
Participant enters the Plan and ending on the date the Participant xxxxxx
employment with the Employer and all members of any Related Group or ending on
the date the Participant is no longer an Eligible Employee.
4.06 ACCOUNTING FOR DISTRIBUTIONS. The Plan Administrator shall subtract
----------------------------
all distributions made to a Participant or to the Participant's Beneficiary from
the Participant's Account when made.
4.07 VALUE OF PARTICIPANT'S ACCRUED BENEFIT. The value of each
--------------------------------------
Participant's Accrued Benefit consists of that proportion of the net worth (at
fair market value) of the Trust Fund which the balance in the Participant's
Accounts (excluding the cash value of the any life insurance contracts) bears to
the Accounts of all Participants (excluding the cash value of the any life
insurance contracts), plus the cash surrender value of any insurance contracts
held by the Trustee on the Participant's life.
20
For purposes of a distribution under the Plan, the value of a Participant's
Accrued Benefit shall be its value as of the Valuation Date immediately
preceding the date of the distribution. Any distribution (other than a
distribution from a segregated Account) made to a Participant (or to the
Participant's Beneficiary) more than 90 days after the most recent Valuation
Date shall include interest on the amount of the distribution as an expense of
the Trust Fund. The interest accrues from such Valuation Date to the date of
the distribution at the rate of 5% annually.
4.08 ALLOCATION AND DISTRIBUTION OF NET INCOME, GAIN, OR LOSS. As of each
--------------------------------------------------------
Valuation Date the Plan Administrator shall adjust the Accounts to reflect net
income, gain, or loss since the last Valuation Date in accordance with the
provisions of this Section. If the Plan is a Profit Sharing Plan with a Cash or
Deferred Arrangement, the Plan Administrator shall adjust any contributions made
pursuant to a Cash or Deferred Arrangement to reflect net income, gain, or loss
on each Valuation Date in accordance with the method elected by the Employer in
Adoption Agreement Section 4.08.
(a) Trust Fund Accounts. The allocation provisions of this paragraph
-------------------
shall apply to all Participant Accounts other than segregated
investment Accounts. The Plan Administrator first shall adjust the
Participant Accounts, beginning with the balances of the Accounts on
the last Valuation Date, by:
(1) reducing the appropriate Accounts for any forfeitures arising
under Article V,
(2) reducing the appropriate Accounts for distributions since the
last Valuation Date,
(3) reducing the appropriate Accounts for insurance premiums paid
since the last Valuation Date with respect to any life insurance
contracts (see Section 11.01), and
(4) reducing the appropriate Accounts for the cash value of any life
insurance contracts.
The Plan Administrator then, subject to the restoration allocation
requirements of Article V, shall allocate the net income, gain, or
loss pro rata to the Participant Accounts, as adjusted by the
immediately preceding sentence. The allocable net income, gain, or
loss shall be the net income (or net loss), including the increase or
decrease in the fair market value of assets, since the last Valuation
Date.
(b) Segregated Investment Accounts. A segregated investment Account shall
------------------------------
receive all income it earns and shall bear all expense or loss it
incurs. As of the Valuation Date, the Plan Administrator shall reduce
a segregated Account for any forfeiture after the Plan Administrator
has made all other allocations, changes, or adjustments to the
segregated investment Account for the Plan Year.
(c) Additional rules. An Excess Amount or suspense account (see Section
----------------
4.10) shall not share in the allocation of net income, gain, or loss
described in this Section.
4.09 ALLOCATION OF VOLUNTARY NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS. The
------------------------------------------------------------
Plan Administrator shall allocate and credit a voluntary nondeductible Employee
contribution made for a particular Plan Year to the contributing Participant's
Voluntary Nondeductible Employee Contributions Account as of the earlier of the
Valuation Date following the contribution or the Accounting Date of the Plan
Year to which the contribution relates.
21
4.10 LIMITATIONS ON ALLOCATIONS TO PARTICIPANTS' ACCOUNTS. The amount of
----------------------------------------------------
Annual Additions which the Plan Administrator may allocate under this Plan on a
Participant's behalf for a Limitation Year may not exceed the Maximum
Permissible Amount. If the amount the Employer otherwise would contribute to
the Participant's Accounts would cause the Annual Additions for the Limitation
Year to exceed the Maximum Permissible Amount, the Employer shall reduce the
amount of its contribution so that the Annual Additions for the Limitation Year
shall equal the Maximum Permissible Amount. The Excess Amount will be deemed to
consist of the Annual Additions last allocated. The Plan Administrator shall
determine the Excess Amount by treating the Annual Additions attributable to a
welfare benefit fund or an individual medical account, if any, as allocated
first, irrespective of the actual allocation date.
Prior to determining the Participant's actual Testing Compensation for the
Limitation Year, the Employer may determine the Maximum Permissible Amount for a
Participant on the basis of a reasonable estimation of the Participant's Testing
Compensation for the Limitation Year, uniformly determined for all Participants
similarly situated. As soon as is administratively feasible after the end of
the Limitation Year, the Plan Administrator shall determine the Maximum
Permissible Amount for the Limitation Year based on the Participant's actual
Testing Compensation for the Limitation Year.
Disposition of Excess Amount. If there is an Excess Amount with respect to
----------------------------
a Participant for a Limitation Year because of contributions based on estimated
Testing Compensation, the allocation of forfeitures or a reasonable error in
determining the amount of Elective Deferrals, the Plan Administrator shall
dispose of such Excess Amount as follows:
(a) The Plan Administrator shall return any voluntary nondeductible
Employee contributions and any Elective Deferrals to the Participant
to the extent that the return would reduce the Excess Amount.
(b) If, after the application of paragraph (a) of this Section, an Excess
Amount still exists, and the Plan covers the Participant at the end of
the Limitation Year, then the Plan Administrator shall use the Excess
Amount to reduce future Employer contributions (including any
allocation of forfeitures) under the Plan for the next Limitation Year
and for each succeeding Limitation Year, as is necessary, for the
Participant.
(c) If, after the application of paragraph (a) of this Section, an Excess
Amount still exists, and the Plan does not cover the Participant at
the end of a Limitation Year, then the Plan Administrator shall hold
the Excess Amount unallocated in a suspense account. The Plan
Administrator shall apply the suspense account to reduce Employer
contributions for all remaining Participants in the next Limitation
Year, and in each succeeding Limitation Year if necessary. If a
suspense account is in existence at any time during a Limitation Year,
all amounts in the suspense account must be allocated to Participant's
Accounts before any Employer or Employee contributions may be made to
the Plan for the Limitation Year.
(d) The Plan Administrator shall not distribute any Excess Amounts to
Participants, former Participants, or Beneficiaries.
If there is an Excess Amount with respect to a Participant for a Limitation
Year for any reason other than forfeitures, the estimation of Testing
Compensation or reasonable error in determining the amount of Elective
Deferrals, the Plan Administrator shall dispose of such Excess Amount by (1)
effective for Plan Years beginning on and after January 1, 1994, returning any
voluntary nondeductible Employee contributions and any Elective Deferrals to the
Participant to the extent that the return would reduce the Excess Amount and (2)
to the extent an Excess Amount exists after the return of any voluntary
nondeductible Employee contributions and Elective Deferrals, by reallocating the
Excess Amount to the
22
remaining Participants who are eligible for an allocation of Employer
contributions for the Plan Year in which the Limitation Year ends. The Plan
Administrator shall make this reallocation on the basis of the allocation method
under the Plan as if the Participant whose Accounts otherwise would receive the
Excess Amount is not eligible for an allocation of Employer contributions.
More than One Plan. The Employer shall specify in the Adoption Agreement
------------------
the manner in which the Excess Amount shall be allocated between the plans of
the Employer.
Defined Benefit Plan Limitation. The Employer shall specify in its
-------------------------------
Adoption Agreement the method to satisfy the Defined Benefit Plan limitation.
4.11 CODE (S) 415 DEFINITIONS. For purposes of this Article, the following
------------------------
terms shall have the meaning described in the paragraphs below:
(a) ANNUAL ADDITIONS shall mean the sum of the following amounts allocated
on behalf of a Participant for a Limitation Year, of (1) all Employer
contributions; (2) all forfeitures; and (3) all Employee contributions
effective for Plan Years beginning after December 31, 1986. Except to
the extent provided in Treasury regulations, Annual Additions shall
include Excess Deferrals, Excess Contributions, and Excess Aggregate
Contributions, irrespective of whether the Plan distributes or
forfeits such excess amounts. Annual Additions shall also include
Excess Amounts reapplied to reduce Employer contributions under
Section 4.10. Amounts allocated after March 31, 1984 to an individual
medical account (as defined in Code (S) 415(l)(2)) and included as
part of a pension and annuity plan maintained by the Employer shall be
Annual Additions. Furthermore, Annual Additions shall include
contributions paid or accrued after December 31, 1985 for taxable
years ending after December 31, 1985 attributable to post-retirement
medical benefits allocated to the separate account of a key employee
(as defined in Code (S) 419A(d)(3)) under a welfare benefit fund (as
defined in Code (S) 419(e)) maintained by the Employer, but only for
purposes of the dollar limitation applicable to the Maximum
Permissible Amount.
(b) DEFINED BENEFIT PLAN shall mean a retirement plan which does not
provide for individual accounts for Employer contributions. The Plan
Administrator shall treat all Defined Benefit Plans (whether or not
terminated) maintained by the Employer as a single plan.
(c) DEFINED BENEFIT PLAN FRACTION shall mean the fraction described below:
Projected annual benefit of the Participant
under all Defined Benefit Plans of the Employer
-------------------------------------------------------
The lesser of (1) 125% (subject to the 100%
Limitation described in paragraph (h)
of this Section) of the dollar
limitation in effect under Code (S) 415(b)(1)(A)
for the Limitation Year, or (2) 140% of the
Participant's average Testing Compensation for the
Participant's highest three consecutive Years of Service
To determine the denominator of this fraction, the Plan Administrator
shall make any adjustment required under Code (S) 415(b) and shall
determine a Year of Service in accordance with Section 5.06. The
"projected annual benefit" is the annual retirement benefit (adjusted
to an actuarially equivalent straight life annuity if the plan
expresses
23
such benefit in a form other than a straight life annuity or qualified
joint and survivor annuity) of the Participant under the terms of the
Defined Benefit Plan with the assumptions that the Participant
continues employment until the normal retirement age as stated in the
Defined Benefit Plan (or current age, if later), that the
Participant's compensation continues at the same rate as in effect in
the Limitation Year under consideration, and that all other relevant
factors used to determine benefits under the Defined Benefit Plan
remain constant as of the current Limitation Year for all future
Limitation Years.
Current Accrued Benefit. If the Participant accrued benefits in one
-----------------------
or more Defined Benefit Plans maintained by the Employer which were in
existence on May 5, 1986, the dollar limitation used in the
denominator of this fraction shall not be less than the Participant's
current accrued benefit. A Participant's current accrued benefit is
the sum of the annual benefits under such defined benefit plans which
the Participant had accrued as of the end of the 1986 Limitation Year
(the last Limitation Year beginning before January 1, 1987),
determined without regard to any change in the terms or conditions of
the Plan made after May 5, 1986 and without regard to any cost of
living adjustment occurring after May 5, 1986. This current accrued
benefit rule applies only if the Defined Benefit Plans individually
and in the aggregate satisfied the requirements of Code (S) 415 as in
effect at the end of the 1986 Limitation Year.
(d) DEFINED CONTRIBUTION PLAN shall mean a retirement plan which provides
for an individual account for each participant and for benefits based
solely on the amount contributed to the participant's account, and any
income, expenses, gains, losses, and forfeitures of accounts of other
participants which the plan may allocate to such participant's
account. The Plan Administrator shall treat all Defined Contribution
Plans (whether or not terminated) maintained by the Employer as a
single plan. For purposes of the limitations of this Article, the
Plan Administrator shall treat employee contributions made to a
Defined Benefit Plan maintained by the Employer as a separate Defined
Contribution Plan. The Plan Administrator shall also treat as a
Defined Contribution Plan an individual medical account (as defined in
Code (S) 415(l)(2)) included as part of a Defined Benefit Plan
maintained by the Employer and, for taxable years ending after
December 31, 1985, a welfare benefit fund under Code (S) 419(e)
maintained by the Employer to the extent there are post-retirement
medical benefits allocated to the separate account of a key employee
(as defined in Code (S) 419A(d)(3)).
(e) DEFINED CONTRIBUTION PLAN FRACTION shall mean the fraction described
below:
The sum as of the close of the Limitation Year of the
Annual Additions to the Participant's Accounts under all
Defined Contribution Plans of the Employer
-----------------------------------------------------------
The sum of the lesser of the following amounts determined
for the Limitation Year and for each prior Year of Service
with the Employer: (1) 125% (subject to the 100%
Limitation in paragraph (h) of this
Section) of the dollar limitation in
effect under Code (S) 415(c)(1)(A) for the Limitation Year
(determined without regard to the special dollar
limitations for employee stock ownership plans), or
(2) 35% of the Participant's Testing Compensation for the
Limitation Year
24
For purposes of determining the Defined Contribution Plan fraction,
the Plan Administrator shall not recompute Annual Additions in
Limitation Years beginning prior to January 1, 1987 to treat all
Employee contributions as Annual Additions. If the Plan satisfied Code
(S) 415 for Limitation Years beginning prior to January 1, 1987, the
Plan Administrator shall redetermine the Defined Contribution Plan
Fraction and the Defined Benefit Plan Fraction as of the end of the
1986 Limitation Year in accordance with this paragraph. If the sum of
the redetermined fractions exceeds 1.0, the Plan Administrator shall
subtract permanently from the numerator of the Defined Contribution
Plan Fraction an amount equal to the product of (1) the excess of the
sum of the fractions over 1.0, times (2) the denominator of the
Defined Contribution Plan Fraction. In making the adjustment, the Plan
Administrator shall disregard any accrued benefit under the Defined
Benefit Plan which is in excess of the current accrued benefit (as
determined in Section 4.11(c)). This Plan continues any transitional
rules applicable to the determination of the Defined Contribution Plan
Fraction under the Employer's Plan as of the end of the 1986
Limitation Year.
(f) EXCESS AMOUNT shall mean the excess of the Participant's Annual
Additions for the Limitation Year over the Maximum Permissible Amount.
(g) MAXIMUM PERMISSIBLE AMOUNT shall mean the lesser of (1) $30,000 (or,
if greater, 25% of the defined benefit dollar limitation under Code
(S) 415(b)(1)(A)), or (2) 25% of the Participant's Testing
Compensation for the Limitation Year. If there is a short Limitation
Year because of a change in Limitation Year, the Plan Administrator
shall multiply the $30,000 (or adjusted) limitation by the following
fraction:
Number of months in the short Limitation Year
-----------------------------------------------
12
(h) 100% LIMITATION shall mean, if it applies, that the Plan Administrator
shall determine the denominator of the Defined Benefit Plan Fraction
and the denominator of the Defined Contribution Plan Fraction by
substituting 100% for 125% each place 125% appears in the definition
of Defined Benefit Plan Fraction and Defined Contribution Plan
Fraction under this Section. The 100% Limitation applies during any
Limitation Year this Plan is Top Heavy Plan only if (1) the Plan's top
heavy ratio exceeds 90%, or (2) the Plan's top heavy ratio is greater
than 60%, and the Employer does not provide extra minimum benefits
which satisfy Code (S) 416(h)(2).
4.12 CONTRIBUTIONS UNDER A CASH OR DEFERRED ARRANGEMENT. This Section
--------------------------------------------------
shall apply only if the Plan is a profit sharing plan with a Cash or Deferred
Arrangement effective for Plan Years beginning after December 31, 1986.
$7,000 Limitation. A Participant's Elective Deferrals for a calendar year
-----------------
beginning after December 31, 1986 shall not exceed $7,000 or the adjusted
limitation in effect at the beginning of the calendar year (the "$7,000
Limitation"). If the Employer determines the Participant's Elective Deferrals
for a calendar year would exceed the $7,000 Limitation, the Employer shall
suspend the Participant's Elective Deferrals until the following January 1. If
a Participant makes Elective Deferrals to another Cash or Deferred Arrangement,
or contributes under a simplified employee pension cash or deferred arrangement,
Code (S) 403(b) annuity, Code (S) 457 plan, or Code (S) 501(c)(18) plan
(irrespective of whether the Employer maintains the other plan), and the
Participant's contributions exceed the $7,000 limitation,
25
the Participant shall have the right to provide the Plan Administrator with a
written claim for Excess Deferrals made for a calendar year. The Participant
shall submit the claim no later than the March 31 following the close of the
particular calendar year and the claim shall specify the amount of the
Participant's Elective Deferrals under this Plan which are Excess Deferrals. If
the total amount of a Participant's Elective Deferrals under this Plan and any
other plan maintained by the Employer exceed the $7,000 Limitation for any
calendar year, the Participant shall be deemed to have designated such excess
amount as an Excess Deferral, and the Excess Deferral shall be distributed to
the Participant in accordance with this Section.
Distribution of Excess Deferrals. If, after the close of a calendar year,
--------------------------------
the Plan Administrator determines a Participant's Elective Deferrals exceed the
$7,000 limitation, the Plan Administrator shall distribute the Excess Deferral,
as adjusted for allocable income or loss. If the Plan Administrator receives a
timely claim as described in the preceding paragraph, it shall distribute the
Excess Deferrals specified by the Participant in his or her claim. The Plan
Administrator shall make all distributions under this paragraph no later than
April 15 of the calendar year following the calendar year in which the Excess
Deferral occurred. If the Plan Administrator distributes the Excess Deferrals
by the appropriate April 15, it may make the distribution irrespective of any
other provision under this Plan or under the Code. If the Plan Year is not a
calendar year, the Employer shall determine to which Plan Year the Excess
Deferrals relate by treating the last deferrals made for the calendar year as
the Excess Deferrals.
Determination of Allocable Income or Loss to Excess Deferrals. The Plan
-------------------------------------------------------------
Administrator shall adjust Excess Deferrals for any income or loss. The
Employer shall specify in its Adoption Agreement whether income or loss shall be
adjusted to the date of distribution or adjusted to the last day of the calendar
year.
Adjustment to the Date of Distribution. If the Employer elects to adjust
--------------------------------------
income or loss to the date of the distribution, the income or loss
allocable to the Excess Deferrals is the sum of: (1) income or loss
allocable to the Participant's Elective Deferrals Account for the calendar
year multiplied by the following fraction:
Participant's Excess Deferrals for the calendar year
----------------------------------------------------------------
Participant's Elective Deferrals Account without regard to any
income or loss occurring during such calendar year
and (2) 10% of the amount determined under (1) multiplied by the number of
whole calendar months between the end of the calendar year and the date of
distribution, counting the month of distribution if distribution occurs
after the 15th of such month.
Adjustment to the Last Day of the Calendar Year. If the Employer elects to
-----------------------------------------------
adjust income or loss to the last day of the calendar year, the income or
loss allocable to Excess Deferrals is the income or loss allocable to the
Participant's Elective Deferrals multiplied by the following fraction:
Participant's Excess Deferrals for the calendar year
----------------------------------------------------------------
Participant's Elective Deferrals Account without regard to any
income or loss occurring during such calendar year.
Actual Deferral Percentage Test. For each Plan Year, the Plan
-------------------------------
Administrator shall determine whether the Elective Deferrals satisfy the actual
deferral percentage ("ADP") test.
26
(a) If the average ADP for the Nonhighly Compensated Group exceeds 8%, the
Plan shall satisfy the ADP test if the average ADP for the Highly
Compensated Group does not exceed 1.25 times the average ADP of the
Nonhighly Compensated Group.
(b) If the average ADP for the Nonhighly Compensated Group equals or
exceeds 2% but does not exceed 8%, the Plan shall satisfy the ADP test
if the average ADP for the Highly Compensated Group does not exceed
the average ADP for the Nonhighly Compensated Group by more than two
percentage points.
(c) If the average ADP for the Nonhighly Compensated Group is less than
2%, the Plan shall satisfy the ADP test if the average ADP for the
Highly Compensated Group is not more than twice the average ADP for
Nonhighly Compensated Group.
Calculation of ADP. The "average ADP" for a group is the average of the
------------------
separate ADPs calculated for each Participant who is a member of that group. A
Participant's ADP for a Plan Year is the ratio of the Participant's Elective
Deferrals (including the Excess Deferrals for each Highly Compensated Employee
except to the extent that the Excess Deferrals are included in the ACP test if
the ADP test is satisfied both with and without exclusion of these Elective
Deferrals and excluding Excess Deferrals for each Nonhighly Compensated
Employee) for the Plan Year to the Employee's Testing Compensation for the Plan
Year. Each Participant's ADP shall be calculated to the nearest 100th of 1%.
For aggregated family members treated as a single Highly Compensated Employee,
the ADP of the family unit is the ADP determined by combining the Elective
Deferrals and Testing Compensation of all aggregated family members. The Plan
Administrator may determine (in a manner consistent with Treasury regulations)
the ADPs of the Participants by taking into account Employer Nonelective
Contributions or Matching Contributions, or both, made to this Plan or to any
other qualified plan maintained by the Employer, which are 100% Nonforfeitable
at all times and which are subject to the Distribution Restrictions. For
purposes of calculating the ADP test, Elective Deferrals, Employer Nonelective
Contributions and Matching Contributions must be made before the last day of the
12 month period immediately following the Plan Year to which contributions
relate. The Employer shall maintain records sufficient to demonstrate
satisfaction of the ADP test and the amount of Employer Nonelective
Contributions or Matching Contributions, if any, used in such test.
A Highly Compensated Employee's ADP shall include Elective Deferrals under
any other cash or deferred arrangement maintained by the Employer. 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.
A Nonhighly Compensated Employee's ADP shall not include Elective Deferrals
under another cash or deferred arrangement maintained by the Employer unless the
Employer treats the Cash or Deferred Arrangement under this Plan and the other
cash or deferred arrangement as a unit for coverage and discrimination purposes.
For Plan Years beginning after December 31, 1989, plans may be treated as a unit
for coverage and discrimination purposes only if they have the same Plan Year.
The Plan Administrator shall not aggregate an employee stock ownership plan
within the meaning of Code (S) 4975(e)(7) ("ESOP") (or the ESOP portion of a
plan) with a non-ESOP plan (or non-ESOP portion of a plan).
Distribution of Excess Contributions. If the Plan Administrator determines
------------------------------------
the Plan fails to satisfy the ADP test for a Plan Year, it shall distribute the
Excess Contributions, as adjusted for allocable income or loss, from the
Participant's Elective Deferrals Account no later than the last day of the
succeeding Plan Year. However, the Employer will incur an excise tax equal to
10% of the amount of Excess
27
Contributions for a Plan Year not distributed to the appropriate Highly
Compensated Employees during the first 2 1/2 months of the next Plan Year. The
Plan Administrator shall distribute to each Highly Compensated Employee his or
her respective share of the Excess Contributions. The Plan Administrator shall
determine the respective shares of Excess Contributions by starting with the
Highly Compensated Employee who has the greatest ADP, reducing his or her ADP to
the next highest ADP, then, if necessary, reducing the ADP of the Highly
Compensated Employees at the next highest ADP level (including the ADP of the
Highly Compensated Employees whose ADP the Plan Administrator already has
reduced), and continuing in this manner until the average ADP for the Highly
Compensated Group satisfies the ADP test. If a Highly Compensated Employee is
part of an aggregated family group, the Plan Administrator shall, in accordance
with the applicable Treasury regulations, shall determine each aggregated family
member's allocable hare of the Excess Contributions assigned to the family unit.
The amount of Excess Contributions to be distributed to any Highly Compensated
Employee shall be reduced by the amount of any Excess Deferrals previously
distributed to the Highly Compensated Employee for the taxable year ending in
the same Plan Year.
Determination of Allocable Income or Loss to Excess Contributions. The
-----------------------------------------------------------------
Plan Administrator shall adjust Excess Contributions for any income or loss.
The Employer shall specify in its Adoption Agreement whether income or loss
shall be adjusted to the date of distribution or adjusted to the last day of the
Plan Year.
Adjustment to the Date of Distribution. If the Employer elects to adjust
--------------------------------------
income or loss to the date of the distribution, the income or loss
allocable to the Excess Contributions is the sum of: (1) income or loss
allocable to the Participant's Elective Deferrals Account for the Plan Year
multiplied by the following fraction:
Participant's Excess Contributions for the Plan Year
----------------------------------------------------------------
Participant's Elective Deferrals Account without regard to any
income or loss occurring during such Plan Year
and (2) 10% of the amount determined under (1) multiplied by the number of
whole calendar months between the end of the Plan Year and the date of
distribution, counting the month of distribution if distribution occurs
after the 15th of such month.
Adjustment to the Last Day of the Plan Year. If the Employer elects to
-------------------------------------------
adjust income or loss to the last day of the Plan Year, the income or loss
allocable to the Excess Contributions is the income or loss allocable to
the Participant's Elective Deferrals Account for the Plan Year multiplied
by the following fraction:
Participant's Excess Contributions for the Plan Year
----------------------------------------------------------------
Participant's Elective Deferrals Account without regard to any
income or loss occurring during such Plan Year.
4.13 VOLUNTARY NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS AND MATCHING
-----------------------------------------------------------
CONTRIBUTIONS - SPECIAL DISCRIMINATION TEST. This Section shall apply only if
-------------------------------------------
the Plan is a profit sharing plan with a Cash or Deferred Arrangement, or if the
Plan permits voluntary nondeductible Employee contributions in Adoption
Agreement Section 3.06. For Plan Years beginning after December 31, 1986, the
Plan Administrator shall determine whether the Matching Contributions, if any,
and voluntary nondeductible Employee contributions described in Section 3.06, if
any, satisfy one of the following average contribution percentage ("ACP") tests:
28
(a) The ACP for the Highly Compensated Group does not exceed 1.25 times
the ACP for the Nonhighly Compensated Group; or
(b) The ACP for the Highly Compensated Group does not exceed the ACP for
the Nonhighly Compensated Group by more than two percentage points (or
the lesser amount prescribed by the multiple use limitation described
in this Section) and the ACP for the Highly Compensated Group is not
more than twice the ACP for the Nonhighly Compensated Group.
Calculation of ACP. The average contribution percentage for a group is the
------------------
average of the separate contribution percentages calculated for each Participant
who is a member of that group. A Participant's contribution percentage for a
Plan Year is the ratio of the Participant's Aggregate Contributions for the Plan
Year to the Participant's Testing Compensation for the Plan Year. Each
Participant's contribution percentage shall be calculated to the nearest 100th
of 1%. For aggregated family members treated as a single Highly Compensated
Employee, the contribution percentage of the family unit is the contribution
percentage determined by combining the Aggregate Contributions and Testing
Compensation of all aggregated family members. For purposes of calculating the
ACP test, Employee contributions shall be considered to have been made in the
Plan Year in which contributed to the Trust, and Matching Contributions and
Employer Nonelective Contributions shall be considered to have been made in the
Plan Year if made before the last day of the 12 month period immediately
following the Plan Year to which contributions relate.
The Plan Administrator, in a manner consistent with Treasury regulations,
may determine the contribution percentages of the Participants by taking into
account Employer Nonelective Contributions (other than Employer Nonelective
Contributions used to satisfy the ADP test under a Cash or Deferred Arrangement)
or Elective Deferrals, or both, made to this Plan or to any other qualified plan
maintained by the Employer. The Plan Administrator shall not include Employer
Nonelective Contributions in the ACP test unless the allocation of Employer
Nonelective Contributions is nondiscriminatory when the Plan Administrator takes
into account Employer Nonelective Contributions and Profit Sharing
Contributions, and also when the Plan Administrator takes into account only the
Profit Sharing Contributions. The Plan Administrator shall not include Elective
Deferrals in the ACP test unless the plan which includes the Elective Deferrals
satisfies the ADP test both with and without the Elective Deferrals included in
this ACP test. For Plan Years beginning after December 31, 1989, the Plan
Administrator shall not include in the ACP test any Employer Nonelective
Contributions or Elective Deferrals under another qualified plan unless that
plan has the same plan year as this Plan. The Plan Administrator shall not
include in the ACP test Matching Contributions that are forfeited because the
contributions to which they relate are Excess Deferrals, Excess Contributions,
or Excess Aggregate Contributions. The Plan Administrator shall maintain
records to demonstrate compliance with the ACP test, including the extent to
which the Plan used Employer Nonelective Contributions or Matching Contributions
to satisfy the test.
A Highly Compensated Employee's Aggregate Contributions taken into account
shall include any Matching Contributions (other than Matching Contributions used
to satisfy the ADP test under a Cash or Deferred Arrangement) and any employee
contributions made on his or her behalf to any other plan maintained by the
Employer, unless the other plan is an employee stock ownership plan within the
meaning of Code (S) 4975(e)(7) ("ESOP"). If the plans have different plan
years, the Plan Administrator shall determine the combined aggregate
contributions on the basis of the plan years ending in the same calendar year.
If the Employer treats two plans as a unit for coverage or
nondiscrimination purposes, the Employer shall combine the plans to determine
whether either plan satisfies the ACP test. This
29
aggregation rule applies to the contribution percentage determination for all
Participants, irrespective of whether a Participant is a Highly Compensated
Employee or a Nonhighly Compensated Employee. For Plan Years beginning after
December 31, 1989, an aggregation of plans under this paragraph shall not apply
to plans which have different plan years, and the Plan Administrator shall not
aggregate an ESOP (or the ESOP portion of a plan) with a non-ESOP plan (or non-
ESOP portion of a plan).
Distribution of Excess Aggregate Contributions. The Plan Administrator
----------------------------------------------
shall determine Excess Aggregate Contributions after determining Excess
Deferrals and Excess Contributions. If the Plan Administrator determines that
the Plan fails to satisfy the ACP test for a Plan Year, it must distribute the
Excess Aggregate Contributions, as adjusted for allocable income or loss, during
the next Plan Year. However, the Employer will incur an excise tax equal to 10%
of the taxable amount of Excess Aggregate Contributions for a Plan Year not
distributed to the appropriate Highly Compensated Employees during the first 2
1/2 months of that next Plan Year. The Plan Administrator shall distribute to
each Highly Compensated Employee his or her respective share of the Excess
Aggregate Contributions. The Plan Administrator shall determine the respective
shares of Excess Aggregate Contributions by starting with the Highly Compensated
Employee who has the greatest contribution percentage, reducing his or her
contribution percentage to the next highest contribution percentage, then, if
necessary, reducing the contribution percentage of the Highly Compensated
Employees at the next highest contribution percentage level (including the
contribution percentage of the Highly Compensated Employees whose contribution
percentage the Plan Administrator already has reduced), and continuing in this
manner until the ACP for the Highly Compensated Group satisfies the ACP test.
If a Highly Compensated Employee is part of an aggregated family group, the Plan
Administrator, in accordance with the applicable Treasury regulations, shall
determine each aggregated family member's allocable share of the Excess
Aggregate Contributions assigned to the family unit.
Determination of Allocable Income or Loss to Excess Aggregate
-------------------------------------------------------------
Contributions. The Plan Administrator shall adjust Excess Aggregate
-------------
Contributions for any income or loss. The Employer shall specify in Adoption
Agreement Section 4.12 whether income or loss shall be adjusted to the date of
distribution or adjusted to the last day of the Plan Year.
Adjustment to the Date of Distribution. If the Employer elects to adjust
--------------------------------------
income or loss to the date of the distribution, the income or loss
allocable to the Excess Aggregate Contributions is the sum of: (1) income
or loss allocable to the Participant's Accrued Benefit attributable to
Aggregate Contributions for the Plan Year multiplied by the following
fraction:
Participant's Excess Aggregate Contributions for the Plan Year
-----------------------------------------------------------------------
Participant's Accrued Benefit attributable to Aggregate Contributions
without regard to any income or loss occurring during such Plan Year
and (2) 10% of the amount determined under (1) multiplied by the number of
whole calendar months between the end of the Plan Year and the date of
distribution, counting the month of distribution if distribution occurs
after the 15th of such month. The Accrued Benefit attributable to
Aggregate Contributions shall mean the Accrued Benefit attributable to
voluntary nondeductible Employee contributions, Matching Contributions
(other than Matching Contributions used to satisfy the ADP test under a
Cash or Deferred Arrangement), and Elective Deferrals taken into account in
the ACP test for the Plan Year or any prior Plan Year.
Adjustment to the Last Day of the Plan Year. If the Employer elects to
-------------------------------------------
adjust income or loss to the last day of the Plan Year, the income or loss
allocable to the Excess Aggregate Contributions
30
is the income or loss allocable to the Participant's Accrued Benefit
attributable to Aggregate Contributions for the Plan Year multiplied by the
following fraction:
Participant's Excess Aggregate Contributions for the Plan Year
------------------------------------------------------------------------
Participant's Accrued Benefit attributable to Aggregate Contributions
without regard to any income or loss occurring during such Plan Year
The Accrued Benefit attributable to Aggregate Contributions shall mean the
Accrued Benefit attributable to voluntary nondeductible Employee
contributions, Matching Contributions (other than Matching Contributions
used to satisfy the ADP test under a Cash or Deferred Arrangement), and
Elective Deferrals taken into account in the ACP test for the Plan Year or
any prior Plan Year.
Characterization of Excess Aggregate Contributions. The Plan Administrator
--------------------------------------------------
shall treat a Highly Compensated Employee's allocable share of Excess Aggregate
Contributions attributable to this Plan first as attributable to his or her
voluntary nondeductible Employee contributions and then to Employer Nonelective
Contributions used in the ACP test.
Multiple Use Limitation. For Plan Years beginning after December 31, 1988,
-----------------------
if at least one Highly Compensated Employee is includable in the ADP test under
a Cash or Deferred Arrangement maintained by the Employer and in the ACP test
under this Section, the sum of the Highly Compensated Group's ADP and ACP may
not exceed the multiple use limitation.
The multiple use limitation is the sum of (a) and (b):
(a) 125% of the greater of: (1) the ADP of the Nonhighly Compensated
Group under the Cash or Deferred Arrangement; or (2) the ACP of the
Nonhighly Compensated Group for the Plan Year beginning with or within
the Plan Year of the Cash or Deferred Arrangement.
(b) 2% plus the lesser of (a)(1) or (a)(2), but no more than twice the
lesser of (a)(1) or (a)(2).
The Plan Administrator shall determine whether the Plan satisfies the
multiple use limitation after applying the ADP test to the Cash or Deferred
Arrangement and the ACP test under this Section and after making any corrective
distributions required by those tests. If the Plan Administrator determines the
Plan has failed to satisfy the multiple use limitation, the Plan Administrator
shall correct the failure by treating the excess amount as Excess Aggregate
Contributions under this Section. The multiple use limitation shall not apply
unless, prior to its application, the ADP and the ACP of the Highly Compensated
Group each exceeds 125% of the respective percentages for the Nonhighly
Compensated Group.
4.14 DEFINITIONS. For purposes of applying the ADP test in Section 4.12
-----------
and the ACP test in 4.13, the following definitions shall apply:
(a) AGGREGATE CONTRIBUTIONS shall mean Matching Contributions (other than
Matching Contributions used to satisfy the actual deferral percentage
test under a Cash or Deferred Arrangement) and voluntary and mandatory
nondeductible Employee contributions.
(b) CASH OR DEFERRED ARRANGEMENT shall mean that a Participant may elect
to have the Employer make payments on behalf of the Participant either
as Employer contributions to the Plan or to the Participant directly
in cash.
31
(c) DISTRIBUTION RESTRICTIONS shall mean that the Participant may not
receive a distribution of the specified contributions (nor earnings on
those contributions) except in the event of:
(1) the Participant's death, disability, termination of employment,
or attainment of age 59 1/2,
(2) financial hardship satisfying the requirements of Code (S) 401(k)
and the applicable Treasury regulations,
(3) a plan termination, without establishment of a successor defined
contribution plan (other than an ESOP),
(4) a sale of substantially all of the assets (within the meaning of
Code (S) 409(d)(2)) used in a trade or business, but
distributions shall only be permitted to an Employee who
continues employment with the corporation acquiring those assets,
or
(5) a sale by a corporation of its interest in a subsidiary (within
the meaning of Code (S) 409(d)(3)), but distributions shall only
be permitted to an Employee who continues employment with the
subsidiary.
For Plan Years beginning after December 31, 1988, a distribution on
account of financial hardship, as described in clause (2), shall not
include earnings on Elective Deferrals credited after the last day of
the last Plan Year beginning prior to January 1, 1989, and shall not
include Matching Contributions and Employer Nonelective Contributions
which are 100% Nonforfeitable at all times and which are subject to
the Distribution Restrictions, or any earnings on such contributions,
irrespective of when credited. A distribution described in clauses
(3), (4) or (5), if made after March 31, 1988, shall be a lump sum
distribution, as required under Code (S) 401(k)(10).
(d) ELECTIVE DEFERRALS shall mean the Employer contributions to a
qualified plan at the election of a Participant, pursuant to a Cash or
Deferred Arrangement. Elective Deferrals shall not include amounts
which have become currently available to the Participant prior to the
election nor amounts designated as nondeductible Employee
contributions at the time of deferral or contribution. Elective
Deferrals which constitute an Excess Amount and which are returned
under Section 4.10 shall not be treated as Elective Deferrals for
purposes of the ADP test under Section 4.12.
(e) EMPLOYER NONELECTIVE CONTRIBUTIONS shall mean contributions made by
the Employer which are not Elective Deferrals, which are not Matching
Contributions, and which are not Profit Sharing Contributions.
Employer Nonelective Contributions shall be 100% Nonforfeitable at all
times and shall be subject to the Distribution Restrictions. Employer
Nonelective Contributions shall not be considered to be 100%
Nonforfeitable at all times if the Participant has a 100%
Nonforfeitable interest only because of Years of Service taken into
account under a vesting schedule.
(f) EXCESS AGGREGATE CONTRIBUTIONS shall mean the amount of Aggregate
Contributions made by the Highly Compensated Employees which causes
the Plan to fail to satisfy the ACP test.
32
(g) EXCESS CONTRIBUTIONS shall mean the amount of Elective Deferrals made
by the Highly Compensated Employees which causes the Plan to fail to
satisfy the ADP test.
(h) EXCESS DEFERRALS shall mean Elective Deferrals in excess of the $7,000
Limitation, or Elective Deferrals designated by the Participant as
Excess Deferrals.
(i) HIGHLY COMPENSATED GROUP shall mean the group of Participants who are
Highly Compensated Employees for the Plan Year.
(j) MATCHING CONTRIBUTIONS shall mean contributions made by the Employer
on account of Elective Deferrals or on account of voluntary
nondeductible Employee contributions. Matching Contributions shall
also include Participant forfeitures allocated on account of such
Elective Deferrals or Employee contributions.
(k) NONHIGHLY COMPENSATED GROUP shall mean the group of Participants who
are Nonhighly Compensated Employees for the Plan Year.
(l) PARTICIPANT shall mean a Participant who is eligible to make voluntary
nondeductible Employee contributions or who is eligible to receive an
allocation of Matching Contributions if the Participant makes Elective
Deferrals, irrespective of whether the Participant actually makes
voluntary nondeductible Employee contributions or Elective Deferrals.
A Participant continues to be a Participant during a period the Plan
suspends the Participant's right to make voluntary nondeductible
Employee contributions or Elective Deferrals following a hardship
distribution.
(m) PROFIT SHARING CONTRIBUTIONS shall mean the Employer contributions
made under the Plan without regard to a Cash or Deferred Arrangement.
(n) TESTING COMPENSATION shall have the meaning assigned to it by Section
1.71, as modified by the Employer's election in Adoption Agreement
Section 4.14(n).
* * * END OF ARTICLE 4 * * *
33
ARTICLE V
PARTICIPANT VESTING
5.01 VESTING UPON RETIREMENT. Upon attainment of the Normal Retirement
-----------------------
Date, a Participant shall be 100% vested in his or her Accrued Benefit.
5.02 VESTING UPON DISABILITY. The Employer shall specify in its Adoption
-----------------------
Agreement the Nonforfeitable percentage of a Participant's Employer
Contributions Account in the event of the disability of the Participant. The
Plan shall consider a Participant disabled on the date the Plan Administrator
determines that the Participant, because of a physical or mental disability, is
unable to engage in any substantial gainful activity and that the disability can
be expected to result in death or which has lasted or can be expected to last
for a continuous period of not less than 12 months. The Plan Administrator may
require a Participant to submit to a physical examination in order to confirm
disability. The Plan Administrator shall apply the provisions of this Section
in a nondiscriminatory, consistent and uniform manner.
5.03 VESTING UPON DEATH. The Employer shall specify in its Adoption
------------------
Agreement the Nonforfeitable percentage of a Participant's Employer
Contributions Account in the event of the death of the Participant.
5.04 EMPLOYEE CONTRIBUTION - FORFEITABILITY. A Participant's Employee
--------------------------------------
Contributions Account shall be, at all times, 100% Nonforfeitable.
5.05 VESTING SCHEDULE. Upon separation from service for reasons other than
----------------
attainment of the Normal Retirement Date, Disability, or Death, the
Nonforfeitable percentage of a Participant's Employer Contributions Account
shall equal the Participant's Employer Contributions Account multiplied by the
percentage corresponding to the Participant's Years of Service with the Employer
under the vesting schedule elected by the Employer in the Adoption Agreement,
such vesting schedule to be effective with respect to a Participant who earns
one Hour of Service in a Plan Year beginning after December 31, 1988. When the
Plan Administrator determines this Plan is a Top Heavy Plan, the Plan
Administrator shall calculate a Participant's vesting percentage in accordance
with the top heavy vesting schedule elected by the Employer in the Adoption
Agreement for the Plan Years specified in the Adoption Agreement.
5.06 YEAR OF SERVICE - VESTING. The Plan Administrator shall determine a
-------------------------
Participant's Years of Service for purposes of vesting in accordance with
Section 5.06 of the Adoption Agreement unless the Employer elected the elapsed
time method under Adoption Agreement Section 1.37. If the Employer elected the
elapsed time method, the Plan Administrator shall credit an Employee's Years of
Service for purposes of vesting in accordance with the elapsed time provisions
of Section 2.02.
For the sole purpose of determining the Nonforfeitable percentage of a
Participant's Employer Contributions Account which accrued for the Participant's
benefit prior to a Forfeiture Break in Service, the Plan Administrator shall
disregard any Year of Service after the Participant first incurs a Forfeiture
Break in Service. The Plan Administrator shall exclude Plan Years prior to a
Break in Service (as defined in Section 5.07) if the number of consecutive
Breaks in Service equals or exceeds the greater of five or the aggregate number
of the Years of Service prior to the Break provided the Participant is 0% vested
in his or her Accrued Benefit derived from Employer contributions at the time
the Participant has a Break in Service. The aggregate number of Years of
Service before a Break in Service does not include any
34
Years of Service not required to be taken into account under this exception by
reason of any prior Break in Service.
5.07 BREAK IN SERVICE - VESTING. For purposes of determining Years of
--------------------------
Service under this Article, a Participant incurs a "Break in Service" if during
any Plan Year the Participant does not complete more than 500 Hours of Service
with the Employer.
5.08 AMENDMENT TO VESTING SCHEDULE. Though the Employer reserves the right
-----------------------------
to amend the vesting schedule at any time, the Plan Administrator shall not
apply the amended vesting schedule to reduce the Nonforfeitable percentage of
any Participant's Employer Contributions Account (determined as of the later of
the date the Employer adopts the amendment, or the date the amendment becomes
effective) to a percentage less than the Nonforfeitable percentage computed
under the Plan without regard to the amendment.
If the Employer makes a permissible amendment to the vesting schedule, each
Participant who has performed at least one Hour of Service in any Plan Year
beginning after December 31, 1988 and who has at least three Years of Service
with the Employer may elect to have the Nonforfeitable percentage of his or her
Employer Contributions Account computed under the Plan without regard to the
vesting schedule amendment. For Participants who do not have at least one Hour
of Service in any Plan Year beginning after December 31, 1988, the election
described in the preceding sentence applies only to Participants having at least
five Years of Service with the Employer. The Participant shall file the
election with the Plan Administrator within 60 days after the latest of the
following three dates: (a) the date the Employer adopts the amendment; (b) the
date the amendment is effective; or (c) the date the Participant receives
written notice of the amendment. The Plan Administrator, as soon as
administratively feasible, shall forward a copy of any amendment to the vesting
schedule to each affected Participant, together with an explanation of the
effect of the amendment, the appropriate form upon which the Participant may
make an election to remain under the vesting schedule provided under the Plan
prior to the amendment and notice of the time within which the Participant shall
make an election to remain under the prior vesting schedule. For purposes of
this Section, an amendment to the vesting schedule includes any Plan amendment
which directly or indirectly affects the computation of the Nonforfeitable
percentage of a Participant's Employer Contributions Account.
5.09 DISTRIBUTIONS TO PARTIALLY VESTED PARTICIPANTS. A partially vested
----------------------------------------------
Participant is a Participant whose Nonforfeitable percentage determined under
this Article is less than 100%. If a partially vested Participant receives a
distribution of his or her entire Nonforfeitable Accrued Benefit before
incurring a Forfeiture Break in Service, the distribution shall be considered to
be a "cash-out distribution" which shall result in a forfeiture of the nonvested
portion of the Participant's Employer Contributions Account in accordance with
Section 5.11.
5.10 DEEMED DISTRIBUTIONS TO 0% VESTED PARTICIPANTS. A 0% vested
----------------------------------------------
Participant is a Participant whose Employer Contributions Account is entirely
forfeitable at the time of his or her separation from Service. The Plan
Administrator shall treat the 0% vested Participant as having received a
distribution on the date of the Participant's separation from Service or, if the
Participant's Employer Contributions Account will receive an allocation of
Employer contributions for the Plan Year in which the Participant separates from
Service, on the last day of that Plan Year.
5.11 FORFEITURE OCCURS. A Participant's forfeiture, if any, of his or her
-----------------
Employer Contributions Account occurs under the Plan on the earlier of:
35
(a) The last day of the Plan Year in which the Participant first incurs a
Forfeiture Break in Service; or
(b) The date the Participant receives a cash-out distribution.
The Plan Administrator shall determine the percentage of a Participant's
forfeiture, if any, under this Section solely by reference to the vesting
schedule of Section 5.05. A Participant shall not forfeit any portion of his or
her Accrued Benefit for any other reason or cause except as provided under
Section 8.06 (unclaimed Account procedure). No forfeiture shall occur solely as
a result of a Participant's withdrawal of voluntary Employee contributions.
5.12 RESTORATION OF FORFEITED ACCRUED BENEFIT. A partially vested
----------------------------------------
Participant who is reemployed by the Employer after receiving a cash-out
distribution may repay the Trustee the amount of the cash-out distribution
attributable to Employer contributions, unless the Participant no longer has a
right to make restoration. If a partially vested Participant makes the
repayment, the Plan Administrator shall restore such Participant's Employer
Contributions Account to the same dollar amount in such Account on the Valuation
Date immediately preceding the date of the cash-out distribution, unadjusted for
any gains or losses occurring subsequent to that Valuation Date. Restoration of
the Participant's Employer Contributions Account includes restoration of all
Code (S) 411(d)(6) protected benefits with respect to that restored Employer
Contributions Account in accordance with applicable Treasury regulations. The
Plan Administrator shall not restore a reemployed Participant's Employer
Contributions Account under this paragraph if:
(a) five years have elapsed since the Participant's first Reemployment
Date following the cash-out distribution; or
(b) the Participant has incurred a Forfeiture Break in Service. This
condition also applies if the Participant makes repayment within the
Plan Year in which his or her Forfeiture Break in Service occurs and
that Forfeiture Break in Service would result in a complete forfeiture
of the amount the Plan Administrator otherwise would restore.
For purposes of applying the restoration provisions of this Section, the Plan
Administrator shall treat the 0% vested Participant as repaying his or her
"cash-out distribution" on the first date of reemployment with the Employer.
5.13 TIME AND METHOD OF RESTORATION. If neither of the two conditions
------------------------------
preventing restoration of the Participant's Employer Contributions Account
applies under Section 5.12, the Plan Administrator shall restore the
Participant's Employer Contributions Account as of the Plan Year Accounting Date
coincident with or immediately following the repayment. If a Participant or
Beneficiary who has incurred a forfeiture of his or her Accrued Benefit under
the provisions of Section 8.06 (unclaimed Account procedure) makes a claim at
any time for his or her forfeited Accrued Benefit, the Plan Administrator shall
restore the Participant's or Beneficiary's forfeited Accrued Benefit to the same
dollar amount as the dollar amount of the Accrued Benefit forfeited, unadjusted
for any gains or losses occurring subsequent to the date of the forfeiture. The
Plan Administrator shall make the restoration during the Plan Year in which the
Participant or Beneficiary makes the claim. To restore the Participant's or
Beneficiary's Employer Contributions Account or Accrued Benefit, the Plan
Administrator shall allocate to the Participant's Accounts from the following
sources:
(a) first, the amount, if any, of Participant forfeitures arising during
the Plan Year;
36
(b) second, the amount, if any, of the Trust Fund net income or gain for
the Plan Year; and
(c) third, the Employer contribution for the Plan Year to the extent made
under a discretionary formula.
To the extent the above amounts are insufficient to enable the Plan
Administrator to make the required restoration, the Employer shall contribute,
without regard to any requirement or condition of Section 3.01, the additional
amount necessary to enable the Plan Administrator to make the required
restoration. The Plan Administrator shall not take into account the allocation
under this Section in applying the Code (S) 415 limitations on allocations under
Article IV.
* * * END OF ARTICLE 5 * * *
37
ARTICLE VI
DISTRIBUTIONS
6.01 DISTRIBUTIONS NOT EXCEEDING $3,500. The Plan Administrator shall
----------------------------------
direct the Trustee to distribute the Participant's Accrued Benefit in the form
of a lump sum, not later than 60 days after the close of the Plan Year in which
the Participant's employment terminates for any reason, including death,
disability, or attainment of the Normal Retirement Date, if the Participant's
Nonforfeitable Accrued Benefit (at the time of the distribution) does not exceed
$3,500. If the Participant's Nonforfeitable Accrued Benefit, at the time of any
distribution, exceeds $3,500, the Plan Administrator shall treat a distribution
as exceeding $3,500 for purposes of all subsequent Plan distributions to the
Participant.
6.02 DISTRIBUTIONS EXCEEDING $3,500. The Trustee shall distribute the
------------------------------
Participant's Accrued Benefit in the form and at the time elected by the
Participant, pursuant to Section 6.07. If the Participant or the Beneficiary
does not elect in writing to a time or method of payment in accordance with
Section 6.07, the Plan Administrator shall direct the Trustee to commence
distribution of a Participant's Nonforfeitable Accrued Benefit (after reduction
for any security interest the Plan has against that Nonforfeitable Accrued
Benefit by reason of an outstanding Participant loan) in accordance with this
Section, not later than 60 days after the close of the Plan Year in which the
Participant's employment terminates for any reason, including death, disability,
or attainment of the Normal Retirement Date. Notwithstanding the immediately
preceding sentence, a Participant (or the Participant's Beneficiary, if the
Participant is deceased) shall consent, in writing, within the 90 day period
ending on the annuity starting date (see Section 6.07), to any distribution if
the Participant's Nonforfeitable Accrued Benefit, at the time of the
distribution exceeds $3,500, and the Participant has not attained the later of
Normal Retirement Date or age 62. Furthermore, the Participant's spouse also
shall consent, in writing, to any distribution for which Section 6.08 requires
the spouse's consent. The failure of a Participant to consent to a distribution
of any part of his or her Nonforfeitable Accrued Benefit which could be
distributed under the Plan before attaining the later of Normal Retirement Date
or age 62 shall be deemed to be an election to defer distribution of the
Participant's Nonforfeitable Accrued Benefit until the time for distribution
specified in the immediately following paragraph.
Unless the participant elects otherwise, the Plan Administrator shall
direct the Trustee to distribute the Participant's Nonforfeitable Accrued
Benefit in a lump sum (or the annuity form of distribution, if required under
Section 6.08) not later than the 60th day after the close of the Plan Year in
which occurs the latest of the following events:
(a) the Participant attains age 65 (or Normal Retirement Date, if
earlier);
(b) the 10th anniversary of the first day of the Plan Year in which the
Participant commenced participation in the plan; or,
(c) the Participant terminates service with the Employer.
Notwithstanding the preceding provisions of this Section, the Plan Administrator
shall direct the Trustee to distribute any amount required to be distributed
under Section 6.03 (or under Code (S) 415) prior to the time described in this
Section.
Distributions Upon Death Which Exceed $3,500. Upon the death of the
--------------------------------------------
Participant, the Plan Administrator shall direct the Trustee to distribute the
Participant's Nonforfeitable Accrued Benefit
38
remaining in the Trust at the time of the Participant's death to the
Participant's Beneficiary in the form and at the time elected by the Beneficiary
in accordance with Section 6.07. The Beneficiary's election is subject to any
restrictions designated in writing by the Participant and not revoked as of the
date of the Participant's death. In the absence of an election by the
Beneficiary, the Plan Administrator shall direct the Trustee to distribute the
Participant's Accrued Benefit in a lump sum (or the annuity form of
distribution, if required under Section 6.08), as soon as administratively
practicable following the Participant's death (or the date on which the Plan
Administrator receives notification of, or otherwise confirms the Participant's
death), but not later than 60 days after the close of the Plan Year in which the
Participant's death or notification occurred.
6.03 DISTRIBUTIONS ON ACCOUNT OF ATTAINING AGE 70 1/2. The provisions in
------------------------------------------------
this Section take precedence over all other provisions in this Article. The
Plan Administrator shall direct the Trustee to distribute under this Section not
later than the Participant's Required Beginning Date. Notwithstanding the
immediately preceding sentence, the Plan Administrator shall direct the Trustee
to distribute a Participant's Nonforfeitable Accrued Benefit in accordance with
a properly executed transitional election (as provided in the last paragraph of
this Section).
Required Beginning Date. Required Beginning Date shall mean the April 1
-----------------------
following the close of the calendar year in which the Participant attains age 70
1/2. However, if the Participant, prior to separating from Service, attained
age 70 1/2 before January 1, 1988, and, for the five Plan Year period ending in
the calendar year in which the Participant attained age 70 1/2 and for all
subsequent years, the Participant did not own more than 5% of the Employer, the
Required Beginning Date shall be the April 1 following the close of the calendar
year in which the Participant separates from Service or, if earlier, the April 1
following the close of the calendar year in which the Participant owns more than
5% of the Employer. Furthermore, if a Participant who did not own more than 5%
of the Employer attained age 70 1/2 during 1988 and did not separate from
Service prior to January 1, 1989, the Participant's Required Beginning Date
shall be April 1, 1990. A mandatory distribution at the Participant's Required
Beginning Date shall be in lump sum (or the annuity form of distribution, if
required under Section 6.08) unless the Participant makes a valid election to
receive an alternative form of distribution.
Minimum Distribution Requirements for Participants. The Trustee shall not
--------------------------------------------------
distribute the Participant's Nonforfeitable Accrued Benefit under a method of
distribution which, as of the Required Beginning Date, does not satisfy the
minimum distribution requirements under Code (S) 401(a)(9) and the applicable
Treasury regulations. The minimum distribution for a calendar year equals the
participant's Nonforfeitable Accrued Benefit as of the Valuation Date preceding
the beginning of the calendar year divided by the Participant's life expectancy
or, if applicable, the joint and last survivor expectancy of the Participant and
his or her designated Beneficiary (as determined under Article VIII, subject to
the requirements of the Code (S) 401(a)(9) regulations). The Plan Administrator
shall increase the Participant's Accrued Benefit, as determined on the Valuation
Date, for contributions or forfeitures allocated after the Valuation Date and by
the December 31 of the calendar year in which the Valuation Date falls, and
shall decrease the Participant's Accrued Benefit by distributions made after the
Valuation Date and by the December 31 of the calendar year in which the
Valuation Date falls.
In computing a minimum distribution, the Plan Administrator shall use the
unisex life expectancy multiples under Treas. Reg. (S) 1.72-9. Unless otherwise
requested by the Participant, the Plan Administrator shall compute minimum
distributions subsequent to the first required minimum distribution without
recalculating the applicable life expectancy, reducing by one for each calendar
year which has elapsed since the date life expectancy was calculated. Upon the
Participant's written request, the Plan Administrator shall compute minimum
distributions subsequent to the first required minimum distribution by
redetermining the applicable life expectancy of the Participant and a spouse
beneficiary. However, the
39
Plan Administrator may not redetermine the joint life and last survivor
expectancy of the Participant and a nonspouse designated Beneficiary in a manner
which takes into account any adjustment to a life expectancy other than the
Participant's life expectancy.
If the Participant's spouse is not the Participant's sole designated
Beneficiary, a method of distribution to the Participant shall not provide more
than incidental benefits to the Beneficiary. For Plan Years beginning after
December 31, 1988, the Plan shall satisfy the minimum distribution incidental
benefit ("MDIB") requirement in accordance with the Treasury regulations issued
under Code (S) 401(a)(9) for distributions made on or after the Participant's
Required Beginning Date and before the Participant's death. To satisfy the MDIB
requirement, the Plan Administrator shall compute the minimum distribution
required by this Section by substituting the applicable MDIB divisor for the
applicable life expectancy factor, if the MDIB divisor is a lesser number.
Following the Participant's death, the Plan Administrator shall compute the
minimum distribution required by this Section solely on the basis of the
applicable life expectancy factor and shall disregard the MDIB factor. For Plan
Years beginning prior to January 1, 1989, the Plan satisfies the incidental
benefits requirement if the distributions to the Participant satisfied the MDIB
requirement, or if the present value of the retirement benefits distributable
solely to the Participant is greater than 50% of the present value of the total
benefits distributable to the Participant and his or her Beneficiaries. The
Plan Administrator shall determine whether benefits to the Beneficiary are
incidental as of the date the Trustee is to commence payment of the retirement
benefits to the Participant, or as of any date the Trustee redetermines the
distribution period to the Participant.
The first minimum distribution is due by the Participant's Required
Beginning Date. The minimum distribution for each subsequent distribution
calendar year, including the calendar year in which the participant's Required
Beginning Date falls, is due by December 31 of that year. If the Participant
receives a distribution in the form of a Nontransferable Annuity Contract, the
distribution satisfies this Section if the contract complies with the
requirements of Code (S) 401(a)(9) and the applicable Treasury regulations.
Minimum Distribution Requirements for Beneficiaries. The method of
---------------------------------------------------
distribution to the Participant's Beneficiary shall satisfy Code (S) 401(a)(9)
and the applicable Treasury regulations. If the Participant's death occurs
after his or her Required Beginning Date (or if earlier, the date an irrevocable
annuity commences to the Participant), the distribution period to the
Beneficiary shall not exceed the distribution period which had commenced for the
Participant. If the Participant's death occurs prior to his or her Required
Beginning Date (or the commencement of an irrevocable annuity), the method of
distribution to the Beneficiary shall provide for distribution to the
Beneficiary over a period not exceeding:
(a) 5 years after the date of the Participant's death; or
(b) the designated Beneficiary's life expectancy, if the Beneficiary is a
designated Beneficiary.
The Plan Administrator shall not direct distribution of the Participant's
Nonforfeitable Accrued Benefit over a period described in clause (b) unless the
Trustee shall commence distribution to the designated Beneficiary not later than
the December 31 following the close of the calendar year in which the
Participant's death occurred. If the designated Beneficiary is the
Participant's surviving spouse, the Trustee may delay distribution until the
December 31 of the calendar year in which the Participant would have attained
age 70 1/2, if later. If the surviving spouse dies after the Participant but
before distributions commence to the surviving spouse, the provisions of this
Section (other than the immediately preceding sentence) shall be applied as if
the surviving spouse were the Participant. If the Trustee distributes in
accordance with clause (b), the minimum distribution for a calendar year equals
the Participant's Nonforfeitable Accrued Benefit as of the latest Valuation Date
preceding the beginning of the calendar
40
year divided by the designated Beneficiary's life expectancy. The Plan
Administrator shall use the unisex life expectancy multiples under Treas. Reg.
(S) 1.72-9 for purposes of applying this paragraph. Upon the written request of
the Participant or of the Participant's surviving spouse, the Plan Administrator
shall recalculate the life expectancy of the Participant's surviving spouse not
more frequently than annually but shall not recalculate the life expectancy of a
nonspouse designated Beneficiary. The Plan Administrator shall apply this
paragraph by treating any amount paid to the Participant's child, which becomes
distributable to the Participant's surviving spouse upon the child's attaining
the age of majority, as paid to the Participant's surviving spouse. Upon the
Beneficiary's written request, the Plan Administrator shall direct the Trustee
to accelerate distribution of all, or any portion, of the Participant's unpaid
Accrued Benefit, as soon as administratively practicable following the request.
Transitional Elections. If the Participant (or Beneficiary) signed a
----------------------
written distribution designation prior to January 1, 1984, the Plan
Administrator shall distribute the Participant's Nonforfeitable Accrued Benefit
in accordance with that designation, subject however, to the requirements, if
applicable, of Section 6.08. The Plan Administrator shall not comply with a
pre-1984 distribution designation if any of the following applies: (a) the
method of distribution would have disqualified the Plan under Code (S) 401(a)(9)
as in effect on December 31, 1983; (b) the Participant did not have an Accrued
Benefit as of December 31, 1983; (c) the distribution designation does not
specify the timing and form of the distribution and the death Beneficiaries (in
order of priority); (d) the substitution of a Beneficiary modifies the
distribution period; or (e) the Participant (or Beneficiary) modifies or revokes
the distribution designation. In the event of a revocation, the Plan shall
distribute, not later than December 31 of the calendar year following the year
of revocation, the amount which the Participant would have received under this
Section if the election had not been in effect or, if the Beneficiary revokes
the election, the amount which the Beneficiary would have received under this
Section if the election had not been in effect. The Plan Administrator shall
apply this Section to rollovers and transfers in accordance with the Code (S)
401(a)(9) regulations.
6.04 DISTRIBUTIONS UNDER DOMESTIC RELATIONS ORDERS. Nothing contained in
---------------------------------------------
this Plan shall prevent the Trustee, in accordance with the direction of the
Plan Administrator, from complying with the provisions of a qualified domestic
relations order (as defined in Code (S) 414(p)). The Employer shall specify in
the Adoption Agreement whether the Plan permits distribution to an alternate
payee under a qualified domestic relations order at any time, irrespective of
whether the Participant has attained the earliest retirement age (as defined
under Code (S) 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 or permits
an agreement between the Plan and the alternate payee to authorize an earlier
distribution; and (b) if the present value of the alternate payee's benefits
under the Plan exceeds $3,500 and the order requires, the alternate payee
consents to any distribution occurring prior to the Participant's attainment of
the earliest retirement age. Nothing in this Section shall be construed to
permit a Participant to receive a distribution at a time otherwise not permitted
under the Plan, nor does it permit the alternate payee to receive a form of
distribution not permitted under the Plan.
The Plan Administrator shall establish reasonable procedures to determine
the qualified status of a domestic relations order. Upon receiving a domestic
relations order, the Plan Administrator promptly shall 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 Plan Administrator shall determine the qualified status of
the order and shall notify the Participant and each alternate payee, in writing,
of its determination. The Plan Administrator shall provide notice under this
paragraph by mailing to the individual's address specified in the domestic
relations order, or in a manner consistent with Department of Labor regulations.
41
If any portion of the participant's Nonforfeitable Accrued Benefit is
distributable during the period the Plan Administrator is making its
determination of the qualified status of the domestic relations order, the Plan
Administrator shall make a separate accounting of the amounts distributable. If
the Plan Administrator determines the order is a qualified domestic relations
order within 18 months following receipt of the order, the Plan Administrator
shall direct the Trustee to distribute the distributable amounts in accordance
with the order. If the Plan Administrator does not make its determination of
the qualified status of the order within the 18 months following receipt of the
order, the Plan Administrator shall direct the Trustee to distribute the
distributable amounts in the manner the Plan would distribute if the order did
not exist and shall apply the order prospectively if the Plan Administrator
later determines the order is a qualified domestic relations order.
If not prohibited by the provisions of the qualified domestic relations
order, the Plan Administrator may direct the Trustee to invest any partitioned
amount in a segregated Account and to invest the account in federally insured,
interest-bearing savings accounts or time deposits (or a combination of both),
or in other fixed income investments. The Trustee shall make any distributions
required under this Section by separate benefit checks or other separate
distribution to the alternate payees.
6.05 IN-SERVICE DISTRIBUTIONS. The Employer shall specify in the Adoption
------------------------
Agreement the extent to which a Participant may receive a distribution prior to
termination of employment with the Employer. A Participant shall make an
election under this Section on a form prescribed by the Plan Administrator at
any time during the Plan Year for which the election is to be effective. In the
written election, the Participant shall specify the dollar amount desired to be
distributed. The Trustee shall distribute to a Participant in accordance with
such an election under this Section within the 90 day period (or as soon as
administratively practicable) after the Participant files the written election
with the Trustee.
Hardship. Prior to the Participant's termination of employment, the
--------
Participant may request a distribution from his or her Nonforfeitable Accrued
Benefit in an amount necessary to satisfy a hardship if the Plan is a profit
sharing plan. If the Plan is a profit sharing plan with a Cash or Deferred
Arrangement, a Participant may only withdraw his or her Elective Deferrals and
earnings accrued prior to December 31, 1988 on Elective Deferrals if (1) the
distribution is made on account of an immediate and heavy financial need of the
Participant and (2) the distribution is necessary to satisfy the financial need.
A distribution shall be considered necessary to satisfy the immediate and
heavy financial need of the Participant only if the distribution is made on
account of any of the following:
(a) medical expenses;
(b) the purchase (excluding mortgage payments) of the Participant's
principal residence;
(c) post-secondary education tuition and related expenses for the next 12
months of the Participant or of the Participant's spouse, children, or
dependents;
(d) to prevent the eviction of the Participant from his or her principal
residence or the foreclosure on the mortgage of the Participant's
principal residence;
(e) funeral expenses of the Participant's family member;
(f) the Participant's disability; or
42
(g) other event the Commissioner of the Internal Revenue Service
determines is a hardship.
The distribution shall be considered necessary to satisfy the financial
need if the Participant first satisfies the need from other resources that are
reasonably available to the Participant. A distribution shall be considered
necessary to satisfy the need if the Employer reasonably relies upon the
Participant's representation that he cannot satisfy the financial need (a) with
reimbursement or compensation from insurance which covers the event giving rise
to the hardship, (b) with assets which the Participant could liquidate, (c) by
ceasing all contributions to the Plan, (d) with distributions or nontaxable
loans from any other plan in which he or she participates, and (e) by borrowing
from commercial sources on reasonable commercial terms. The amount of hardship
distribution permitted under this section may include amounts necessary to pay
any federal, state, or local income taxes or penalties reasonably anticipated to
result from the distribution. A need cannot reasonably be relieved by one of
the actions listed is the fourth paragraph of this Section if the effect would
be to increase the amount of the need within the meaning of the final Code (S)
401(k) Treasury regulations.
If the Employer elects the safe harbor hardship provisions in the Adoption
Agreement, any hardship distribution from the Plan shall be deemed to meet the
requirement that the distribution be necessary to satisfy the financial need,
and the following requirements shall apply:
(a) the distribution shall not exceed the amount of the immediate and
heavy financial need of the Participant;
(b) the Participant shall obtain all distributions (other than the
hardship distribution) and all nontaxable loans available under all
qualified plans of the Employer before receiving a hardship
distribution;
(c) the Participant's Elective Deferrals and any Employee contributions to
all plans of the Employer shall be suspended for 12 months after the
Participant receives the hardship distribution; and
(d) the Participant's Elective Deferrals for the calendar year immediately
following the calendar year of the hardship distribution shall equal
the $7,000 Limitation less the amount of the Participant's Elective
Deferrals for the calendar year in which the Participant received the
hardship distribution.
The Plan Administrator shall direct the Trustee to make the hardship
distribution as soon as administratively practicable after the Participant makes
a valid request for the hardship distribution. If the Plan Administrator denies
the request for a hardship distribution, such denial shall be subject to the
provisions of Section 8.11.
6.06 DISTRIBUTION OF VOLUNTARY EMPLOYEE CONTRIBUTIONS. Upon written
------------------------------------------------
request from the Participant, the Trustee shall distribute all or part of the
value of the Participant's Accrued Benefit derived from voluntary Employee
contributions (deductible or nondeductible) described in Article III. A
distribution of voluntary Employee contributions (deductible or nondeductible)
shall comply with the annuity distribution requirements described in this
Article if those requirements are applicable to the Plan. A Participant may not
exercise the right to a distribution of voluntary Employee contributions more
than once during any Plan Year.
6.07 DISTRIBUTION METHODS, CONSENTS, AND ELECTION. Subject to the annuity
--------------------------------------------
distribution requirements, if any, prescribed by Section 6.08 and any
restrictions prescribed by Section 6.03, a
43
Participant or Beneficiary may elect distribution in accordance with the methods
elected by the Employer in its Adoption Agreement commencing within a reasonable
period of time on or after 60 days following the end of the Plan Year in which
the Participant terminated employment with the Employer. The distribution
options permitted under this Section are available only if the present value of
the Participant Nonforfeitable Accrued Benefit, at the time of the distribution
to the Participant, exceeds $3,500.
To facilitate distributions under this Article VI, the Plan Administrator
may direct the Trustee to segregate all or any part of the Participant's Accrued
Benefit in a segregated investment Account. The Trustee shall invest the
Participant's segregated investment Account in Federally insured interest
bearing savings accounts or time deposits (or a combination of both), or in
other fixed income investments. The Participant or Beneficiary, at any time,
may elect to accelerate the distribution of all, or any portion, of the
Participant's unpaid Nonforfeitable Accrued Benefit, subject to the requirements
of Section 6.08.
Not earlier than 90 and not later than 30 days before the Participant's
annuity starting date, the Plan Administrator shall provide a benefit notice to
a Participant who is eligible to make an election or required to consent under
this Article. For purposes of this Article, the term "annuity starting date"
means the first day of the first period for which the Plan pays an amount as an
annuity or in any other form. The benefit notice shall explain the optional
methods of distribution from the Plan, including the material features and
relative values of those methods, and the Participant's right to defer
distribution until he attains age 70 1/2. If a distribution is one to which
Code (S)(S) 401(a)(11) and 417 do not apply, such distribution may commence less
than 30 days after the notice required under Treas. Reg. (S) 1.411(a)-11(c) is
given, provided that:
(a) the Plan Administrator clearly informs the Participant that the
Participant has a right to a period of at least 30 days after
receiving the notice to consider the decision of whether or not to
elect a distribution (and, if applicable, a particular distribution
option), and
(b) the Participant, after receiving the notice, affirmatively elects a
distribution.
If a Participant or Beneficiary makes an election under this Section, the
Plan Administrator shall direct the Trustee to distribute the Participant's
Nonforfeitable Accrued Benefit in accordance with that election. The
Participant or Beneficiary shall make an election under this Section by filing
his election form with the Plan Administrator at any time before the Trustee
otherwise would distribute a Participant's Accrued Benefit in accordance with
the requirements of this Article.
6.08 ANNUITY DISTRIBUTIONS TO PARTICIPANTS AND SURVIVING SPOUSES. The
-----------------------------------------------------------
annuity distribution provisions of Sections 6.09, 6.10, 6.11, 6.12, and 6.13
shall apply to all Participants other than Participants in a profit sharing plan
(or a profit sharing plan with a Cash or Deferred Arrangement) to which the
exception in the immediately following paragraph applies, Participants whose
Nonforfeitable Accrued Benefit does not exceed $3,500, and Participants who have
not been credited with at least one Hour of Service after August 23, 1984. A
Participant's Nonforfeitable Accrued Benefit which does not exceed $3,500 shall
be distributed in accordance with Section 6.01. For purposes of applying the
annuity distribution provisions of this Article, the Plan Administrator shall
treat a former spouse as the Participant's spouse or surviving spouse to the
extent provided under a qualified domestic relations order described in Section
6.04. The annuity distribution provisions shall apply separately to the portion
of the Participant's Nonforfeitable Accrued Benefit subject to the qualified
domestic relations order and to the portion of the Participant's Nonforfeitable
Accrued Benefit not subject to that order.
Profit Sharing Plan Exception. If the Plan is a profit sharing plan (or a
-----------------------------
profit sharing plan with a Cash or Deferred Arrangement), and the Employer
elects in the Adoption Agreement not to have the
44
annuity distribution provisions apply, Sections 6.09, 6.10, 6.11, 6.12, and 6.13
shall not apply to any Participant in the Plan except to:
(a) a Participant with respect to whom the Plan is a direct or indirect
transferee from a plan subject to the Code (S) 417 requirements, and
the Plan received the transfer after December 31, 1984, unless the
transfer is an elective transfer;
(b) a Participant who elects a life annuity distribution; and
(c) a Participant whose benefits under a defined benefit plan maintained
by the Employer are offset by benefits provided under this Plan.
Waiver. If the Participant has elected to waive the qualified joint and
------
survivor annuity or the preretirement survivor annuity in accordance with
Section 6.12 or Section 6.13, the Plan Administrator shall direct the Trustee to
distribute the Participant's Nonforfeitable Accrued Benefit in accordance with
Section 6.02.
6.09 JOINT AND SURVIVOR ANNUITY. The Plan Administrator shall direct the
--------------------------
Trustee to distribute a married or unmarried Participant's Nonforfeitable
Accrued Benefit in the form of a qualified joint and survivor annuity, unless
the Participant makes a valid waiver election (as described in Section 6.12)
within the 90 day period ending on the annuity starting date. If, as of the
annuity starting date, the Participant is married, a qualified joint and
survivor annuity shall mean an immediate annuity which is purchasable with the
Participant's Nonforfeitable Accrued Benefit and which provides a life annuity
for the Participant and a survivor annuity payable for the remaining life of the
Participant's surviving spouse equal to 50% of the amount of the annuity payable
during the life of the Participant. If, as of the annuity starting date, the
Participant is not married, a qualified joint and survivor annuity shall mean an
immediate life annuity for the Participant which is purchasable with the
Participant's Nonforfeitable Accrued Benefit.
6.10 PRERETIREMENT SURVIVOR ANNUITY. If a married Participant dies prior
------------------------------
to the annuity starting date, the Plan Administrator shall direct the Trustee to
distribute a portion of the Participant's Nonforfeitable Accrued Benefit to the
Participant's surviving spouse in the form of a preretirement survivor annuity,
unless the Participant has a valid waiver election (as described in Section
6.13) in effect, or unless the Participant and the spouse were not married
throughout the one year period ending on the date of the Participant's death. A
preretirement survivor annuity shall mean an annuity which is purchasable with
50% of the Participant's Nonforfeitable Accrued Benefit (determined as of the
date of the Participant's death) and which is payable for the life of the
Participant's surviving spouse. The value of the preretirement survivor annuity
shall be attributable to Employer contributions and to Employee contributions in
the same proportion as the Participant's Nonforfeitable Accrued Benefit shall be
attributable to those contributions. The portion of the Participant's
Nonforfeitable Accrued Benefit not payable under this paragraph shall be payable
to the Participant's Beneficiary in accordance with the other provisions of this
Article VI. If the present value of the preretirement survivor annuity does not
exceed $3,500, the Plan Administrator, on or before the annuity starting date,
shall direct the Trustee to make a lump sum distribution to the Participant's
surviving spouse, in lieu of a preretirement survivor annuity, in accordance
with Section 6.01.
6.11 SURVIVING SPOUSE ELECTIONS. If the present value of the preretirement
--------------------------
survivor annuity exceeds $3,500, the Participant's surviving spouse shall be
entitled to elect to have the Trustee commence distribution of the preretirement
survivor annuity at any time following the date of the Participant's death, but
not later than the mandatory distribution periods. The surviving spouse shall
be entitled to elect any distribution method allowed under Section 6.07 of the
Employer's Adoption Agreement in lieu of the
45
preretirement survivor annuity. In the absence of an election by the surviving
spouse, the Plan Administrator shall direct the Trustee to distribute the
preretirement survivor annuity 60 days following the close of the Plan Year in
accordance with Section 6.02.
6.12 WAIVER ELECTION - QUALIFIED JOINT AND SURVIVOR ANNUITY. Not earlier
------------------------------------------------------
than 90 and not later than 30 days before the Participant's annuity starting
date, the Plan Administrator shall provide the Participant a written explanation
of the terms and conditions of the qualified joint and survivor annuity; the
Participant's right to make, and the effect of, an election to waive the joint
and survivor form of benefit; the rights of the Participant's spouse regarding
the waiver election; and the Participant's right to make, and the effect of, a
revocation of a waiver election. A Participant shall be entitled to revoke a
waiver of the qualified joint and survivor annuity or to make a new waiver an
unlimited number of times during the election period.
A married participant's waiver election is not valid unless:
(a) the Participant's spouse (to whom the survivor annuity is payable
under the qualified joint and survivor annuity) has consented in
writing to the waiver election, the spouse's consent acknowledges the
effect of the election, and a notary public or the Plan Administrator
(or the Plan Administrator's representative) witnesses the spouse's
consent;
(b) the spouse consents to the alternate form of distribution designated
by the Participant or to any change in that designated form of
distribution; and
(c) unless the spouse is the Participant's sole primary Beneficiary, the
spouse consents to the Participant's Beneficiary designation or to any
change in the Participant's Beneficiary designation.
The spouse's consent to a waiver of the qualified joint and survivor annuity is
irrevocable, unless the Participant revokes the waiver election. The spouse may
execute a blanket consent to any form of distribution designation or to any
Beneficiary designation made by the Participant, if the spouse acknowledges the
right to limit that consent to a specific designation but, in writing, waives
that right. The consent requirements of this Section shall apply to a former
spouse of the Participant, to the extent required under a qualified domestic
relations order described in Section 6.04.
The Plan Administrator shall accept as valid a waiver election which does
not satisfy the spousal consent requirements if the Plan Administrator
establishes the Participant does not have a spouse, the Plan Administrator is
not able to locate the Participant's spouse, the Participant is legally
separated or has been abandoned (within the meaning of State law) and the
Participant has a court order to that effect, or other circumstances exist under
which the Secretary of the Treasury shall excuse the consent requirement. If
the Participant's spouse is legally incompetent to give consent, the spouse's
legal guardian (even if the guardian is the Participant) may give consent on
behalf of the spouse.
6.13 WAIVER ELECTION - PRERETIREMENT SURVIVOR ANNUITY. The Plan
------------------------------------------------
Administrator shall provide a written explanation of the preretirement survivor
annuity to each married Participant, within the period of the following periods
which ends last:
(a) the period beginning on the first day of the Plan Year in which the
Participant attains age 32 and ending on the last day of the Plan Year
in which the Participant attains age 34;
(b) a reasonable period after an Employee becomes a Participant;
(c) a reasonable period after the annuity distribution provisions become
applicable to the Participant; or
46
(d) a reasonable period after a fully subsidized preretirement survivor
annuity no longer satisfies the requirements for a fully subsidized
benefit. The Plan fully subsidizes the costs of a benefit if no
increase in cost or decrease in benefits to the Participant may result
from the Participant's failure to elect another benefit.
A reasonable period is the period beginning one year before and ending one year
after the applicable event. If the Participant separates from Service before
attaining age 35, the Plan Administrator shall provide the written explanation
within the period beginning one year before and ending one year after the
separation from Service. The written explanation shall describe, in a manner
consistent with Treasury regulations, the terms and conditions of the
preretirement survivor annuity comparable to the explanation of the qualified
joint and survivor annuity required under Section 6.12. The Participant shall
be entitled to revoke a waiver of the preretirement survivor annuity or to make
a new waiver an unlimited number of times during the election period.
A Participant's waiver election of the preretirement survivor annuity is
not valid unless:
(a) the Participant makes the waiver election not earlier than the first
day of the Plan Year in which he or she attains age 35; and
(b) the Participant's spouse (to whom the preretirement survivor annuity
is payable) satisfies the consent requirements described in Section
6.12, except the spouse need not consent to the form of benefit
payable to the designated Beneficiary.
The spouse's consent to the waiver of the preretirement survivor annuity is
irrevocable, unless the Participant revokes the waiver election. If the
Participant separates from Service prior to the first day of the Plan Year in
which he or she attains age 35, the Plan Administrator shall accept a waiver
election with respect to the Participant's Accrued Benefit attributable to
Service prior to the separation from Service. Furthermore, if a Participant who
has not separated from Service makes a valid waiver election, except that it
does not meet the timing requirement of clause (a) of this paragraph, the Plan
Administrator shall accept that election as valid, but only until the first day
of the Plan Year in which the Participant attains age 35.
6.14 DIRECT ROLLOVER/TRANSFER PROVISIONS. This Section applies to
-----------------------------------
distributions made on or after January 1, 1993. Notwithstanding any provision
of the Plan to the contrary that would otherwise limit a Distributee's election
under this Section, a Distributee may elect, at the time and in the manner
prescribed by the Plan Administrator, to have any portion of an Eligible
Rollover Distribution paid directly to an Eligible Retirement Plan specified by
the Distributee in a Direct Rollover. The following definitions shall apply for
purposes of this Section:
(a) ELIGIBLE ROLLOVER DISTRIBUTION: An Eligible Rollover Distribution is
any distribution of all or any portion of the balance to the credit of
the Distributee, except that an Eligible Rollover Distribution does
not include:
(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, for a specified period of
ten years or more;
(2) any distribution to the extent the distribution is required under
Code (S) 401(a)(9); and
47
(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).
(b) ELIGIBLE RETIREMENT PLAN: An Eligible Retirement Plan is an
individual retirement account described in Code (S) 408(a); an
individual retirement annuity described in Code (S) 408(b); an annuity
plan described in Code (S) 403(a); or a qualified trust described in
Code (S) 401(a), that accepts the Distributee's Eligible Rollover
Distribution. However, in the case of an Eligible Rollover
Distribution to the surviving spouse, an Eligible Retirement Plan is
an individual retirement account or individual retirement annuity.
(c) DISTRIBUTEE: A Distributee includes an Employee or former Employee.
In addition, the Employee's or former Employee's surviving spouse and
the Employee's or former Employee's spouse or former spouse who is the
alternate payee under a qualified domestic relations order, as defined
in Code (S) 414(p), are Distributees with regard to the interest of
the spouse or former spouse.
(d) DIRECT ROLLOVER: A Direct Rollover is a payment by the Plan to the
Eligible Retirement Plan specified by the Distributee.
* * * END OF ARTICLE 6 * * *
48
ARTICLE VII
PLAN LOANS
7.01 AVAILABILITY OF PARTICIPANT LOANS. If the Employer elects in its
---------------------------------
Adoption Agreement to apply the provisions of this Article, Participant loans
shall be permitted under the Plan in accordance with the provisions of this
Article.
7.02 REQUIREMENTS. To comply with the plan loan provisions of Code (S)
------------
4975(d)(1), the Employer's Participant loan program shall meet the following
requirements:
(a) Loans shall be made available to all Participants and Beneficiaries on
a reasonably equivalent basis.
(b) Loans shall not be made available to Highly Compensated Employees in
an amount greater than the amount made available to other Employees.
(c) Loans shall be adequately secured and bear a reasonable rate of
interest.
(d) No Loan shall exceed the present value of the Participant's vested
Accrued Benefit.
(e) A Participant shall obtain the consent of his or her spouse, if any,
to use the Participant's Accrued Benefit as security for the loan,
unless the annuity distribution requirements of Article VI do not
apply to the Participant's Accrued Benefit. Spousal consent shall be
obtained not earlier than the beginning of the 90 day period that ends
on the date on which the loan is to be secured. The consent shall be
in writing, shall acknowledge the effect of the loan, and shall 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. A new consent shall
be required if the account balance is used for renegotiation,
extension, renewal, or other revision of the loan.
If a valid spousal consent has been obtained in accordance with the
procedures of Article VI, then, notwithstanding any other provision of
this Plan, the portion of the Participant's Nonforfeitable Accrued
Benefit used as a security interest held by the Plan by reason of the
loan outstanding to the Participant shall be reduced by the
outstanding loan amount for purposes of determining the amount of the
Nonforfeitable Accrued Benefit distributable at the time of death or
distribution, but only if the reduction is used as repayment of the
loan. If less than 100% of the Participant's Nonforfeitable Accrued
Benefit (determined without regard to the preceding sentence) is
distributable to the surviving spouse, then the Participant's
Nonforfeitable Accrued Benefit shall be adjusted first by reducing the
Nonforfeitable Accrued Benefit by the amount of the security used as
repayment of the loan, and then by determining the benefit payable to
the surviving spouse.
(f) In the event of default, foreclosure on the note and attachment of
security shall not occur until a distributable event occurs under the
Plan.
(g) No loans shall be made to any Shareholder-Employee or Owner-Employee.
49
7.03 LOAN APPLICATION. Any Participant may apply for a loan from the Plan.
----------------
If the Participant is deceased, the Beneficiary may apply for a loan in the same
manner as a Participant. A Participant shall apply for each loan in writing
with an application which specifies the amount of the loan desired, the
requested duration of the loan, and the source of security for the loan. The
Plan Administrator shall not approve any loan if a Participant is not
creditworthy. In order to be creditworthy, the Participant must have
established in the community, a reputation which would entitle the Participant
to a similar loan from a commercial or business lender. In applying for the
loan from the Plan, each Participant shall give full authority to the Plan
Administrator to investigate his or her credit-worthiness.
7.04 LIMITATION ON LOAN AMOUNT. The Plan Administrator shall not approve
-------------------------
any loan to a Participant in an amount which exceeds the greater of $10,000 or
50% of the Participant's Nonforfeitable Accrued Benefit, as reflected by the
books and records of the Plan. Effective for Plan Years beginning after
December 31, 1986, the maximum aggregate dollar amount of loans outstanding to
any Participant shall not exceed $50,000, reduced by the excess of the
Participant's highest outstanding loan balance during the 12 month period ending
on the date of the loan over the Participant's current outstanding loan balance
on the date of the loan.
7.05 EVIDENCE OF LOAN. The Plan Administrator shall document every loan in
----------------
the form of a promissory note signed by the Participant for the face amount of
the loan, together with interest not to exceed two percentage points above the
prime interest rate of the Employer's bank in effect on the date the Plan
Administrator approves the Participant's loan, payable at least quarterly under
a level amortization schedule.
The Plan Administrator shall fix the term of, or repayment of, any loan;
however, in no instance shall the term of repayment be greater than five years,
unless the loan qualifies as a home loan. The Plan Administrator may fix the
term for repayment of a home loan. A "home loan" shall mean a loan used to
acquire a dwelling unit which, within a reasonable time, the Participant uses as
the Participant's principal residence.
7.06 SECURITY FOR LOAN. A Participant shall secure each loan with an
-----------------
irrevocable pledge and assignment of the nonforfeitable amount of the borrowing
Participant's Accrued Benefit under the Plan or other security the Plan
Administrator accepts and finds to be adequate, or both the Participant's
Accrued Benefit and other security. The Plan Administrator may request the
borrowing Participant to secure each loan with other assets acceptable to the
Plan Administrator. If the Participant secures the loan wholly or partly with
his or her Accrued Benefit, the pledge and assignment of such Accrued Benefit
shall be in the form provided by the Plan Administrator.
7.07 LOAN TREATED AS DIRECTED INVESTMENT. The Plan Administrator shall
-----------------------------------
treat a loan made to a Participant in accordance with this Article VII as a
Participant direction of investment of the borrowing Participant's Account. The
loan shall remain a part of the Trust, but, to the extent of the loan
outstanding at any time, the borrowing Participant's Account alone shall share
in any interest paid on the loan, and it alone shall bear any expense or loss it
incurs in connection with the loan. The Trustee may retain any principal or
interest paid on the borrowing Participant's loan in an interest bearing
segregated investment Account on behalf of the borrowing Participant until the
Trustee deems it appropriate to add the amount paid to the Participant's
Accounts under the Plan.
7.08 LOAN POLICY. The Plan Administrator may adopt additional guidelines
-----------
for administering its Participant loan program in the form of a loan policy.
* * * END OF ARTICLE 7 * * *
50
ARTICLE VIII
ADMINISTRATIVE PROVISIONS
8.01 PLAN ADMINISTRATOR. If the Employer does not appoint a Plan
------------------
Administrator, the Employer shall be the Plan Administrator. The Employer may
appoint one or more persons as Plan Administrator to administer the Plan. The
persons appointed as Plan Administrator shall serve without compensation for
services as such, but the Employer shall pay or reimburse all expenses properly
and actually incurred in the performance of Plan duties of the Plan
Administrator and any fiduciary, including the expense for any bond required
under ERISA.
8.02 TERM. Each person appointed as Plan Administrator shall serve until
----
the appointment of a successor.
8.03 PLAN ADMINISTRATOR'S POWERS AND DUTIES. Not in limitation, but in
--------------------------------------
amplification of the powers and duties specified herein, the Plan Administrator
shall have the power to:
(a) determine the eligibility of an Employee to participate in the Plan,
the value of a Participant's Accrued Benefit and the Nonforfeitable
percentage of each Participant's Accrued Benefit;
(b) adopt rules of procedure and regulations necessary for the proper and
efficient administration of the Plan to the extent that the rules are
not inconsistent with the terms of this Agreement;
(c) enforce the terms of the Plan and the rules and regulations it adopts;
(d) direct the Trustee in the allocations to the Accounts and
distributions from the Trust;
(e) review and render decisions with respect to a claim for (or denial of
a claim for) a benefit under the Plan;
(f) interpret and construe the terms of the Plan;
(g) determine all questions arising in the administration of the Plan,
including, but not limited to, questions regarding the entitlement of
Participants and Beneficiaries to benefits provided under the Plan;
(h) make all determinations of fact necessary to the exercise of all other
powers and duties specified herein;
(i) furnish the Employer with information which the Employer may require
for tax or other purposes;
(j) engage the services of agents to assist it with the performance of its
duties;
(k) engage the services of an Investment Manager or Managers (as defined
in ERISA (S) 3(38)), each of whom shall have full power and authority
to manage, acquire, or dispose (or direct the Trustee with respect to
acquisition or disposition) of any Plan asset under its control;
51
(l) establish a nondiscriminatory policy which shall be observed in making
loans, if any, to Participants;
(m) establish and maintain a funding standard account, if required, and to
make credits and charges to the account to the extent required by and
in accordance with the provisions of the Code; and
(n) have full responsibility for compliance with the reporting and
disclosure rules under ERISA for this Plan.
The Plan Administrator shall exercise all of its powers and duties under the
Plan in its good faith discretion and in a uniform and nondiscriminatory manner.
8.04 FUNDING POLICY. The Plan Administrator shall review, not less often
--------------
than annually, all pertinent Employee information and Plan data in order to
establish the funding policy of the Plan and to determine the appropriate
methods of carrying out the Plan's objectives. The Plan Administrator shall
communicate periodically, as it deems appropriate, to the Trustee and to any
Plan Investment Manager, the Plan's short-term and long-term financial needs so
investment policy can be coordinated with Plan financial requirements.
8.05 MANNER OF ACTION. The decision of a majority of the persons appointed
----------------
and qualified as Plan Administrator controls. Action by the Plan Administrator
may be taken at a meeting or in writing without a meeting. The Plan
Administrator may authorize any one of the persons appointed as Plan
Administrator to sign on its behalf any notices, directions, applications,
certificates, consents, approvals, waivers, letters, or other documents. The
Plan Administrator shall evidence this authority by an instrument signed by all
members and filed with the Trustee. No person appointed as Plan Administrator
may decide or determine any matter concerning the distribution, nature, or
method of settlement of his or her own benefits under the Plan - except in
exercising an election available in his or her capacity as a Participant -
unless the Participant is acting alone in the capacity of Plan Administrator.
8.06 UNCLAIMED ACCOUNT PROCEDURE. The Plan does not require either the
---------------------------
Trustee or the Plan Administrator to search for, or ascertain the whereabouts
of, any Participant or Beneficiary. At the time the Participant's or
Beneficiary's benefit becomes distributable under Article VI, the Plan
Administrator, by certified or registered mail addressed to the Participant's or
Beneficiary's last known address of record with the Plan Administrator or the
Employer, shall notify any Participant, or Beneficiary, that the Participant or
Beneficiary is entitled to a distribution under this Plan. The notice shall
quote the provisions of this Section and otherwise shall comply with the notice
requirements of Article VI. If the Participant, or Beneficiary, fails to claim
his or her distributive share or make his or her whereabouts known in writing to
the Plan Administrator within six months after the date of mailing of the
notice, the Plan Administrator shall treat the Participant's or Beneficiary's
unclaimed payable Accrued Benefit as forfeited and shall reallocate the
unclaimed payable Accrued Benefit in accordance with Section 4.02.
If a Participant or Beneficiary whose account was forfeited under this
Section makes a claim at any time for his or her forfeited Accrued Benefit, the
Plan Administrator shall direct the Trustee to distribute the Participant's or
Beneficiary's restored Accrued Benefit not later than 60 days after the close of
the Plan Year in which the Plan Administrator restores the forfeited Accrued
Benefit in accordance with Section 5.13.
At the time the Plan terminates, the Plan Administrator shall restore any
Participant's Nonforfeitable Accrued Benefit forfeited in accordance with this
Section (if the Nonforfeitable Accrued
52
Benefit at the time of forfeiture exceeded $3,500) in accordance with Section
5.13. However, the Plan Administrator shall not restore the Accrued Benefit of
any Participant if the Accrued Benefit would have been lost under the state
escheat law at the time of the Plan termination. Any Accrued Benefit restored
under this paragraph shall be protected by establishing an XXX for the lost
Participant, by purchasing an annuity for the lost Participant, or by
transferring the account to an ongoing plan of the Employer.
8.07 BENEFICIARY DESIGNATION. Any Participant may designate, in writing,
-----------------------
any person or persons, contingently or successively, to whom the Trustee shall
pay the Participant's Accrued Benefit (including any life insurance proceeds
payable to the Participant's Account) in the event of the Participant's death,
and the Participant may designate the form and method of payment. The Plan
Administrator shall prescribe the form for the written designation of
Beneficiary, and upon the Participant's filing the form with the Plan
Administrator, the form effectively revokes all designations filed prior to that
date by the same Participant.
Coordination with Survivor Requirements. If the joint and survivor
---------------------------------------
requirements of Article VI apply to the Participant, this Section shall not be
construed to impose any special spousal consent requirements on the
Participant's Beneficiary designation. However, in the absence of spousal
consent (as required by Article VI) to the Participant's Beneficiary designation
(a) any waiver of the joint and survivor annuity or of the preretirement
survivor annuity is not valid; and (b) if the Participant dies prior to the
annuity starting date, the Participant's Beneficiary designation shall apply
only to the portion of the death benefit which is not payable as a preretirement
survivor annuity. Regarding clause (b), if the Participant's surviving spouse
is a primary Beneficiary under the Participant's Beneficiary designation, the
Trustee shall satisfy the spouse's interest in the Participant's death benefit
first from the portion which is payable as a preretirement survivor annuity.
Profit Sharing Plan Exception. If, pursuant to Section 6.08, the joint and
-----------------------------
survivor requirements do not apply to a married Participant, that Participant's
Beneficiary designation is not valid unless the Participant's spouse consents
(in accordance with the following paragraph) to the Beneficiary designation. The
spousal consent requirement in this paragraph does not apply if the Participant
and his or her spouse are not married throughout the one year period ending on
the date of the Participant's death, or if the Participant's spouse is the
Participant's sole primary Beneficiary.
Any designation by a married Participant of a person other than the
Participant's spouse shall be effective only with the consent of the spouse and
only if the consent is in writing, acknowledges the effect of the consent, is
witnessed by a Plan representative or a notary public, and meets one of the
following three requirements:
(a) the consent shall designate a specific Beneficiary or a specific form
of benefit that cannot be changed without the additional consent of
the spouse in a form meeting the requirements of this Section;
(b) the consent shall specifically provide that the Participant may change
the designation of a Beneficiary or a form of benefit without any
further consent by the spouse, and the spouse shall acknowledge in the
consent that he or she is giving up the right to limit his or her
consent to a specific Beneficiary or a specific form of benefit; or
(c) the consent shall meet the requirements of clause (b) of this
sentence, except that the Participant's right to change a Beneficiary
or a form of benefit without any further consent by the Spouse may be
limited to a change among certain beneficiaries or certain forms of
benefits.
53
A spouse's consent shall not be required if it is established to the
satisfaction of the Plan Administrator that the required consent cannot be
obtained because there is no spouse, because the spouse cannot be located, or
because of other circumstances that may be prescribed in Treasury regulations.
An election made by the Participant and consented to by the Participant's spouse
may be revoked by the Participant in writing without the consent of the spouse.
Any new election shall comply with the requirements of this Section. A consent
by a former spouse shall not be applicable to a new spouse.
8.08 NO BENEFICIARY DESIGNATION. If a Participant fails to name a
--------------------------
Beneficiary or if the Beneficiary named by a Participant predeceases the
Participant or dies before complete distribution of the Participant's Accrued
Benefit as prescribed by the Participant's Beneficiary form, then the Trustee
shall pay the Participant's Accrued Benefit in accordance with Article VI in the
following order of priority (unless modified by the Adoption Agreement) to:
(a) the Participant's surviving spouse;
(b) the Participant's surviving issue, per stirpes;
--- -------
(c) the Participant's surviving parents, in equal shares; or
(d) the estate of the Participant.
The Plan Administrator shall direct the Trustee as to the method and to whom the
Trustee shall make payment under this Section.
8.09 INFORMATION TO PLAN ADMINISTRATOR. Each Participant and each
---------------------------------
Beneficiary of a deceased Participant shall furnish to the Plan Administrator
such evidence, data, or information as the Plan Administrator considers
necessary or desirable for the purpose of administering the Plan. The Employer
shall supply current information to the Plan Administrator regarding the name,
date of birth, date of employment, annual compensation, leaves of absence, Years
of Service, and date of termination of employment of each Employee who is or who
may be eligible to become a Participant under the Plan, together with any other
information which the Plan Administrator considers necessary. Each Participant
and each Beneficiary of a deceased Participant shall file with the Plan
Administrator in writing, his or her address and any change of address. Any
communication, statement, or notice addressed to a Participant, or Beneficiary,
at his or her last address filed with the Plan Administrator, or as shown on the
records of the Employer, shall bind the Participant, or Beneficiary, for all
purposes of this Plan.
8.10 INFORMATION TO PARTICIPANTS AND BENEFICIARIES. Any Participant in the
---------------------------------------------
Plan or any Beneficiary may examine copies of the Plan description, latest
annual report, any bargaining agreement, this Plan and Trust, and any contract
or other instrument under which the Plan was established or is operated. The
Plan Administrator shall maintain all of the items listed in this Section in the
Plan Administrator's office, or in such other place or places as the Plan
Administrator may designate from time to time, for examination during reasonable
business hours. A Beneficiary's right to (and the Plan Administrator's or the
Trustee's duty to provide to the Beneficiary) information or data concerning the
Plan shall not arise until the Beneficiary first becomes entitled to receive a
benefit under the Plan. Upon the written request of a Participant or
Beneficiary the Plan Administrator shall furnish a copy of any item listed in
this Section. The Plan Administrator may make a reasonable charge to the
requesting person for the copy so furnished. As soon as practicable after the
Accounting Date of each Plan Year, but within the time prescribed by ERISA and
the regulations under ERISA, the Plan Administrator shall deliver to each
Participant (and to each Beneficiary of a deceased Participant) a statement of
his or her Accrued Benefit in the Trust as of that date and such other
information that ERISA requires to be furnished to the
54
Participant or Beneficiary. No Participant, other than a Participant acting as
Plan Administrator, has the right to inspect the records reflecting the Account
of any other Participant. The Plan Administrator, within the time prescribed by
ERISA and the applicable regulations, shall furnish to all Participants and
Beneficiaries a summary description of any material amendment to the Plan, a
notice of discontinuance of the Plan, and all other information required by
ERISA to be furnished without charge.
8.11 APPEAL PROCEDURE FOR DENIAL OF BENEFITS. The Plan Administrator shall
---------------------------------------
provide adequate notice in writing to any Participant or to any Beneficiary
whose claim for benefits under the Plan has been denied. The plan
Administrator's notice shall set forth:
(a) the specific reason for the denial;
(b) specific references to pertinent Plan provisions on which the denial
is based;
(c) a description of any additional material and information needed for
the Participant or Beneficiary to perfect the claim and an explanation
of why the material or information is needed;
(d) a statement that any appeal the Participant or Beneficiary wishes to
make of the adverse determination shall be made in writing and be
received by the Plan Administrator within 75 days after the appealing
Participant or Beneficiary received the denial of benefits notice that
failure to appeal the action in writing within the 75 day period shall
render the adverse determination final, binding, and conclusive; and
(e) the name and address where the Participant or Beneficiary may send an
appeal.
A Participant or Beneficiary appealing a denial of benefits (or the
authorized representative of the Participant or Beneficiary) shall be entitled
to submit in writing any issues and comments relating to the denial. The
Participant or Beneficiary or the duly authorized representative shall be
entitled to review pertinent Plan documents. The Plan Administrator shall
reexamine all facts related to the appeal and make a final determination as to
whether the denial of benefits is justified under the circumstances. The Plan
Administrator shall advise the Participant (or Beneficiary) of its decision
within 60 days after the written request for review, unless special
circumstances (such as a hearing) would make the rendering of a decision within
the 60 day limit unfeasible, but in no event may the Plan Administrator render a
decision on a denial for a claim for benefits later than 120 days after its
receipt of a request for review.
8.12 LIABILITY AND INDEMNIFICATION. The Employer shall assume no
-----------------------------
obligation or responsibility to any of its Employees, Participants, or
Beneficiaries for any act of, or failure to act, on the part of the Trustee or
the Plan Administrator (unless the Employer is the Plan Administrator). The
Employer shall indemnify and hold harmless every person acting in the capacity
of the Plan Administrator from and against any and all loss resulting from
liability to which the Plan Administrator may be subjected by reason of any act
or conduct (except willful misconduct or gross negligence) in its official
capacities in the administration of this Trust and Plan, including all expenses
reasonably incurred in its defense, in case the Employer fails to provide such
defense. The indemnification provisions of this Section shall not relieve the
Plan Administrator from any liability it may have under ERISA for breach of a
fiduciary duty. Furthermore, the Plan Administrator and the Employer may execute
an agreement further delineating the indemnification agreement of this Section
if the agreement is consistent with and does not violate ERISA. The
indemnification provisions of this Section extend to the Trustee solely to the
extent provided by an agreement executed by the Trustee and the Employer.
* * * END OF ARTICLE 8 * * *
55
ARTICLE IX
AMENDMENT, MERGER AND TERMINATION
9.01 AMENDMENT BY EMPLOYER.
---------------------
(a) The Employer shall have the right at any time:
(1) to amend this Agreement in any manner it deems necessary or
advisable in order to qualify (or maintain qualification of) this
Plan and Trust under the appropriate provisions of Code (S)
401(a); and
(2) to amend this Agreement in any other manner.
The Employer shall be entitled to change the choice of options in the
Adoption Agreement and may add overriding language in the Adoption
Agreement when such language is necessary to satisfy Code (S)(S) 415
or 416 because of the required aggregation of multiple plans. No
amendment may authorize or permit any of the Trust Fund (other than
the part which is required to pay taxes and administration expenses)
to be used for or diverted to purposes other than for the exclusive
benefit of the Participants or their Beneficiaries or estates. No
amendment may cause or permit any portion of the Trust Fund to revert
to or become a property of the Employer. The Employer shall not make
any amendment which affects the rights, duties, or responsibilities of
the Trustee or the Plan Administrator without the written consent of
the affected Trustee or Plan Administrator.
(b) Code (S) 411(d)(6) Protected Benefits. An amendment (including the
-------------------------------------
adoption of this Plan as a restatement of an existing plan) may not
decrease a Participant's Accrued Benefit, except to the extent
permitted under Code (S) 412(c)(8), and may not reduce or eliminate
Code (S) 411(d)(6) protected benefits determined immediately prior to
the adoption date (or, if later, the effective date) of the amendment.
An amendment reduces or eliminates Code (S) 411(d)(6) protected
benefits if the amendment has the effect of either (1) eliminating or
reducing an early retirement benefit or a retirement-type subsidy (as
defined in Treasury regulations), or (2) except as provided by
Treasury regulations, eliminating an optional form of benefit. The
Plan Administrator shall disregard an amendment to the extent
application of the amendment would fail to satisfy the requirements of
this paragraph (b). If the Plan Administrator disregards an amendment
because the amendment would violate clause (1) or clause (2) of this
paragraph (b), the Plan Administrator shall maintain a schedule of the
early retirement option or other optional forms of benefit the Plan
must continue for the affected Participants.
(c) The Employer shall make all amendments in writing. Each amendment
shall state the date to which it is either retroactively or
prospectively effective.
9.02 MERGER/DIRECT TRANSFER. The Trustee may not consent to, or be a party
----------------------
to, any merger or consolidation with another plan, or to a transfer of assets or
liabilities to another plan, unless immediately after the merger, consolidation,
or transfer, the surviving plan provides each Participant with a benefit equal
to or greater than the benefit each Participant would have received had the Plan
terminated immediately before the merger, consolidation, or transfer. The
Trustee possesses the specific authority
56
to enter into merger agreements or direct transfer of assets agreements with the
trustees of plans described in Code (S) 401(a), including an elective transfer,
and to accept the direct transfer of plan assets, or to transfer plan assets, as
a party to any such agreement.
The Trustee may accept a direct transfer of plan assets on behalf of an
Employee prior to the date the Employee becomes a Participant in accordance with
the requirements of Section 2.01. If the Trustee accepts a direct transfer of
plan assets, the Plan Administrator and Trustee shall treat the Employee as a
Participant for all purposes of the Plan except for purposes of sharing in
Employer contributions or forfeitures under the Plan until the Employee actually
becomes a Participant in accordance with the requirements of Section 2.01.
Code (S) 401(k) Transfer Rules. If the Plan receives a direct transfer (by
------------------------------
merger or otherwise) of elective contributions (or amounts treated as elective
contributions) from a plan with a cash or deferred arrangement, the distribution
restrictions of Code (S)(S) 401(k)(2) and (10) shall continue to apply to those
transferred elective contributions.
9.03 TERMINATION.
-----------
(a) The Employer shall have the right, at any time, to suspend or
discontinue its contributions under the Plan, and to terminate, at any
time, this Plan and the Trust created under this Agreement. The Plan
shall terminate upon the first to occur of the following:
(1) the date terminated by action of the Employer;
(2) the date the Employer is judicially declared bankrupt or
insolvent, unless the proceeding authorized continued maintenance
of the Plan; or
(3) the dissolution, merger, consolidation, or reorganization of the
Employer or the sale by the Employer of all or substantially all
of its assets, unless the successor or purchaser makes provision
to continue the Plan, in which event the successor or purchaser
shall become the Employer under this Plan.
(b) Full Vesting on Termination. Upon either full or partial termination
---------------------------
of the Plan, or, if applicable, upon complete discontinuance of profit
sharing plan contributions to the Plan, an affected Participant's
right to his or her Accrued Benefit is 100% Nonforfeitable,
irrespective of the Nonforfeitable percentage which otherwise would
apply under Article V.
(c) Distributions Upon Termination. Upon termination of the Plan, the
------------------------------
distribution provisions of Article VI shall remain operative, with the
following exceptions:
(1) if the present value of the Participant's Nonforfeitable Accrued
Benefit does not exceed $3,500, the Plan Administrator shall
direct the Trustee to distribute the Participant's Nonforfeitable
Accrued Benefit in a lump sum as soon as administratively
practicable after the Plan terminates; and
(2) if the present value of the Participant's Nonforfeitable Accrued
Benefit exceeds $3,500, the Participant or the Beneficiary, in
addition to the elections provided in connection with the
distribution events permitted under Article VI, may elect
57
to have the Trustee commence distribution of his or her
Nonforfeitable Accrued Benefit as soon as administratively
practicable after the Plan terminates.
To liquidate the Trust, the Plan Administrator shall purchase a
deferred annuity contract for each Participant which protects the
Participant's distribution rights under the Plan, if the Participant's
Nonforfeitable Accrued Benefit exceeds $3,500 and the Participant does
not elect an immediate distribution pursuant to clause (2) of this
paragraph (c). The Trust shall continue until the Trustee in
accordance with the direction of the Plan Administrator has
distributed all of the benefits under the Plan.
(d) On each Valuation Date, the Plan Administrator shall credit any part
of a Participant's Accrued Benefit retained in the Trust with its
proportionate share of the Trust's income, expenses, gains, and
losses, both realized and unrealized. Upon termination of the Plan,
the amount, if any, in a suspense account under Article IV shall
revert to the Employer, subject to the conditions of the Treasury
regulations permitting such a reversion. A resolution or amendment to
freeze all future benefit accruals but otherwise to continue
maintenance of this Plan, is not a termination for purposes of this
Section.
* * * END OF ARTICLE 9 * * *
58
ARTICLE X
MISCELLANEOUS
10.01 EXCLUSIVE BENEFIT. Except as provided under Articles III and IX, the
-----------------
Employer has no beneficial interest in any asset of the Trust and no part of any
asset in the Trust may ever revert to or be repaid to an Employer, either
directly or indirectly; nor, prior to the satisfaction of all liabilities with
respect to the Participants and their Beneficiaries under the Plan, may any part
of the corpus or income of the Trust Fund, or any asset of the Trust, be used
for, or diverted to, purposes other than the exclusive benefit of the
Participants or their Beneficiaries. However, if the Commissioner of Internal
Revenue, upon the Employer's request for initial approval of this Plan,
determines that the Trust created under the Plan is not a qualified trust exempt
from federal income tax, then (and only then) the Trustee, upon written notice
from the Employer, shall return the Employer's contributions (and any earnings
attributable to the contributions) to the Employer. The Trustee shall make the
return of the Employer contribution under this Section within one year of the
final disposition by the Internal Revenue Service of the Employer's request for
initial approval of the Plan. The Plan and Trust shall terminate upon the
Trustee's return of the Employer's contributions.
10.02 NO RESPONSIBILITY FOR EMPLOYER ACTION. Neither the Trustee nor the
-------------------------------------
Plan Administrator shall have any obligation or responsibility with respect to
any action required by the Plan to be taken by the Employer, any Participant, or
any Employee, or for the failure of any of such persons to act or make any
payment or contribution, or to otherwise provide any benefit contemplated under
this Plan. Furthermore, neither the Trustee nor the Plan Administrator shall be
required to collect any contribution required under the Plan, or to determine
the correctness of the amount of any Employer contribution. Neither the Trustee
nor the Plan Administrator shall have any obligation to inquire into or be
responsible for any action or failure to act on the part of the others. Any
action required of a corporate Employer shall be taken by its board of directors
or its designate.
10.03 FIDUCIARIES NOT INSURERS. The Trustee, the Plan Administrator, and
------------------------
the Employer in no way guarantee the Trust Fund from loss or depreciation. The
Employer does not guarantee the payment of any money which may be due or becomes
due to any person from the Trust Fund. The liability of the Plan Administrator
and the Trustee to make any payment from the Trust Fund at any time and all
times shall be limited to the then available assets of the Trust.
10.04 WAIVER OF NOTICE. Any person entitled to notice under the Plan may
----------------
waive the notice.
10.05 WORD USAGE. Words used in the masculine also apply to the feminine
----------
where applicable, and wherever the context of the Plan dictates, the plural
includes the singular and the singular includes the plural.
10.06 STATE LAW. The Employer shall specify in its Adoption Agreement the
---------
state law which shall determine all questions arising with respect to the
provisions of this Agreement except to the extent federal statute supersedes the
state law.
10.07 EMPLOYMENT NOT GUARANTEED. Nothing contained in this Plan, or with
-------------------------
respect to the establishment of the Trust, or any modification or amendment to
the Plan or Trust, or in the creation of any Account, or the payment of any
benefit, shall give any Employee, Participant, or Beneficiary any right to
continue employment, any legal or equitable right against the Employer, or
Employee of the Employer,
59
or against the Trustee, its agents or employees, or against the Plan
Administrator, except as expressly provided by the Plan and Trust, by ERISA, or
by a separate agreement.
10.08 ASSIGNMENT OR ALIENATION. Subject to Code (S) 414(p) (relating to
------------------------
qualified domestic relations orders), neither a Participant nor a Beneficiary
may voluntarily or involuntarily anticipate, assign, or alienate (either at law
or in equity) any benefit provided under the Plan, and the Trustee shall not
recognize any such anticipation, assignment, or alienation. Furthermore, a
benefit under the Plan shall not be subject to attachment, garnishment, levy,
execution, or other legal or equitable process.
* * * END OF ARTICLE 10 * * *
60
ARTICLE XI
LIFE INSURANCE PROVISIONS
11.01 INSURANCE BENEFIT. The Employer may elect to provide incidental life
-----------------
insurance benefits for insurable Participants who consent to life insurance
benefits by signing the appropriate insurance company application form;
provided, however, that the aggregate of life insurance premiums paid for the
benefit of a Participant, at all times, shall not exceed the following
percentages of the aggregate of the Employer's contributions allocated to any
Participant's Account: (a) 49% in the case of the purchase of ordinary life
insurance contracts; or (b) 25% in the case of the purchase of term life
insurance contracts. Furthermore, if the Trustee purchases a combination of
ordinary life insurance contracts and term life insurance contracts, then the
sum of 50% of the premiums paid for the ordinary life insurance contracts and
the premiums paid for the term life insurance contracts shall not exceed 25% of
the Employer contributions allocated to any Participant's Account. The Trustee
shall not purchase any incidental life insurance benefit for any Participant
prior to the Accounting Date as of which the Plan Administrator first makes an
Employer contribution allocation to the Participant's Employer Contributions
Account. At an insured Participant's written direction, the Trustee shall use
all or any portion of the Participant's Voluntary Nondeductible Employee
Contributions Account, if any, to pay insurance premiums covering the
Participant's life. No part of the Voluntary Deductible Employee Contributions
Accounts, if any, shall be used to purchase life insurance.
The Employer shall direct the Trustee as to the insurance company and
insurance agent through which the Trustee is to purchase the insurance
contracts, the amount of the coverage, and the applicable dividend plan. Each
application for a policy, and the policies themselves, shall designate the
Trustee as sole owner and named beneficiary with the right reserved to the
Trustee to exercise any right or option contained in the policies, subject to
the terms and provisions of this Agreement. Proceeds of insurance contracts
paid to the Participant's Account under this Article XI shall be subject to the
distribution requirements of Article VI. The Trustee shall not retain any such
proceeds for the benefit of the Trust.
The Trustee shall charge all amounts paid by it pursuant to an Employer's
election under this Section for the premiums on any incidental benefit insurance
contracts covering the life of a Participant to the Account of the Participant.
The Trustee shall hold all incidental benefit insurance contracts issued under
the Plan as assets of the Trust created under the Plan.
11.02 LIMITATION ON LIFE INSURANCE PROTECTION. The Trustee shall not
---------------------------------------
continue any life insurance protection for any Participant beyond the latest of
such Participant's termination of employment, his or her Normal Retirement Date,
or notification from the Plan Administrator of such Participant's termination of
employment. If the Trustee holds any incidental benefit insurance contracts on
the life of a Participant when the Participant terminates employment (other than
by reason of death), the Trustee shall proceed as follows:
(a) if the entire cash value of the contracts is vested in the terminating
Participant, or if the contracts have no cash value at the end of the
policy year in which termination of employment occurs, the Trustee
shall transfer the contracts to the Participant endorsed so as to vest
in the transferee all right, title, and interest to the contracts,
free and clear of the Trust; subject, however, to restrictions
regarding surrender or payment of benefits as the issuing insurance
company may permit and as the Plan Administrator shall direct;
61
(b) if only part of the cash value of the contracts is vested in the
terminating Participant, the Trustee, to the extent the Participant's
interest in the cash value of the contracts is not vested, may adjust
the Participant's interest in the value of his or her Account
attributable to Trust assets other than incidental benefit insurance
contracts and proceed as in clause (a) of this Section, or the Trustee
shall effect a loan from the issuing insurance company on the sole
security of the contracts for an amount equal to the difference
between the cash value of the contracts at the end of the policy year
in which termination of employment occurs and the amount of the cash
value that is vested in the terminating Participant, and the Trustee
shall transfer the contracts endorsed so as to vest in the transferee
all right, title, and interest to the contracts, free and clear of the
Trust; subject, however, to the restrictions as to surrender or
payment of benefits as the issuing insurance company may permit and
the Plan Administrator shall direct; or
(c) if no part of the cash value of the contracts is vested in the
terminating Participant, the Trustee shall surrender the contracts for
cash proceeds as may be available.
In accordance with the written direction of the Plan Administrator the
Trustee shall make any transfer of contracts under this Section not later than
60 days after the later of the close of the Plan Year in which the Participant
terminates employment or the close of the Plan Year in which the Participant
attains Normal Retirement Date.
The Trustee shall not transfer any contract under this Section if the
contract contains a method of payment not specifically authorized by Article VI
or fails to comply with the joint and survivor annuity requirements, if
applicable, of Article VI. In this regard, the Trustee either shall convert
such a contract to cash and distribute the cash instead of the contract, or
before making the transfer, shall require the issuing company to delete the
unauthorized method of payment option from the contract.
11.03 DEFINITIONS. For purposes of this Article XI:
-----------
(a) CONTRACT or CONTRACTS shall mean a policy of insurance. In the event
of any conflict between the provisions of this Plan and the terms of
any contract or policy of insurance issued in accordance with this
Article XI, the provisions of the Plan shall control.
(b) INSURABLE PARTICIPANT shall mean a Participant to whom an insurance
company, upon an application being submitted in accordance with the
Plan, would be willing to issue insurance coverage, either as a
standard risk or as a risk in an extra mortality classification.
(c) INSURANCE AGE shall mean the age of a person as determined by the
issuing company to accomplish the purposes of the Plan.
(d) ISSUING COMPANY shall mean any life insurance company which has issued
a policy upon application by the Trustee under the terms of this
Agreement.
(e) POLICY shall mean an ordinary life insurance contract or a term life
insurance contract issued by an insurer on the life of a Participant.
(f) TERM LIFE INSURANCE CONTRACT shall mean a term life insurance
contract, a universal life insurance contract, or any other life
insurance contract which is not an ordinary life insurance contract.
62
11.04 DIVIDEND PLAN. The dividend plan shall be premium reduction unless
-------------
the Plan Administrator directs the Trustee to the contrary. The Trustee shall
use all premiums for a contract to purchase insurance benefits or additional
insurance benefits for the Participant on whose life the insurance company has
issued the contract. Furthermore, the Trustee shall arrange, where possible,
that all policies issued on the lives of Participants under the Plan shall have
the same premium due date and all ordinary life insurance contracts shall
contain guaranteed cash values with as uniform basic options as are possible to
obtain. The term "dividends" includes policy dividends, refunds of premiums,
and other credits.
11.05 INSURANCE COMPANY DUTIES AND OBLIGATIONS. No insurance company shall
----------------------------------------
be considered to be a party to this Agreement nor shall any insurance company be
responsible for its validity. No insurance company shall be required to examine
the terms of this Agreement nor be responsible for any action taken by the
Trustee. For the purpose of making application to an insurance company and in
the exercise of any right or option contained in any policy, the insurance
company shall be entitled to rely upon the signature of the Trustee and shall be
held harmless and completely discharged in acting at the direction and
authorization of the Trustee. An insurance company shall be discharged from all
liability for any amount paid to the Trustee or paid in accordance with the
direction of the Trustee, and it shall not be obliged to see to the distribution
or further application of any moneys it so pays.
Each insurance company shall keep such records; make such identification of
contracts, funds, and accounts within funds; and supply such information as may
be necessary for the proper administration of the Plan under which it is
carrying insurance benefits.
* * * END OF ARTICLE 11 * * *
63
ARTICLE XII
TRUST AGREEMENT
12.01 ACCEPTANCE. This Trust Agreement, incorporated as Article XII under
----------
the Holland & Xxxx Defined Contribution Basic Plan Document and Trust Agreement,
is made by and between the Employer and the Trustee. The Trustee accepts the
Trust created under the Plan and agrees to perform the obligations imposed by
the Trust. All right, title, and interest in and to the Trust Fund shall at all
times be vested exclusively in the Trustee. The Trustee shall accept its
appointment by executing the Adoption Agreement executed by the Employer, or by
executing a written acceptance of the office of Trustee. If more than two
Trustees are appointed by the Employer, the decision of a majority of the
Trustees shall control with respect to any decision regarding the administration
or investment of the Trust Fund.
12.02 BOND. The Trustee shall provide bond for the faithful performance of
----
its duties under the Trust to the extent required by ERISA.
12.03 RECEIPT OF CONTRIBUTION. The Trustee shall hold in the Trust Fund
-----------------------
all amounts received by the Trustee and designated in writing as contributions
to the Trust Fund. All contributions so received together with any income or
other increment realized by the Trust Fund shall be invested and administered by
the Trustee in accordance with the terms of this Article XII. The Trustee shall
have no responsibility or power with respect to the calculation or collection of
any contributions to the Plan for the Employer.
12.04 PAYMENTS FROM THE TRUST FUND. Payments from the Trust Fund shall be
----------------------------
made by the Trustee to such persons, in such manner, at such times, and in such
amounts as the Plan Administrator shall specify in written instructions to the
Trustee. The Plan Administrator shall have the sole authority to direct the
Trustee to make payments from the Trust Fund. The Plan Administrator shall act
in its good faith discretion pursuant to the powers and duties described in
Section 8.03. The Trustee shall have no obligation to inquire whether any payee
or distributee is entitled to any payment, whether the distribution is proper or
within the terms of the Plan, or as to the manner of making any payment or
distribution.
The Trustee may make distribution under the Plan in cash or property, or
partly in each, at its fair market value as determined by the Trustee. The term
"property" shall include a Nontransferable Annuity which satisfies the
distribution requirements under Article VI. If the Trustee distributes an
annuity contract, the contract shall be a Nontransferable Annuity.
If any check in payment of a benefit under the Plan which had been mailed
by regular U.S. Mail to the last address of the payee as furnished to the
Trustee by the Plan Administrator is returned unclaimed, the Trustee shall so
notify the Plan Administrator and shall discontinue further payments to such
payee until it receives further instructions from the Plan Administrator.
12.05 EXCLUSIVE BENEFIT. Except as the Plan permits the return of Employer
-----------------
contributions under circumstances specified in Articles III and IX, it shall be
impossible at any time prior to the satisfaction of all liabilities with respect
to Participants and their Beneficiaries, for any part of the Trust Fund to be
used for, or diverted to, purposes other than the exclusive benefit of Plan
Participants and their Beneficiaries, except that payment of taxes and
administrative expenses may be made from the Trust Fund. The Trustee shall
discharge its duties under this Article XII solely in the interest of the
Participants of the Plan and their Beneficiaries and for the exclusive purpose
of providing benefits to Participants and their Beneficiaries and defraying
reasonable expenses of administering the Plan, with the care, skill, prudence,
and diligence under the circumstances then prevailing that a prudent man acting
in a like capacity and
64
familiar with such matters would use in the conduct of an enterprise of a like
character and with like aims, all in accordance with the provisions of this
Article XII insofar as they are consistent with the provisions of ERISA.
12.06 TRUSTEE INVESTMENT POWERS. The Trustee shall have full discretion
-------------------------
and authority with regard to the investment and management of the Trust Fund,
except with respect to a Plan asset under the control or direction of an
Investment Manager properly appointed in accordance with Section 12.08 or with
respect to a Plan asset subject to Employer or Participant direction of
investment. The Trustee shall coordinate its investment policy with Plan
financial needs as communicated to it by the Plan Administrator. The Trustee is
authorized and empowered, without previous application to, or subsequent
ratification of, any court, tribunal, or commission, or any federal or state
governmental agency, but not by way of limitation:
(a) to invest any part or all of the Trust Fund in any common or preferred
stocks or other securities, open-end or closed-end mutual funds
(including the investment of up to 100% of the Trust Fund in
qualifying Employer securities as defined in ERISA (S) 407), United
States retirement plan bonds, corporate bonds, notes, debentures,
convertible debentures, commercial paper, U.S. Treasury bills, U.S.
Treasury notes, other direct or indirect obligations of the United
States Government or its agencies, certificates of deposits or savings
accounts in a bank or other savings institution supervised by the
United States or a state, improved or unimproved real estate or
interests in real estate situated in the United States, limited
partnerships, insurance contracts of any type, annuities, endowment
contracts, mortgages, notes, or other property of any kind, real or
personal, including shares or certificates of participation issued by
regulated investment companies or regulated investment trusts, shares
or units of participation in qualified common trust funds, in
qualified pooled funds, or in pooled investment funds of an insurance
company qualified to do business in the state, and to buy or sell
options on common stock on a nationally recognized exchange with or
without holding the underlying common stock, as a prudent man would do
under like circumstances with due regard for the purposes of this Plan
and any investment made or retained by the Trustee in good faith shall
be proper but shall be of a kind constituting a diversification
considered by law suitable for trust investments;
(b) to retain in cash so much of the Trust Fund as it may deem advisable
to satisfy liquidity needs of the Plan and to deposit any cash held in
the Trust Fund in a bank account at reasonable interest, including, if
a bank is acting as Trustee, specific authority to invest in any type
of deposit of the Trustee at a reasonable rate of interest or in a
common trust fund (the provisions of which govern the investment of
such assets and which the Plan incorporates by this reference) as
described in Code (S) 584 which the Trustee (or an affiliate of the
Trustee, as defined in Code (S) 1504) maintains exclusively for the
collective investment of money contributed by the bank (or the
affiliate) in its capacity as Trustee and which conforms to the rules
of the Comptroller of the Currency; and
(c) to invest in loans, if the Employer authorizes such investment in its
Adoption Agreement, on a nondiscriminatory basis to a Participant
(other than an Owner-Employee or a Shareholder-Employee) in accordance
with Article VII and any loan policy established by the Plan
Administrator, if the loan is adequately secured, bears a reasonable
rate of interest, provides for repayment within a specified time,
prohibits offset of the Participant's Nonforfeitable Accrued Benefit
for loan default prior to the time the Trustee otherwise would
distribute the Participant's Nonforfeitable Accrued Benefit, does not
65
exceed (at the time the Plan extends the loan) the present value of
the Participant's Nonforfeitable Accrued Benefit, otherwise conforms
to the exemption provided by Code (S) 4975(d)(1), and, if the
Participant's Nonforfeitable Accrued Benefit is subject to the joint
and survivor annuity requirements of Code (S) 417, the Participant's
spouse, if any, consents to the use of any portion of the
Participant's Accrued Benefit as security, or (by separate consent) an
increase in the amount of security, for a loan, within the 90 day
period ending on the date the Participant pledges any portion of his
or her Accrued Benefit for a loan.
12.07 TRUSTEE POWERS, RIGHTS AND DUTIES. Except as otherwise required by
---------------------------------
law, no party dealing with the Trustee shall have any obligation to inquire into
the authority of the Trustee or into the application by the Trustee of any funds
or other property transferred to the Trustee. The decisions of the Trustee in
the exercise of any of its powers or the carrying out of any of its
responsibilities shall be final and conclusive as to all persons for all
purposes, to the extent permitted by law. The Trustee shall have all the powers
necessary or advisable to carry out the provisions of the Trust and all
inherent, implied, and statutory powers now or subsequently provided by law,
including, but not by way of limitation, the power and right to:
(a) cause any securities or other property to be registered and held in
its name as Trustee, or in the name of one or more of its nominees,
without disclosing the fiduciary capacity, or to keep the same in
unregistered form payable to bearer;
(b) manage, sell, contract to sell, grant options to purchase, convey,
exchange, pledge, transfer, abandon, improve, repair, insure, lease
for any term even though commencing in the future or extending beyond
the term of the Trust, encumber, mortgage, deed in trust, or use any
other form of hypothecation, or otherwise deal with the whole or any
part of the Trust Fund on such terms and for such property or cash, or
part cash and credit, as it may deem best; to retain, hold, maintain,
or continue any securities or investments that it may hold as part of
the Trust Fund for such length of time as it may deem advisable; and
generally, in all respects, to do all things and exercise each and
every right, power, and privilege in connection with and in relation
to the Trust Fund as could be done, exercised, or executed by an
individual holding and owning such property in absolute and
unconditional ownership;
(c) abandon, compromise, contest, and arbitrate claims and demands; to
institute, compromise, and defend actions at law (but without
obligation to do so unless indemnified to the Trustee's satisfaction);
(d) vote in person or by proxy any shares of stock held in the Trust Fund;
to participate in or to exchange securities or other property in
reorganization, liquidation, or dissolution of any corporation, the
securities of which are held in the Trust Fund;
(e) borrow money and to pay any amount due on any loan or advance made to
the Trust Fund, to charge against and pay from the Trust Fund all
taxes of any nature levied, assessed, or imposed upon the Trust Fund;
(f) execute the application for any insurance contract to be applied for
under the Plan; to pay from the Trust Fund premiums, assessments,
dues, charges, and interest to acquire or maintain any insurance
contracts held in the Trust Fund; to collect and receive all dividends
or payments of any kind payable under any insurance contracts held in
the
66
Trust Fund or to leave the same with the issuing insurance company;
and to exercise any other power or take any other action permitted
under any insurance contract held in the Trust Fund;
(g) lease for oil, gas, and other mineral purposes and to create mineral
severances by grant or reservation; to pool or unitize interests in
oil, gas, and other minerals; and to enter into operating agreements
and to execute division and transfer orders;
(h) perform any and all other acts in its judgment necessary or
appropriate for the proper and advantageous management, investment,
and distribution of the Trust; and
(i) retain any funds or property subject to any dispute without liability
for the payment of interest, and to decline to make payment or
delivery of the funds or property until final adjudication is made by
a court of competent jurisdiction.
12.08 INVESTMENT MANAGER. The Employer may appoint an Investment Manager
------------------
to manage the investment of all or a portion of the Trust Fund. The Investment
Manager shall be a fiduciary other than the Trustee:
(a) who has the power to manage, acquire, or dispose of any assets of the
Plan;
(b) who is (1) registered as an investment adviser under the Investment
Advisers Act of 1940; (2) a bank, as defined in the Investment
Advisors Act of 1940; or (3) an insurance company qualified to perform
services described in paragraph (a) under the laws of more than one
state; and
(c) who has acknowledged in writing that as Investment Manager, the person
is a fiduciary with respect to the Plan.
If the Employer appoints an Investment Manager, the Investment Manager
shall have the exclusive responsibility for directing the investment and
management of the assets of the Trust Fund to which its appointment applies. If
more than one Investment Manager is appointed, each Investment Manager shall
have exclusive responsibility for directing the investment and management of a
specified portion of the assets of the Trust Fund as the Employer shall
determine. The Trustee shall not be liable for the acts or omissions of any
Investment Manager appointed by the Employer, nor shall the Trustee be under any
obligation to invest or otherwise manage any asset of the Plan which is subject
to the management of a properly appointed Investment Manager. The Trustee shall
have no obligation to question any written investment direction by a properly
appointed Investment Manager. The Trustee shall comply as promptly as possible
with any investment direction given by an Investment Manager.
12.09 INVESTMENT OF THE TRUST FUND. Investments of the Trust Fund shall be
----------------------------
diversified to minimize the risk of large losses unless under the circumstances
it is clearly prudent not to do so. The Trustee or Investment Manager shall act
with the care, skill, prudence, and diligence under the circumstances then
prevailing that a prudent man acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise of a like character and with
like aims.
12.10 EMPLOYER DIRECTION OF INVESTMENT. The Employer has the right to
--------------------------------
direct the Trustee with respect to the investment and re-investment of assets
comprising the Trust Fund only if the Trustee consents in writing to permit such
direction. If the Trustee consents to Employer direction of investment, the
Trustee and the Employer shall execute an agreement as a part of this Plan
containing such conditions,
67
limitations, and other provisions they deem appropriate before the Trustee shall
follow any Employer direction as respects the investment or reinvestment of any
part of the Trust Fund.
12.11 PARTICIPANT DIRECTION OF INVESTMENT. A Participant has the right to
-----------------------------------
direct the Trustee with respect to the investment or reinvestment of the
Participant's Accounts only if the Employer authorizes such Participant
direction of investment in its Adoption Agreement. The Trustee shall follow any
written Participant direction with respect to the investment of any part of the
Participant's Accounts. Participant Accounts which are subject to Participant
direction shall be treated as segregated investment Accounts (see Section 4.08).
The Trustee shall not be liable for any loss or for any breach resulting from a
Participant's direction of the investment of any part of the Participant's
Accounts. The Plan Administrator and the Trustee shall treat any investment by
Participant directed Accounts in collectibles (as defined by Code (S) 408(m)) as
a distribution under the Plan to the Participant.
12.12 RECORDS AND ACCOUNTS. The Trustee shall keep all such records and
--------------------
accounts which may be necessary in the administration and conduct of this Trust.
Upon written request from the Trustee, the Employer or Plan Administrator shall
furnish the Trustee in writing with information specified in any such request
and necessary or appropriate in connection with any of the Trustee's
responsibilities or powers (including, without limitation, the names, addresses,
and specimen signatures of all parties authorized to furnish instructions or
notices to the Trustee). The Trustee's records and accounts shall be open to
inspection by the Employer and the Plan Administrator at all reasonable times
during business hours, and may be audited from time to time by any person or
persons as the Employer or Plan Administrator may specify in writing. After the
close of each Plan Year, the Trustee shall provide the Plan Administrator a
statement of assets and liabilities of the Trust Fund for such year. The
Trustee shall furnish the Plan Administrator any additional information relating
to the Trust Fund that the Plan Administrator requests.
All income, profits, recoveries, contributions, forfeitures, and any and
all moneys, securities, and properties of any kind at any time received or held
by the Trustee shall be held for investment purposes as a commingled Trust Fund.
Separate accounts or records may be maintained for operational or accounting
purposes, but no such account or record shall be considered as segregating any
funds or property from any other funds or property contained in the commingled
fund, unless specifically designated as a segregated investment Account.
12.13 VALUATION OF THE TRUST FUND. The Trustee shall value the Trust Fund
---------------------------
as of each Accounting Date to determine the current fair market value of the
Trust Fund assets. The Trustee shall value the Trust Fund on such other dates
as directed by the Plan Administrator.
12.14 TAX RETURNS. The Trustee shall file all tax returns required of the
-----------
Trustee.
12.15 FEES AND EXPENSES. A Trustee shall be entitled to receive reasonable
-----------------
compensation for services rendered or for the reimbursement of expenses properly
and actually incurred in the performance of its duties under the Trust.
However, no Trustee who already receives fulltime pay from the Employer shall
receive compensation from the Plan, except for reimbursement of expenses
properly and actually incurred. All compensation and expenses shall be paid by
the Plan, unless the Employer, in its discretion, elects to pay all or any part
of Trustee compensation or recurring administrative or overhead expenses. The
Plan Administrator shall not treat any fee or expense properly paid, directly or
indirectly, by the Employer as an Employer contribution.
12.16 CHANGE OF TRUSTEE. A Trustee may be removed by the Employer at any
-----------------
time upon 30 days' written notice to the Trustee, or on such shorter notice as
may be agreed to by the Employer and
68
the Trustee. A Trustee may resign at any time upon 30 days' written notice to
the Employer, or on such shorter notice as may be agreed to by the Employer and
the Trustee.
Upon such removal or resignation, the Employer shall appoint a successor
Trustee and the successor Trustee shall have the same powers and duties as those
conferred upon the predecessor Trustee. If the Employer fails to appoint a
successor Trustee within 60 days of removal or resignation of the Trustee, the
Employer shall be treated as having appointed itself as Trustee and as having
executed its acceptance of appointment. Each successor Trustee shall succeed to
the title of the Trust Fund vested in its predecessor upon the successor
Trustee's written acceptance of the office of Trustee. The resigning or removed
Trustee, upon receipt of acceptance in writing by the successor Trustee, shall
execute all documents and do all acts necessary to vest the title of record in
the successor Trustee. No successor Trustee shall be liable for the acts or
omissions of any prior Trustee which occurred prior to the successor Trustee's
acceptance of office, or be obliged to examine the accounts, records, or acts of
any prior Trustee.
In the event that any corporate Trustee hereunder shall be converted into,
shall merge or consolidate with, or shall sell or transfer substantially all of
its assets and business to another corporation, state or federal, the
corporation resulting from such conversion, merger, or consolidation, or the
corporation to which such sale or transfer shall be made, shall thereupon become
and be the Trustee under this Article XII with the same effect as though
originally so named.
* * * END OF ARTICLE 12 * * *
69
XXXXXX DENTAL MANAGEMENT SERVICES, INC.
SAVINGS PLAN
AND
TRUST AGREEMENT
Holland & Xxxx LLP
Suite 3200
000 00xx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
(000) 000-0000
XXXXXX DENTAL MANAGEMENT SERVICES, INC.
ADOPTION AGREEMENT
PROFIT SHARING PLAN WITH CASH OR DEFERRED ARRANGEMENT
AND STOCK BONUS PLAN
By executing this Adoption Agreement, the Employer elects to adopt the Holland
& Xxxx Defined Contribution Basic Plan Document and Trust Agreement in full as
if the Employer were a signatory to that Agreement. The Employer makes the
following elections granted under the provisions of the Plan.
The name of the Plan as adopted by the Employer shall be the Xxxxxx Dental
-----------------
Management Services, Inc. Savings Plan. The Employer is adopting this Plan:
--------------------------------------
(X) as the original document establishing the Plan and Trust.
( ) in substitution for, and as an amendment of, an existing retirement
plan, the original plan being established as of ________________
________________________________________________________________.
ARTICLE I
DEFINITIONS
1.11 COMPENSATION. Compensation shall have the meaning specified in Section
------------
1.11 of the Plan which is actually paid during the Plan Year, except
Compensation shall not include:
( ) overtime. [This option may only be selected if the Plan does not
utilize a Permitted Disparity Level.]
( ) bonuses. [This option may only be selected if the Plan does not
utilize a Permitted Disparity Level.]
Compensation:
(X) shall include
( ) shall not include
Employer contributions which are not includable in the gross income of the
Participant under Code (S)(S) 125, 402(a)(8), 402(h), or 403(b).
1.19 EFFECTIVE DATE. The Effective Date of this Plan shall be April
-------------- -----
1, 1997. The Effective Date of the Cash or Deferred Arrangement shall be the
-------
later of the first day the Cash or Deferred Arrangement is adopted or the
Effective Date. [Date selected shall be the first Plan Year beginning after
December 31, 1988.]
1
1.22 ELIGIBLE EMPLOYEE. Eligible Employee shall specifically include all
-----------------
Employees, except:
( ) Leased Employees.
(X) Members of a collective bargaining unit. An Employee is a member of a
collective bargaining unit if the Employee is included in a unit of
Employees covered by an agreement which the Secretary of Labor finds to
be a collective bargaining agreement between employee representatives
and one or more employers if there is evidence that retirement benefits
were the subject of good faith bargaining between such employee
representatives and such employer or employers.
( ) Commission salesmen who the Employer compensates for Services either
solely or primarily on a commission basis.
( ) Hourly Employees.
( ) Salaried Employees.
(X) Nonresident aliens within the meaning of Code (S) 7701(b)(1)(B).
---------------------------------------------------------------
[This option may only be selected if the Plan satisfies on a continuing
basis the coverage tests of Code (S) 410(b), the anti-discrimination
tests of Code (S) 401(a)(4) and the participation test of Code (S)
401(a)(26) taking into account the exclusion described.]
1.37 HOUR OF SERVICE. The Plan Administrator shall credit Hours of Service on
---------------
the basis of the method selected below:
( ) On the basis of actual hours worked determined from records of hours
worked, hours for which the Employer makes payment, or hours for which
payment is due from the Employer.
( ) On the basis of days worked. The Plan Administrator shall credit an
Employee with 10 Hours of Service if under Section 1.37 the Employee
would be credited with at least one Hour of Service during the day.
(X) On the basis of weeks worked. The Plan Administrator shall credit an
Employee with 45 Hours of Service if under Section 1.37 the Employee
would be credited with at least one Hour of Service during the week.
( ) On the basis of semi-monthly payroll periods. The Plan Administrator
shall credit an Employee with 95 Hours of Service if under Section 1.37
the Employee would be credited with at least one Hour of Service during
the semi-monthly payroll period.
( ) On the basis of months worked. The Plan Administrator shall credit an
Employee with 190 Hours of Service if under Section 1.37 the Employee
would be credited with at least one Hour of Service during the month.
( ) On the basis of elapsed time, as provided in Section 2.02.
2
1.40 LIMITATION YEAR. The Limitation Year shall be:
---------------
(X) the Plan Year.
( ) the 12 consecutive month period ending every ______________________.
1.49 NORMAL RETIREMENT DATE. Normal Retirement Date under the Plan shall mean:
----------------------
(X) the date the Participant attains age 65. [The age selected shall not
--
exceed age 65.]
( ) the later of the date the Participant attains age ____________ or the
____________ anniversary of the first day of the first Plan Year in
which the Participant entered the Plan. [The age selected shall not
exceed age 65 and the anniversary selected shall not exceed the 5th
anniversary.]
1.58 PLAN ENTRY DATE. Plan Entry Date shall mean the Effective Date and every
---------------
January 1, April 1, July 1 and October 1 of every Plan Year.
----------------------------------------
1.59 PLAN YEAR. Plan Year shall mean:
---------
(X) the short period beginning on April 1 and ending on December 31 for the
-----------------------------------------
first Plan Year and the 12 consecutive month period corresponding to
---------------
the Employer's taxable year, ending every December 31 for each Plan
-------------------------
Year thereafter.
---------------
( ) the 12 consecutive month period ending every ________________________.
( ) the short period beginning _________________________________ and
ending ______________________.
1.69 SERVICE FOR PREDECESSOR EMPLOYER. In accordance with Section 1.69 of the
--------------------------------
Plan, the Plan shall take into account service with a predecessor employer:
(X) only to the extent required by law.
( ) as service with the Employer for purposes of:
( ) participation under Article II.
( ) vesting under Article V.
Predecessor employer shall mean __________________________________________
________________________________________________________________.
1.71 TESTING COMPENSATION. Testing Compensation shall be determined in
--------------------
accordance with the following definition in Section 1.71:
( ) Code (S) 415(c)(3) Compensation.
(X) W-2 Compensation.
Testing Compensation:
(X) shall include
( ) shall not include
Employer contributions which are not includable in the gross income of the
Employee under Code (S)(S) 125, 402(a)(8), 402(h), or 403(b).
3
1.72 TOP HEAVY PLAN. The Plan Administrator shall determine the present value
--------------
of Accrued Benefits and any other amounts necessary under Defined Benefit Plans
included in the Top Heavy Plan calculation:
(X) in accordance with the terms of those plans.
( ) by discounting for mortality and interest based on the following:
Interest rate: %
----------
Mortality table: ________________________________________________.
ARTICLE II
EMPLOYEES ENTITLED TO PARTICIPATE
2.01 ELIGIBILITY. Each Eligible Employee shall become a Participant in the
-----------
Plan and shall be eligible to make elections under a Cash or Deferred
Arrangement on the Plan Entry Date (if employed on that date) coincident with or
immediately:
( ) preceding
(X) following
the date the Eligible Employee satisfies the following eligibility conditions.
The Eligible Employee shall satisfy the eligibility conditions on:
( ) the later of the date on which the Eligible Employee completes one
Year of Service or attains age 21.
( ) the later of the date on which the Eligible Employee completes
______________ Year of Service and attains age _____________________.
[The number of years selected shall not exceed 1 Year of Service and
the age selected shall not exceed age 21.]
(X) the date on which the Eligible Employee completes 6 months
--------
of Service. [The number of years selected shall not exceed 1 Year of
Service.]
( ) the Eligible Employee's Employment Commencement Date.
(X) The eligibility conditions of this Adoption Agreement Section shall
apply solely to an Eligible Employee employed by the Employer after
April 1, 1997. Each Eligible Employee employed by the Employer
-------------
on or before April 1, 1997 shall become a Participant in the Plan on
-------------
the later of the Effective Date of the Plan or the Employee's
Employment Commencement Date.
4
Each Participant shall be eligible to receive Matching Contributions, Employer
Nonelective Contributions, and Profit Sharing Contributions beginning with the
Plan Entry Date coincident with or immediately:
( ) preceding
(X) following
the date the Participant satisfies the following specified conditions:
( ) the later of the date on which the Eligible Employee completes one
Year of Service or attains age 21.
( ) the later of the date on which the Eligible Employee completes
______________ Years of Service and attains age ____________________.
[The number of years selected shall not exceed 2. If more than 1 Year
of Service is selected, the Plan shall require 100% immediate vesting.
The age selected shall not exceed age 21.]
(X) the date on which the Eligible Employee completes 6 months
--------
of Service. [The number of years selected shall not exceed 2. If more
than 1 Year of Service is selected, the Plan shall require 100%
immediate vesting.]
( ) the later of the date on which the Eligible Employee completes two
Years of Service without an intervening Break in Service (as defined
by Section 2.03 of the Plan), or attains age 21. [If this option is
selected, the Plan shall require 100% immediate vesting.]
(X) The eligibility conditions of this Adoption Agreement Section shall
apply solely to an Eligible Employee employed by the Employer after
April 1, 1997. Each Eligible Employee employed by the Employer
-------------
on or before April 1, 1997 shall become a Participant in the Plan on
-------------
the later of the Effective Date of the Plan or the Employee's
Employment Commencement Date.
2.02 YEARS OF SERVICE - PARTICIPATION. For purposes of determining Years of
--------------------------------
Service and Breaks in Service under Article II, the Plan shall:
(X) measure succeeding 12 consecutive month periods by reference to:
( ) each anniversary of the Employee's Employment Commencement Date.
(X) each anniversary of the first day of the Plan Year which includes
the first anniversary of the Employee's Employment Commencement
Date, regardless of whether the Employee is entitled to be
credited with 1,000 Hours of Service during the 12 consecutive
month period which commenced with the Employee's Employment
Commencement Date. An Employee who receives credit for 1,000 Hours
of Service during the 12 consecutive month period which commenced
with the Employee's Employment Commencement Date and during the
Plan Year which includes the first anniversary of the Employee's
Employment Commencement Date shall receive credit for two Years of
Service for purposes of eligibility to participate in the Plan.
( ) credit Years of Service in accordance with the elapsed time
provisions of Section 2.02.
5
2.06 ELECTION NOT TO PARTICIPATE. An Eligible Employee:
---------------------------
(X) shall not be permitted to elect not to participate except to the extent
the Eligible Employee declines to participate in a Cash or Deferred
Arrangement.
( ) shall be permitted to irrevocably elect not to participate prior to
or at the time the Eligible Employee has first met the requirements of
Section 2.01 or of any other plan of the Employer meeting the
requirements of Code (S) 401.
ARTICLE III
CONTRIBUTIONS
3.01 AMOUNT. Although the Employer may contribute to this Plan irrespective of
------
whether it has net profits, the Employer intends this Plan to be a profit
sharing plan for all purposes under the Code. With respect to the portion of
the Plan that is invested in Employer Securities, the Employer intends that
portion of the Plan to be a stock bonus plan. The amount of the Employer's
annual contribution to the Trust shall equal the sum of the Elective Deferrals,
the Matching Contributions, the Employer Nonelective Contributions, and the
Profit Sharing Contributions.
Elective Deferrals. The Employer shall contribute:
------------------
( ) the amount the Participants elect to have contributed to the Plan
instead of receiving in cash after the Effective Date of the Cash or
Deferred Arrangement. A Participant shall make the election on the form
provided by the Plan Administrator on or before the Accounting Date of
the Plan Year to which the election privilege relates. If the
Participant fails to file a written election with the Plan
Administrator before the Accounting Date of the Plan Year, the
Participant's right to a cash election shall lapse for that Plan Year.
(X) the amount of Salary Reduction Contributions for the Plan Year. Salary
Reduction Contributions shall mean the amount by which the Participants
have elected to reduce their Testing Compensation for the Plan Year
after the Effective Date of the Cash or Deferred Arrangement. A
Participant shall make the election on the form provided by the Plan
Administrator.
(X) A Participant shall have the right to elect to reduce his or her
Testing Compensation by a percentage up to 15%. The percentage
--
specified shall not be less than 1% and not greater than
-
15%. The Employer shall not apply the salary reduction percentage
--
to a bonus unless the Participant specifies its application to
bonuses. The Participant shall have the right to elect a different
percentage applicable to bonuses.
( ) A Participant shall have the right to elect to reduce his or her
Testing Compensation by a specified dollar amount. The dollar
amount for the Plan Year shall not exceed ____________% of the
Participant's Testing Compensation.
6
An Employee shall have the right to revoke a salary reduction
agreement:
(X) on or before the 1st day of every payroll period.
---
( ) on or before the _____ day of every _____ month of the Plan Year.
( ) on or before the _____ day of every Plan Year.
An Employee shall have the right to execute a new salary reduction
agreement:
( ) on or before the _____ day of every month.
(X) once in any calendar quarter, effective for the first day of the
next payroll period.
( ) on or before the _____ day of every Plan Year.
An Employee shall have the right to modify an existing salary reduction
agreement:
( ) on or before the _____ day of every month.
(X) once in any calendar quarter, effective for the first day of the
next payroll period.
( ) on or before the _____ day of every Plan Year.
Matching Contributions.
----------------------
( ) The Employer shall not contribute any Matching Contributions to the
Plan.
( ) The Employer shall contribute on behalf of each Participant an amount
equal to _____% of the Participant's Elective Deferrals.
( ) The Employer shall contribute on behalf of each Participant an amount
equal to the first $_____ of the Participant's Elective Deferrals.
( ) The Employer shall contribute on behalf of each Participant an amount
equal to _____% of the Participant's Elective Deferrals up to a
maximum of:
( ) _____% of the Participant's Testing Compensation.
( ) _____% of the Participant's Elective Deferrals.
( ) $ _____.
( ) ________________________________________________________________.
(X) The Employer shall contribute the percentage the Employer from time to
time may deem advisable of:
(X) each Participant's Elective Deferrals up to 2% of the
-
Participant's Testing Compensation.
( ) the first $ _____ of each Participant's Elective Deferrals up
_____% of the Participant's Testing Compensation.
7
The Employer shall determine its Matching Contributions by taking into
account only Participants who are eligible under Adoption Agreement Section
2.01 for Matching Contributions, and by not taking into account a
Participant's Excess Deferrals or Excess Contributions.
Employer Nonelective Contributions. The Employer shall contribute the
----------------------------------
amount the Employer from time to time may deem advisable.
Profit Sharing Contributions. The Employer shall contribute:
----------------------------
(X) the amount the Employer may from time to time deem advisable. At the
Employer's discretion, the Profit Sharing Contribution may be made in
Employer Securities in accordance with the provisions of Article XIII.
( ) _____% of Current Earnings & Profits. Current Earnings and Profits
shall mean the Employer's net income for any taxable year determined by
the Employer upon the basis of its books of account in accordance with
generally accepted accounting practices consistently applied without
any deductions for federal and state income taxes or for contributions
made by the Employer under this Plan, but the Employer shall not carry
forward operating losses, if any, during prior taxable years in
determining Current Earnings & Profits. Current Earnings and Profits
shall specifically include dividends, interest, rents, capital gains
and losses, and gain or loss from the sale of any property described in
Code (S) 1231(b).
( ) _____% of each Participant's Compensation and
( ) _____%
( ) the maximum percentage permitted under the Permitted Disparity
Level table
of each Participant's Compensation in excess of the Permitted Disparity
Level.
[The percentage applied to each Participant's Compensation in excess of
the Permitted Disparity Level shall not exceed the lesser of (a) the
percentage applied to each Participant's Compensation or (b) 5.7%, if
the Permitted Disparity Level selected equals 100% of the taxable wage
base. If the Permitted Disparity Level is less than the taxable wage
base, replace the 5.7% limitation with the percentage determined in
accordance with the following table:
Permitted Disparity Level Percentage
------------------------- ----------
More than $0, but not more than the greater of $10,000 or
20% of the taxable wage base 5.7%
More than the greater of $10,000 or 20% of the taxable
wage base, but not more than 80% of the taxable wage base 4.3%
More than 80% of the taxable wage base, but less than
100% of the taxable wage base 5.4%]
The Permitted Disparity Level shall be:
( ) $ _____. [This option may only be selected if the percentage of
each Participant's Compensation in excess of the Permitted
Disparity Level is determined by reference to the Permitted
Disparity Level table each Plan Year.]
( ) _____% of the taxable wage base as determined under Section 230 of
the Social Security Act in effect on the first day of the Plan
Year.
8
3.02 MINIMUM EMPLOYER CONTRIBUTION. The Employer:
-----------------------------
(X) shall provide the top heavy minimum contribution under the Plan in
accordance with Section 3.02.
( ) shall not provide the top heavy minimum contribution. The Employer
provides the top heavy minimum contribution in the __________________
the Employer maintains. However, the Employer shall contribute an
additional amount for the Account of any Participant who is entitled
under this Section to a top heavy minimum allocation but who is not a
Participant in the __________________________________________________
(or does not receive the full top heavy minimum contribution in the
_____________________________________________________________________
____________________________) if that Participant's contribution for
the Plan Year is less than the top heavy minimum contribution. The
additional amount shall be the amount necessary to increase the
Participant's contribution to equal the top heavy minimum contribution.
( ) shall provide a top heavy minimum contribution equal to _____% of the
Non-Key Employee's Testing Compensation for the Plan Year.
( ) ______________________________________________________________________
______________________________________________________________________
______________________________________________________________________.
3.05 ROLLOVER CONTRIBUTIONS. An Eligible Employee:
----------------------
(X) shall be permitted to make rollover contributions under the Plan.
( ) shall not be permitted to make rollover contributions under the Plan.
3.06 VOLUNTARY NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS. An Eligible Employee:
----------------------------------------------
( ) shall be permitted to make voluntary nondeductible Employee
contributions.
(X) shall not be permitted to make voluntary nondeductible Employee
contributions. The Plan shall not accept voluntary nondeductible
Employee contributions or matching contributions for Plan Years
beginning after the Plan Year in which this Plan is adopted by the
Employer. Voluntary nondeductible Employee contributions and any
matching contributions with respect to voluntary nondeductible Employee
contributions for Plan Years beginning after December 31, 1986 shall be
limited in accordance with Section 4.13.
9
ARTICLE IV
ALLOCATIONS TO ACCOUNTS
4.02 ALLOCATION OF CONTRIBUTIONS AND FORFEITURES. Subject to the conditions of
-------------------------------------------
Section 4.05 and any restoration under Section 5.13, the Plan Administrator
shall allocate and credit the following contributions as follows:
Elective Deferrals. The Plan Administrator shall allocate each Participant's
------------------
Elective Deferrals to the Participant's Elective Deferrals Account.
Notwithstanding Section 4.02 of the Holland & Xxxx Defined Contribution Basic
Plan Document and Trust Agreement, Accounting Date shall mean the date the
Trustee receives the Elective Deferrals for purposes of allocating net income,
gain, or loss under Section 4.08 to the Participants' Elective Deferrals
Accounts.
Matching Contributions. The Plan Administrator shall allocate the annual
----------------------
Matching Contributions and forfeitures, if any, made on behalf of a
Participant to the Participant's Matching Contribution Account.
Notwithstanding Section 4.02 of the Holland & Xxxx Defined Contribution Basic
Plan Document and Trust Agreement, Accounting Date shall mean the date the
Trustee receives the Matching Contributions for purposes of allocating net
income, gain, or loss under Section 4.08 to the Participants' Matching
Contribution Accounts.
Employer Nonelective Contributions. The Plan Administrator shall allocate and
----------------------------------
credit the contribution, if any, the Employer designates as an Employer
Nonelective Contribution to the Elective Deferrals Account of each Participant
in the same ratio that each Participant's Testing Compensation for the Plan
Year bears to the total Testing Compensation of all Participants for the Plan
Year. The Plan Administrator may include an Employer Nonelective Contribution
in the ADP test described in Section 4.12 or in the ACP test described in
Section 4.13, to the extent necessary to satisfy either test, but the Plan
Administrator shall not use the same Employer Nonelective Contribution
allocated to a Participant's Account for purposes of satisfying both tests.
For purposes of allocating the Employer Nonelective Contribution,
"Participant" shall mean Participants who are not Highly Compensated
Employees. Notwithstanding Section 4.02 of the Holland & Xxxx Defined
Contribution Basic Plan Document and Trust Agreement, Accounting Date shall
mean the date the Trustee receives the Employer Nonelective Contribution for
purposes of allocating net income, gain, or loss under Section 4.08 to the
Participants' Elective Deferrals Accounts.
Profit Sharing Contributions. The Plan Administrator shall allocate and credit
----------------------------
each Profit Sharing Contribution and forfeitures, if any, to the Profit
Sharing Contributions Account of each Participant:
(X) in the same ratio that each Participant's Compensation for the Plan
Year bears to the total Compensation of all Participants for the Plan
Year. If the Profit Sharing Contribution is made in the form of
Employer Securities, the Plan Administrator shall allocate and credit
the shares of Employer Securities in the same ratio that each
Participant's Compensation for the Plan Year bears to the total
Compensation of all Participants for the Plan Year. Notwithstanding
Section 4.02 of the Holland & Xxxx Defined Contribution Basic Plan
Document and Trust Agreement, Accounting Date shall mean the date the
Trustee receives the Profit Sharing Contribution for purposes of
allocating net income, gain, or loss under Section 4.08 to the
Participants' Profit Sharing Contributions Accounts.
( ) (a) first, in an amount equal to an identical percentage:
10
( ) not exceeding 5.7%
( ) not exceeding 5.4%
( ) not exceeding 4.3%
( ) not exceeding the percentage determined in accordance with the
Permitted Disparity Level table
of each Participant's Compensation and of each Participant's
Compensation which exceeds the Permitted Disparity Level, and
(b) second, in the same ratio that each Participant's Compensation for
the Plan Year bears to the total Compensation of all Participants
for the Plan Year.
(c) The Permitted Disparity Level shall be:
( ) $ ______. [This option may only be selected if the
identical percentage in (a) is determined by reference to the
Permitted Disparity Level table each Plan Year.]
( ) _____% of the taxable wage base as determined under Section
230 of the Social Security Act in effect on the first day of
the Plan Year.
[If the Permitted Disparity Level selected is equal to 100% of the
taxable wage base, the identical percentage selected in (a) of this
option shall not exceed 5.7%. If the Permitted Disparity Level
selected is less than the taxable wage base, the identical percentage
selected in (a) of this option shall not exceed the percentage
determined in accordance with the following table:
Permitted Disparity Level Percentage
------------------------- ----------
More than $0, but not more than the greater of $10,000
or 20% of the taxable wage base 5.7%
More than the greater of $10,000 or 20% of the taxable
wage base, but not more than 80% of the taxable wage
base 4.3%
More than 80% of the taxable wage base, but less than
100% of the taxable wage base 5.4%]
( ) equal to the amount of the annual Employer contribution made to the
Trust for the Participant's benefit. The Plan Administrator shall make
this allocation in accordance with and in the same manner as the
contribution formula adopted by the Employer under Adoption Agreement
Section 3.01.
( ) (a) first, in the same ratio that the Testing Compensation for the Plan
Year of each Non-Key Employee eligible for a minimum contribution and
of each Participant bears to the total Testing Compensation of all
Participants and such Non-Key Employees for the Plan Year, but not
exceeding 3% of Testing Compensation of each Participant and such
Non-Key Employee.
(b) second, in the same ratio that the Participant's Compensation in
excess of the Permitted Disparity Level for the Plan Year bears to
the Compensation in excess of the Permitted Disparity Level of all
Participants for the Plan Year, but not exceeding 3% of the
Permitted Disparity Level.
11
(c) third, in an amount equal to an identical percentage,
( ) not exceeding 2.7%
( ) not exceeding 2.4%
( ) not exceeding 1.3%
( ) not exceeding the percentage determined in accordance with the
Permitted Disparity Level table
of each Participant's Compensation and of each Participant's
Compensation which exceeds the Permitted Disparity Level, and
(d) fourth, in the same ratio that each Participant's Compensation for
the Plan Year bears to the total Compensation of all Participants
for the Plan Year.
(e) The Permitted Disparity Level shall be:
( ) $ _____. [This option may only be selected if the
identical percentage in (c) is determined by reference to the
Permitted Disparity Level table each Plan Year.]
( ) _____% of the taxable wage base as determined
under Section 230 of the Social Security Act in effect on the
first day of the Plan Year.
[If the Permitted Disparity Level selected is equal to 100% of the
taxable wage base, the identical percentage selected in (c) of this
option shall not exceed 2.7%. If the Permitted Disparity Level
selected is less than the taxable wage base, the identical percentage
selected in (c) of this option shall not exceed the percentage
determined in accordance with the following table:
Permitted Disparity Level Percentage
------------------------- ----------
More than $0, but not more than the greater of $10,000
or 20% of the taxable wage base 2.7%
More than the greater of $10,000 or 20% of the taxable
wage base, but not more than 80% of the taxable wage
base 1.3%
More than 80% of the taxable wage base, but less than
100% of the taxable wage base 2.4%]
4.04 FORFEITURES. Subject to any restoration under Section 5.13, the Plan
-----------
Administrator shall treat the amount of a Participant's Accrued Benefit
forfeited under the Plan:
( ) as an additional amount to be allocated as part of and in the same
manner as the Profit Sharing Contributions.
( ) as an additional amount to be allocated as part of and in the same
manner as the Matching Contributions.
12
(X) with respect to a Participant's Accrued Benefit attributable to
Matching Contributions, as a reduction of the Matching Contributions.
(X) with respect to a Participant's Accrued Benefit attributable to Profit
Sharing Contributions, as a reduction of the Profit Sharing
Contributions. With respect to forfeitures of Employer Securities, as a
reduction of the number of shares to be contributed.
Forfeitures shall be allocated or applied:
( ) to the Plan Year in which the forfeiture occurs.
(X) to the Plan Year following the Plan Year in which the forfeiture
occurs.
4.05 ELIGIBILITY TO RECEIVE ALLOCATION OF EMPLOYER CONTRIBUTION AND
--------------------------------------------------------------
FORFEITURES. In allocating the Profit Sharing Contributions and forfeitures, if
-----------
any, for a Plan Year, the Plan Administrator shall take into account
Compensation paid to the Participant:
(X) for that part of the Plan Year the Employee is a Participant in the
Plan.
( ) for the entire Plan Year.
( ) in accordance with the elapsed time method.
Minimum Number of Hours of Service. The minimum number of Hours of Service a
----------------------------------
Participant shall be required to complete during a Plan Year in order to
receive an allocation of the Profit Sharing Contributions and forfeitures (if
allocated in the same manner as Profit Sharing Contributions under Adoption
Agreement Section 4.04) for the Plan Year is:
(X) 1,000 Hours of Service.
( ) _____ Hours of Service. [The number of Hours of Service selected shall
not exceed 1,000.]
( ) not applicable under the elapsed time method.
The minimum number of Hours of Service a Participant shall be required to
complete during a Plan Year in order to receive an allocation of the Matching
Contributions and forfeitures (if allocated in the same manner as Matching
Contributions under Adoption Agreement Section 4.04) for the Plan Year is:
(X) 1,000 Hours of Service
( ) _____ Hours of Service. [The number of Hours of Service selected shall
not exceed 1,000.]
( ) not applicable under the elapsed time method.
The Participant shall be eligible to make Elective Deferrals and to receive an
allocation of the Employer Nonelective Contribution without regard to an Hour
of Service requirement.
13
If the Participant terminates employment during the Plan Year because of
death, disability, or attaining the Normal Retirement Date:
(X) there shall be no Hour of Service requirement nor last day of the year
employment requirement in order to receive an allocation of the Profit
Sharing Contributions and the Matching Contributions, if any.
( ) the applicable Hour of Service requirement shall apply.
( ) the Participant shall receive an allocation of the Profit Sharing
Contributions and the Matching Contributions, if any, in accordance
with the elapsed time method under Section 4.05.
Employment on the Last Day of the Plan Year. A Participant who, during a
-------------------------------------------
particular Plan Year, completes the Hour of Service requirement:
( ) shall share in the allocation of Matching Contributions, Profit
Sharing Contributions, Employer Nonelective Contributions, and
Participant forfeitures, if any, for that Plan Year without regard to
whether the Participant is employed on the Accounting Date of that Plan
Year.
(X) shall share in the allocation of Matching Contributions, Profit Sharing
Contributions, and Participant forfeitures, if any, for that Plan Year
only if the Participant is employed on the Accounting Date of that Plan
Year. The Participant shall share in the allocation of Employer
Nonelective Contributions, if otherwise eligible, without regard to
whether the Participant is employed on the Accounting Date of that Plan
Year.
( ) shall share in the allocation of the Matching Contributions, Profit
Sharing Contributions, Employer Nonelective Contributions, and
Participant forfeitures, if any, for that Plan Year in accordance with
the elapsed time method of Section 4.05.
4.08 ALLOCATION AND DISTRIBUTION OF NET INCOME, GAIN, OR LOSS. As of each
--------------------------------------------------------
Valuation Date the Plan Administrator shall allocate net income, gain, or loss
attributable to Elective Deferrals during the Plan Year:
(X) in accordance with the provisions of Section 4.08(a).
( ) in accordance with the provisions of Section 4.08(b). The Plan
Administrator shall establish a segregated investment Account for the
Elective Deferrals of each Participant. The Plan Administrator shall
allocate the Elective Deferrals made during the Plan Year at the time
the Employer makes the contribution to the Plan. As of the Accounting
Date of each Plan Year, the Plan Administrator shall withdraw the funds
in the Participant's segregated investment Account and direct the
Trustee to invest the funds as part of the Trust Fund.
( ) in accordance with the provisions of Section 4.08(a), except that the
Plan Administrator shall treat Elective Deferrals contributed:
14
( ) at any time prior to the Accounting Date of the Plan Year
( ) at any time prior to the first day of the seventh month of the
Plan Year
as part of the Participant's Elective Deferrals Account at the
beginning of the Plan Year.
( ) ______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
The Plan Administrator shall apply the provisions of Section 4.08(a)
separately to each investment options, taking into account only the portion
of each Participant's Account which is invested in the particular
investment option.
4.10 LIMITATION ON ALLOCATIONS TO PARTICIPANT'S ACCOUNTS.
---------------------------------------------------
More Than One Plan. If the Employer maintains more than one plan, the Plan
------------------
Administrator shall attribute:
(X) the total Excess Amount allocated as of the Accounting Date to this
Plan.
( ) the total Excess Amount allocated as of the Accounting Date to the
_______________________________________________________________________
the Employer maintains.
( ) to this Plan an amount equal to the product of:
(a) the total Excess Amount allocated as of the Accounting Date
(including any amount which the Plan Administrator would have
allocated but for the limitations of Code (S) 415); times
(b) the ratio of (1) the amount allocated to the Participant's Accounts
as of the Accounting Date under this Plan to (2) the total amount
allocated as of the Accounting Date under all qualified Defined
Contribution Plans (determined without regard to the limitations of
Code (S) 415).
( ) ______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
Defined Benefit Plan Limitation.
-------------------------------
(X) The Employer does not maintain and never has maintained a Defined
Benefit Plan covering any Participant in this Plan. Accordingly, no
special Defined Benefit Plan limitation applies under this Plan.
( ) If the Participant presently participates, or has ever participated
under a Defined Benefit Plan maintained by the Employer, then the sum
of the Defined Benefit Plan Fraction and the Defined Contribution Plan
Fraction for the Participant for that Limitation Year shall not exceed
1.0. To the extent necessary to satisfy the limitation under this
Section, the Employer shall reduce:
( ) the Participant's projected annual benefit under the Defined
Benefit Plan under which the Participant participates.
15
( ) its contribution or allocation on behalf of the Participant to the
Defined Contribution Plan under which the Participant participates
and then, if necessary, the Participant's projected annual benefit
under the Defined Benefit Plan under which the Participant
participates.
( ) _______________________________________________________________________
_______________________________________________________________________
4.12 CONTRIBUTIONS UNDER A CASH OR DEFERRED ARRANGEMENT.
--------------------------------------------------
Determination of Allocable Income or Loss. The Plan Administrator shall
-----------------------------------------
adjust Excess Deferrals, Excess Contributions, and Excess Aggregate
Contributions for any income or loss:
( ) up to the date of distribution.
(X) up to the last day of the calendar year with respect to Excess
Deferrals and up to the last day of the Plan Year with respect to
Excess Contributions and Excess Aggregate Contributions.
4.14 DEFINITIONS. For purposes of Section 4.14(n), the Plan:
-----------
(X) shall limit Testing Compensation taken into account to Testing
Compensation received only for the portion of the Plan Year in which
the Employee was a Participant and only for the portion of the Plan
Year in which the Plan was in effect.
( ) shall include Testing Compensation for the entire Plan Year,
irrespective of whether the Plan was in effect for the entire Plan Year
or whether the Employee begins, resumes or ceases to be a Participant
during the Plan Year.
ARTICLE V
PARTICIPANT VESTING
5.02 VESTING UPON DISABILITY. Upon the disability of a Participant, the
-----------------------
Participant's Nonforfeitable percentage in his or her Profit Sharing
Contributions Account and Matching Contributions Account:
(X) shall be 100%.
( ) shall be determined under the vesting schedule applicable to the
Participant's Profit Sharing Contributions Account and Matching
Contributions Account under Article V.
5.03 VESTING UPON DEATH. Upon the death of a Participant, the deceased
------------------
Participant's Nonforfeitable percentage in his or her Profit Sharing
Contributions Account and Matching Contributions Account:
(X) shall be 100%.
( ) shall be determined under the vesting schedule applicable to the
Participant's Profit Sharing Contributions Account and Matching
Contributions Account under Article V.
16
( ) shall be 0% and the Profit Sharing Contributions Account and Matching
Contributions Account shall be forfeited (to the extent permitted
under the annuity distribution rules) and reallocated in accordance
with Section 4.04.
5.05 VESTING SCHEDULE. A Participant's Elective Deferrals Account shall be
----------------
100% Nonforfeitable at all times. Subject to Section 8.06 (unclaimed Account
procedure) of the Plan, the Participant's Nonforfeitable percentage in his or
her Profit Sharing Contributions Account and Matching Contributions Account:
( ) shall be 100% at all times.
(X) shall be determined under the following vesting schedule:
Years of Service Nonforfeitable [5 Year 3 to 7 Year
With the Employer Percentage Cliff Graded
----------------- -------------- ------- -----------
Less than 1......................0% 0% 0%
1.........................0% 0% 0%
2........................33% 0% 0%
3........................67% 0% 20%
4.......................100% 0% 40%
5.......................100% 100% 60%
6.......................100% 100% 80%
7 or more...............100% 100% 100%]
[The Employer shall select either the 5 year cliff vesting schedule or
the 3 to 7 year graded vesting schedule and complete the blanks in the
vesting schedule with percentages equal to or greater than the
percentages in the vesting schedule selected. If the vesting schedule
selected is not a top heavy vesting schedule, the Employer shall
select a top heavy vesting schedule under the following option.]
( ) In lieu of the preceding vesting schedule, the following top heavy
vesting schedule shall apply:
( ) in the first Plan Year in which the Plan is a Top Heavy Plan and
in all subsequent Plan Years.
( ) only in Plan Years in which the Plan is a Top Heavy Plan.
Years of Service Nonforfeitable [3 Year 2 to 6 Year
With the Employer Percentage Cliff Graded
----------------- -------------- ------- -----------
Less than 1.....................__% 0% 0%
1........................__% 0% 0%
2........................__% 0% 20%
3........................__% 100% 40%
4........................__% 100% 60%
5........................__% 100% 80%
6 or more...............100% 100% 100%]
[The Employer shall select either the 3 year cliff vesting schedule or
the 2 to 6 year graded vesting schedule and complete the blanks in the
vesting schedule with percentages equal to or greater than the
percentages in the vesting schedule selected.]
17
The Plan Administrator shall apply the top heavy vesting schedule to
Participants who earn at least one Hour of Service after the top heavy
vesting schedule becomes effective. A shift between vesting schedules under
this Section is an amendment to the vesting schedule. A shift to a new
vesting schedule under this Section is effective on the first day of the
Plan Year for which the Top Heavy Plan status of the Plan changes.
The Plan Administrator shall treat the Participant's interest in life
insurance contracts purchased on the Participant's behalf under Article XI:
(X) as part of the Participant's Profit Sharing Contributions Account
subject to the applicable vesting schedule.
( ) as 100% Nonforfeitable at all times.
5.06 YEAR OF SERVICE - VESTING. For purposes of determining Years of Service
-------------------------
under Section 5.05 (unless the Employer elected the elapsed time method under
Section 1.36 of the Adoption Agreement), the Plan shall include all Plan Years
during which an Employee completes not less than 1,000 Hours of Service with the
Employer and the Related Group:
(X) including Plan Years in which the Employer did not maintain this Plan
or a predecessor plan.
( ) excluding Plan Years in which the Employer did not maintain this Plan
or a predecessor plan.
(X) excluding Plan Years prior to the Plan Year in which the Participant
attained age 18.
ARTICLE VI
DISTRIBUTIONS
6.04 DISTRIBUTIONS UNDER DOMESTIC RELATIONS ORDERS. An alternate payee under a
---------------------------------------------
qualified domestic relations order:
(X) shall be entitled to a distribution at any time, irrespective of
whether the Participant has attained the earliest retirement age (as
defined under Code (S) 414(p)) under the Plan.
( ) shall not be entitled to a distribution prior to the time the
Participant attains the earliest retirement age (as defined under Code
(S) 414(p)) under the Plan.
6.05 IN-SERVICE DISTRIBUTIONS. Prior to terminating employment with the
------------------------
Employer:
(X) A Participant, after attaining the Normal Retirement Date, shall have
the right to elect to receive all or any portion of the Participant's:
( ) Profit Sharing Contributions Account.
(X) Matching Contributions Account.
(X) Elective Deferrals Account.
(X) Rollover Contributions Account.
18
(X) A Participant shall have the right to request a distribution from the
Participant's Elective Deferrals Account in an amount necessary to
satisfy a hardship in accordance with the safe harbor hardship
distribution provisions of Section 6.05.
( ) A Participant shall have the right to receive a distribution from the
Participant's Profit Sharing Contribution Account, Matching
Contributions Account, Elective Deferrals Account and Rollover
Contributions Account after attaining age 59 1/2.
( ) A Participant shall not have any right to receive a distribution of any
portion of the Participant's Profit Sharing Contribution Account,
Matching Contributions Account, Elective Deferrals Account and Rollover
Contributions Account prior to termination of Service with the Employer
(except as mandated by Article VI).
6.07 DISTRIBUTION METHODS. Subject to the annuity distribution requirements of
--------------------
Section 6.08, if applicable to this Plan, and the minimum distribution
requirements of Section 6.03, a Participant or Beneficiary shall have the right
to elect distribution under one or any combination of the following methods:
(X) lump sum distribution in cash to the extent the Participant's Account
is not invested in Employer Securities and in Employer Securities only
to the extent the Participant's Account is invested in Employer
Securities. With respect to Employer Securities distributed in
accordance with the provisions of Article XIII, the Participant shall
receive the lump sum distribution in whole shares of Employer
Securities and cash for any fractional share.
( ) monthly installments over a fixed period of time not exceeding the life
expectancy of the Participant or the joint life and last survivor
expectancy of the Participant and the Participant's Beneficiary.
( ) quarterly installments over a fixed period of time not exceeding the
life expectancy of the Participant or the joint life and last survivor
expectancy of the Participant and the Participant's Beneficiary.
( ) annual installments over a fixed period of time not exceeding the life
expectancy of the Participant or the joint life and last survivor
expectancy of the Participant and the Participant's Beneficiary.
( ) joint and ____% survivor annuity.
( )
_______________________________________________________________________
______________________________________________________________________.
[A distribution method selected under this option may not permit
distribution over a period of time which exceeds the life expectancy of
the Participant or the joint life and last survivor expectancy of the
Participant and the Participant's Beneficiary.]
19
6.08 ANNUITY DISTRIBUTIONS TO PARTICIPANTS AND SURVIVING SPOUSES. Section 6.08
-----------------------------------------------------------
of the Plan shall apply:
(X) to Participants only to the extent required by law.
( ) to all Participants.
ARTICLE VII
PLAN LOANS
7.01 AVAILABILITY OF PARTICIPANT LOANS. Participant loans:
---------------------------------
( ) shall be permitted under the Plan in accordance with Article VII.
(X) shall not be permitted.
ARTICLE VIII
ADMINISTRATIVE PROVISIONS
8.08 NO BENEFICIARY DESIGNATION.
--------------------------
(X) The distribution priority of Section 8.08 of the Plan shall apply.
( )
______________________________________________________________________
______________________________________________________________________
_____________________________________________________________________.
ARTICLE X
MISCELLANEOUS
10.06 STATE LAW. This agreement shall be interpreted under the law of
---------
Colorado.
--------
ARTICLE XII
TRUST AGREEMENT
12.06 TRUSTEE INVESTMENT POWERS. Notwithstanding Section 12.06 of the Holland
-------------------------
& Xxxx Defined Contribution Basic Plan Document and Trust Agreement, the Trustee
is hereby authorized to retain any Employer Securities contributed to the Plan
in the form of Employer Securities and shall have no obligation to dispose of
such Employer Securities except as directed by the Plan Administrator.
12.09 INVESTMENT OF THE TRUST FUND. Notwithstanding Section 12.06 of the
----------------------------
Holland & Xxxx Defined Contribution Basic Plan Document and Trust Agreement, the
Trustee shall not be required to diversify investments in Employer Securities.
12.11 PARTICIPANT DIRECTION OF INVESTMENT. A Participant:
-----------------------------------
(X) shall have the right to direct the Trustee with respect to the
investment of the Participant's Elective Deferrals Account, Matching
Contributions Account and Rollover Contributions
20
Account but shall not have the right to direct the Trustee with respect
to the investment of the Participation's Profit Sharing Contributions
Account.
( ) shall not have the right to direct the Trustee with respect to the
investment of the Participant's Accounts (other than a Participant loan
treated as a Participant direction of investment under Article VII).
ARTICLE XIII
EMPLOYER SECURITIES PROVISIONS
13.01 PURPOSE OF PLAN. This plan is intended to be a stock bonus plan with
---------------
respect to the portion of the Plan invested in Employer Securities. As such,
one purpose of this Plan is to benefit Participants and Beneficiaries by
obtaining and retaining for them, individually and collectively, a position of
equity ownership in the Employer by making Profit Sharing Contributions in the
form of Employer Securities.
13.02 INVESTMENT OF CASH CONTRIBUTIONS. All Employer Profit Sharing
--------------------------------
Contributions made in the form of cash shall be paid over to the Trustee and
invested by the Trustee in its discretion. Employer contributions made in the
form of Employer Securities shall be held by the Trustee. The Employer shall
contribute Employer Securities to the Trust out of authorized but unissued or
treasury shares of the Employer.
13.03 ACCOUNTING FOR EMPLOYER SECURITIES. All Employer Securities held by the
----------------------------------
Trustee shall be allocated to Accounts and distributed according to the number
of shares held in a particular Account, not according to the value of the
shares.
13.04 ALLOCATION OF STOCK DIVIDENDS. Any securities received by the Trustees
-----------------------------
as a stock split or dividend or as a result of reorganization or other
recapitalization shall be allocated as of each Valuation Date in the same
proportion as the Employer Securities are held in the Participants' Accounts.
In the event any rights, warrants or options are issued on common shares or
other securities held in the Trust, the Trustees shall exercise them for the
acquisition of additional investments to the extent that cash is then available
and the investment is deemed prudent.
13.05 CASH DIVIDENDS ON EMPLOYER SECURITIES. Any cash dividend declared by
-------------------------------------
the Employer with respect to Employer Securities in the Plan shall be paid to
the Trustee and shall be allocated to each Participant's Profit Sharing
Contributions Account based on the number of shares held in that Participant's
Account. The dividend shall be invested by the Trustee in its discretion.
13.06 VOTING OF EMPLOYER SECURITIES. Every Participant shall have the right
-----------------------------
to direct the Trustee with respect to the voting of the Employer Securities
allocated to his Employer Contribution Account with respect to any corporate
matter which, by law or by corporate charter, requires more than a majority
vote.
At the time of the mailing to stockholders of the notice of any stockholders'
meeting of the Employer, the Employer shall cause to be prepared and delivered
to each Participant a notice of the stockholders' meeting with a descriptive
statement of the items upon which the Participant has the right to exercise his
right to vote. Neither the Trustee nor the Plan Administrator shall have the
right to vote any Employer Securities which a Participant fails to vote as
authorized by this Section.
13.07 DISTRIBUTION IN EMPLOYER SECURITIES. Notwithstanding the provisions of
-----------------------------------
Article VI of the Holland & Xxxx Defined Contribution Basic Plan Document and
Trust Agreement, benefits shall be
21
payable in the form of Employer Securities to the extent that the distributions
are in whole shares of Employer Securities. If a distribution includes a
fractional share, a distribution of only the fractional share portion may be
made in cash.
13.08 PUT OPTION. The Employer will issue a put option to each Participant
----------
receiving a distribution of Employer Securities from the Trust. The put option
will permit the Participant to sell the Employer Securities to the Employer, at
any time during either one of two put option periods, at the current Fair Market
Value. The first put option period runs during the 60 day period beginning on
the date the Employer Securities are first distributed by the Plan. The second
put option runs during the 60 day period that (1) occurs during the calendar
year that begins immediately following the date of distribution and (2)
immediately follows the date on which the Employer receives the valuation of the
Employer Securities for the last day of the previous Plan Year. The period
during which the put option may be exercised shall not include any time when a
holder is unable to exercise the put option because the Employer is prohibited
from honoring the put option by federal or state law. If a Participant (or
Beneficiary) exercises his or her put option, the Employer must purchase the
Employer Securities at Fair Market Value in accordance with the terms provided
under Section 13.11. Following the expiration of the second put option period,
a Participant shall have no right to require the Employer to purchase the
Employer Securities distributed by the Plan.
13.09 RESTRICTION ON EMPLOYER SECURITIES. Except upon prior written consent
----------------------------------
of the Employer, no Participant (or Beneficiary) may sell, assign, give,
pledge, encumber, transfer or otherwise dispose of any Employer Securities now
owned or subsequently acquired by him or her without complying with the terms of
this Article. If a Participant (or Beneficiary) pledges or encumbers any
Employer Securities without the prior written consent, any security holder's
rights with respect to such Employer Securities are subordinate and subject to
the rights of the Employer.
13.10 LIFETIME TRANSFER/RIGHT OF FIRST REFUSAL. If any Participant (or
----------------------------------------
Beneficiary) who receives Employer Securities under this Plan desires to dispose
of any of his Employer Securities for any reason during his or her lifetime
(whether by sale, assignment, gift, or any other method of transfer), he or she
first must offer the Employer Securities for sale to the Employer. The Employer
may require a Participant (or Beneficiary) entitled to a distribution of
Employer Securities to execute an appropriate stock restriction agreement
(evidencing the right of first refusal) prior to receiving a certificate for
Employer Securities.
In the case of an offer by an independent third party, the offer to the
Employer is subject to all the terms and conditions set forth in Section 13.11,
based on a price equal to the Fair Market Value per share and payable in
accordance with the terms of Section 13.11; however, if the selling price and
terms offered to the Participant by the third party are more favorable to the
Participant than the selling price and terms of Section 13.11, the selling price
and terms of the offer of the third party shall apply. The Employer must give
written notice to the offering Participant of its acceptance of the
Participant's offer within 14 days after the Participant has given written
notice to the Employer or the Employer's rights under this Section will lapse.
The Employer may grant the Trust the option to assume the Employer's rights and
obligations with respect to all or any part of the Employer Securities offered
to the Employer under this Section.
13.11 PAYMENT OF PURCHASE PRICE. When the Employer exercises an option to
-------------------------
purchase a Participant's Employer Securities pursuant to an offer given under
Section 13.10 or when a Participant notifies the Employer in writing that a put
option is being exercised pursuant to Section 13.08, the Employer must make
payment in lump sum or, if the distribution to the Participant (or his or her
Beneficiary) constitutes a Total Distribution, in substantially equal
installments over a period not exceeding
22
5 years. A Total Distribution to a Participant (or to a Beneficiary) is the
distribution, within one taxable year of the recipient, of the entire balance to
the Participant's credit under the Plan. In the case of a distribution which is
not a Total Distribution or which is a Total Distribution with respect to which
the Employer will make payment in lump sum, the Employer must pay the
Participant (or Beneficiary) the Fair Market Value of the Employer Securities
repurchased no later than 30 days after the date the Participant (or
Beneficiary) exercises the put option. In the case of a Total Distribution with
respect to which the Employer will make installment payments, the Employer must
make the first installment payment no later than 30 days after the Participant
(or Beneficiary) exercises the put option. For installment amounts not paid
within 30 days of the exercise of the put option, the purchaser must evidence
the balance of the purchase price by executing a promissory note, delivered to
the selling Participant at the Closing. The note delivered at Closing must bear
a reasonable rate of interest, determined as of the Closing Date, and the
Employer must provide adequate security. The note must provide for equal annual
installments with interest payable with each installment, the first installment
being due and payable one year after the Closing Date. The note further must
provide for acceleration in the event of 30 days' default of the payment on
interest or principal and must grant to the maker of the note the right to
prepay the note in whole or in part at any time or times without penalty;
however, the Employer may not have the right to make any prepayment during the
calendar year or fiscal year of the Participant (Beneficiary) in which the
Closing Date occurs.
13.12 VALUATIONS. The Trust shall be valued by the Trustee at Fair Market
----------
Value annually as of the close of business on the last day of the Plan Year. A
similar valuation of the Trust may occur at the end of any calendar month upon
direction of the Plan Administrator.
13.13 TERMS AND DEFINITIONS. For purposes of this Article:
---------------------
(a) EMPLOYER SECURITIES means any security issued by the Employer which
constitutes an Employer Security within the meaning of ERISA (S)
407(d)(5).
(b) FAIR MARKET VALUE means the value of the Employer Securities (1)
determined as of the date of the exercise of an option if the exercise is
by a Disqualified Person, or (2) in all other cases, determined as of the
most recent Accounting Date. If the Employer Securities are publicly
traded, fair market value will be based on the most recent closing price
in public trading, as reported in The Wall Street Journal or any other
-----------------------
publication of general circulation designated by the Plan Administrator,
unless another method of valuation is required by the standards applicable
to prudent fiduciaries. If the Employer Securities cannot be valued on the
basis of its closing price in recent public trading, its fair market value
will be determined by an independent appraisal by a person who customarily
makes such appraisals. The Employer shall comply with the requirements
under Code (S) 401(a)(28)(C) in selecting an independent appraiser. In
performing an appraisal, the independent appraiser selected shall comply
with all requirements under Code (S) 401(a)(28)(C), under ERISA (S) 3(18),
and under regulations promulgated under either of these two statutory
provisions. In the case of a transaction between the Plan and an Employer
or another party in interest, the fair market value of the Employer
Securities must be determined as of the date of the transaction rather
than as of some other Valuation Date occurring before or after the
transaction. In other cases, the fair market value of the Employer
Securities will be determined as of the most recent Valuation Date. The
determination of fair market value of Employer Securities by such an
appraisal shall be binding on all parties interested in the Plan and may
be relied upon by the Trustee.
23
(c) NOTICE means any offer, acceptance of an offer, payment or any other
communication. A person has given Notice permitted or required under this
Article when the person deposits the Notice in the United States mail,
first class, postage prepaid, addressed to the person entitled to the
Notice at the address, currently listed for him or her in the records of
the Employer. Any person affected by this Section has the obligation of
notifying the Employer of any change of address.
(d) BENEFICIARY includes the legal representative of a deceased Participant.
(e) CLOSING means the place, date and time (Closing Date) to which the selling
Participant (or his or her Beneficiary) and purchaser may agree for
purposes of a sale and purchase under this Section; however, Closing must
take place not later than 30 days after the exercise of an offer under
Section 13.08.
(f) DISQUALIFIED PERSON has the meaning ascribed to that term under Code (S)
4975(e)(2).
13.14 BINDING EFFECT. The provisions of this Article shall bind the Employer,
--------------
any Participant or Beneficiary who receives Employer Securities under this Plan
and their respective successors and assigns.
Holland & Xxxx may amend any part of this Plan. Holland & Xxxx will inform the
Employer of any amendments made to, or the discontinuance or abandonment of, the
Holland & Xxxx Defined Contribution Basic Plan Document and Trust Agreement or
the Adoption Agreement executed by the Employer. The Adopting Employer may not
rely on the notification letter issued by the Internal Revenue Service to
Holland & Xxxx as evidence that the Plan is qualified under Code (S) 401. In
order to obtain reliance with respect to Plan qualification, the Employer must
apply to the appropriate key district office for a determination letter.
The Employer may change the choice of options in the Adoption Agreement, add
overriding language to Adoption Agreement Sections 4.10 and 3.02 to satisfy Code
(S)(S) 415 and 416, and add certain model amendments published by the Internal
Revenue Service which specifically provide that their adoption will not cause
the Plan to become an individually designed plan. If the Employer amends the
plan for any other reason, including a waiver of the minimum funding requirement
under Code (S) 412(d), the Employer will no longer participate in this Regional
Prototype Plan and the Plan will become an individually designed plan. If the
Plan fails to attain or retain qualification, the Plan will no longer
participate in this Regional Prototype Plan and will become an individually
designed plan.
The Trustee, in accepting its position as Trustee, agrees to all of the
obligations, responsibilities and duties imposed upon the Trustee under the Plan
and Trust.
24
The Employer hereby agrees to the provisions of this Plan and Trust, and in
witness of its agreement, the Employer by its duly authorized officers has
executed this Adoption Agreement, and the Trustee has signified its acceptance
as Trustee under this Prototype Plan and Trust, on the date written below.
XXXXXX DENTAL MANAGEMENT SERVICES, INC.
EMPLOYER
By:
------------------------------------
Title:
---------------------------------
Date:
----------------------------------
Attest:
---------------------------
NORWEST BANK
TRUSTEE
By:
------------------------------------
Title:
---------------------------------
Date:
----------------------------------
25
