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EXHIBIT 10.30
PROFIT SHARING PLAN AND TRUST
AS SPONSORED BY PACIFIC CONSULTING GROUP
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DEFINED CONTRIBUTION PLAN
Table of Contents
Article I ...................................Adoption Agreement
Article II...................................Definitions
Article III..................................Participation and Vesting
Article IV...................................Employer Contributions and Voluntary
Non-deductible Employee Contributions
Article V....................................Elective Deferrals
Article VI...................................Allocation of Employer Contributions and
Limitations on Contributions and Benefits
Article VII..................................Top-Heavy Rules
Article VIII.................................Payment of Benefits
Article IX...................................Life Insurance Policies and Contracts
Article X....................................Miscellaneous
Article XI...................................Loans to Participants
Article XII..................................Trust and Administration
Article XIII.................................Limitation on Employee Contributions and
Matching Employer Contributions
Article XIV..................................Distribution of Excess Deferrals
Article XV...................................Distribution of Excess Contributions
Article XVI..................................Distribution of Excess Aggregate Contributions
Article XVII.................................Integration with Social Security
Article XVIII................................Eligible Rollovers
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ARTICLE I
DEFINED CONTRIBUTION
PLAN & TRUST
ADOPTION AGREEMENT
Company Name: CRL Network Services, Inc.
Address: Xxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Telephone #: (000) 000-0000
EIN #: 00-0000000
Plan #: 001
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The undersigned (X) incorporated ( ) unincorporated Employer hereby adopts the
Pacific Consulting Group Prototype Plan and Trust Agreement, and elects the
following and said elections shall override the language of the Basic Plan
Document if there is a conflict:
(1) Type of Plan shall mean a:
(A)( ) Profit Sharing Plan.
(B)(X) Profit Sharing/401(k) Plan (if elected CODA Adoption
Agreement must be completed).
(2) Effective Date and Plan Year means the Employer:
(A)(X) Establishes a new Plan and Trust on this Effective
Date of the Plan which is January 1, 1997. The first
Plan Year shall begin on the Effective Date and end on
December 31, 1997. Subsequent Plan Years shall be the 12
consecutive month period beginning January 1, and each
anniversary thereafter.
(B)( ) Amends and restates in its entirety a previously
established qualified Plan and Trust of the Employer
which has an Effective Date of ____________________,
199 . Except as specifically provided in the Plan, the
Effective Date of this amendment and restatement is
_____________________________. The Plan Year shall be
the 12 consecutive month period beginning on
___________________ and each anniversary thereafter.
(3) Any Life Insurance Purchased by the Plan shall start on
_______n/a___________, 199 and for any subsequent Contracts shall be
__n/a________, 199 and the 12 consecutive month period beginning on ___ n/a
______________ and each anniversary thereafter.
(4) Compensation
(A) Compensation shall be determined on the basis of:
(choose one)
(1)(X) Plan Year
(2)( ) Calendar Year
(B) Compensation shall exclude Employer contributions made
pursuant to a Salary Savings Agreement under:
(1)( ) A Cash or Deferred Arrangement under Code
Section 401(k) or Simplified Employee Pension
under Code Section 402(h) (1) (B)
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(2)( ) A flexible benefit plan under Code Section
125.
(3)( ) A tax deferred annuity under Code Section 4C3
(b)
(C) If the Employer chooses a non-integrated formula,
Compensation will exclude:
(1)( ) overtime.
(2)( ) bonuses.
(3)( ) commissions.
NOTE: These exclusions will not be considered for
purposes if IRC Section 415.
(D) Maximum Compensation
For the purposes of the Plan, Compensation shall be
limited to $160,000.00, the maximum amount which will be
considered for Plan purposes. This maximum amount shall
not exceed $160,000.00 as adjusted.
NOTE: Any exclusion of Compensation must satisfy the
requirements of Section 1.401(a) (4) of the Income Tax
Regulations and Code Section 414(5) and the regulations
thereunder.
(5) Normal Retirement Age
Normal Retirement Age of a Participant shall be: (choose one)
(A)( ) His 65th birthday (not to exceed 65th).
(B)( ) The earlier of his _______ birthday and the first
day of the Plan Year within ________ months of his 65th
birthday.
(C)(X) The later of his 65th birthday (not to exceed 65th)
and the 5th anniversary of his participation (not to
exceed five)
(6) Eligibility for Participation
Each Employee shall be eligible for participation in the Plan upon
meeting the following eligibility requirements:
(A) Age and Service Requirements
(1)( ) No age or service required
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(2)(X) Service Requirements
A. ( )None
B. ( )1/2 year of Service
C. ( )1 year of Service
D. (X)Other: 1/4 year of service (not to exceed 12
months)
(3)(X) Age Requirements
A. (X)None
B. ( )18
C. ( )20.5
D. ( )21
(B) Effective Date of Participation or Entry Date:
An Employee who satisfies the conditions of eligibility shall
participate in the plan not later than:
(1)( ) the first day of the Plan Year in which the eligible
employee satisfies the conditions for eligibility
(2)( ) the first day of the Plan Year next following
the day on which the Eligible Employee satisfies the
conditions for eligibility. (Requires Minimum Service of
6 months and Age 20.5 Years in 6(A) above)
(3)( ) the earlier of the first day of the Plan Year,
or the first day of the 7th month of the Plan Year, next
following the date on which the Eligible Employee
satisfies the conditions for eligibility
(4)(X) the earlier of the first day of the Plan Year, or
the first day of the 4th, 7th, or 10th month, next
following the date on which the Eligible Employee
satisfies the conditions for eligibility.
(5)( ) the earlier of the first day of the month next following
the date on which the Eligible Employee satisfies the
conditions of eligibility.
(C) Hours of Service Computation
Hours of Service shall be determined on the basis of the method
selected below. Only one method may be selected. The method
selected shall be applied to all Employees covered under the
Plan. (choose one)
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(1)(X) On the basis of actual hours for which an Employee
is paid or entitled to payment.
(2)( ) On the basis of days worked.
An Employee shall be credited with ten (10) Hours of
Service if such Employee would be credited with at least
one (1) Hour of Service during the day.
(3)( ) On the basis of weeks worked.
An Employee shall be credited with forty-five (45) Hours
of Service if such Employee would be credited with at
least one Hour of Service during the week.
(4)( ) On the basis of semi-monthly payroll periods.
An Employee shall be credited with ninety-five (95)
Hours of Service if such Employee would be credited with
at least one (1) Hour of Service during the semi-monthly
payroll period.
(5)( ) On the basis of months worked-
An Employee shall be credited with one hundred ninety
(190) Hours of Service if such Employee would be
credited with at least one (1) Hour of Service during
the month.
(D) The classification of Employee(s) eligible for participation
will be: (choose one)
(1)( ) All.
(2)(X) All except
( ) Salaried.
(X) Hourly
( ) Employees covered by a collective bargaining
agreement between the Employer and Employee
Representatives under which retirement benefits
were the subject of good faith bargaining. For
this purpose, the term "Employee
Representatives" does not include any
organization more than half of whose members are
employees who are owners, officers, or
executives of the employer.
Other (specify)______________________
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NOTE: Any election to exclude salaried, hourly, or other shall be made
in a manner to assure compliance with IRC 410(b) and 401(a) (26).
(E) Service with a predecessor Employer, including a sole proprietor
or partnership, which did not maintain this Plan shall be
considered to be service with the Employer for purposes of
determining:
(1)( ) Eligible Service
(2)( ) Vested Service
(3)(X) None of the above.
(7) Employer Contribution and Allocation Formula Amount
(A) The amount of the Employer's annual contribution to the Trust
will equal:
(1)(X) The amount (or additional amount) the Employer may
from time to time deem advisable.
(2)( ) ___________% of the Compensation of all Participants
under the Plan, determined for the Employer's taxable
year for which it makes the contribution. (may not
exceed 15%)
(3) % of Net Profits but no more than $ ____________.
(4)( ) This is a frozen Plan effective ______________. The
Employer will not contribute to the Plan with respect to
any period following the stated date.
(B) Contribution Allocation. Employer Contributions will be
allocated in accordance with the method selected below.
(1)( ) Nonintegrated Contribution and Allocation Formula.
(see Minimum Contributions under Top-Heavy Plans at
Section 6.01(a).)
The Employer shall allocate Employer Contributions (and
Participant forfeitures) in the same ratio that each
Participant's Compensation for the Plan Year bears to
the total Compensation of all Participants for that Plan
Year.
(2)(X) Integrated Allocation Formula-Maximum Disparity. The
Employer will allocate the annual Employer Contributions
and participant forfeitures, if any, in the same ratio
that each Participant's Excess Compensation for the Plan
Year bears to the total Excess Compensation of all
Participants for the Plan Year. The allocation under
this paragraph, as a percentage of each Participant's
Excess Compensation, must not exceed the
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applicable percentage listed under the Maximum Disparity
Table contained in Article XVII. If the Plan is
top-heavy, then step one and two of Article XVII must be
allocated before this allocation is made
The Employer will then allocate any remaining Employer
Contributions and Participant forfeitures, if any, 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.
For purposes of this section, "Excess Compensation"
means Compensation in excess of the following
Integration Level:
The Integration Level is equal to:
(X) The taxable wage base.
( ) $_____ (a dollar amount less than the wage
base)
( ) ________% of the tax wage base (not to exceed
100).
(8) Employee Contributions
(A) Employee Voluntary Contributions ( ) shall (X) shall not
be permitted.
(B) Employee Roll-Over Contributions (X) shall ( ) shall not
be permitted.
(9) In the event of the termination of employment or participation of a
Participant prior to his normal Retirement Age, his vested interest in that
portion of his Participant's Account derived from Employer Contributions shall
be:
(A) Vesting Schedule (choose one)
(1)( ) If such termination should occur prior to the
completion of three (3) Years of Service, the
Participant shall be entitled to no vested interest. If
such termination occurs after the completion of three
(3) Years of Service the Participant shall have a vested
interests determined under the following table:
% after 3 Years of Service
(not less than 20%)
% after 4 Years of Service
(not less than 40%)
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% after 5 Years of Service
(not less than 60%)
% after 6 Years of Service
(not less than 80%)
% after 7 Years of Service
(not less than 100%)
(2)( ) If such termination should occur prior to the
completion of five (5) Years of Service, the Participant
shall be entitled to no vested interest. If such
termination occurs after the completion of five (5)
Years of Service, the Participant shall have a vested
interest determined under the following table:
100% after 5 Years of Service
(3)(X) 5 % after 1 Year of Service
10 % after 2 Years of Service
20 % after 3 Years of Service
(not less than 20%)
40 % after 4 Years of Service
(not less than 40%)
60 % after 5 Years of Service
(not less than 60%)
80 % after 6 Years of Service
(not less than 80%)
100 % after 7 Years of Service
(not less than 100%)
(4)( ) 100%
If the Vesting Schedule contained under (A)l or (A)2 is
not selected, than any other Vesting Schedule selected
must vest as quickly as the later of either (A)l or (A)2
at every point in time.
(B) TOP HEAVY VESTING SCHEDULE
In the event the Plan shall be determined to be a Top-Heavy, the
following vesting schedule shall apply not withstanding the vesting
schedule elected above:
(1)( ) 100% vesting after Years of Service (no more than 2)
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(2)(X) A Participant's right to a nonforfeitable percentage
of his Participant's Account derived from Employer
Contributions shall be determined under the following
table:
10 % after 1 Years of Service
20 % after 2 Years of Service
(not less than 20%)
40 % after 3 Years of Service
(not less than 40%)
60 % after 4 Years of Service
(not less than 60%)
80 % after 5 Years of Service
(not less than 80%)
100 % after 6 Years of Service
(not less than 100%)
(10) For purposes of Section 9 of the Adoption Agreement, Years of Service
shall include all Years of Service with the Employer or Employers which
have maintained the Plan, Provided, however, that Years of Service shall
not include:
(A)( ) Years of Service before Age 18.
(B)( ) Years of Service with an Employer during any period
for which the Employer did not maintain the Plan or a
predecessor plan.
(C)( ) Years of Service with an Employer during any period
for which the Employer was not a Plan Participant.
(11) Retirement prior to Normal Retirement Age (choose one)
(A)(X) Will be permitted upon the attainment of Age 55 and the
completion of 10 Years of Service.
(B)( ) Will not be permitted.
(12) A Participant whose employment is terminated before the end of a Plan
Year but after he has completed 1000 Hours of Service for such Plan
Year:
(A)( ) shall share in Employer Contributions for such Plan
Year.
(B)(X) shall not share in Employer contributions for such Plan
Year.
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(13) The Employer designates Xxxxx Xxxxx as said trustee(s)
(14) The Employer designates CRL Network Services as Plan Administrator.
(15) The Employer is because of Code Section 415 and 416 required to
aggregate the following Plans NONE _________________________. The
employer is required to request a letter of determination for this and
the other Plan(s) that are aggregated
(16) The following rates and mortality table shall be used to compute accrued
benefits for top-heavy purposes of aggregated plans:
( ) _______________ % interest, or
(X) the P.B.C.G. rate in effect at the time of distribution; 1984
Unisex Mortality Table.
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NATURE OF THE PLAN
A. The Employer hereby adopts this Defined Contribution Plan & Trust
Agreement, hereinafter the "Plan". This Plan is create for the purpose of
providing the Employee(s) with retirement benefits in accordance with Code
Sections 401 through 417 of the Internal Revenue Code, as amended.
B. Following the execution of this Defined Contribution Plan and Trust
Agreement, the Employer shall apply as a qualified nondiscriminatory retirement
plan for the exclusive benefit of the Plan Participants. The sponsoring
organization shall inform the adopting employer of any and all amendments or
discontinuance of this Plan. Failure to properly fill out this Adoption
Agreement may result in disqualification of this Plan. An adopting Employer may
not rely on the notification letter with respect to the qualification of this
Plan and must apply to the key district director for a letter of determination
in order to obtain reliance. This adoption agreement can only be used with the
Basic Plan Document of this Plan. If the employer fails to attain or retain
qualification, this Plan will no longer be considered a prototype plan and will
be considered an individually designed plan. The Regional Prototype Sponsor may
amend any part of this Plan.
IN WITNESS WHEREOF, the Employer and the trustee(s) have caused this
instrument to be executed.
Dated: 9/19/97 By: /s/
---------------------------- ---------------------------------
Employer
By: /s/
---------------------------------
Trustee
By:
---------------------------------
Trustee
Approved as to form by counsel:
---------------------------------
Attorney at Law
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CODA ADOPTION AGREEMENT
[X] Check here and complete the provisions below if Elective Deferrals are
permitted under this plan.
SECTION I: EMPLOYER CONTRIBUTIONS UNDER THE CODA ADOPTION AGREEMENT
1.1. The employer may make contributions to the CODA without regard to current
or accumulated earnings and profits for the taxable year or years ending with or
within the Plan year.
[X] check here if applicable.
SECTION II: ELECTIVE DEFERRALS
2.1. A participant may elect to have his or her Compensation reduced by the
following percentage or amount per pay period, or for a specified pay period or
periods, as designated in writing to the Plan Administrator.
[X] a. An amount not in excess of [15%] of a Participant's Compensation.
[ ] b. An amount not in excess of $_________ of a Participant's Compensation.
No Participant shall be permitted to have Elective Deferrals made under this
plan during any calendar year in excess of $7,000.00 multiplied by the
Adjustment Factor, as set out in IRC Section 402 (g)
2.1. (a) A Participant may elect to commence Elective Deferrals on January 1,
April 1, July 1, and October 1. Such election shall become effective as of the
first pay period following the pay period during which the Participant's
election to commence Elective Deferrals was made, or as soon as administratively
feasible thereafter.
2.1. (b) A Participant's election to have Elective Deferrals made pursuant to a
salary reduction agreement shall remain in effect until modified or terminated.
A participant may modify the amount of Elective Deferrals as of January 1, April
1, July 1, and October 1. Such election shall become effective as of the first
pay period following the pay period during which the Participant's election to
modify Elective Deferrals was made, or as soon as administratively feasible
thereafter.
2.2. A Participant may base Elective Deferrals on cash bonuses that, at the
Participant's election, may be contributed to the CODA or received by the
Participant in cash.
2.2. (a) A Participant shall be afforded a reasonable period to elect to defer
amounts described in Section 2.2 above. Such election shall become effective as
of the next pay period following the pay period during which the Participant's
election to make such Elective Deferrals was made, or as soon as
administratively feasible thereafter.
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2.3. A Participant shall designate the amount and frequency of his or her
Elective Deferrals in the form and manner specified by the Plan Administrator.
SECTION III: QUALIFIED NON-ELECTIVE CONTRIBUTIONS
3.1. The Employer [ X ] will [ ] will not make Qualified Non-elective
Contributions to the plan. If the Employer does make Qualified Non-elective
Contributions to the Plan, then the amount or such Contributions to the plan for
each Plan Year shall be [elect one]
[ ] a. [_____] percent (not to exceed 15 percent) of the Compensation for all
Participant's eligible to share in the allocation.
[X] b. An amount as determined by the Employer.
Allocation of Qualified Non-elective Contributions shall be made in accordance
with Section IV below.
SECTION IV: ALLOCATION OF QUALIFIED NON-ELECTIVE CONTRIBUTIONS
4.1. Allocations of Qualified Non-elective Contributions to each Participant's
account shall be made in the ratio in which each Participant's Compensation for
the Plan Year bears to the total Compensation of all Participants for such Plan
Year.
SECTION V: LIMITATIONS ON CONTRIBUTIONS
5.1. Amounts that are contributed or allocated to the accounts of each
Participant under the Plan must not, when aggregated with amounts that are
contributed or allocated to the accounts of each Participant under any other
Plan or Plans in accordance with the provisions of the underlying Plan document,
exceed the limits as otherwise required under Section 415 of the Code and the
regulations thereunder.
SECTION VI: MATCHING CONTRIBUTIONS (Required)
6.1. The employer [ X ] will [ ] will not make Matching Contributions to the
plan on behalf of Participants who make elective Deferrals. Complete Sections
6.2, 6.3, 6.4, and 9.1, of this Adoption Agreement if Matching Contributions
will be made to the Plan.
6.2. The Employer will make Matching Contributions to the Plan on behalf of:
[X] a. All Participants who make elective Deferrals.
[ ] b. All Participants who are Non-highly Compensated Employees and who make
Elective Deferrals.
6.3. Matching Contributions will be:
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[ ] a. Non-forfeitable when made.
[X] b. Subject to the vesting schedule applicable to Employer Contributions,
other than Elective Deferrals and Qualified Non-elective Contributions, under
the Plan.
6.4. The amount of such Matching Contributions made on behalf of each
Participant as specified in Section 6.2 of this Adoption Agreement shall be:
[ ] a. [ ] percent of the Elective Deferral made for each Plan Year.
[X] b. Equal to a discretionary percentage, to be determined each year
by resolution of the Employer, of the Elective Deferral of the Participant.
[ ] c. [ ] percent of the Elective Deferral which does not exceed [ ] percent
of a Participant's Compensation or [$__________].
For the purposes of this section, those contributions shall not discriminate in
favor of highly compensated employees (within the meaning of IRC Section 414
(q)).
SECTION VII: QUALIFIED MATCHING AND QUALIFIED NON-ELECTIVE CONTRIBUTIONS
7.1. Qualified Matching Contributions and Qualified Non-elective Contributions
may be taken into account as Elective Deferrals for Purposes of Calculating the
Actual Deferral Percentages. In determining Elective Deferrals for the purpose
of the ADP Test, the employer shall include [ELECT AS APPROPRIATE]:
[ ] a. Qualified Matching Contributions
[X] b. Qualified Non-elective Contributions
under this plan or any other plan of the employer, as provided by regulations
under the Code.
7.2. The amount of Qualified Matching Contribution made under Article 5.05 of
this CODA and taken into account ad Elective Deferrals for purposes of
calculating the Actual Deferral Percentage, subject to such other requirements
as may be prescribed by the Secretary of the Treasury, shall be:
[ ] a. All such Qualified Matching Contributions.
[ ] b. Such Qualified Matching Contributions that are needed to meet the Actual
Deferral Percentage test stated in Article 5.05 of the Plan.
7.3. The amount of Qualified Non-Elective Contributions made under Article 5.05
of this Plan and taken into account as Elective Deferrals for purposes of
calculating the Actual Deferral Percentages, subject to such other requirements
as may be prescribed by the Secretary of the Treasury, shall be:
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[X] a. All such Qualified Non-elective Contributions.
[ ] b. Such Qualified Non-elective Contributions that are needed to meet the
Actual Deferral Percentage test stated in Section 5.6 of the Plan.
SECTION VIII: CLAIMS FOR EXCESS ELECTIVE DEFERRALS
8.1. Participants who claim Excess Elective Deferrals for the preceding calendar
year must submit their claims in writing to the Plan Administrator by March 1.
SECTION IX: FORFEITURES
9.1. Forfeitures of Excess Aggregate Contributions shall be:
[ ] a. Applied to reduce Employer Contributions.
[X] b. Allocated, after all other forfeitures under the Plan, to each
Participant's Matching Contribution account in the ratio which each
Participant's Compensation for the Plan Year bears to the total Compensation of
all Participants for such Plan Year.
SECTION X: EFFECTIVE DATE (REQUIRED)
10.1. The provisions of this CODA Adoption Agreement Amendment will be effective
as of January 1, 1997
Dated: 9/19/97 By: /s/
---------------------------- ---------------------------------
Employer
By: /s/
---------------------------------
Trustee
By:
---------------------------------
Trustee
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ARTICLE II -- DEFINITIONS
2.01
"Account or Accounts" shall mean the Profit-Sharing Plan Contribution
Account, Tax Sheltered Savings Account, Employer Contribution Account, Employee
contribution, or any other Account the Trustee(s) establish to accept Employer
Contributions or Employee contributions, and income or loss, if any, to the Plan
or Plans established under the Adoption Agreement(s) completed in connection
with the Basic Plan Document under Section 4.03(a), or (b) the Voluntary
Contribution Account to be established by the Trustees under Section 4.06 for
each Participant who makes voluntary contributions under Section 4.04, or (c)
both Accounts.
2.02
"Adjustment Factor" shall mean the cost of living adjustment factor
prescribed by the Secretary of the Treasury under Section 415(d) of the Code for
years beginning after December 31, 1987, as applied to such items and in such
manner as the Secretary shall provide.
2.03
"Adoption Agreement" means Article I of the Plan and the CODA Adoption
Agreement, if applicable.
2.04
"Affiliated Employer" shall mean the Employer and any corporation which
is a member of a controlled group of corporations (as defined in Section 414(b)
of the Code) which includes the Employer; any trade or business (whether or not
incorporated) which is under common control (as defined in Section 414(c) of the
Code) with the Employer; and organization whether or not incorporated) which is
a member of an affiliated service group (as defined in Section 414(m) of the
Code) which includes the Employer; and any other entity required to be
aggregated with the Employer pursuant to regulations under Section 414(o) of the
Code.
2.05
"Allocation Date" means the last day of the Plan year.
2.06
"Anniversary Date" means the first day of the plan year, and the same
day and month of each following year.
2.07
Average Compensation shall be determined as if the Participant's
Compensation during the most current Limitation Year remained the same until his
Normal Retirement Date.
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2.08
"Basic Plan Document" means Article II through XVII of this Plan. This
Plan is the Basic Plan Document, the Adoption Agreement, and the CODA Adoption
Agreement, if applicable.
2.09
"Beneficiary" means a person or persons designed by or otherwise
entitled upon a Participant's death, to receive any benefits or payments under
the terms of this Plan.
2.10
"Break In Service" means:
(a) for purposes of vesting, any Plan Year during which not more
than five hundred (500) Hours of Service are completed by an Employee, and
(b) For purposes of eligibility, any twelve consecutive month
period beginning on an Employee's Date of Hire and anniversaries thereof during
which not more than five hundred (500) Hours of Service are completed by an
Employee.
2.11
"Code" means the Internal Revenue Code of 1986 and amendments thereto.
2.12
"Compensation" shall mean a participant's earned income, wages,
salaries, and fees for professional services and other amounts received without
regard to whether or not an amount is paid in cash for personal services
actually rendered in the course of employment with the employer maintaining the
plan to the extent that the amounts are includable in gross income (including,
but not limited to, commissions paid salesman, compensation for services on the
basis of a percentage of profits, commissions on insurance premiums, tips and
bonuses, fringe benefits, and reimbursements or other expense allowances under a
nonaccountable plan (as described in Treasury Regulation 1.62-2(c)), and
excluding the following:
(a) Employer contributions to a plan or deferred compensation
which are not includable in the employee's gross income for the taxable year in
which contributed, or employer contributions under a simplified employee pension
plan to the extent such contributions are deductible by the employee, or any
distributions from a plan of deferred compensation;
(b) Amounts realized from the exercise of a non-qualified stock
option, or when restricted stock (or property) held by the employee either
becomes freely transferable or is no longer subject to a substantial risk or
forfeiture;
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(c) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option; and
(d) other amounts which received special tax benefits, or
contributions made by the employer (whether or not under a salary reduction
agreement) towards the purchase of an annuity contract described in section
403(b) of the Internal Revenue Code (whether or not the contributions are
actually excludable from the gross income of the Employee).
For purposes of applying the limitations of this article, compensation
for a limitation year is the compensation actually paid or made available during
such limitation year.
Notwithstanding the preceding sentence, compensation for a participant
in a defined contribution plan who is permanently and totally disabled (as
defined in section 22(e) (3) of the Internal Revenue Code) is the compensation
such participant would have received for the limitation year if the participant
had been paid at the rate of compensation paid immediately before becoming
permanently and totally disabled; such imputed compensation for the disabled
participant may be taken into account only if the participant is not a highly
compensated employee (as defined in section 414(q) of the Code) and
contributions made on behalf of such participant are nonforfeitable when made.
For years beginning after December 31, 1988, the annual compensation of
each participant taken into account for determining all benefits provided under
the plan for any determination period shall not exceed $200,00.00. This
limitation shall be adjusted by the Secretary at the same time and in the same
manner as under section 415(d) of the Code, except that the dollar increase in
effect on January 1 of any calendar year is effective for years beginning in
such calendar year and the first adjustment to the $200,000.00 limitation is
effected on January 1, 1990. If the period for determining compensation used in
calculating an employee's allocation for a determination period is a short plan
year (i.e. shorter that 12 months), the annual compensation limit is an amount
equal to the otherwise applicable annual compensation limit multiplied by the
fraction, the numerator of which is the number of months in the short plan year,
and the denominator of which is 12.
In determining the compensation of a participant for purposes of this
limitation, the rules of section 414(q) (6) of the Code shall apply, except in
applying such rules, the term "family" shall include only the spouse of the
participant and any lineal descendants of the participant who have not attained
age 19 before the close of the year. If, as a result of the application of such
rules the adjusted $200,000 limitation is exceeded, then (except for purposes of
determining the portion of compensation up to the integration level if this plan
provides for permitted disparity), the limitation shall be prorated among the
affected individuals in proportion to each individual's compensation as
determined under this section prior to the application of this limitation.
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2.13
"Covered Employee" means any Employee who is not an Excluded Employee.
2.14
"Date of Hire" means:
(a) the date on which Employees first perform an Hour of
Service, or
(b) in the case of Employees who have incurred a Break in
Service following a Termination of Employment, the date on which they first
complete an Hour of Service after such Termination of Employment.
2.15
"Disability" means the Participant, because of a physical or mental
disability, will be unable to perform the duties of his customary position of
employment (or is unable to engage in any substantial gainful activity) for an
indefinite period which the Plan Administrator considers will be of long
continued duration.
A Participant also is disabled if he incurs the permanent loss or loss
of use of a member or function of the body, or is permanently disfigured, and
incurs a Separation from Service. The Plan considers a Participant disabled on
the date the Plan Administrator determines the Participant satisfied the
definition of disability. A Participant must submit to a physical examination in
order to confirm disability. The Plan Administrator will apply the provisions of
this Section in a nondiscriminatory, consistent, and uniform manner.
2.16
"Earned Income" means a Self-Employed Individual's net earnings from
self-employment in the trade or business with respect to which the Plan is
established, for which personal services of the individual are a material
income-producing factor. Net earnings will be determined without regard to items
not included in gross income and the deductions allocable to such items. Net
earnings are reduced by contributions by the Employer to a qualified plan to the
extent deductible under Section 404 of the Code. Net earnings shall be
determined with regard to the deduction allowed to the employer by section
164(f) of the Code for taxable years beginning after December 31, 1989.
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2.17
"Elective Deferrals or Employee Contributions" shall mean contributions
made to the plan during the Plan Year by the Employer, at the election of the
Participant, in lieu of cash compensation and shall include contributions made
pursuant to a salary reduction agreement.
2.18
"Employee" means any employee of the Employer maintaining the Plan or of
any other employer required to be aggregated with such Employer under sections
414(b), (c), (m) or (o) of the Code. The term employee shall also include any
leased employee deemed to be an employee of the Employer described in the
previous paragraph as provided in Sections 414(n) or (o) of the Code.
2.19
"Employer" means the Employer chosen in the Adoption Agreement and any
Affiliated Employer and any successor to such Employer.
2.20
"ERISA" means Public law No. 93-406, the Employee Retirement Income
Security Act of 1974, as amended from time to time.
2.21(a)
"Excluded Employee" means an individual in the employ of an Employer or
an Affiliated Employer as described in this Article of the Plan who:
(1) is included in a unit of employees covered by a collective
bargaining agreement between Employee Representatives and one of more Affiliated
Employers, if retirement benefits were the subject of good faith bargaining
between employee representatives and the Employers or Affiliated Employers,
unless the collective bargaining agreement provides for coverage of a unit of
employees under this Plan. For purposes of this Paragraph (1), the term
"Employee Representatives" does not include any organization more than half of
whose members are Employees who are owners, officers or executives of the
Employer; or
(2) (A) is neither a resident nor a citizen of the United States
of America, and
(B) receives no earned income, within the meaning of
Section 911(b) of the Code or from Employers or Affiliated Employers that
constitutes income from sources within the United States, within the meaning of
Section 861(a) (3) of the Code.
(b) Excluded Employees shall be credited with Years of Service
for all purposes under this Plan, but:
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(1) may not become Participants while they remain
Excluded Employees, and
(2) shall receive no allocation to their account while
they are Excluded Employees except for allocations of gains or loss to their
account balances as a result of income or loss sustained on investments.
2.22
"Family Member" shall mean a spouse and the lineal ascendants and
descendants (and spouses of each ascendants and descendants) of any employee or
former employee.
2.23(a)
"Highly Compensated Employee" shall mean:
(1) An employee who is a 5% owner, as defined in Code section
416(i)(l)(iii), at any time during the determination year or the look-back year.
(2) An employee who receives compensation in excess of $75,000
(indexed in accordance with section 415(d)) during the look-back year.
(3) An employee who receives compensation in excess of $50,000
(indexed in accordance with section 415(d)) during the look-back year and is a
member of the top-paid group for the look-back year.
(4) An employee who is an officer, within the meaning of section
416(i), during the look-back year and who receives compensation in the look-back
year greater than 50% of the dollar limitation if effect under section 415(b)
(1) (A) for the calendar year in which the look-back year begins.
(5) An employee who is both described in paragraph 2, 3, or 4
above when these paragraphs are modified to substitute the determination year
for the look-back year and one of the 100 employees who receive the most
compensation from the employer during the determination year
(b) The determination year is the plan year for which the
determination of who is highly compensated is being made.
(c) The determination year is the 12 month period immediately
preceding the determination year, or if the employer elects, the calendar year
ending with or within the lookback year. The lookback year shall be the
twelve-month period immediately proceeding the determination year.
(d) The top-paid group consists of the top 20% of employees
ranked on the basis of compensation received during the year. For purposes of
determining the number of
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employees in the top-paid group, employees described in section 414(q) (8) and Q
& A 9(b) of section 1.414 (q)-1T of the regulations are excluded.
(e) The number of officers is limited to 50 (or, if lesser, the
greater of 3 employees or 10% of employees) excluding those employees who may be
excluded in determining the top-paid group.
(f) When no officer has compensation in excess of 50% of the
section 415(b) (1) (A) limit, the highest paid officer is treated as highly
compensated.
(g) Compensation is compensation within the meaning of section
415(c)(3), including elective or salary reduction contributions to a cafeteria
plan, cash or deferred arrangement or tax-sheltered annuity.
(h) Employers aggregated under sections 414(b), (c), (m), or (o)
are treated as a single employer.
(i) A highly compensated employee who is either a 5% owner or
one of the ten most highly compensated employees is subject to the family
aggregation rules of IRC Section 414(q) (6).
(j) A former employee who had a separation year prior to the
determination year and who was a highly compensated active employee for either
(1) such employee's separation year or (2) any determination year ending on or
after the employee's 55th birthday. Generally, a separation year is the
determination year the employee separates from service. With respect to an
employee who separated from service before January 1, 1987, the plan may provide
that such an employee will be included as a highly compensated employee only if
the employee was a 5% owner or received compensation in excess of $50,000 during
(1) the employee's separation year (or the year preceding such separation year)
or (2) any year ending on or after such individual's 55th birthday (or the last
year ending before such employee's 55th birthday).
2.24(a)
"Hour of Service" means:
(1) each hour for which an Employee is directly or indirectly
paid, or entitled to payment, by an Employer or Affiliated Employer for the
performance of duties. These hours shall be credited to the Employee for the
computation period and periods in which the duties are performed; and
(2) each hour which an Employee is directly or indirectly paid,
or entitled to payment, by an Employer or Affiliated Employer on account of a
period of time during which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation, holiday, illness,
incapacity (including disability), layoff, jury duty, military duty or leave of
absence. No more than 501 Hours of Service shall be credited under this
paragraph for any single continuous period (whether or not such period occurs in
a single computation period).
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(3) each hour for which back pay, irrespective of mitigation of
damages, has been either awarded or agreed to by an Employer or Affiliated
Employer if the Employee is not entitled to credit for such hour under any other
paragraph of this Subsection (a).
(b) The number of an Employee's Hours of Service and the Plan
Year or other computation period to which they are to be credited shall be
determined in accordance with DOL Regulations Sections 2530.200b-2 and
2530.200b-3 which is hereby incorporated by reference into this Plan.
(c) Solely for purposes of determining whether an Employee
incurs a Break in Service, an Employee who is absent from work for maternity or
paternity reasons shall receive credit for the Hours of Service which would
otherwise have been credited to such Employee but for such absence, or in any
case in which such hours cannot be determined, eight (8) Hours of service per
day of such absence. For purposes of this Subsection (c), an absence from work
for maternity or paternity reasons means an absence (1) by reason of the
pregnancy of the Employee, (2) by reason of a birth of a child of the Employee,
(3) by reason of the placement of a child with the Employee in connection with
the adoption of such child by such Employee, or (4) for purposes of caring for
such child for a period beginning immediately following such birth or placement.
The Hours of Service credited under this Subsection
(c) shall be credited (1) in the Plan Year in which the absence
begins if the crediting is necessary to prevent a Break in Service in that
period, or (2) in all other cases, in the following Plan Year.
2.25
"Inactive Participant" shall mean any Employee or former Employee who
has ceased to be a Participant and on whose behalf an account is maintained
under the plan.
2.26
"Insurer" means the life insurance company chosen by the Trustee(s) to
issue policies to the Plan.
2.27
"Key Employee" means any Employee or former Employee (and the
Beneficiaries of such Employee) who at any time during the "Determination
Period" was an officer of the Employer if such individual's Compensation exceeds
50 percent of the dollar limitation under Section 415(b) (1) (A) of the Code, an
owner (or considered an owner under Section 318 of the Code) of one of the ten
largest interests in the Employer if such individual's compensation exceeds 100
percent of the dollar limitation under Section 415(c)(l)(A) of the Code, a
5-percent owner of the Employer, or a one percent owner of the Employer who has
an annual compensation of more than $150,000. Annual compensation means
compensation as defined in section 415(c) (3) of the Code, but including amounts
contributed by the employer pursuant to a salary reduction agreement which are
excludable from the employee's gross income under
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section 125, section 402(a)(8), section 402(h) or section 403(b) of the Code.
For purposes of determining a 5-percent owner or a one percent owner, neither
the aggregation rules nor the rules of subsection (b), (c), and (m) of IRC
Section 414 apply. Beneficiaries of an employee acquire the character of the
employee who performed service for the employer. Also, inherited benefits will
retain the character of the benefits of the employee who performed services for
the employer. For purposes of this Section, the "Determination Period" is the
Plan Year containing the Determination Date and the 4 preceding Plan Years. The
determination of who is a Key Employee will be made in accordance with Section
416(i) (1) of the Code and the regulations thereunder
2.28
"Leased Employees" The plan treats a Leased Employee as an employee of
the Employer. A Leased Employee is an individual (who otherwise is not an
Employee of the Employer) who, pursuant to a leasing agreement between the
Employer and any other person, has performed services for the Employer (or for
the Employer and any persons related to the Employer within the meaning of Code
Section 414(n)(6)) on a substantially full time basis for at least one year and
who performs services historically performed by employees in the Employer's
business field. If a Leased Employee is treated as an Employee, "Compensation"
includes compensation from the leasing organization which is attributable to
services performed for the Employer. The Plan does not treat a Leased Employee
as an Employee if the leasing organization covers the employee in a safe harbor
plan and, prior to application of this safe harbor plan exception, 20% or less
of the Employer's Employees (other than Highly Compensated Employees) are Leased
Employees. A safe harbor plan is a money purchase pension plan providing
immediate participation, full and immediate vesting, and a nonintegrated
contribution formula equal to at least 10% of the employee's compensation
without regard to employment by the leasing organization on a specified date.
The safe harbor plan must determine the 10% contribution on the basis of
compensation as defined in Code Section 415(c) (3) plus any employer
contribution under a qualified cash or deferred arrangement to the extent not
included in gross income under Section 402(a)(8) or 402(h)(l)(B), any amount
which the Employee would have received in cash but for an election under a
cafeteria plan (within the meaning of Section 125 of the Code), and any amount
contributed to an annuity contract described in Section 403(b) pursuant to a
salary reduction agreement (within the meaning of section 3121(a) (5) (D) of the
Code). Contributions or benefits provided a leased employee by the leasing
organization which are attributable to services performed for the recipient
employer shall be treated as provided by the recipient Employer.
2.29
"Matching Contribution" shall mean any contribution to the Plan made by
the Employer for the Plan Year and allocated to a Participant's account by
reason of the Participant's Employee Contributions or Elective Deferrals.
Matching contributions are not available for hardship withdrawals.
2.30
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27
"Non-Highly Compensated Employee" shall mean an Employee of the Employer
who is neither a Highly Compensated Employee nor a Family Member.
2.31
"Non-Key Employee" means any Employee of an Employer who is not a Key
Employee.
2.32
"Normal Retirement Age" means the age selected in the Adoption Agreement
of this Plan.
2.33
"Owner Employee" means an individual who is a sole proprietor or who is
a partner owning more than ten percent (10%) of either the capital or profits
interest of the partnership.
2.34
"Participant" means an Employee who has become a Participant in the Plan
under Section 3.01(a) or (b) and has not made the election described in Section
3.02, and whose participation in the Plan has not ceased under Section 3.01(c).
2.35
"Plan Year" is defined in the Adoption Agreement.
2.36
"Qualified Nonelective Contributions" shall mean contributions (other
than Matching Contributions) made by the Employer and allocated to separate
Participants' accounts that the Participant may not elect to receive in cash
until distributed from the plan; that are 100% vested and nonforfeitable when
made; and that are not distributable under the terms of the plan to Participants
or their beneficiaries earlier than the earlier of:
(a) separation from service, death, or disability of the
Participant;
(b) attainment of the age 59 1/2 by the Participant;
(c) termination of the plan without establishment of another
defined contribution plan, other than an employee stock ownership plan (as
defined in section 4975(e) or section 409 of the Code) or a simplified employee
pension plan as defined in section 408(k); or
(d) the disposition by a corporation to an unrelated corporation
of substantially all of the assets (within the meaning of section 409(d) (2) of
the Code) used in a trade or business of such corporation if such corporation
continues to maintain this plan after the
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disposition, but only with respect to employees who continue employment with the
corporation acquiring such assets.
2.37
"Retirement" means (a) any Termination of Employment on or after a
Participant's Normal Retirement Date, or (b) Termination of Employment due to
disability.
2.38
"Self Employed Individual" means an individual or partner who has earned
income for the taxable year from the trade or business for which the Plan is
established. A self employed individual also includes an individual who would
have had earned income but for the fact that the trade or business had no net
profits for the taxable year.
2.39
"Tax Sheltered Savings Account" shall mean an account established by the
Trustees under Section 5.03 for each Participant electing to make an " Elective
Deferral" to the Plan.
2.40
"Termination of Employment" means termination of employment with an
Employer or an Affiliated Employer for any reason; but no Termination of
Employment shall occur when an Employee transfers from the employ of one
Employer or Affiliated Employer to another Employer or Affiliated Employer.
2.41
"Trust" or "Trust Fund" means the trust forming part of this Plan and
all of its assets which are held by the Trustees under it.
2.42
"Trustee" or "Trustees" means the individuals specified in Article I of
the Plan and any additional or successor trustees of the Trust Fund.
2.43
"Unallocated Suspense Account" means an account to be established by the
Trustees for the purpose of holding excess contributions and forfeitures.
2.44
"Voluntary Contribution Account" means the Account to be established by
the Trustees under Section 4.06 for each Participant who makes a voluntary
contribution to the Plan. Voluntary contributions are not elective deferrals.
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2.45(a)
"Years of Service" means the total of (1) for purposes of vesting, all
Plan Years not excluded by Subsection (b) or (c) during which an Employee
completes at least one thousand (1,000) Hours of Service, (2) for purposes of
eligibility to participate the twelve consecutive month period beginning on an
Employee's Date of Hire and anniversaries thereof during which an Employee
completes at least one thousand (1,000) Hours of Service beginning on the date
the employee first performs an hour of service for the employer, and (3) any
period of employment taken into account on the basis of the rules contained in
any plan of a predecessor employer maintained by the Employer or if such a Plan
is not maintained under uniform and non-discriminatory rules which are
applicable to all Employees.
(b) If this Plan is a new Plan and does not substitute for an
existing Plan, Years of Service for purposes of vesting completed before (1) the
Effective Date of the Plan or (2) the Employee's attainment of age eighteen (18)
shall be disregarded.
(c) Notwithstanding anything to the contrary contained in this
Section, if elected in Article 1 of the Plan, all of an Employee's Years of
Service shall be taken into account.
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ARTICLE III -- PARTICIPATION AND VESTING
3.01
Participation
(a) Covered Employees who, as of the first day of the Plan Year
in which this Plan is adopted, have completed the minimum age requirement and
have completed the minimum service requirement specified in Article I Section
6(A)2 and 6(A)3 shall become participants as of such date.
(b) Covered Employees who do not become Participants under
Article III 3.01(a) shall become Participants on the Effective Date of
Participation specified in the Adoption Agreement following the date they
satisfy the age and service requirement specified in Article I Section 6(A)2 and
6(A)3.
(c) Participants shall cease to be Participants as of the date
of termination of employment.
3.02
Election not to Participate
If elected in writing by the Participant and his spouse, any Key
Employee may, by informing the Trustees, elect not to participate in the Plan.
3.03
Vesting
(a) Notwithstanding the selection made in the Adoption Agreement
a Participant shall be fully (100%) vested in the balance of his Employer
Contribution Account upon his Normal Retirement Age, as defined in IRC Section
4"(a) (8), or if he has a Termination of Employment on account of his death.
(b) (1) If a former Participant becomes a Participant after
having five (5) consecutive one-year Breaks in Service, Years of Service
completed by the Participant after such Breaks in Service shall be disregarded
for determining the vested interest in that portion of the Employer Contribution
Account balance which accrued before the Break in Service. However, all Years of
Service including those completed prior to such Breaks in Service will count for
determining the vested interest in that portion of the Employer Contribution
Account which accrued after such Breaks in Service.
(2) If a Participant does not incur five (5) consecutive
one-year Breaks in Service, all Years of Service shall be counted for
determining the vested interest in the Employer Contribution Account which
accrued before and after the Break in Service. A participant who is re-employed
after a break-in-service will be allowed to participate in the plan immediately
on his or her re-employment commencement date. In any event, a Participant's
Employer Contribution Account will continue to share in earnings and losses of
the Trust Fund.
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(3) In the case of a participants who does not have any
nonforfeitable right to the account balance derived from employer contributions,
years of service before a period of consecutive 1-year breaks in service will
not be taken into account in computing eligibility service if the number of
consecutive 1-year breaks in service in such period equals or exceeds the
greater of 5 or the aggregate number of years of service. Such aggregate number
of years of service will not include any years of service disregarded under the
preceding sentence by reason of prior breaks in service.
If a participant's years of service are disregarded pursuant to the
preceding paragraph, such participant will be treated as a new employee for
eligibility purposes. If a participant's years of service may not be disregarded
pursuant to the preceding paragraph, such participant shall continue to
participate immediately upon reemployment.
(4) In the case of any participant who has a 1-year break in
service, years of eligibility service before such break will not be taken into
account until the employee has completed a year of service after returning to
employment. Such year of service will be measured by the 12-consecutive month
period beginning on an employee's reemployment commencement date and, if
necessary, subsequent 12-consecutive month periods beginning on anniversaries of
reemployment commencement date. The reemployment commencement date is the first
day on which the employee is credited with an hour of service for the
performance of duties after the first eligibility computation period in which
the employee incurs a one year break in service.
(5) In the event a participant is no longer a member of an
eligible class of employees and becomes ineligible to participate but has not
incurred a break in service, such employee will participate immediately upon
returning to an eligible class of employees. If such participant incurs a break
in service, eligibility will be determined under the break in service rules of
the plan. In the event an employee who is not a member of an eligible class of
employees becomes a member of an eligible class, such employee will participate
immediately if such employee has satisfied the minimum age and service
requirements and would have otherwise previously become a participant.
(6) If an employee terminates service, and elects, in accordance
with the requirements of Article VIII, to receive the value of the employee's
vested account balance, the nonvested portion will be treated as a forfeiture.
If the employee elects to have distributed less than the entire vested portion
of the account balance derived from employer contributions, the part of the
nonvested portion that will be treated as a forfeiture is the total nonvested
portion multiplied by a fraction, the numerator of which is the amount of the
distribution attributable to employer contributions and the dominator of which
is the total value of the vested employer derived account balance. If an
employee receives a distribution pursuant to this section and the employee
resumes employment covered under this plan, the employee's employer-derived
account balance will be restored to the amount on the date of distribution if
the employee repays to the plan the full amount of the distribution attributable
to employer contributions before the earlier of 5 years after the first date on
which the participant is subsequently re-employed by the employer, or the date
the participant incurs 5 consecutive 1-year breaks in service following the
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date of the distribution. If an employee is deemed to receive a distribution
pursuant to this section, and the employee resumes employment covered under this
plan before the date the participant incurs 5 consecutive 1-year breaks in
service, upon the reemployment of such employee, the employer-derived account
balance of the employee will be restored to the amount on the date of such
deemed distribution. If a distribution is made at a time when a participant has
a nonforfeitable right to less than 100 percent of the account balance derived
from employer contributions and the participant may increase the nonforfeitable
percentage in the account;
(i) A separate account will be established for the
participant's interest in the plan as of the
time of the distribution, and
(ii) At any relevant time the participant's
nonforfeitable portion of the separate account
will be equal to an amount ("X") determined by
the formula:
X=P(AB + (R x D)) - (R x D)
For the purposes of applying the formula: P is
the nonforfeitable percentage at the relevant
time, AB is the account balance at the relevant
time, D is the amount of the distribution, and R
is the ratio of the account balance at the
relevant time to the account balance after
distribution.
(7) In the case of a participant who has 5 or more consecutive
1-year breaks in service, the participant's pre-break service will count in
vesting of the employer-derived accrued benefit only if either:
(i) such participant has any nonforfeitable interest
in the account balance attributable to employer
contributions at the time of separation from
service; or
(ii) upon returning to service the number of
consecutive 1-year breaks in service is less
than the number of years of service.
(8) In the case of a participant who has 5 or more consecutive
1-year breaks in service all service after such breaks in service will be
disregarded for the purpose of vesting the employer-derived account balance that
accrued before such breaks in service. Such participant's pre-break service will
count in vesting the post-break employer-derived account balance only if either:
(i) such participant has any nonforfeitable interest
in the account balance attributable to employer
contributions at the time of separation from
service; or
(ii) upon returning to service the number of
consecutive 1-year breaks in service is less
than the number of years of service.
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Separate accounts will be maintained for the
participant's pre-break and post-break
employer-derived account balance. Both accounts
will share in the earnings and losses of the
fund.
(c) If the Plan's vesting schedule is amended, or the Plan is
amended in any way that directly or indirectly affects the computation of the
Participant's vested percentage or if the Plan is deemed amended by an automatic
change to or from a top-heavy vesting schedule, each Participant with at least
three (3) years of Service with the Employer may elect, within a reasonable
period after the adoption of the amendment or change, to have the vested
percentage computed under the Plan without regard to such amendment or change.
Any participant whose non forfeitable percentage is determined under the new
vesting schedule may elect to have his non forfeitable percentage determined
under the old vesting schedule. The period during which the election may be made
shall commence with the date the amendment is adopted or deemed to be made and
shall end on the latest of:
(1) 60 days after the amendment is adopted;
(2) 60 days after the amendment becomes effective, or;
(3) 60 days after the Participant is issued written
notice of the amendment by the Employer or plan administrator.
(d) No amendment to the Plan shall be effective to the extent
that it has the effect of decreasing a Participant's Account balance.
Notwithstanding the preceding sentence, a Participant's Account balance may be
reduced to the extent permitted under Section 412(c) (8)of the Code. For
purposes of this paragraph, a plan amendment which has the effect of decreasing
a participant's account balance or eliminating an optional form of benefit, with
respect to benefits attributable to service before the amendment shall be
treated as reducing an account balance. Furthermore, no amendment to the Plan
shall have the effect of decreasing a Participant's vested interest or accrued
benefit determined without regard to such amendment, as of the later of (1) the
date such amendment is adopted, or (2) the date it becomes effective.
Furthermore, if the vesting schedule of a plan is amended, in the case of an
employee who is a participant as of the later of the date such amendment is
adopted or the date it becomes effective, the nonforfeitable percentage
(determined as of such date) of such employee's right to his employer derived
accrued benefit will not be less than his percentage computed under the plan
without regard to such amendment.
3.04
Controlled Trades or Businesses
(a) If this Plan provides contributions or benefits for one or
more Owner-Employees who control both the business for which this Plan is
established and one or more other trades or businesses, this Plan and the plan
established for other trades or businesses must, when looked at as a single
plan, satisfy Section 401(a) and (d) of the Code for the Employees of this and
all such other trades or businesses.
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(b) (1)If this Plan provides contributions or benefits for one
or more Owner-Employees who control one of more other trades or businesses, the
employees of such other trades or businesses must be included in a plan which
satisfies Section 401(a) and (d) of the Code and which provides contributions
and benefits not less favorable than those provided for Owner-Employees under
this Plan.
(2) If an individual is covered as an Owner-Employee under the
plans of two or more trades or businesses which are not controlled and the
individual controls another trade or business, then the contributions or
benefits of the employees under the plan of the trades or businesses which are
controlled must be as favorable as those provided for him under the most
favorable plan of the trade or business which is not controlled.
(c) For purposes of this Section 3.04, an Owner-Employee, or two
or more Owner-Employees, will be considered to control a trade or business if
the Owner-Employee, or two or more Owner-Employees together:
(1) Own the entire interest in a unincorporated trade or
business, or
(2) in the case of a partnership, own more than 50
percent of either the capital interest or the profits interest in the
partnership.
An Owner-Employee, or two or more Owner-Employees shall also be treated as
owning any interest in a partnership which is owned, directly or indirectly, by
a partnership which such Owner-Employee, or such two or more Owner-Employees,
are considered to control within the meaning of the preceding sentence.
3.05
Ineligible Class
An employee who would otherwise be eligible to participate in this Plan
who is in an ineligible class of employees, will immediately participate in this
plan on becoming a member of an eligible class.
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ARTICLE IV -- EMPLOYER CONTRIBUTIONS AND
VOLUNTARY NON-DEDUCTIBLE EMPLOYEE CONTRIBUTIONS
4.01
Employer Contributions to the Profit Sharing Plan
If the Profit-Sharing Plan Adoption Agreement is completed in
conjunction with this Basic Plan Document, the Employer's contribution for each
Plan Year shall be the amount specified in the Adoption Agreement or such other
amount as may be specified in an appropriate resolution or other written
directive. No contribution shall be made for any Participant which would cause
the "Annual Addition" to any Participant's Account to exceed the "Maximum
Permissible Amount" specified in Article VI.
4.02
Timing of Employer Contributions
(a) Employer contributions may be made in one or more installments at
such time or times during the Plan Year or during any additional period provided
by law for making contributions for the Plan year as the Employer may decide.
(b) For purposes of making allocations to Employer contribution
Accounts, all contributions for any Plan Year shall be considered made on the
Allocation Date, regardless of the actual date of contribution.
(c) All contributions shall be payable to the Trustees, except that with
the consent of the Trustees, the portion of the Employer's contribution which
represents premiums or considerations on insurance policies or annuity contracts
may be paid directly by the Employer to the Insurer under such terms as may be
mutually agreed upon by the Employer and Insurer.
(d) A matching contribution shall be allocated to an employee's account
under the terms of the Plan as of any date within the plan year when it is
actually paid to the trust no later than the end of the twelve month period
beginning on the day after the close of such plan year, and is made on behalf of
an employee on account of such employee's elective contribution or employee
contributions for the plan year.
4.03
Establishing Employer Contribution Accounts
(a) The Trustees shall establish a separate Employer Contribution
Account for each Participant for each Adoption Agreement completed in connection
with this Basic Plan Document. A Participant's share of Employer contributions,
forfeitures and mandatory Employee contributions determined in accordance with
Sections 6.01 and 6.02 shall be allocated to each such Account. Except as
provided in Subsection (b), all Participants' Employer Contribution Accounts
shall be held as a single, commingled fund except for life insurance and
individual annuity contracts.
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These shall be held exclusively for the benefit of the Participant upon
whose life such contract is issued.
(b) The Trustees may, by mutual agreement with a Participant, segregate
such Participant's Account(s) and hold, invest and value such Account(s)
separately from all other Plan assets. After a Participant has a Termination of
Employment, the Trustees do not need the Participant's consent to establish a
segregated Account from which a distribution will be made to the Participant or
his Beneficiary, but all distributions must comply with Article VIII.
4.04
Voluntary Contributions
(a) Each Participant may, if the Plan Administrator so allows, make
voluntary non-deductible contributions to the Plan at such times and under such
conditions as the Trustees may prescribe. However, Employer contributions and
voluntary contributions may not be commingled in the same individual annuity
contract.
(b) The aggregate voluntary contributions during any Plan Year may not
exceed ten percent (10%) of a Participants aggregate Compensation during any
Plan Year.
(c) Voluntary Contributions and Matching Contributions shall be
aggregated to determine if this Plan meets the nondiscrimination tests of Code
Section 401(m) and Proposed Treasury Regulations l.401(m)-l. Voluntary
Contributions shall, notwithstanding any other provision of this Plan, be
distributed first and then Matching Contributions to any highly compensated
participant if this Plan or any other Plan required to be aggregated with this
Plan for purposes of the nondiscrimination tests, if this Plan or the aggregated
plans fail the nondiscrimination tests. Under this test, the actual contribution
percentage (ACP) for the group of eligible highly compensated employees may not
exceed the greater of (a) 125% of the ACP for all other eligible employees or
(b) the lesser of twice the ACP for all other eligible employees, or such ACP
for all other eligible employees plus 2%. The ACP for a group of eligible
employees is the average of the ratios (calculated separately for each employee)
of the amount of voluntary and matching contributions (and any other
contributions required to be aggregated for purposes of the ACP test) made on
behalf of each employee for the plan year, divided by the employee's
compensation.
4.05
Payment of Voluntary Contributions
(a) All voluntary contributions must be made in cash.
(b) All voluntary contributions made under Section 4.04 shall be part of
the Trust Fund.
(c) Voluntary contributions may not be used to purchase life insurance
contracts, but may be used, to the extent necessary, to keep any life insurance
contract which was initially
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purchased with Employer contributions in force when Employer contributions are
insufficient for this purpose.
(d) In the event voluntary contributions are used in the manner
described in Subsection (c) , the value of the life insurance contract which is
attributable to voluntary contributions shall be determined in the same ratio to
the total value of the contract as the premiums paid by voluntary contributions
bear to the total premiums paid.
4.06
Voluntary Contribution Account
(a) The Trustees shall establish and maintain a Voluntary Contribution
Account for each Participant who makes voluntary contributions.
(b) The balance in each Participant's Voluntary Contribution Account
shall at all times be fully (100%) vested. At no time shall the balance in a
Participant's Voluntary Contribution Account be forfeited for any reason.
4.07
Withdrawal of Voluntary Contributions
(a) A Participant may, at any time, with spousal consent if married,
elect to withdraw all or any portion of the balance in his Voluntary
Contribution Account.
(b) Upon a Termination of Employment, the balance in a Participant's
Voluntary Contribution Account shall be distributed to him at the time and in
the manner specified in Article VIII. However, a Participant may, with the
consent of the Trustees and his spouse choose a different method of distribution
for the Voluntary Contribution Account than is chosen for the Employer
Contribution Account.
4.08
Roll-overs
A Participant may, with the consent of the Trustees, roll over to this
Plan all or any part of a qualified total distribution as defined in Section 402
(a) (5) (E) of the Code. An amount may also be transferred to this Plan on a
Participant's behalf directly from another plan which qualifies under Section
401(a) of the Code. In the event that a Participant makes a roll-over or if an
amount is transferred to this Plan on his behalf, the proceeds shall be held in
a segregated roll-over contribution account to be established by the Trustees
which shall be invested and valued separately from all other Plan assets. A
Participant shall at all times be fully (100%) vested in the value, if any, of
his roll-over contribution account.
4.09
Valuation of Trust Fund
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(a) The value of the Trust Fund and each Participant's Account shall be
determined as of the last day of the Plan Year or more frequently as determined
by the Administrative Committee. All assets of the Trust Fund shall be valued at
their fair market value, determined in accordance with regulations adopted by
the Trustees. On such date, the earnings and losses of the Trust Fund will be
allocated to each Participant's Account in the ratio that such Account balance
bears to all Account balances or based upon earning and losses in that Account.
(b) The value of any life insurance or annuity contract held in a
Participant's Account as of the last day of the Plan Year shall be equal to the
sum of the net cash values of the life insurance contracts and the value
available to provide annuity benefits of allocated annuity contracts held in
such Account as of such date.
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ARTICLE V -- ELECTIVE DEFERRALS
5.01
Maximum Amount of Elective Deferrals
Effective as of January 1, 1987, no Employee shall be permitted to have
Elective Deferrals made under this plan during any calendar year in excess of
$7000.00 multiplied by the Adjustment Factor as provided by the Secretary of the
Treasury. The foregoing limit shall not apply to Elective Deferrals of amounts
attributable to service performed in 1986 and described in Section 1105(c) (5)
of the Tax Reform Act of 1986.
5.02
Employee Elections
Each Participant shall file a written election form with the Plan
Administrator no later than the date he becomes eligible to participate,
specifying the portion of his Compensation to be contributed to the Plan as an
Elective Deferral. The portion contributed shall be deposited to the
Participants "Tax Sheltered Savings Account". Such election of the Participants
shall remain in effect until a new election is filed with the Plan Administrator
in accordance with Section 5.04.
5.03
Tax Sheltered Savings Account
(a) The Trustees shall establish and maintain a Tax Sheltered Savings
Account for each Participant who makes an Elective Deferral.
(b) The balance in each Participant's Tax Sheltered Savings Account
shall at all times be fully (100%) vested. At no time shall the balance in a
Participant's Tax Sheltered Savings Account be forfeited for any reason.
5.04
Adjustments to Elective Deferrals
A Participant may increase or decrease the rate of Elective Deferrals
effective as of any pay period or at times as determined by the Plan
Administrator by submitting a new election to the Plan Administrator. A
Participant may suspend his Elective Deferrals at any time by submitting a
written 30 day notice to the Plan Administrator. Suspensions during the Plan
Year shall be effective as soon as practicable after the election is filed with
the Plan Administrator. Amounts attributable to elective deferrals may not be
distributed earlier than: 1. The employee's retirement, death, disability or
separation from service; 2. The termination of the plan without establishment of
another defined contribution plan, other than an employee stock ownership plan
(as defined in section 4975(e) or section 409 of the Code) or a simplified
employee pension plan as defined in section 408(k); 3. In the case of a profit
sharing or stock bonus plan, the employee's attainment of age 59 1/2 or the
employee's hardship; 4. The disposition by a corporation to an unrelated
corporation of substantially all of the assets (within the meaning of section
409(d) (2) of the Code) used in a trade or business of such corporation
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if such corporation continues to maintain this plan after the disposition, but
only with respect to employees who continue employment with the corporation
acquiring such assets; or 5. The disposition by a corporation to an unrelated
entity of such corporation's interest in a subsidiary (within the meaning of
section 409(d) (3) of the Code) if such corporation continues to maintain this
plan, but only with respect to employees who continue employment with the
subsidiary.
5.05
Actual Deferral Percentage
(a) The Actual Deferral Percentage for Eligible Participants who are
Highly Compensated Employees for the Plan Year shall not exceed the Actual
Deferral Percentage for Eligible Participants who are Nonhighly Compensated
Employees for the Plan Year multiplied by 1.25; or
(b) The Actual Deferral Percentage for Eligible Participants who are
Highly Compensated Employees for the Plan Year shall not exceed the Actual
Deferral Percentage for Eligible Participants who are Nonhighly Compensated
Employees for the Plan year multiplied by 2, provided that the Actual Deferral
Percentage for Eligible Participants who are Highly Compensated Employees does
not exceed the Deferral Percentage for Eligible Participants who are Nonhighly
Compensated Employees by more than two (2) percentage points or such lesser
amount as the Secretary of the Treasury shall prescribe to prevent the multiple
use of this alternative limitation with respect to any Highly Compensated
Employee.
5.06
Definitions. For purposes of this Article V and for purposes of Articles
XIV and XV of this Plan, the following definitions shall be used:
(a) Actual Deferral Percentage shall mean for a specified group of
participants for a Plan Year, the average of the ratios (calculated separately
for each participant in such group) of (1) the amount of employer contributions
actually paid over the trust on behalf of such participant for the Plan Year to
(2) the participant's Compensation for such Plan Year. Employer contributions on
behalf of any participant shall include: (1) any Elective Deferrals made
pursuant to the participant's deferral election (including Excess Elective
Deferrals of Highly Compensated Employees) , but excluding (a) Excess Elective
Deferrals of Non-highly compensated Employees that arise solely from Elective
Deferrals made under the plan or plans of this employer and (b) Elective
Deferrals that are taken into account in the Contribution Percentage test
(provided the ADP test is satisfied both with and without exclusion of these
Elective Deferrals); and (2) at the election of the employer, Qualified
Non-elective Contributions and Qualified Matching Contributions. For purposes of
computing Actual Deferral percentages, an employee who would be a participant
but for the failure to make Elective Deferrals shall be treated as a participant
on whose behalf no Elective Deferrals are made.
(b) Average Actual Deferral Percentage shall mean the average (expressed
as a percentage) of the Actual Deferral Percentage of the Eligible Participants
in a group.
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(c) Qualified Employer Deferral Contributions shall mean Qualified
Nonelective Contributions taken into account under the terms of the plan without
regard to this Article in determining the Actual Deferral Percentage.
(d) Eligible Participant shall mean any employee who is directly or
indirectly eligible to make a cash or deferred election under the plan for all
or a portion of a plan year and includes: an employee who would be a plan
participant but for the failure to make required contributions; an employee
whose eligibility to make elective contributions has been suspended because of:
an election (other than certain one-time elections) not to participate, a
distribution, or a loan; an employee who cannot defer because of Code section
415 limits on annual additions; and, an employee who is unable to make an
elective contribution because his or her compensation is less than a stated
dollar amount. In the case of an eligible employee who makes no elective
contributions the deferral ratio that is to be included in determining the ADP
is zero. Employee for the Plan Year who is eligible to have Elective Deferrals
or Qualified Nonelective Employer Contributions and Qualified Matching
Contributions allocated to his account under two or more plans or arrangements
described in Section 401(k) of the Code that are maintained by the Employer or
an Affiliated Employer shall be determined as if all such Elective Deferrals and
Qualified Employer Deferral Contribution were made under a single arrangement.
Additionally, all elective contributions that are made under two or more plans
that are aggregated for purposes of Code Section 401(a) (4) or 410(b) (other
than section 410(b) (2) (A) (ii)) are to be treated as made under a single plan
and that if two or more plans are permissively aggregated for purposes of Code
Section 401(k), the aggregated plans must also satisfy Code Sections 401 (a) (4)
and 410(b) as though they were a single plan. Plans may not be permissively
aggregated after January 1, 1989 unless the plans have the same plan year.
5.07
Special Rules
(a) For purposes of this Article V, the Actual Deferral Percentage for
any Eligible Participant who is a Highly Compensated Employee for the Plan Year
and who is eligible to have Elective Deferrals or Qualified Non-elective
Contributions or Qualified Matching Contributions or both if treated as Elective
Deferrals for purposes of the ADP test, allocated to his account under two or
more plans or arrangements described in Section 401(k) of the Code and all Plans
that have a plan year that end in the same calendar year shall be treated as a
single arrangement and all Plans that are maintained by the Employer or an
Affiliated Employer shall be determined as if all such Elective Deferrals and
Qualified Non-elective Contributions or Qualified Matching Contributions, or
both, were made under a single arrangement. Notwithstanding the foregoing,
certain plans shall be treated as separate if mandatorily desegregated under
regulations under section 401(k) of the Code.
(b) For purposes of determining the Actual Deferral Percentage in the
case of a highly compensated employee who is either a 5% owner or one of the ten
most highly compensated employees and is thereby subject to the family
aggregation rules of section 414(q) (6), the actual deferral ratio (ADR) for the
family group (which is treated as one highly compensated employee) is the ADR
determined by combining the elective contributions, compensation, and amounts
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treated as elective contributions of all eligible family members. Except to the
extent taken into account in the preceding sentence, the elective contributions,
compensation, and amounts treated as elective contributions of all family
members shall be disregarded as separate employees in determining the actual
deferral percentages for the groups of highly compensated employees and
nonhighly compensated employees.
(c) The determination and treatment of the Elective Deferrals, Qualified
Nonelective Contributions, Qualified Matching Contributions, or both, and Actual
Deferral Percentage of any Participant shall satisfy such other requirements as
may be prescribed by the Secretary of the Treasury. The Employer shall maintain
records sufficient to demonstrate satisfaction of the ADP test and the amount of
Qualified Non-elective Contributions or Qualified Matching Contributions, or
both, used in such test.
(d) For purposes of determining whether a plan satisfied the actual
deferral percentage test of Code section 401(k), all elective contributions that
are made under two or more plans that are aggregated for purposes of Code
section 401(a) (4) or 410(b) (other than section 410(b)(2)(A)(ii)) and that have
the same Plan Year are to be treated as made under a single plan and that is two
or more plans are permissively aggregated for purposes of Code section 401(k),
the aggregated plans must also satisfy sections 401(a)(4) and 410(b) of the Code
as though they were a single plan.
(e) For purposes of determining the ADP test, Elective Deferrals,
Qualified Non-elective Contributions, and Qualified Matching Contributions must
be made before the last day of the 12th month period immediately following the
plan year to which the contributions relate.
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ARTICLE VI -- ALLOCATION OF EMPLOYER CONTRIBUTIONS AND LIMITATIONS ON
CONTRIBUTIONS AND BENEFITS
6.01
Allocation of Employer Contributions
Employer Contributions shall be allocated in accordance with the
Adoption Agreement Section (7) (B) and Article XVII if the plan provides for
permitted disparity or social security integration.
6.02
Allocation of Forfeitures
Except as otherwise provided in Section 8.05, any forfeiture arising
under Section 6.03 shall be allocated as if it were an Employer contribution.
6.03
Timing of Forfeitures
No forfeiture shall be made unless, a Participant has a Termination of
Employment and five consecutive one year breaks in service or a distribution as
described in Section 8.01(a) is made, the non-vested portion of the
Participant's Account shall be forfeited on the earlier of (1) the last day of
the first Plan Year in which the Participant receives a distribution in
accordance with Section 8.04(a)(l), or (2) the last day of the first Plan Year
in which a Break in Service occurs in all other cases.
6.04
Limitations on Contribution and Benefits
(a) For purposes of this section 6.04, the following terms shall be
defined as follows:
(1) Annual Additions--The sum of the following amounts allocated on
behalf of a Participant for a Limitation Year:
(A) all Employer contributions,
(B) all forfeitures,
(C) all employee contributions, and annual additions include
excess contributions described in Code Section 401(k), excess aggregate
contributions described in Code Section 401(m) and excess deferrals described in
Code 402 (g), irrespective of whether the plan distributes or forfeits such
excess amounts. Annual additions also include excess amounts re-applied to
reduce employer contributions under section 6.02 of the plan. Annual additions
include all contributions after March 31, 1984 to an individual medical account,
as defined in section 415(1) (2) of the Code, which is part of a defined benefit
plan maintained by the Employer, and amounts derived from contributions paid or
accrued after December 31, 1985, in taxable years ending after such date, which
are attributable to post-retirement medical benefits, as
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defined in Code Section 419A(d) (3), allocated to the separate account of a Key
Employee, under a welfare benefit fund, as defined in Code Section 419(e),
maintained by the Employer.
For purposes of this section 6.04, amounts re-applied to reduce Employer
contributions under paragraph 6.04(b) (4) shall also be included as Annual
Additions.
(2) (A) "Compensation" means for any Limitation Year, the definition as
set out in Article II, Section 12.
(3) "Defined Benefit Plan" means any Retirement Plan that is not a
Defined Contribution Plan.
(4) "Defined Benefit Plan Fraction" means a fraction, the numerator of
which is the sum of the Participant's Projected Annual Benefits under all the
Defined Benefit Plans (whether or not terminated) maintained by the Employer,
and the denominator of which is the lesser of (1) 125 percent of the dollar
limitation in effect for the Limitation Year under Section 415(b) & (d) of the
Code, or (2) 140 percent of the Participant's Highest Average Compensation taken
over three (3) consecutive Years of Service.
Notwithstanding the above if the Participant was a Participant as of the
first day of the first limitation year beginning after December 31, 1986, in one
or more defined benefit plans maintained by the employer which were in existence
on May 6, 1986, the denominator of this fraction will be not less than 125
percent of the sum of the annual benefits under such plans which the participant
had accrued as of the close of the last limitation year beginning before January
1, 1987, disregarding any changes in the terms and conditions of the plan after
May 5, 1986. The preceding sentence applies only if the defined benefit plans
individually and in the aggregate satisfied the requirements of section 415 of
the Code for all limitation years beginning before January 1, 1987.
(5) "Defined Contribution Plan" means a Retirement Plan which provides
for an individual account for each participant and for benefits based solely on
the amount contributed to such account and any income, expense, gains and
losses, and forfeitures of accounts of other participants which may be allocated
to such account.
(6) "Defined Contribution Plan Fraction" means a fraction, the numerator
of which is the sum of the Annual Additions to the Participant's account under
all the Defined Contribution Plans (whether or not terminated) and all
contributions to individual medical accounts as defined in Section 415(1) (2) of
the Code maintained by the Employer for the current and all prior Limitation
Years described in Section 415(b) & (d) of the Code (including the Annual
Additions attributable to the Participant's non-deductible employee
contributions to all Defined Benefit Plans, whether or not terminated,
maintained by the Employer and the Annual Additions attributable to all welfare
benefit funds as described in Section 6.04(a)(l)(D) of the Plan), and the
denominator of which is the sum of the maximum aggregate amounts for the current
and all prior Limitation Years of service with the Employer (regardless of
whether a Defined Contribution Plan was maintained by the Employer). The maximum
aggregate amount in any Limitation Year
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is the lesser of (1) 125 percent of the dollar limitation in effect under
Section 415(c) (1) (A) of the Code, or (2) 35 percent of the Participant's
Compensation for the Limitation Year.
If the Employee was a participant as of the end of first day of the
first limitation year beginning after December 31, 1986, in one or more defined
contribution plans maintained by the employer which were in existence on May 6,
1986, the numerator of this fraction will be adjusted if the sum of this
fraction and the defined benefit fraction would otherwise exceed 1.0 under the
terms of this plan. Under the adjustment, an amount equal to the product of (1)
the excess of the sum of the fractions over 1.0 times (2) the denominator of
this fraction, will be permanently subtracted from the numerator of this
fraction. The adjustment is calculated using the fractions as they would be
computed as of the end of the last limitation year beginning before January 1,
1987, and disregarding any changes in terms and conditions of the plan made
after May 5, 1986, but using the section 415 limitation applicable to the first
limitation year beginning on or after January 1, 1987. The annual addition for
any limitation year beginning before January 1, 1987, shall not be recomputed to
treat all employee contributions as annual additions.
(7) "Employer" means the Employer that adopts this Plan. In the case of
a group of employers which constitutes a controlled group of corporations (as
defined in section 414(b) of the Code, as modified by section 415(h)) which
constitutes trades or businesses (whether or not incorporated) which are under
common control (as defined in Code Section 414(c), as modified by section
415(h)), or which forms part of an Affiliated Service Group (as defined in Code
Section 414(m)) or a separate organization, employee leasing or other
arrangement described in Code Section 414(0) or the regulations prescribed under
the Code Section all such employers or groups shall be considered a single
Employer for purposes of applying the limitations of this Section 6.04.
(8) "Excess Amount" means the value of the excess of Annual Additions to
a Participant's Account for the Limitation Year over the Maximum Permissible
Amount.
(9) "Highest Average Compensation". The Average Compensation for the
three consecutive Years of Service with the Employer that produces the highest
average. A Year of Service with the Employer is the 12-consecutive month period
defined in Section 2.45 of the Plan.
(10) "Limitation Year" means the calendar year unless a different
limitation year is chosen in the Adoption Agreement. All plans of the Employer
or the Affiliated Service Group shall have the same Limitation Year. If the
limitation year is amended to a different 12 consecutive month period, the new
limitation year must begin on a date within the limitation year in which the
amendment is made.
(11) "Regional Prototype Plan" means this basic plan and any amendments
the form of which is the subject of a favorable opinion letter from the Internal
Revenue Service.
(12) "Maximum Permissible Amount" means the lesser of (1) $30,000, or
such larger amount equal to 1/4 of the defined benefit dollar limitations as
adjusted for cost-of-living increases pursuant to IRC sections 415(d)(l) and
415(d)(3), or (2) 25 percent of the Participant's
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Compensation for the Limitation Year. If a short Limitation Year is created
because of an amendment changing the Limitation Year to a different 12
consecutive months period, the Maximum Permissible Amount will not exceed
$30,000 multiplied by the following fraction:
Number of months in the short Limitation Year
-------------------------------------------------------------------------
12
(13) "Projected Annual Benefit" means the annual retirement benefit
(adjusted to an actuarially equivalent straight life annuity if such benefit is
expressed in a form other than a straight life annuity or qualified joint and
survivor annuity) to which the Participant would be entitled under the terms of
the Plan assuming:
(A) the Participant will continue employment until normal
retirement age under the Plan (or current age, if later), and
(B) the Participant's Compensation for the current Limitation
Year and all other relevant factors used to determine benefits under the Plan
will remain constant for all future Limitation Years.
(14) "Retirement Plan" means any plan maintained by an Employer which is
(1) a pension, profit-sharing, stock bonus or cash or deferred arrangement plan
described in Sections 401(a) and 501(a) of the Code, (2) an annuity plan or
annuity contract described in Section 403(a) or 403(b) of the Code or (3) a
qualified bond purchase plan described in Section 405(a) of the Code.
(b) (1)If the Participant does not participate in, and has never
participated in another qualified plan or welfare benefit fund as defined in
Section 419(e) of the Code or an individual medical account which is part of any
pension or annuity plan described in Code Section 415(1) (2) maintained by the
Employer, the amount of Annual Additions which may be credited to the
Participant's Account for any Limitation Year will not exceed the lesser of (A)
the Maximum permissible Amount, or (B) any other limitation contained in this
Plan. If the Employer contribution that would otherwise be contributed or
allocated to the participant's Account would cause the Annual Additions for the
Limitation Year to exceed the Maximum Permissible Amount, the amount contributed
or. allocated will be reduced so that the Annual Additions for the Limitation
Year will equal the Maximum Permissible Amount.
(2) Prior to determining the Participant's actual compensation for the
Limitation Year, the Employer may determine the Maximum Permissible Amount for a
Participant on the basis of a reasonable estimation of the Participant's
Compensation for the Limitation Year, uniformly determined for all Participants
similarly situated.
(3) As soon as is administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for the Limitation Year will be
determined on the basis of the Participant's actual Compensation for the
Limitation Year.
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(4) If there is an Excess Amount, the excess will be disposed of as
follows:
(A) Any non-deductible voluntary employee contributions, to the
extent they would reduce the Excess Amount, will be returned to the Participant;
(B) If after the application of Paragraph (A) an Excess Amount
still exists, and the Participant is covered by the Plan at the end of the
Limitation Year, the Excess Amount in the Participant's Account will be used to
reduce Employer contributions (including any allocation of forfeitures) for such
Participant in the next Limitation Year, and each succeeding Limitation Year, if
necessary.
(C) If after the application of Paragraph (A) an Excess Amount
still exists, and the Participant is not covered by the Plan at the end of the
Limitation Year, the Excess Amount will be held in the Unallocated Suspense
Account. The amount in the Unallocated Suspense Account will be applied to
reduce future Employer contributions (including allocation of any forfeitures)
for all remaining Participants in the Next Limitation Year, and each succeeding
Limitation Year, if necessary.
(D) If the Unallocated Suspense Account is in existence at any
time during the Limitation Year pursuant to this section, it will not
participate in the allocation of the Trust's investment gains and losses. If a
suspense account is in existence at any time during a particular limitation
year, all amounts in the suspense account must be allocated and reallocated to
participants' accounts before any employer or employee contributions may be made
to the plan for that limitation year. Excess amounts may not be distributed to
participants or former participants.
(c) This Subsection (c) (1) applies to Employers who, in addition to
this Plan, maintain one or more other qualified Regional Prototype Defined
Contribution Plan(s) or welfare benefit funds.
(1) If, in addition to this Plan, the Participant is covered under
another qualified Regional Prototype Defined Contribution Plan(s), welfare
benefit fund as defined in Section 419(e) of the Code or Individual Medical
Account(s) as defined under section 415(1) (2) of the Code maintained by the
Employer during any Limitation Year, the Annual Additions which may be credited
to a Participant's Account under this Plan for any such Limitation Year will not
exceed the Maximum Permissible Amount reduced by the Annual Additions credited
to a Participant's Account under the other plans and welfare benefit funds for
the same Limitation Year. If the Annual Additions with respect to the
Participant under other Defined Contribution Plans and welfare benefit funds
maintained by the Employer are less than the Maximum Permissible Amount and the
Employer contribution that would otherwise be contributed or allocated to the
Participant's Account under this Plan would cause the Annual Additions for the
Limitation Year to exceed this limitation, the amount contributed or allocated
will be reduced so that the Annual Additions under all such Plans and funds for
the Limitation Year will equal the Maximum Permissible Amount. If the Annual
Additions with respect to the Participant under such other Defined Contribution
Plans and welfare benefit funds in the aggregate are equal to or
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greater than the Maximum Permissible Amount, no amount will be contributed or
allocated to the Participant's Account under this Plan for the Limitation Year.
(2) Prior to determining the Participant's actual Compensation for the
Limitation Year, the Employer may determine the Maximum Permissible Amount for a
Participant in the manner described in Section 6.04(b)(2).
(3) As soon as is administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for the Limitation Year will be
determined on the basis of the Participant's actual Compensation for the
Limitation Year.
(4) If, pursuant to Section 6.04(c) (3), a Participant's Annual
Additions under this Plan and such other plans would result in an Excess Amount
for a Limitation Year, the Excess Amount will be deemed to consist of the Annual
Additions last allocated, except that Annual Additions attributable to a welfare
benefit fund or individual medical account, as defined in Section 415(1) (2) of
the Code, maintained by the Employer, will be deemed to have been allocated
first regardless of the actual allocation date.
(5) If an Excess Amount was allocated to a Participant on an allocation
date of this Plan which coincides with an allocation date of another plan, the
Excess Amount attributed to this Plan will be the product of:
(A) the total Excess Amount allocated as of such date, times.
(B) the ratio of (i) the Annual Additions allocated to the
Participant for the Limitation Year as of such date under this Plan to (ii) the
total Annual Additions allocated to the Participant for the Limitation Year as
of such date under this and all the other qualified Defined Contribution Plans.
(6) Any Excess Amount attributed to this Plan will be disposed in the
manner described in Section 6.04(b) (4).
(d) This Subsection applies to Employers who maintain another qualified
Defined Contribution Plan which is not a Regional Prototype Plan. If the
Participant is covered under another qualified Defined Contribution Plan
maintained by the Employer which is not a Regional Prototype Plan, Annual
Additions which may be credited to the Participant's Account under this Plan for
any Limitation Year will be limited in accordance with Sections 6.04(c)(l)
through 6.04(c)(6) as though the other plan were a Regional Prototype Plan.
(e) This Subsection applies to an Employer who maintains, or at any time
maintained, a qualified Defined Benefit Plan. If the Employer maintains, or at
any time maintained, a qualified Defined Benefit Plan covering any Participant
in this Plan, the sum of the Participant's Defined Benefit Plan Fraction and
Defined Contribution Plan Fraction will not exceed 1.0 in any Limitation Year.
The Annual Additions which may be credited to the Participant's Account under
this Plan for any Limitation Year will be limited in accordance with the
Adoption Agreement.
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6.05
Super Top-Heavy Adjustments
In any Plan Year which the Top-Heavy Ratio exceeds 90% (i.e., becomes
Super Top-Heavy) the denominators of the Defined Benefit Plan Fraction and
Defined Contribution Plan Fraction (as described in IRC Section 415(e)) shall be
computed substituting a factor of 1.0 for 1.25.
6.06
Integration of Paired Plans
If the Employer adopts this Plan and another plan that qualifies under
Code Section 401 only one Plan may be integrated.
6.07
Compensation Limit
Compensation taken into account under the plan shall not exceed
$200,000, adjusted for changes in the cost of living as provided in section
415(d) of the Internal Revenue Code, for the purpose of calculating a plan
participant's account balance (including the right to any optional benefit
provided under the plan) for any plan year commencing after December 31, 1988.
6.08
Coordination of Top-Heavy Minimum
If the top-heavy ratio does not exceed 90% and the employer uses a
factor of 1.25 in the denominator of the Code Section 415 fraction, one of the
following conditions must be met:
(a) A defined benefit minimum of 3% per year of service (up to 30%) is
provided, or
(b) For participants covered only by a defined contribution plan, a
defined contributions minimum of 4% is provided, or
(c) For participants covered by both types of plans, benefits from the
defined contribution minimum are comparable to the 3% defined benefit minimum,
or
(d) The plan provides a floor offset where the floor is 3% defined
benefit minimum, or
(e) A defined contribution minimum of 7 1/2% of compensation is provided
for any non-key employee who is covered under both a defined benefit plan and a
defined contribution plan (each of which is top-heavy) of an employer.
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ARTICLE VII -- TOP-HEAVY RULES
7.01
Definitions--For purposes of this Article VII the following terms shall
be defined as follows:
(a) "Determination Date" means for any Plan Year after the first Plan
Year, the last day of the preceding Plan Year. For the first Plan Year, the last
day of that year.
(b) "Permissive Aggregation Group" means the Required Aggregation Group
of plans plus any other plan or plans of the Employer which, when considered as
a group with the Required Aggregation Group, would continue to satisfy the
requirements of Section 401(a)(4) and 410 of the Code.
(c) "Present Value" means a benefit of equivalent value and shall be
based only on the interest and mortality rates specified in the defined benefit
plan. In the absence of such specifications in the defined benefit plan, Present
Value shall be determined by applying the then current purchase rates for
qualified, single payment non-participating immediate annuities issued by the
Insurance Company and discounting the resulting value by 6 percent per annum.
(d) "Required Aggregation Group" means (1) each qualified plan of the
Employer in which at least one Key Employee participates in the plan year
containing the determination date or any of the four preceding plan years, and
(2) any other qualified plan of the Employer which enables a plan described in
this Subsection (d) to meet the requirements of Sections 401(a) (4) or 410 of
the Code, are required to be aggregated for top-heavy testing purposes and are
considered the required aggregation group. All employers aggregated under
sections 414(b), (c) or (m) are considered a single employer.
(e) "Top-Heavy Plan" means for any Plan Year beginning after December
31, 1983, this plan, if any of the following conditions exists:
(1) If the Top-Heavy Ratio for this Plan exceeds 60 percent and
this Plan is not part of any Required Aggregation Group or Permissive
Aggregation Group of plans
(2) If this Plan is a part of a Required Aggregation Group of
plans but not part of a Permissive Aggregation Group and the Top-Heavy Ratio for
the Required Aggregation Group of plans exceeds 60 percent.
(3) If this Plan is a part of a Required Aggregation Group and
part of a Permissive Aggregation Group of plans and the Top-Heavy Ratio for the
Permissive Aggregation Group exceeds 60 percent.
This Plan is "Super Top-Heavy" if any of the above described
conditions exists when "90 percent" is substituted for "60 percent" each place
that it appears.
(f) "Top-Heavy Ratio" means
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(1) If the Employer maintains one or more defined contribution plans
(including any Simplified Employee Pension Plan) and the Employer has not
maintained any defined benefit plan which during the 5-year period ending on the
Determination Date(s) has or has had accrued benefits, the Top-Heavy Ratio for
this Plan alone or for the Required or Permissive Aggregation Group, as
appropriate, is a fraction, the numerator of which is the sum of the Account
balances of all Key Employees as of the Determination Date(s) (including any
part of any account balance distributed in the 5-year period ending on the
Determination Date(s)), and the denominator of which is the sum of all account
balances (including any part of any account balance distributed in the 5-year
period ending on the Determination Date(s)), both computed in accordance with
Section 416 of the Code and the regulations thereunder. Both the numerator and
denominator of the Top-Heavy Ratio are increased to reflect any contribution not
actually made as of the Determination Date, but which is required to be taken
into account on that date under Section 416 of the Code and the regulations
thereunder.
(2) If the Employer maintains one or more defined contribution plans
(including any Simplified Employee Pension Plans) and the Employer maintains or
has maintained one or more defined benefit plans which during the 5-year period
ending on the Determination Date(s) has or has had any accrued benefits, the
Top-Heavy Ratio for any Required or Permissive Aggregation Group, as
appropriate, is a fraction, the numerator of which is the sum of account
balances under the aggregated defined contribution plan or plans for all Key
Employees, determined in accordance with Paragraph (1), and the Present Value of
accrued benefits under the aggregated defined benefit plan or plans for all Key
Employees as of the Determination Date(s) , and the denominator of which is the
sum of the account balances under the aggregated defined contribution plan or
plans for all Participants, determined in accordance with Paragraph (1), and the
Present Value of accrued benefits under the defined benefit plan or plans for
all Participants as of the Determination Date(s), all determined in accordance
with Section 416 of the Code and the regulations thereunder. The accrued
benefits under a defined benefit plan in both the numerator and denominator of
the Top-Heavy Ratio are increased for any distribution of an accrued benefit
made in the 5-year period ending on the Determination Date.
(3) For purposes of Paragraphs (1) and (2) , the value of Account
balances and the Present Value of Accrued Benefits will be determined as of the
most recent Valuation Date that falls within or ends with the 12-month period
ending on the Determination Date, except as provided in Section 416 of the Code
and the regulations thereunder for the first and second plan years of a defined
benefit plan. The Account balances and accrued benefits of a Participant (1) who
is not a Key Employee but who was a Key Employee in a prior year, or (2) who has
not been credited with at least one hour of service for any Employer maintaining
the Plan at any time during the 5-year period ending on the Determination Date
will be disregarded. The calculation of the Top-Heavy Ratio, and the extent to
which distributions, roll-overs, and transfers are taken into account will be
made in accordance with Section 416 of the Code and the regulations thereunder.
Deductible Employee contributions will not be taken into account for purposes of
computing the Top-Heavy Ratio. When aggregating plans, the value of Account
balances and accrued benefits will be calculated with reference to the
Determination Dates that fall within the same calendar year. The accrued benefit
of a participant other than a key employee shall be determined under (a) the
method, if any, that uniformly applies for accrual purposes under all
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defined benefit plans maintained by the employer, or (b) if there is no such
method, as if such benefit accrued not more rapidly than the slowest accrual
rate permitted under the fractional rule of section 4"(b) (1) (C) of the Code.
(g) "Allocation Date" means the date specified in Article 2.05 as of
which Account balances or accrued benefits are valued for purposes of
calculating the Top-Heavy Ratio.
7.02
Minimum Contributions
(a) Except as otherwise provided in Subsections (c) and (d) for any Plan
Year in which the Plan is a Top-Heavy Plan, the Employer contributions and
forfeitures allocated on behalf of any Participant who is not a Key Employee
shall not be less than the lesser of (1) three percent (3%) of such
Participant's Compensation, or (2) in the case where the Employer has no defined
benefit plan which designates this Plan to satisfy Section 401 of the Code, the
largest percentage of Employer contributions and forfeitures expressly allocated
on behalf of any Key Employee for that year as a percentage of the first
$200,000 of the Key Employee's compensation, and shall include amounts
contributed as a result of a salary reduction agreement. The minimum
contribution is determined without regard to any Social Security contribution.
This minimum contribution shall be made even though, under other Plan
provisions, the Participant would not otherwise be entitled to receive such
contribution, or would have received a lesser allocation for (i) the year
because of the Participant's failure to complete 1,000 Hours of Service (or any
equivalent provided in the Plan) , or (ii) the Participant's failure to make
mandatory employee contributions to the Plan, or (iii) compensation less than a
stated amount.
(b) For purposes of computing the minimum contribution, "Compensation"
will means Compensation as defined in this Plan.
(c) The requirements of Subsection (a) shall not apply to any
Participant who was not employed by the Employer on the last day of the Plan
Year.
(d) The requirements of Subsection (a) shall not apply to any
Participant to the extent the Participant is covered under any other plan or
plans of the Employer and the minimum contribution or benefit requirement
applicable to Top-Heavy Plans will be met in such other plan or plans.
(e) After January 1, 1989, this plan may not include elective deferrals
or matching contributions as Employer contributions for the purpose of
satisfying the minimum contributions requirement.
7.03
Nonforfeitability of Minimum Contribution
The minimum contribution required (to the extent required to be
nonforfeitable under Code Section 416(b)) may not be forfeited under Code
Section 4"(a)(3)(B) or Code Section 4"(a)(3)(D).
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7.04
Compensation Limit
For any Plan Year, only the first $200,000 (or such larger amount as may
be prescribed by the Secretary of the Treasury or his delegate) of a
Participant's annual Compensation shall be taken into account for purposes of
determining Employer contributions under the Plan.
7.05
Minimum Vesting for Non-Standardized Plans
For any Plan Year in which this Plan is a Top-Heavy Plan, one of the
minimum vesting schedules as elected by the Employer in the Adoption Agreement
will automatically apply to the Plan. The minimum vesting schedule applies to
all benefits within the meaning of Section 411(a)(7) of the Code except those
attributable to Employee contributions, including benefits accrued before the
effective date of Code Section 416 and benefits accrued before the Plan became
Top-Heavy. Further, no decrease in a Participant's nonforfeitable percentage may
occur in the event the Plan's status as Top-Heavy changes for any Plan Year.
However, this section does not apply to the Account balances of any Employee who
does not have an Hour of Service after the Plan has initially become Top-Heavy
and such Employee's Account balance attributable to Employer contributions and
forfeitures will be determined without regard to this Section 7.05. If the Plan
is top-heavy then the vesting schedule selected in the Adoption Agreement
Section 9(B) shall apply. If the vesting schedule under the Plan shifts in or
out of the above schedule for any Plan Year because of the Plan's top-heavy
status, such shift is an amendment to the vesting schedule and the election in
this Section of the Plan.
7.06
Coordination of Top-Heavy Plan Minimum Contribution
If an Employer and Affiliated Employer maintain both defined
contribution and defined benefit plans, the top-heavy minimums shall be
coordinated by providing that contributions and forfeitures under the defined
contribution plan equal 5% of compensation for each year the plan is top-heavy.
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ARTICLE VIII -- PAYMENT OF BENEFITS
8.01
Form of Distributions
(a) Following a Termination of Employment but in no event later than
April 1st of the calendar year following the year in which a 5% owner (as
defined in Section 416(i) of the Code) attains age 70-1/2, the vested portion of
a Participant's Account balance shall be distributed, subject to the provision
of section 8.02, to him, or in the event of the Participant's death, to his
Beneficiary in one lump sum. A Participant may elect to receive any benefit in
cash, installments, or subject to Subsection (b), apply all or a portion of the
cash to the purchase of an immediate or deferred non-transferable annuity
contract. A Participant may also elect, subject to the provisions of Subsection
(d), to receive the life insurance contracts, if any, held on his life. However,
a deferred annuity may not be purchased on behalf of a terminated Participant
who has attained age 70-1/2. Optional forms of benefits shall be made available
to Participants in a manner that does not discriminate in favor of highly
compensated participants. Distributions to each participant shall commence no
later than the participant's required beginning date. Required Beginning Date
means April 1st of the calendar year following the calendar year in which the
employee attains age 70-1/2. If a Participant dies his interest shall be
distributed at least as rapidly as his benefit was being distributed and in no
event may the distribution take longer than five years from the date of death.
Any distribution required under the incidental death benefit requirement of Code
Section 401(a)(9)(G) shall be treated as a distribution for the purposes of
this plan section. The provisions reflecting Code Section 401(a)(9) and
Proposed Treasury Regulations 1.401(a)(9)-2 shall override any distribution
options in this plan which are inconsistent with Code Section 401(a)(9) and
Proposed Treasury Regulation 1-401(a)(9)-2.
(b)(1) For purposes of this Article VIII, "Designated Beneficiary" means
any individual designated as a Beneficiary by the Participants as defined in
Section 401(a)(9) of the Code and the proposed regulations thereunder.
(2) Any annuity purchased shall comply with all requirements of the Plan
and pursuant to Subsection (a) or (c) must be payable over the Participant's
life (or over the joint lives of the Participant and Designated Beneficiary) .
Such annuity will be non-transferable and will provide for non-increasing
payments and may provide for an annuity certain feature. If an annuity certain
feature applies such period may not exceed the joint and last survivor
expectancy of the Participant and his Designated Beneficiary, as the case may
be. An annuity certain feature shall have a payment period which shall be
greater than 50% of the annuity which is payable during the joint lives of the
participant and the spouse. A participant who elects to defer receipt of
benefits shah not do so to the extent that the participant is creating a death
benefit that is more than incidental. Life expectancy will be determined not
later than the date distribution must commence under Subsection (a) or (c) of
this Article.
(3) Individual Account
(A) If a participant's benefit is to be distributed over (1) a
period not extending beyond the life expectancy of the
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participant or the joint life and last survivor expectancy of the participant
and the participant's designated beneficiary or (2) a period not extending
beyond the life expectancy of the designated beneficiary, the amount required to
be distributed for each calendar year, beginning with distributions for the
first distribution calendar year, must at least equal the quotient obtained by
dividing the participant's benefit by the applicable life expectancy.
(B) For calendar years beginning before January 1, 1989, if the
participant's spouse is not the designated beneficiary, the method of
distribution selected must assure that at least 50% of the present value of the
amount available for distribution is paid within the life expectancy of the
participant.
(C) For calendar years beginning after December 31, 1988, the
amount to be distributed each year, beginning with distributions for the first
distribution calendar year shall not be less than the quotient obtained by
dividing the participant's benefit by the lessor of (l) the applicable life
expectancy or (2) if the participant's spouse is not the designated beneficiary,
the applicable divisor determined from the table set forth in Q&A-4 of section
1.401(a)(9)-2 of the proposed regulations. Distributions after the death of the
participant shall be distributed using the applicable life expectancy in section
4.1(a) above as the relevant divisor without regard to Proposed Regulations
section 1.401(a)(9)-2.
(D) The minimum distribution required for the participant's
first distribution calendar year must be made on or before the participant's
required beginning date. The minimum distribution for other calendar years,
including the minimum distribution for the distribution calendar year in which
the employee's required beginning date occurs, must be made on or before
December 31 of that distribution calendar year. For distributions beginning
before the participant's death, the first distribution calendar year is the
calendar year immediately preceding the calendar year which contains the
participant's required beginning date. For distributions beginning after the
participant's death, the first distributions calendar year is the calendar year
in which distributions are required to begin according to this section
hereinabove.
(E) Participant's benefit shall mean the account balance as of
the last valuation date in the calendar year immediately preceding the
distribution calendar year (valuation calendar year) increased by the amount of
any contribution or forfeitures allocated to the account balance as of dates in
the valuation calendar year after the valuation date and decreased by
distributions made in the valuation calendar year after the valuation date. For
purposes of this paragraph, if any portion of the minimum distribution for the
first distribution calendar year is made in the second distribution calendar
year on or before the required beginning date, the amount of the minimum
distribution made in the second distribution calendar year shall be treated as
if it had been made in the immediately preceding distribution calendar year.
(c) If a Participant who has attained age 70-1/2 remains employed by the
Employer then contributions will continue to be made for the Participant to the
extent required under Section 4.01. However, in the case of a 5% owner, in
addition to any benefit otherwise receivable by such Participant from
contributions made previously, an additional distribution will be made. The
amount of the distribution will be, subject to the provisions of Section 7.02,
the lump sum value of the Participant's Account or, at the election of the
Participant, the value of the
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Account will be applied to purchase an immediate annuity. Distributions to each
participant shall commence no later than the participants required beginning
date. Any distribution required under the incidental death benefit requirement
of Code Section 401(a)(9)(G) shall be treated as a distribution for the purposes
of this plan section. The provisions reflecting Code Section 401(a)(9) and
Proposed Treasury Regulation 1.401(a) (9)-2 shall override any distribution
options in this Plan which is inconsistent with the Code Section 401(a)(9) and
Proposed Treasury Regulation l.401(a)(9)-2.
(d)(1) A Participant who is entitled to a distribution under this
Section of the Plan and who is fully (100%) vested in the balance of his
contribution Account may elect to receive a distribution of any life insurance
contracts issued on his life. If the Participant is not fully (100%) vested at
the time distribution commences and if such life insurance contracts would
otherwise be surrendered by the Plan, the Participant may purchase the
contracts. The Participant will pay the Plan the amount necessary to put the
Plan in the same cash position as it would have been in if the Trustees had
surrendered the contract and distributed the Participant's vested interest in
the Plan. Any amount paid to a child of the participant will be treated as if it
had been paid to the surviving spouse if the amount becomes payable when the
child reaches the age of majority.
(2) Upon the request of a Participant described in Paragraph (1) , the
Trustees may borrow all or any portion of the cash surrender value of any life
insurance policy issued on such Participant's life and then sell the contract to
the Participant subject to the loan. Loans from insurance contracts for any
other purpose, except as specified in Section 9.04, shall be prohibited under
this Plan.
(3) If a Participant who has a Termination of Employment does not
purchase the policy or policies issued on his life under this Section 8.01(d),
the policy or policies on his life shall be surrendered by the Trustees(1) the
cash surrender proceeds shall be added to his Account and distributed under the
provisions of this Article VIII.
(4) A Participant shall elect the manner in which his vested Account
balance is to be distributed by signing a written statement and, if necessary,
making a Qualified Election on a form satisfactory to the Trustees and the
Insurer, if required, within a reasonable time before or after his Termination
of Employment. If a Participant fails to make a valid election of a manner of
distribution within the time specified by the Trustees, the distribution shall
be made in one sum, or installments, except to the extent otherwise provided in
Section 8.02(b).
(5) A Participant with vested benefits attributable to Employee or
Employer contributions, who survives until the Annuity Starting Date, (which is
the earlier of the first day of the first period for which an amount payable as
an annuity or in the case of a benefit not payable in the form of an annuity,
the first day on which all events have occurred which entitle the participant or
beneficiary to such benefit) shall receive benefits in the form of a qualified
joint and survivor annuity. For an unmarried participant a qualified joint and
survivor annuity shall mean a single life annuity.
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(6) If the value of a participant's vested account balance derived from
employer and employee contributions exceeds (or at the time of any prior
distribution exceeded) $3,500.00, and the account balance is immediately
distributable, the participant and the participant's spouse (or where either the
participant or the spouse has died, the survivor) must consent to any
distribution of such account balance. The consent of the participant and the
participant's spouse shall be obtained in writing within the 90-day period
ending on the annuity starting date. The annuity starting date is the first day
of the first period for which an amount is paid as an annuity or any other form.
The plan administrator shall notify the participant and the participant's spouse
of the right to defer any distribution until the participant's account balance
is no longer immediately distributable. Such notification shall include a
general description of the material features, and an explanation of the relative
values of, the optional forms of benefit available under the plan in a manner
that would satisfy the notice requirements of section 417(a)(3), and shall be
provided no less than 30 days and no more than 90 days prior to the annuity
starting date.
Notwithstanding the foregoing, only the participant need consent to the
commencement of a distribution in the form of a qualified joint and survivor
annuity while the account balance is immediately distributable. (Furthermore, if
payment in the form of a qualified joint and survivor annuity is not required
with respect to the participant pursuant to section 8.2 of the plan, only the
participant need consent to the distribution of an account balance that is
immediately distributable.) Neither the consent of the participant nor the
participant's spouse shall be life under this Section 8.01(d), the policy or
policies on his life shall be surrendered by the Trustees, the cash surrender
proceeds shall be added to his Account and distributed under the provisions of
this Article VIII.
(4) A Participant shall elect the manner in which his vested Account
balance is to be distributed by signing a written statement and, if necessary,
making a Qualified Election on a form satisfactory to the Trustees and the
Insurer, if required, within a reasonable time before or after his Termination
of Employment. If a Participant fails to make a valid election of a manner of
distribution within the time specified by the Trustees, the distribution shall
be made in one sum, or installments, except to the extent otherwise provided in
Section 8.02(b).
(5) A Participant with vested benefits attributable to Employee or
Employer contributions, who survives until the Annuity Starting Date, (which is
the earlier of the first day of the first period for which an amount payable as
an annuity or in the case of a benefit not payable in the form of an annuity,
the first day on which all events have occurred which entitle the participant or
beneficiary to such benefit) shall receive benefits in the form of a qualified
joint and survivor annuity. For an unmarried participant a qualified joint and
survivor annuity shall mean a single life annuity.
(6) If the value of a participant's vested account balance derived from
employer and employee contributions exceeds (or at the time of any prior
distribution exceeded) $3,500.00, and the account balance is immediately
distributable, the participant and the participant's spouse (or where either the
participant or the spouse has died, the survivor) must consent to any
distribution of such account balance. The consent of the participant and the
participant's spouse shall be obtained in writing within the 90-day period
ending on the annuity
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starting date. The annuity starting date is the first day of the first period
for which an amount is paid as an annuity or any other form. The plan
administrator shall notify the participant and the participant's spouse of the
right to defer any distribution until the participant's account balance is no
longer immediately distributable. Such notification shall include a general
description of the material features, and an explanation of the relative values
of, the optional forms of benefit available under the plan in a manner that
would satisfy the notice requirements of section 417(a)(3), and shall be
provided no less than 30 days and no more than 90 days prior to the annuity
starting date.
Notwithstanding the foregoing, only the participant need consent to the
commencement of a distribution in the form of a qualified joint and survivor
annuity while the account balance is immediately distributable. (Furthermore, if
payment in the form of a qualified joint and survivor annuity is not required
with respect to the participant pursuant to section 8.2 of the plan, only the
participant need consent to the distribution of an account balance that is
immediately distributable.) Neither the consent of the participant nor the
participant's spouse shall be required to the extent that a distribution is
required to satisfy section 401(a) (9) or section 415 of the Code. In addition,
upon termination of this plan if the plan does not offer an annuity option
(purchased from a commercial provider) the participant's account balance may,
without the participant's consent, be distributed to the participant or
transferred to another defined contribution plan (other than an employee stock
ownership plan as defined in section 4975(e) (7) of the Code) within the same
controlled group. An account balance is immediately distributable if any part of
the account balance could be distributable to the participant (or surviving
spouse) before the participant attains or would have attained if not deceased)
the later of normal retirement age or age 62. For purposes of determining the
applicability of the foregoing consent requirements to distributions made before
the first day of the first plan year beginning after December 31, 1988, the
participant's vested account balance shall not include amounts attributable to
accumulated deductible employee contributions within the meaning of section
72(0)(5)(B) of the Code.
8.02
Qualified Joint and Survivor Annuity and pre-retirement Survivor Annuity
(a) For purposes of this Article VIII:
(1) "Qualified Election" means a waiver of a Qualified Joint and
Survivor Annuity or a pre-Retirement Survivor Annuity, as defined under article
8.02(a)(3) and (5) of the Plan. The waiver must be in writing and must be
consented to by the participant's Spouse. The Spouse's consent to a waiver must
be witnessed by a Plan representative or notary public and must be limited to a
benefit for a specific alternate Beneficiary. Notwithstanding this consent
requirement, if the participant established to the satisfaction of a Plan
representative that such written consent may not be obtained because there is no
Spouse or the Spouse cannot be located, a waiver by the participant only will be
deemed a Qualified Election. Any consent necessary under this provision will be
valid only with respect to the Spouse who signs the consent, or in the event of
a deemed Qualified Election, the designated Spouse. Additionally, a revocation
of a prior waiver may be made by a participant without the consent of the Spouse
at any time before the commencement of benefits. However, once made, the consent
of a Participant's Spouse shall
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be irrevocable. A participant may make any number of revocations during the
election period. Any new waiver or change of Beneficiary will require new
spousal consent.
(2) During the 90 day period ending on the annuity starting
date, a participant may waive the Qualified Joint and Survivor Annuity form of
benefit provided the following conditions are satisfied:
(A) the participant's spouse consents in writing to the election
are the spouse's consent is witnessed by a plan representative or notary public;
(B) the participant's waiver and the spouse's consent state that
the specific nonspouse beneficiary (including any class of beneficiaries or
contingent beneficiaries) and the particular optional form of benefit, may not
be further modified (except back to a Qualified Joint and Survivor Annuity)
without subsequent spousal consent (unless expressly permitted by the spouse);
and
(C) The spouses consent acknowledges the effect of the election.
Unless an optional form of benefit is selected pursuant to a qualified election
within a 90-day period ending on the annuity starting date, a married
participant's vested accrued benefit will be paid in the form of a qualified
joint and survivor annuity and an unmarried participant's vested accrued benefit
will be paid in the normal form of an immediate life annuity. The participant
may elect to have such annuity distributed upon attainment of the earliest
retirement age under the Plan.
(3) "Qualified Joint and Survivor Annuity" means an annuity for
the life of the Participant with a survivor annuity for the life of the Spouse
which is not less than 50 percent and not more than 100 percent of the amount of
the annuity which is payable during the joint lives of the Participant and the
Spouse and which is the amount of benefit which can be purchased with the vested
balance in the Participant's Account. The Joint and 50% Survivor Annuity is
designated as the automatic form of benefit payment.
(4) "Spouse" means the spouse or surviving spouse of the
Participant, including a former spouse or surviving spouse to the extent
provided under a qualified domestic relations order as described in Section
414(p) of the Code.
(5) "Pre-retirement survivor annuity" shall mean an annuity
which is purchased for the life of the surviving spouse the actuarial equivalent
of which is not less than 50 percent of the nonforfeitable account balance,
including the proceeds of life insurance on the participant's life, of the
Participant, as of the date of death. No more than a proportional percent of the
account balance attributable to contributions that may not be forfeited at
death, (e.g. employee deferrals) may be used to satisfy this requirement. The
amount of life insurance shall not exceed the Incidental Death Benefits
contained in 9.03 of the plan.
(b) Notwithstanding any other provision of this Plan to the contrary,
except as provided in Subsection (d) -
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(1) If a Participant who completes at least one (1) Hour of
Service on or after August 23, 1984 does not make a Qualified Election and dies
before benefits have commenced as a Qualified Joint and Survivor Annuity, the
Participant's vested Account balance, including life insurance, less any loans
will be distributed in the form of a life annuity; and if a married participant
with vested benefits attributable to employer or employee contributions dies
before the Annuity Starting Date, the participant's spouse will be provided with
a pre-retirement survivor annuity unless there has been a proper election to
waive the pre-retirement survivor annuity and the notice requirements have been
met.
(2) If a married Participant who completes at least one (1) Hour
of Service on or after August 23, 1984 does not make a Qualified Election and
dies before benefits have begun under the Plan, his Account balance including
life insurance less any loans shall be applied to purchase an annuity for the
surviving Spouse the actuarial equivalent of which is not less than 50% of the
account balance of the participant as of the date of death.
(3) the surviving spouse may direct the commencement of payments
under the Pre-Retirement Survivor Annuity within a reasonable time after the
participant's death.
(c)(1)The Trustees shall provide to each Participant within no less
than 30 days and no more than 90 days prior to the annuity starting a written
explanation of (1) the terms and conditions of the Qualified Joint and Survivor
Annuity; (2) the Participant's right to make and the effect of an election to
waive the Qualified Joint and Survivor Annuity; (3) the rights of a
Participant's Spouse; and (4) the right to make and the effect of a revocation
of a previous election to waive the Qualified Joint and Survivor Annuity.
Notwithstanding the other requirements of this section, the respective notices
prescribed by this section need not be given to a participant if (1) the plan
"fully subsides" the costs of a qualified joint and survivor annuity or
qualified preretirement survivor annuity, and (2) the plan does not allow the
participant to waive the qualified joint and survivor annuity or qualified
preretirement survivor annuity and does not allow a married participant to
designate a nonspouse beneficiary. A 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.
(2) The Trustees shall also provide each Participant within the period
beginning on the first day of the Plan Year in which the Participant attains age
32 and ending with the close of the Plan Year preceding the Plan Year in which
the Participant attains age 35, a written explanation of the Pre-Retirement
Survivor Annuity as described in Section 8.02(b) (2) in such terms and in such
manner as would be comparable to the explanation provided for meeting the
requirements of Paragraph (1).
(3) If a Participant enters the Plan after the first day of the Plan
Year in which age 32 is attained, the Trustees shall provide the required notice
no later than the close of the third Plan Year following the Participant's entry
into the Plan.
(4) The Trustees shall provide a participant and his spouse, if any,
with a written explanation of a pre-retirement survivor annuity within one year
after the Participant separates from service before age 35 if he has already
received the explanation.
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(5) Election Period: The period which begins on the first day of the
plan year in which the participant attains age 35 and ends on the date of the
participant's death. If a participant separates from service prior to the first
day of the plan year in which age 35 is attained, with respect to the account
balance as of the date of separation, the election period shall begin on the
date of separation. Pre-age 35 waiver: A participant who will not yet attain age
35 as of the end of any current plan year may make a special qualified election
to waive the qualified preretirement survivor annuity for the period beginning
on the date of such election and ending on the first day of the plan year in
which the participant will attain age 35. Such election shall not be valid
unless the participant receives a written explanation of the qualified
preretirement survivor annuity. Qualified preretirement survivor annuity
coverage will be automatically reinstated as of the first day of the plan year
in which the participant attains age 35. Any new waiver on or after such date
shall be subject to the full requirement of this Section. Earliest retirement
age shall mean the earliest date under the Plan the Participant could elect to
receive retirement benefits.
(d) This section shall apply to a participant in a profit sharing plan,
and to any distribution, made on or after the first day of the first plan year
beginning after December 31, 1988, from or under a separate account attributable
solely to accumulated deductible employee contributions, as defined in section
72(o)(5)(B) of the Code, and maintained on behalf of a participant in a money
purchase pension plan, (including a target benefit plan) if the following
conditions are satisfied: (1) the participant does not or cannot elect payments
in the form of a life annuity; and (2) on the death of a participant, the
participant's vested account balance will be paid to the participant's surviving
spouse, but if there is no surviving spouse, or if the surviving spouse has
consented in a manner conforming to a qualified election, then to the
participant's designated beneficiary. The surviving spouse may elect to have
distribution of the vested account balance commence within the 90-day period
following the date of the participant's death. The account balance shall be
adjusted for gains or losses occurring after the participant's death in
accordance with the provisions of the plan governing the adjustment of account
balances for other types of distributions. This section shall not be operative
with respect to a participant in a profit sharing plan if the plan is a direct
or indirect transferee of a defined benefit plan, money purchase plan, a target
benefit plan, stock bonus, or profit sharing plan which is subject to the
survivor annuity requirements of section 401(a)(11) and section 417 of the Code.
The participant may waive the spousal death benefit described in this section at
any time provided that no such waiver shall be effective unless it satisfied the
conditions that would apply to the participant's waiver of the qualified
preretirement survivor annuity. For purposes of this section, vested account
balance shall mean, in the case of a money purchase pension plan or a target
benefit plan, the participant's separate account balance attributable solely to
accumulated deductible employee contributions within the meaning of section
72(o)(5)(B) of the Code. In the case of a profit sharing plan, vested account
balance shall have the same meaning as provided in hereinabove.
8.03
Transitional Rules
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(a) Any living Participant who is not receiving benefits on August 23,
1984, and would otherwise not receive the benefits prescribed in Section 8.02
must be given the opportunity to elect to have the provisions of Section 8.02
apply if (1) such Participant is credited with at least one (1) Hour of Service
under this Plan or a predecessor plan in a Plan Year beginning on or after
January 1, 1976 and (2) had at least ten (10) Years of Service when he or she
incurred a Termination of Employment.
(b) Any living Participant who is not receiving benefits on August 23,
1984, and who was credited with at least one Hour of Service under this Plan or
a predecessor plan on or after September 2, 1974, and who is not otherwise
credited with any service in a Plan Year beginning on or after January 1, 1976,
must be given the opportunity to have his or her benefits paid in accordance
with Subsection (d).
(c) The respective opportunities to elect (as described in Subsections
(a) and (b)) must be given to the appropriate Participants during the period
beginning on August 23, 1984, and ending on the date benefits would otherwise
begin.
(d) Any Participant who has elected pursuant to Subsection (b) and any
Participant who does not elect under Subsection (a) or who meets the
requirements of Subsection (a) except that such Participant does not have at
least ten (10) Years of Service when he or she had a Termination of Employment,
shall have his or her benefits distributed in accordance with all of the
following requirements if benefits would have been payable in the form of a life
annuity:
(1) Automatic Joint and Survivor Annuity - If benefits in the
form of a life annuity become payable to a married Participant who:
(A) begins to receive payments under the Plan on or
after his Normal Retirement Age, or
(B) dies on or after Normal Retirement Age while still
working for the Employer; or
(C) begins to receive payments on or after the Qualified
Early Retirement Age; or
(D) has a Termination of Employment on or after
attaining Normal Retirement Age (or the Qualified Early Retirement Age) and
after satisfying the eligibility requirements for the payment of benefits under
the Plan and thereafter dies before beginning to receive such benefits; then
such benefits will be received under this Plan in the form of a Qualified Joint
and Survivor Annuity, unless the Participant has elected otherwise during the
election period. The election period must begin at least six (6) months before
the Participant attains Qualified Early Retirement Age and end not more than 90
days before the commencement of benefits. Any election will be in writing and
may be changed by the Participant at any time.
(E) A Participant who is employed after attaining the
Qualified Early Retirement Age will be given the opportunity to elect, during
the election period, to have a
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survivor annuity payable on death. If the Participant elects the survivor
annuity, payments under such annuity must not be less than the payments which
would have been made to the Spouse under the Qualified Joint and Survivor
Annuity if the Participant had retired on the date before his or her death. Any
election under this provision will be in writing and may be changed by the
Participant at any time. The election period begins on the later of (1) the 90th
day before the Participant attains the Qualified Early Retirement Age, or (2)
the date on which participation begins, and ends on the date the Participant has
a Termination of Employment.
(e) For purposes of this Section 8.03 Qualified Early Retirement Age is
the latest of:
(1)(A) the earliest date, under the Plan, on which the
Participant may elect to receive retirement benefits,
(B) the first day of the 120th month beginning before
the Participant reaches Normal Retirement Age, or
(C) the date the Participant begins participation.
(2) Qualified Joint and Survivor Annuity is an annuity for the life of
the Participant with a survivor annuity for the life of the Spouse as described
in Section 8.02(a) (6).
8.04
Timing of Distributions
(a) The distribution of a Participant's Account balance (other than
elective contributions see 8.04(g)) under Section 8.01 shall begin at the
Participant's or Beneficiary's election:
(1) On the earliest practicable date following a Termination of
Employment, if
(A) the Participant 5 fully (100%) vested in his or her
Employer contribution Account balance on his Termination of Employment, or
(B) the distribution is made in a lump sum and does not
exceed $3,500, or
(C) the distribution is made in a lump sum and the
Participant has elected (with his spouse's consent) to receive such
distribution; and
(D) distributions shall be made not later than the
required beginning date for distributions.
(2) On the earliest practicable date after the Allocation Date of the
first Plan Year in which a Participant has a Break in Service, in any case not
specified in Paragraph (1), provided that such Participant consents (and where
applicable obtains his spouse's consent) to receive such distribution on such
date.
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(b) In no event, unless a Participant consents to postponement under
Subsection (d), may the distribution of his Account balance commence later than
the sixtieth (60th) day after the last day of the Plan Year in which occurs the
later of (1) a Participant's Normal Retirement Age, or (2) ; the date of his
Termination of Employment.
(c) The Participant or Beneficiary may elect to defer distributions
under the Plan to the date specified in Section 8.04(a)(2) or to the latest date
specified in Section 8.04(b). Any such deferral of distributions shall be
administered in a uniform and non-discriminatory manner. The employer may not
through the exercise of any discretion, deny a participant a Code Section 4"(d)
(6) protected benefit for which the participant is otherwise eligible.
(d) A former Participant may consent to postpone the distribution of his
Account balance beyond the latest date permitted by Subsection (b), but in no
event later than April 1st of the calendar year following the year in which age
70-1/2 is attained, by filing a written statement with the Trustees describing
the distribution to which he is entitled and stating the date upon which he
desires such distribution to commence. Any such postponement shall require the
approval of the Trustees.
(e) For distributions beginning before the participant's death, the
first distribution calendar year is the calendar year immediately preceding the
calendar year which contains the participant's required beginning date. For
distributions beginning after the participant's death, the first distribution
calendar year is the calendar year in which distributions are required to begin.
(f) If the Plan has early retirement provision and contains either a
minimum age or service for eligibility, a participant who meets the service
requirement, but separates from service before early retirement will begin to
receive benefits, unless otherwise elected upon meeting the early retirement age
(g) Elective Deferrals may not be distributed earlier than upon one of
the following events:
(1) The employee's retirement, death, disability or separation
from service;
(2) The termination of the plan without establishment of a
successor defined contribution plan other than an employee stock ownership plan
(as defined in section 4975(e) or section 409 of the Code) or a simplified
employee pension plan as defined in section 408(k).
(3) In case of a profit sharing or stock bonus plan, the
employee's attainment of age 59-1/2 or, for plan year beginning before 1989, the
employee's hardship;
(4) the sale or other disposition by a corporation to an
unrelated corporation of substantially all of the assets used in a trade or
business, but only with respect to employees who continue employment with the
acquiring corporation; and
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(5) The sale or other disposition by a corporation of its
interest in a subsidiary to an unrelated entity but only with respect to
employees who continue employment with the subsidiary.
(6) All distributions that may be made pursuant to one or more
of the foregoing distributable events are subject to the spousal and participant
consent requirements (if applicable) contained in section 4c(a) (11) and 417 of
the Code. In addition, distributions after March 31, 1988, that are triggered by
event (2), (4), or (5) enumerated above must be made in a lump sum.
(h) The required beginning date of a participant who attains age 70 1/2
before January 1, 1988, shall be determined in accordance with (1) or (2) below:
(1) Non-5-percent owners. The required beginning date of a
participant who is not a 5-percent owner is the first day of April of the
calendar year following the calendar year in which the later of retirement or
attainment of age 70 1/2 occurs.
(2) 5-percent owners. The required beginning date of a
participant who is a 5-percent owner during the year beginning after December
31, 1979, is the first day of April following the later of:
(i) the calendar year in which the participant attains
age 70 1/2, or
(ii) the earlier of the calendar year with or within
which ends the plan year in which the participant becomes a 5-percent owner, or
the calendar year in which the participant retires.
The required beginning date of a participant who is not a 5-percent owner who
attains age 70 1/2 during 1988 and who has not retired as of January 1, 1989, is
April 1, 1990.
(i) 5-percent owner. A participant is treated as a 5-percent owner for
purposes of this section if such participant is a 5-percent owner as defined in
section 416(i) of the Code (determined in accordance with section 416 but
without regard to whether the plan is top-heavy) at any time during the plan
year ending with or within the calendar year in which such owner attains age 66
1/2 or any subsequent plan year. Once distributions have begun to a 5-percent
owner under this section, they must continue to be distributed, even if the
participant ceases to be a 5-percent owner in a subsequent year.
8.05
Repayment of Forfeitures
(a) A former Participant who again becomes an Employee and satisfies all
of the conditions set forth in this Subsection (a), may repay to the Trust Fund
the amount of any distribution which was received upon the Participant's
previous Termination of Employment. Upon such repayment, the Employer shall
restore the portion of the Participant's Account balance which was forfeited
upon such Termination of Employment, unadjusted for any gains or losses
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incurred by the Trust Fund since the Allocation Date as of which the forfeiture
occurred. The right of repayment described in this Subsection (a) shall exist
only if --
(1) the Participant, following a previous Termination of
Employment, received a distribution in one lump sum;
(2) upon such Termination of Employment, such Participant was
not fully (100%) vested in his Employer contribution Account balance; and
(3) such repayment is made before the Participant has incurred
five (5) consecutive one-year Breaks in Service.
(b) Any restoration of forfeitures under Subsection (a) shall be made
from Employer contributions.
(c) If a benefit is forfeited because the Participant or beneficiary
cannot be found, such benefit will be reinstated if a claim is made by the
Participant or beneficiary.
8.06
Distributions After Death
(a)(1)In the event a Participant dies before benefits commence and the
Participant has not made a Qualified Election to waive the Pre-Retirement
Annuity, such benefit shall be paid in the form of an immediate or deferred
annuity for the surviving Spouse's lifetime or with the consent of the surviving
Spouse in one lump sum. In the event a surviving Spouse elects to purchase a
deferred annuity, distribution must commence not later than the date on which
the Participant would have attained age 70-1/2. In the event the surviving
Spouse is the Beneficiary and dies before distribution to such Spouse begins,
the surviving Spouse shall be treated as if he or she were the Participant. If a
Participant dies before benefits commence and his surviving Spouse is not the
designated Beneficiary, the entire interest must be distributed within 5 years
after the participant's death to the Participant's Beneficiary or Beneficiaries
unless a designated Beneficiary elects not later than one year following the
Participant's death to receive the distribution over the designated
Beneficiary's lifetime. If distributions have commenced to the Participant
before the Participant's death, the remaining portion of the Participant's
benefit will be paid to the Participant's surviving Spouse or other Beneficiary
as rapidly as under the method selected by the Participant. Any amount paid to a
child of the Participant will be treated as if it had been paid to the surviving
spouse if the amount becomes payable to the surviving spouse when the child
reaches the age of majority. If distribution in the form of an annuity
irrevocably commences to the participant before the required beginning date, the
date distribution is considered to begin is the date distribution actually
commences.
(2) For purposes of Paragraph (1), payments will be calculated by use of
the return multiples specified in section 1.72-9 of the Income Tax Regulations.
Life expectancy of a surviving spouse may be recalculated annually. In the case
of any other designated Beneficiary, life expectancy will be calculated at the
time payment first commences and payments for any
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12-consecutive month period will be based on such life expectancy minus the
number of whole years passed since distribution first commenced.
(b) Notwithstanding the provisions contained in Subsection (a) and
subject to the requirements contained in Section 8.02(a), a distribution on
behalf of any Employee, including a 5% owner, may be made in accordance with the
following requirements (regardless of when such distribution commences):
(1) The distribution by the trust is one which would not have
disqualified such trust under Section 401(a)(9) of the Code, as in effect prior
to amendment by the Deficit Reduction Act of 1984.
(2) The distribution is in accordance with a method of
distribution designated by the Employee whose interest in the trust is being
distributed or, if the Employee is deceased, by a Beneficiary of such Employee.
(3) Such designation was in writing was signed by the Employee
of the Beneficiary, and was made before January 1, 1984 and was made pursuant to
Section 242(b)(2) of the Tax Equity and Fiscal Responsibility Act of 1982
("TEFRA").
(4) The Employee had accrued a benefit under the Plan as of
December 31, 1983.
(5) (A) The method of distribution designated by the Employee of
the Beneficiary specifies the time at which distribution will commence, the
period over which distributions will be made, and in the case of any
distribution upon the Employee's death, the Beneficiaries of the Employee listed
in order of priority.
(B) A distribution upon death will not be covered by
this transitional rule unless the information in the designation contains the
required information described above with respect to the distributions to be
made upon the death of the Employee.
(C) For any distribution which commences before January
1, 1984, but continues after December 31, 1983, the Employee, or the
Beneficiary, to whom such distribution is being made, will be presumed to have
designated the method of distribution under which the distribution is being made
if the method of distribution was specified in writing and the distribution
satisfies all the applicable requirements described in Paragraphs 1 through 5
above.
(D) If a designation is revoked, and subsequent
distribution must satisfy the. requirements of Section 401(a)(9) of the Code
and the proposed regulations thereunder. If a designation is revoked subsequent
to the date distributions are required to begin, the trust must distribute by
the end of the calendar year following the calendar year in which the revocation
occurs the total amount not yet distributed which would have been required to
have been distributed to satisfy section 401(a)(9) of the Code and the proposed
regulations thereunder, but for the section 242(b)(2) election. For calendar
years beginning after December 31, 1988, such distributions must meet the
minimum distribution incidental benefit
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requirements in section 1.401(a) (9)-2 of the proposed regulations. Any changes
in the designation will be considered to be a revocation of the designation.
However, the mere substitution or addition of another Beneficiary (one not named
in the designation) under the designation will not be considered to be a
revocation of the designation, so long as such substitution or addition does not
alter the period over which distributions are to be made under the designation,
directly or indirectly (for example, by altering the relevant measuring life) .
In the case in which an amount is transferred or rolled over from one plan to
another plan, the rules in Q & A J-2 and Q & A J-3 shall apply.
8.07
Beneficiaries
(a) Upon receipt of a notification from the Trustees that an individual
has qualified for participation in the Plan, a participant shall designate, on
forms provided for that purpose by the Trustees and the Insurer, if applicable,
a Beneficiary and successor Beneficiary. Such designation shall be subject to
the following rules:
(1) If the Participant is married, and has not made a Qualified
Election, the Beneficiary shall be his Spouse.
(2) If the Participant is married, and he revokes a Qualified
Election, the Beneficiary shall be his Spouse.
(3) If the Participant is not married or is married and has made
a Qualified Election, the Beneficiary of any death benefit under the Plan shall
be his designated Beneficiary.
(4) If the Participant is married or unmarried and any life
insurance or annuity contract is issued on his life under this Plan, the
Beneficiary of such contract shall be the Trustee(s).
The designation of a Beneficiary shall be effective upon its receipt in
proper form by the Trustees, or, if applicable, the Insurer.
(b) The Trustees of the Insurer may prescribe rules and regulations for
changing the Beneficiary. If any Participant fails to designate a Beneficiary or
is predeceased by the designated Beneficiary, the Beneficiary shall be:
(1) the Participant's Spouse, if married, otherwise
(2) the Participant's living children (including adoptive
children) in equal shares, otherwise
(3) The Participant's parents, if living, in equal shares.
8.08
Incompetency
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A Participant or Beneficiary may be, in the judgment of the Trustees,
legally, physically or mentally incapable of personally receiving and receipting
for any payment due under this Plan. If so, payment may, in the discretion of
the Trustees, be made to the guardian or legal representative of such
Participant or Beneficiary. If no guardian or representative exists, payment may
be made to any other person or institution which, in the judgment of the
Trustees, then maintains or has custody of, such Participant or Beneficiary.
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ARTICLE IX -- LIFE INSURANCE POLICIES AND ANNUITY CONTRACTS
9.01
Purchase of Life Insurance
The trustees shall apply for and will be owner of any insurance contract
purchased under the terms of this plan. The insurance contract(s) must provide
that proceeds will be payable to the trustee, however the trustee shall be
required to pay over all proceeds of the contract(s) to the participant's
designated beneficiary in accordance with the distribution provisions of this
plan. A participant's spouse will be the designated beneficiary of the proceeds
in all circumstances unless a qualified election has been made with spousal
consent in accordance with Section 8, Joint and Survivor Annuity Requirements,
if applicable. Under no circumstances shall the trust retain any part of the
proceeds. In the event of any conflict between the terms of this plan and the
terms of any insurance contract purchased hereunder, the plan provisions shall
control.
9.02
Ownership of Policies and Contracts
(a) The Trustees shall own all life insurance and annuity contracts
acquired under the Plan and shall be designated as sole owner in each contract
and shall abide by the terms of this plan including the joint and survivor
annuity requirements
(b) In the event that this Plan substitutes for a previous Plan which
was non-trusteed, any life insurance or annuity contract which was purchased
under such previously existing plan may be kept in force under this Plan even
though it is owned by the Participant and not by the Trustees. Each such
contract shall be non-transferable and must be endorsed to prohibit the owner
from exercising the loan and assignment privileges without the consent of the
Employer.
(c) In the event that any life insurance contract was purchased under a
pre-existing plan on the life of a Participant, such contract may be maintained
under this Plan (even if not issued by the Insurer) . The only annuity contracts
which may be maintained under this Plan are those which are issued by the
Insurer.
9.03
Incidental Death Benefits
(a) The limitations on the amount of insurance which may be purchased
under the Plan are the portion of Employer contributions and forfeitures
allocated to the Participant's Account for the current and first two (2)
preceding Plan Years used to purchase term or universal life insurance policies,
plus 50% of the portion used to purchase ordinary life insurance and endowment
policies other than retirement income policies, shall at no time exceed 25% of
the portion of such sum not used to purchase retirement income policies. All
amounts allocated prior to the last two Plan Years may be applied to the
purchase of whole life or term insurance. For purposes of these incidental
insurance provisions, ordinary life insurance contracts are contracts with both
nondecreasing death benefits and nonincreasing premiums. If such contracts
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are purchased, less than 1/2 of the aggregate employer contributions allocated
to any participant will be used to pay the premiums attributable to them. The
sum of 1/2 of the ordinary life insurance premiums and all other life insurance
premiums will not exceed 1/4 of the aggregate employer contributions and
employee deferrals allocated to any participant.
(b) As soon as practicable after each Allocation Date, the Trustees
shall recompute the maximum death benefit purchasable in accordance with the
provisions of Section 9.03(a). If upon such recomputation it is determined that
the face amount of the contract(s) on the Participant's life exceeds the maximum
death benefit as so recomputed, or if such Participant shall have modified or
terminated his election, the Trustees shall take such action as may be specified
by the Insurer to adjust the face amount of the contract(s) held for the
Participant so as not to exceed the limitation contained in Section 9.03(a).
9.04
Increases and Reductions in Face Amount
(a) Each policy acquired under this Article IX shall be purchased from
assets of the Account of the Participant on whose life such contract is issued
and shall be an asset of the Trust earmarked for such Participant's Account.
(b) A Participant who desires to maintain less life insurance under the
Plan than the amount in force may elect to purchase the contract(s) issued on
his life for an amount equal to the net cash value. Alternatively, the Trustees
may borrow out the loan value(s) and sell the contract(s) subject to the loan(s)
to the Participant for the then remaining value. If the Participant does not
elect to make the purchase, the contract(s) will be surrendered.
9.05
Application of Dividends
All dividends or credits earned on insurance contracts will be allocated
to the Account of the Participant on whose life such contract was issued.
9.06
Refund of Premiums
If a premium or the cost of insurance on a life insurance contract Is
waived on account of a Participant's disability, the premium or the cost of
insurance which is returned by the Insurer shall be added to the disabled
Participant's Account.
9.07
Distribution of Life Insurance policies
Life Insurance policies shall be either converted to cash, an annuity
contract, or distributed to the Participant at or before retirement. If the
participant's benefit is distributed in the form of an annuity purchased from an
insurance company, distributions thereunder shall be
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made in accordance with the
requirement of section 401(a) (9) of the Code and the proposed regulations
thereunder.
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ARTICLE X -- MISCELLANEOUS
10.01
Non-Alienation and Non-Assignment of Benefits
(a) No benefit under this Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, charge,
encumbrance, garnishment, levy or attachment. Any attempt to anticipate,
alienate, sell, transfer, assign, pledge, charge, encumber, garnish, levy upon
or attach any benefit under this Plan shall be void. No benefit under this Plan
shall be in any manner liable for or subject to the debts, contracts,
liabilities engagements or torts of the person entitled to it.
(b) The prohibition against assignment and alienation of benefits
contained in Subsection (a) shall not apply to any benefit payable with respect
to a Participant pursuant to a qualified domestic relations order as defined in
Section 414(p) of the Code or pursuant to any domestic relations order if such
order was entered before January 1, 1985.
10.02
Amendment to Plan
(a) The Employer may amend any selection it has made in Article I or
replace this Plan with another program, at any time. Also, no amendment or
replacement of the Plan may change, without the Trustees' written consent, the
duties, responsibilities, rights or privileges of the Trustees under the Plan.
(b) No amendment or replacement of the Plan may deprive any Participant
of any benefit accrued under the Plan, decrease a Participant's Account balance
or eliminate an optional form of distribution, except for the removal of an
option which does not involve a Participant's "protected benefits" as determined
in accordance with regulations to be prescribed by the Secretary of the
Treasury, except to the extent such amendment is necessary for the Plan to
obtain or retain its qualified status or to conform the Plan to any other law or
regulation which pertains to qualified retirement plans.
(c) The Employer may amend this Plan if the amendment relates to
administrative provisions of the trust or custodial account document (such as
provisions relating to investments and the duties of trustees), so long as the
amended provisions are not in conflict with any other provisions of the plan and
do not conflict with any other provision of the plan and do not cause the plan
to fail to qualify under section 401(a) of the Code.
(d) The sponsoring organization may amend any part of the plan. For
purposes of sponsoring organization amendments, the mass submitter shall be
recognized as the agent of the sponsoring organization. If the sponsoring
organization does not adopt the amendments made by the mass submitter, it will
no longer be identical to or a minor modifier of the mass submitter plan. The
employer may (1) change the choice of options in the adoption agreement, (2) add
overriding language in the adoption agreement when such language is necessary to
satisfy section 415 or section 416 of the Code because of the required
aggregation of multiple plans, and
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(3) add certain model amendments published by the Internal Revenue Service which
specifically provide that their adoption will not cause the plan to be treated
as individually designed. An employer that amends the plan for any other reason,
including a waiver of the minimum funding requirement under section 412(d) of
the Code, will no longer participate in this regional prototype plan and will be
considered to have an individually designed plan.
10.03
Merger or Consolidation
If this Plan merges or consolidates with, or transfers assets or
liabilities to, any other plan, each Participant in this Plan shall be entitled
to receive a benefit immediately after the merger, consolidation or transfer
(assuming that the Plan had then terminated) which is equal to or greater than
the benefit such Participant would have been entitled to receive immediately
before the merger, consolidation or transfer (assuming that the Plan had then
terminated).
10.04
Termination of Plan
The Employer may terminate the Plan at any time. No benefit shall accrue
to any Participant after such termination. Upon the termination or partial
termination of the Plan, each affected Participant shall be 100% vested in his
Accounts. If this Plan is a Profit Sharing Plan, in the event of a complete
discontinuance of contributions under the Plan, each affected Participant shall
be 100% vested in his Account under such Plan.
10.05
Gender and Form
Wherever any words are used in this Plan in the masculine gender, they
should be considered as if they are also used in the feminine gender, in all
cases where they so apply and vice-versa; and wherever any words are used in
this Plan in a singular form, they should be considered as if they are also used
in a plural form, in all cases where they so apply and vice-versa.
10.06
Conditions on Employer Contributions
(a) The Employer's contribution is conditioned upon the initial
qualification of the Plan under Section 401(a) of the Code. If the Plan fails to
qualify, the Trustees shall within one year after the date initial qualification
is denied, dispose of each contract and liquidate each Account as if the
Participant on whose life such contract was issued or for whom such Account was
established had resigned with a non-forfeitable percentage of zero, and each
Participant's voluntary contributions, if any, plus any gains and less any
losses and expenses attributable thereto, shall be returned to the Participant
who made it. However, if this Plan is being substituted for a previous program,
the Trustees shall dispose of each contract in accordance with non-forfeitable
provisions of this plan. In the event that the Commissioner of the Internal
Revenue determines that the plan is not initially qualified under the Internal
Revenue Code, any
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contribution made incident to that initial qualification by the employer must be
returned to the Employer within one year after the date the initial
qualification is denied, but only if the application for the qualification is
made by the time prescribed by law for filing the employer's return for the
taxable year in which the Plan is adopted, or such later year as the Secretary
of the Treasury may prescribe.
(b) All contributions made by the Employer to the Plan are conditioned
upon their deductibility under Section 404 of the Code. If the deduction for any
contribution is denied, the value of the contribution shall to the extent it is
disallowed be returned to the Employer within one year following the date of
disallowance.
(c) If any Employer contribution to this Plan is made by a good faith
mistake of fact, the value of the contribution may be returned to the Employer
within one year following the date it is made.
10.07
Conflict Between Plan and Contracts
In the event of a conflict between the provisions of the Plan and any
insurance contract issued under or to the Plan, the provisions of the Plan shall
govern.
10.08
Furnishing Information to Participants, Etc.
(a) The Trustees shall notify all persons who are eligible to
participate in this Plan, informing them of the basic provisions of the Plan and
their rights and obligations under it.
(b) The Employer shall require each Participant to take whatever action
may be necessary by such Participant to permit the Administrator, the Trustee,
the Participant and the Insurer to comply, with the laws and regulations
applying to the Plan. The Trustees shall take all necessary steps to carry out
the provisions of the Plan.
10.09
Annual Accounting
The Trustee shall give to the Employer an annual accounting on the basis
of the Plan Year showing receipts and the charges and credits made under the
Plan. Such accounting shall be based upon the current fair market value of the
Trust assets. The value of any insurance or annuity contract shall be determined
in the same way as in Section 4.09(b). The Employer's approval of the Trustee's
accounting will be assumed at the end of 90 days after receipt by the Employer
unless the Trustee is notified otherwise. The Trustee shall also, on request,
provide the Employer with whatever information the Employer deems necessary to
enable it to comply with the reporting and disclosure requirements established
by federal law.
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10.10
Exclusive Benefit
This Plan has been established for the exclusive benefit of the
Participants and their Beneficiaries. No trust funds shall revert to or be used
by or enjoyed by the Employer, except to the extent provided by Section 10.06.
10.11
Hardship Withdrawals
A Participant may apply in writing to the Plan Administrator for a
hardship withdrawal at any time. The withdrawal must be for an immediate and
heavy financial need of the Participant for which funds are not reasonably
available from other resources of the Participant. Hardship withdrawals are
subject to the spousal consent requirements contained in Sections 401(a)(11) and
417 of the Code. If approved by the Plan Administrator, such withdrawal shall
equal the lesser of (i) the amount required to be distributed to meet the need
created by the hardship, or (ii) the Participant's total accumulated
contributions exclusive of earnings after 1988. The only circumstances which may
warrant approval of a Participant's application for a hardship withdrawal are:
(a) Medical expenses described in section 213(d) of the Code incurred by
the employee, the employee's spouse, or and dependents of the employee (as
defined in section 152);
(b) Purchase (excluding mortgage payments) of a principal residence for
the employee;
(c) Payment of tuition and related educational fees for the next 12
months of post-secondary education for the employee, his or her spouse,
children, or dependents; or
(d) The need to prevent the eviction of the employee from his principal
residence or foreclosure on the mortgage of the employee's principal residence.
10.12
Hardship Withdrawals Limitations
The following conditions apply to withdrawals made under Section 10.11:
(a) A Participant may make only one withdrawal from his Tax Sheltered
Savings Account in any 12-month period.
(b) Withdrawals pursuant to Section 10." hereof shall be based on the
value of the Participant's Tax Sheltered Savings Account as of the Valuation
Date coincident with or next following the Participant's request.
(c) Withdrawals shall be made from the investment fund(s) designated by
the Participant in writing on a form supplied by the Plan Administrator.
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(d) If a hardship withdrawal is allowed by the Plan Administrator the
withdrawal will be made without forfeiting vested benefits based upon employer
contributions.
(e) Distribution of Elective Deferrals (and any earnings credited to a
participant's account as of the end of the last Plan Year ending before July 1,
1989) may be made to a participant in the event of hardship.
10.13
Hardship Withdrawals Immediate Financial Need
A distribution will be deemed to be necessary to satisfy an immediate and heavy
financial need of an employee if all of the following requirements are
satisfied:
(a) The distribution is not in excess of the amount of the immediate and
heavy financial need of the employee (including amounts necessary to pay any
federal, state or local income taxes or penalties reasonably anticipated to
result from the distribution),
(b) The employee has obtained all distributions, other than hardship
distributions, and all nontaxable loans currently available under all plans
maintained by the employer,
(c) The plan, and all other plans maintained by the employer, provide
that the employee's elective contributions and employee contributions will be
suspended for at least 12 months after receipt of the hardship distribution, and
(d) The plan, and all other plans maintained by the employer, provide
that the employee may not make elective contributions for the employee's taxable
year immediately following the taxable year of the hardship distribution in
excess of the applicable limit under section 402(g) for such next taxable year
less the amount of such employee's elective contributions for the taxable year
of the hardship distribution.
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ARTICLE XI -- LOANS TO PARTICIPANTS
11.01
Loans from the Plan
Any Participant or beneficiary may apply to the Plan Administrator for a
loan from the Plan. All such loans are available to Participants and
beneficiaries on the same basis with no special treatment of favoritism shown to
officers, stockholders, or highly compensated employees. The Plan Administrator
can establish the policy of denying loans to all Participants and/or
beneficiaries. No loans will be made to any share-holder employee or
owner-employee. For purposes of this requirement, a share-holder employee means
an employee or officer of an electing small business (Subchapter S) corporation
who owns (or is consider as owning within the meaning of section 318 (a) (1) of
the Code, on any day during the taxable year of such corporation, more than 5%
of the outstanding stock of the corporation.
11.02
Amount of Loan
Participant loans, including all Plans of the Employer, are limited to
an amount not to exceed the lesser of:
a) 50% of the Participant's accrued vested benefit; or
b) $50,000.
The $50,000 limitation is reduced by the highest outstanding loan
balance during the previous twelve (12) months.
11.03
Term of Loan
The maximum term for a Participant loan is five (5) years unless the
purpose of the loan is for the purchase of a dwelling to be used as principal
residence of the Participant ("home loan").
11.04
Spousal Consent
A participant must obtain the consent of his or her spouse, if any, to
use of the account balance as security for the loan. Spousal consent shall be
obtained no earlier than the beginning of the 90-day period that ends on the
date on which the loan is to be so secured. The consent must be in writing, must
acknowledge the effect of the loan, and must be witnessed by a plan
representative or notary public. Such consent shall thereafter be binding with
respect to the consenting spouse or any subsequent spouse with respect to that
loan. 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, then, notwithstanding any other provision of
this plan, the portion of the participant's vested account balance used as a
security interest held
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by the plan by reason of a loan outstanding to the participant shall be taken
into account for purposes of determining the amount of the account balance
payable at the time of death or distribution, but only if the reduction is used
as repayment of the loan. If less than 100% of the participant's vested account
balance (determined without regard to the preceding sentence) is payable to the
surviving spouse, then the account balance shall be adjusted by first reducing
the vested account balance by the amount of the security used as repayment of
the loan, and then determining the benefit payable to the surviving spouse.
11.05
Security
All Participant loans must be secured, in writing, by no more than one
half of the non-forfeitable amount of the Participant's accrued vested benefit.
When the Participant terminates employment with the Employer, dies, or becomes
disabled, any unpaid portion of the loan will be subtracted from the amount of
any distribution due the Participant from the Plan.
11.06
Rate of Interest
All Participant loans will bear a rate of interest equal to 1% above the
current Bank of America's Prime Lending Rate in force at the time such loan is
transacted.
11.07
Repayment of Loan
Generally, all loans must be repaid within five (5) years from the date
the loan is approved with the outstanding balance due at maturity. The only
exception to this general rule is "home loans" which may be written for a
reasonable term, exceeding five years. Participants will be required to make
fully amortized payments at least on a quarterly basis.
11.08
Default on Payments
Participant loans will be subject to demand in the event of default or
foreclosure, but attachment of security will not occur until a distributable
event occurs in the Plan.
"Default" is defined as follows:
a) Failure to make a payment when due (or within ten (10) days
thereafter).
b) Another note of Borrower to Lender becomes or is declared to be due
and payable prior to its maturity.
c) Property pledged as security has become subject to attachment or
garnishment, or has been disposed of without provision of satisfactory
substitute.
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d) Borrower seeks relief from claims of creditors by invoking the
provisions of the federal Bankruptcy Code or state law.
e) Borrower is subject to bankruptcy, insolvency or other similar
proceeding started by another, consents to, or approves of any such proceeding,
or a receiver is appointed with respect to the Borrower.
11.09
Late Payments
Should an installment payment not be received within ten (10) days of
the due date, the Participant will be charged a late fee of $10.00. If the late
fees have not been paid by the maturity date of the note (or such earlier time
as demand for the balance is made), the outstanding charges will be withdrawn
from the Participant's account balance.
11.10
Interest Credited
Participant loans are deemed to be investments made solely for the
benefit of the account of the Participant under the Plan. Thus, all interest
paid with respect to any Participant loan is credited to the account of the
Borrower, and any loss or other expense associated with any such loan is borne
by the account of the Borrower.
11.11
Death of Participant
In the event of the Participant's death prior to the complete repayment
of this loan, including principal and accrued interest, the Administrator is
directed to distribute the Note evidencing this loan to the Beneficiary(ies)
designated by the Participant under the terms of the Plan and Trust Agreement(s)
covering the Participant's account, and, in the absence of such designation,
then pursuant to the laws of intestacy of the State of California. Under no
circumstances will the Administrator be required to make a creditor's claim
against the Participant's estate for the payment of this loan. Should the
Participant's death necessitate such a claim, it shall be prosecuted, if at all,
by the Participant's Beneficiary(ies) either directly or on behalf of the
Administrator as permitted by the applicable probate procedure. All reasonable
costs and expenses relating to such claim will be borne by the account of the
Participant.
11.12
Loan Request
A Participant or beneficiary must complete and return Participant Loan
Application to the Plan Administrator, so that a determination can be made as to
the requested Participant loan.
11.13
Existing Balances
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No loan to any participant or beneficiary can be made to the extent that
such loan when added to the outstanding balance of all other loans to the
participant or beneficiary would exceed the lesser of (a) $50,000 reduced by the
excess (if any) of the highest outstanding balance of loans during the one year
period ending on the day before the loan is made, over the outstanding balance
of loans from the plan on the date the loan is made, or (b) one-half the present
value of the nonforfeitable accrued benefit of the participant or, if greater,
the total accrued benefit up to $10,000. For the purpose of the above
limitation, all loans from all plans of the employer and other members of a
group of employers described in section 414(b), 414(c), and 414(m) and (o) of
the Code are aggregated. Furthermore, any loan shall by its terms require that
repayment (principal and interest) be amortized in level payments, not less
frequently than quarterly, over a period not extending beyond five years from
the date of the loan, unless such loan is used to acquire a dwelling unit which
within a reasonable time (determined at the time the loan is made) will be used
as the principal residence of the participant. An assignment or pledge of any
portion of the participant's interest in the plan and a loan, pledge, or
assignment with respect to any insurance contract purchased under the plan, will
be treated as a loan under this paragraph.
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ARTICLE XII -- TRUST AND ADMINISTRATION
12.01
Appointment of Trustees
The assets of the Trust Fund shall be held by the Trustee or Trustees
appointed by the Employer provided, however, that in the case of a
sole-proprietorship there shall not be fewer than two (2) Trustees. The Trustees
shall hold office until their successors have been duly appointed or until
death, resignation or removal.
12.02
Authority to Act
The Trustees shall act unanimously, except that if at any time there are
more than two (2) Trustees, they shall act by majority vote and may act either
by vote at a meeting or in writing without a meeting. However, if there is more
than one Trustee, each Trustee shall be empowered to sign any document or
otherwise enter into any transaction on behalf of all Trustees.
12.03
Appointment of Consultants
The Trustees may appoint such independent accountants, enrolled
actuaries, legal counsel, investment advisors, and other agents or specialists
as they deem necessary or desirable in connection with the performance of their
duties hereunder. The Trustees shall be entitled to rely conclusively upon, and
shall be fully protected in any action taken by them in good faith in relying
upon any opinions or reports which shall be furnished to them by any such
independent accountants, enrolled actuary, legal counsel, investment advisor or
other specialist.
12.04
Expenses of the Trust
The Trustees shall serve without compensation for services as such. All
expenses of the Trust shall be paid by the Employer. Such expenses shall include
any expenses incidental to the operation of the Trust, including, but not
limited to, fees of independent accountants, enrolled actuaries, legal counsel,
investment advisors and other agents or specialists and similar costs.
12.05
Fiduciary Duties
The Trustees shall discharge their duties with respect to the Plan
solely in the interests of the Participants and their Beneficiaries and
(a) for the exclusive purpose of providing benefits to Participants and
their beneficiaries and defraying reasonable expenses of administering the Plan;
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(b) with the care, skill, prudence and diligence under the circumstances
then prevailing that a prudent man, acting in like capacity and familiar with
such matters, would use in the conduct of an enterprise of a like character and
with like aims;
(c) by diversifying the investments of the Trust Fund so as to minimize
the risk of large losses, unless under the circumstances it is clearly prudent
not to do so; and
(d) in accordance with the documents and instruments governing the Plan
insofar as such documents and instruments are consistent with the provisions of
ERISA.
12.06
Indemnification by Employer
The Employer shall indemnify and hold harmless each of the Trustees
against any and all claims, loss, damages, expense (including legal fees and
other expenses of litigation) and liability arising from any action or failure
to act, except when the same is judicially determined to be due to the gross
negligence or willful misconduct of such Trustee.
12.07
Plan Administration
The Employer is hereby designated as the "administrator" of the Plan
within the meaning of Section 3(16)(A) of ERISA, unless another Plan
Administrator is chosen in the Adoption Agreement. The Trustees are hereby
designated as "named fiduciaries" within the meaning of Section 402(a)(2) of
ERISA, and shall, unless otherwise provided pursuant to Subsection (b), jointly
administer the Plan as agents of the Employer in accordance with its terms and
shall have all powers necessary to carry out the provisions of the Plan. In
carrying out their duties with respect to the general administration of the
Plan, the Trustees shall have, in addition to any other lawful powers and not by
way of limitation, the following powers:
(a) to determine all questions relating to eligibility to participate in
the Plan;
(b) to compute the amount and kind of benefits payable to the
Participants and their Beneficiaries;
(c) to make disbursements from the Trust in accordance with the
provisions of the Plan;
(d) to maintain all records necessary for the administration of the
Plan;
(e) to interpret the provisions of the Plan and to make and publish such
rules and regulations as are consistent with the terms of the Plan
(f) to modify the method of accounting for the Plan; and
(g) the determination of the Plan Administrator and Trustees shall be
final and binding and shall be overturned only if it is determined that the
decision was arbitrary and
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capricious. All matters must go to mandatory arbitration before the American
Arbitration Association if there is a dispute.
12.08
Establishing the Trust Fund
The Trustees shall receive all cash contributions paid to them and shall
establish the Trust Fund. The Trust Fund shall beheld, managed and administered
in accordance with the terms of this Plan and Trust.
12.09
Investing Trust Fund Assets
(a) The Trustees shall invest and reinvest the Trust Fund and keep the
Trust Fund invested, without distinction between principal and income, in such
securities of other property, real or personal, foreign or domestic, whoever
situated, as the Trustees shall deem advisable. The Trust Fund may be invested
in, but is not limited to, the general account of an insurance company licensed
to do business in the state in which the Employer's principal place of business
is located, shares in a regulated investment company or plans for accumulation
of such shares, common or preferred stocks, bonds and mortgages, and other
evidence of ownership or indebtedness. In making such investments, the Trustees
shall not be restricted to securities or other property of the character
authorized or required by applicable law for trust investments. Each Participant
will direct the Trustees as to the type of investment(s) to be purchased with
the participant's account.
(b) The Trustee can establish a policy allowing Participant Directed
Accounts. Participant Directed Accounts shall relieve the Trustees from any
fiduciary responsibility or liability with respect to the self-directed
investments. Each Participant will direct the Trustee as to the type of
investment(s) to be purchased with the Participant's account
12.10
Permissible Investments
The Trustees shall have the following powers and authority in the
investment of the assets of the Trust Fund:
(a) to apply for an purchase individual and group life insurance and
annuity contracts;
(b) to purchase, or subscribe for, any securities (including shares in a
regulated investment company or plans for the accumulation of such shares) or
other property, including call and put options and futures contracts, and to
retain the same in trust (The Trustees are specifically authorized to limit
investment, in their own discretion, to shares or regulated investment companies
or to plans for the accumulation of such shares);
(c) to sell, exchange, convey, transfer or otherwise dispose of, by
private contract or at public auction, any securities or other property held by
them; and no person dealing with the
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Trustees shall be bound to see to the application of the purchase money or to
inquire into the validity, expediency or propriety of any such sale or other
disposition;
(d) to vote any stocks, bonds or other securities, to give general or
special proxies or powers of attorney with or without power of substitution; to
exercise any conversion privileges, subscription rights or other options and to
make any payments incidental thereto; to oppose, or to consent to, or otherwise
participate in, corporate reorganizations or other changes affecting corporate
securities; to pay any assessments or charges in connection with any security;
to delegate any discretionary powers; and generally to exercise any of the
powers of an owner with respect to stocks, bonds, securities or other property
held as part of the Trust Fund;
(e) to cause any securities or other property held as part of the Trust
Fund to be registered in their own names or in the name of one or more nominees,
and to hold any investments in bearer form, but the books and records of the
Trustees shall at all times show that all such investments are part of the trust
Fund;
(f) to borrow or raise money for the purposes of the Plan in such amount
and upon such terms and conditions as the Trustees shall deem advisable; and for
any sum so borrowed, to issue their promissory note as Trustees and to secure
the repayment thereof pledging all, or any part, of the Trust Fund; and no
person lending money to the Trustees shall be bound to see to the application of
the money lent or to inquire into the validity, expediency or propriety of any
such borrowing;
(g) to keep such portion of the Trust Fund in cash or cash balances as
the Trustees may, from time to time, deem to be in the best interests of the
Plan, without liability for interest thereon;
(h) to accept and retain for such time as may seem advisable any
securities or other property received or acquired by them as Trustees hereunder,
whether or not such securities or other property would normally be purchased as
investments hereunder;
(i) to sell call options on any national securities exchange with
respect to securities held in the Trust Fund, and to purchase call options for
the purpose of closing out previous sales of call options; and
(j) to appoint any bank or trust company as corporate trustee and to
sign agreement with any corporate trustee to provide for the investment of any
Trust Fund assets.
12.11
Funding Policy
The Trustees shall establish a funding policy and method consistent with
the objectives of the Plan and the requirements of Title I of ERISA. The
Trustees should meet at least annually to review such funding policy and method.
In establishing and reviewing such funding policy and method, the Trustees shall
endeavor to determine the Plan's short-term and long-term financial
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needs, taking into account the need for liquidity to pay benefits and the need
for investment growth.
12.12
Payments From Trust Fund
The Trustees shall from time to time make payments out of the Trust Fund
in accordance with the provisions of the Plan in such manner, in such amounts
and for such purposes as they may determine, and when any such payment has been
made, the amount thereof shall no longer constitute a part of the Trust Fund.
12.13
Resignation or Removal of Trustees
Any Trustee may be removed by the Employer at any time upon thirty (30)
days' notice in writing to the Trustees, which notice may be waived by the
Trustees. A Trustee may resign at any time upon thirty (30) days notice in
writing to the Employer, which notice may be waived by the Employer. Upon such
removal or resignation of a Trustee, or upon the death or disability of a
Trustee, the Employer may, or in the event there is no then acting Trustee, who
shall have the same powers and duties as those conferred upon the other
trustees, who shall have the same powers and duties as those conferred upon the
other Trustee.
12.14
Transfer From Other Plans
The Trustees are authorized to receive any assets which may be
transferred to this Plan from another plan which is qualified under Section
401(a) of the Code or which is replaced by this Plan. Amounts so transferred or
rolled over, if permitted, shall be accounted for separately and shall be their
own sub-trust.
12.15
Claims Review Procedure
Benefits shall be payable in accordance with Plan provisions. A
Participant or Beneficiary who fails to receive or has a dispute regarding
benefits under the Plan, and who believes he or she is entitled to such
benefits, may file a claim for such benefits. If such a claim is denied in while
or in part, the Trustees shall give the claimant in writing:
(a) the reason for such denial;
(b) the provisions of the Plan upon which the claim denial is based;
(c) a description of additional information which may tend to establish
the claim, including an explanation of why the additional material will be
helpful; and
(d) an explanation of the Plan's claim review procedure.
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(e) The claimant may obtain a review by the Employer of the denial of
the claim by submitting a written request to the Employer within 60 days of
receiving the information described above. The Employer shall, upon receipt of
such a request from the claimant, advise the claimant of the time, date and
place of the review, which shall be during normal business hours not more than
30 days after the date of the claimant's request. The claimant may, upon written
request to the Employer, review pertinent documents at reasonable times at the
office of the Employer. The claimant may submit issues and comments in writing.
The claimant may authorize a representative to appear for the claimant by
designating such representative to the Employer in writing. The claimant may
withdraw such authorization or authorize a different representative in the same
manner. The Employer shall be the "named fiduciary" within the meaning of
Section 402(a) of ERISA for the purpose of deciding appeals of denied claims.
After a denial of a claim, the matter must be submitted to the American
Arbitration Association for a determination prior to submission of the matter to
Federal Court. If the claimant does not submit the matter to arbitration then
the Plan and Fiduciaries of this Plan shall not be liable for attorney's fees in
the event that the claimant prevails in Federal Court.
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ARTICLE XIII-LIMITATIONS ON EMPLOYEE CONTRIBUTIONS AND MATCHING EMPLOYER
CONTRIBUTIONS
13.01
Contribution Percentage
(a) The Average Contribution Percentage for Eligible Participants who
are Highly Compensated Employees for the Plan Year shall not exceed the Average
Contribution Percentage for Eligible Participants who are Non-highly Compensated
Employees for the Plan Year multiplied by 1.25; or
(b) The Average Contribution Percentage for Eligible Participants who
are Highly Compensated Employees for the Plan Year shall not exceed the Average
Contribution Percentage for Eligible Participants who are Non-Highly Compensated
Employees for the Plan Year multiplied by 2, provided that the Average
Contribution Percentage for Eligible Participants who are Highly Compensated
Employees does not exceed the Average Contribution Percentage for Eligible
Participants who are Non-Highly Compensated Employees by more than two (2)
percentage points or such lesser amount as the Secretary of the Treasury shall
prescribe to prevent the multiple use of this alternative limitation with
respect to any Highly Compensated Employee.
13.02
Definitions
For purposes of this Article XIII, and for purposes of Article XVI of this Plan,
the following definitions shall apply.
(a) "Average Contribution Percentage", "ACP" shall mean the average
(expressed as a percentage) of the Contribution Percentages of the Eligible
Participants in a group. The plan shall take into account the actual
contribution ratios of all eligible employees for the purpose of determining the
actual contribution percentage
(b) "Contribution Percentage" shall mean the ratio (expressed as a
percentage) of the sum of the Employee Contributions and Matching Contributions
under the plan on behalf of the Eligible Participant for the Plan Year to the
Eligible Participant's Compensation for the Plan Year. An Eligible Employee who
makes no employee contributions and who receives no matching contributions shall
have a contribution ratio that is to be included in determining the ACP of zero.
Such Contribution Percentage Amounts shall not include Matching Contributions
that are forfeited either to correct Excess Aggregate Contributions or because
the contributions to which they relate are Excess Deferrals, Excess
Contributions, or Excess Aggregate Contributions
(c) "Eligible Participant" shall mean any employee who is eligible to
make an Employee Contribution, or an Elective Deferral (if the employer takes
such contributions into account in the calculation of the Contribution
Percentage), or to receive a Matching Contribution (including forfeitures) or a
Qualified Matching Contribution. If an Employee Contribution is required as a
condition of participation in the plan, any employee who would be a participant
in
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the plan if such employee made such a contribution shall be treated as an
eligible participant on behalf of whom no Employee Contributions are made.
13.03
Special Rules
(a) For purposes of this Article XIII, the Contribution Percentage for
any Eligible Participant who is a Highly Compensated Employee for the Plan Year
and who is eligible to make Employee Contributions, or to receive Matching
Contributions or Elective Deferrals allocated to his account under two or more
plans described in Section 401(a) of the Code or arrangements described in
Section 401(k) of the Code that are maintained by the Employer or an Affiliated
Employer shall be determined as if all such contributions and Elective Deferrals
were made under a single plan and if those plans have different plan years then
all such Plans whose limitation year ends with or within the same calendar year
shall be treated as a single arrangement. Notwithstanding the foregoing, certain
plans shall be treated as separate if mandatorily desegregated under regulations
under section 401(m) of the Code. Family members, with respect to Highly
Compensated Employees, shall be disregarded as separate employees in determining
the Contribution Percentage both for participants who are Non-highly Compensated
Employee and for participants who are Highly Compensated Employees.
(b) All employee deferrals and matching contributions that are made
under two or more plans that are aggregated for purposes of section 401(a) (4)
and 410(b) (other than section 410(b)(2)(A)(ii)) are to be treated as made under
a single plan for the purposes of determining whether the plan satisfies the
actual contribution percentage test of IRC section 401(m). If two or more plans
are permissively aggregated for purposes of section 401(m), the aggregated plans
must also satisfy section 401(a) (4) and 410(b) as though they were a single
plan, but for plan years beginning after December 31, 1989, plans may be
aggregated only if the plans have the same Plan Year.
(c) A Highly compensated Employee who is either a 5% owner or one of the
ten most highly compensated employees and is therefore subject to the family
aggregation rules of IRC section 414(q)(6), the actual contribution ratio (ACR)
for the family group (which is treated as one highly compensated employee) shall
be the greater of (1) the ACR determined by combining the contributions and
compensation of all eligible family members who are highly compensated without
regards to family aggregation, and (2) the ACR (actual contribution ratio)
determined by combining the contributions and compensation of all eligible
family members. Except to the extent taken into account in the preceding
sentence, the contributions and compensation of all family members are to be
disregarded in determining the actual contribution percentages for the groups of
highly compensated employees and nonhighly compensated employees.
(d) The determination and treatment of the Contribution Percentage of
any Participant shall satisfy such other requirements as may be prescribed by
the Secretary of the Treasury.
(e) In calculating the actual contribution percentage (ACP) test of
section 401(m) for a plan year, contributions will be taken into account as
follows: An employee deferral is to be taken into account if it is paid to the
trust during the plan year or paid to an agent of the plan and
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transmitted to the trust within a reasonable period after the end of the plan
year. An excess contribution to a cash or deferred arrangement that is
recharacterized is to be taken into account in the plan year in which the
contribution would be have been received in cash by the employee had the
employee not elected to defer the amounts. A matching contribution shall be
taken into account for a plan year only if it is (1) made on account of the
employee's elective or employee contributions for the plan year, (2) allocated
to the employee's account as of a date within that year, and (3) paid to the
trust by the end of the twelfth month following the close of that year.
Qualified matching contributions which are used to meet the requirements of Code
Section 401(k) (3) (A) are not to be taken into account for purposes of the ACP
test of Code Section 401(m).
(f) For purposes of determining the Contribution Percentage of an
Eligible Participant who is a Highly Compensated Employee, the Employee
Contributions, matching Employer Contributions, qualified nonelective
contributions, and Compensation of such Participant shall include the Employee
Contributions, Matching Contributions, qualified nonelective contributions, and
Compensation of Family Members, and such Family Members shall be disregarded in
determining the Contribution Percentage for Eligible Participants who are
Nonhighly Compensated Employees. For purposes of determining in Contribution
Percentage test, Employee Contributions are considered to have been made in the
Plan Year in which contributed to the trust. Matching Contributions and
Qualified Non-elective Contributions will be considered made for a Plan Year if
made no later than the end of the twelve-month period beginning on the day after
the close of the Plan Year.
(g) A separate account must be maintained for each participant's
matching contributions as described in Code Section 401(m) (4) (A), that are
not used to satisfy the test provided in Code Section 401(k) (3).
(h) The employer shall maintain records sufficient to demonstrate
satisfaction of the ACP test and the amount of Qualified Non-elective
Contributions or Qualified Matching Contributions, or both, used in such test.
(i) If one or more Highly Compensated Employees participate in both a
CODA and a plan subject to the ACP test maintained by the employer and the sum
of the ADP and ACP of those Highly Compensated Employees subject to either or
both test exceeds the Aggregate limit, then the ACP of those Highly Compensated
Employees who also participate in a CODA will be reduced (beginning with such
Highly compensated Employee whose ACP is the highest) so that the limit is not
exceeded. The amount by which each highly Compensated Employee's Contribution
Percentage Amounts is reduced shall be treated as an Excess Aggregate
Contribution. The ADP and ACP of the Highly Compensated Employees are determined
after any corrections required to meet the ADP and ACP tests. Multiple use does
not occur if either the ADP or ACP of the Highly Compensated Employees does not
exceed 1.25 multiplied by the ADP and ACP of the Non-highly Compensated
Employees. "Aggregate Limit" shall mean the sum of (i) 125 percent of the
greater of the ADP of the Non-highly Compensated Employees for the Plan Year or
the ACP of Non-highly Compensated Employees under the plan subject to Code
section 401(m) for the Plan Year beginning with or within the Plan Year of the
CODA and
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(ii) the lesser of 200% or two plus the lesser of such ADP or ACP.
"Lesser" is substituted for "greater" in "(i)", above, and "greater" is
substituted for "lesser" after "two plus the" in "(ii)" if it would result in a
larger Aggregate Limit.
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ARTICLE XIV-DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS
14.01
In General
Notwithstanding any other provision of the plan, Excess Deferral Amounts
and income allocable thereto shall be distributed no later than April 15, 1988
and each April 15 thereafter to Participants who claim such Allocable Excess
Deferral Amounts for the preceding calendar year. "Elective Deferrals" shall
mean any employer contributions made to the plan at the election of the
participant, in lieu of cash compensation, and shall include contributions made
pursuant to a salary reduction agreement or other deferral mechanism. With
respect to any taxable year, a participant's Elective Deferral is the sum of all
Employer contributions made on behalf of such participant pursuant to an
election to defer under any qualified CODA as described in section 401(k) of the
Code, any simplified employee pension cash or deferred arrangement as described
in section 402(h)(l)(B), any eligible deferred compensation plan under section
457, any plan as described under section 501(c)(18), and any employer
contributions made on the behalf of a participant for the purchase of any
annuity contract under section 403(b) pursuant to a salary reduction agreement.
Elective Deferrals shall not include any deferrals properly distributed as
excess annual additions.
14.02
Definitions
For purposes of this Plan, the "Excess Elective Deferrals" shall mean
Elective Deferrals that are includable in a participant's gross income under
section 402(g) of the Code to the extent such participant's Elective Deferrals
for a taxable year exceed the dollar limitation under such Code Section. Excess
Elective Deferrals shall be treated as annual additions under the plan, unless
such amounts are distributed no later than the first April 15 following the
close of the participant's taxable year. Excess Elective Deferrals shall be
adjusted for any income or loss up to the date of distribution. The income or
loss allocable to Excess Elective Deferrals is the sum of: (1) income or loss
allocable to the participant's Elective Deferral account for the taxable year
multiplies by a fraction, the numerator of which is such participant's Excess
Elective Deferrals for the year and the denominator is the participant's account
balance attributable to Elective Deferrals with regard to any income or loss
occurring during such taxable year; and (2) ten percent of the amount determined
under (1) multiplied by the number of whole calendar months between the end of
the participant's taxable year and the date of distribution, counting the month
of distribution if distribution occurs after the 15th of such month.
14.03
Claims
A mechanism must be provided by which a participant may notify or be
deemed to notify the Plan Administrator of Excess Elective Deferrals, and if in
writing it shall be submitted to the plan administrator no later than March 1;
shall specify the Participant's Excess Deferral Amount for the Preceding
calendar year; and shall be accompanied by the Participant's written statement
that if such amounts are not distributed, such Excess Deferral Amount, when
added to amounts
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deferred under other plans or arrangements described in Sections 401(k), 408(k)
or 403(b) of the Code, exceeds the limit imposed on the Participant by Section
402(g) of the Code for the year in which the deferral occurred.
Deemed notification occurs if Excess Elective Deferrals arise solely
from Elective Deferrals made under the plan or plans of this employer. A
participant is deemed to notify the Plan Administrator of any Excess Elective
Deferrals that arise by taking into account only those Elective Deferrals made
to this plan and any other plans of this employer.
14.04
Maximum Distribution Amount
Excess Deferral Amount distributed to a Participant with respect to a
calendar year shall be adjusted for income and , if there is a loss allocable to
the Excess Deferral, shall in no event be less than the lesser of the
Participant's account under or the Participant's Elective Deferrals for the Plan
Year.
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ARTICLE XV -- DISTRIBUTION OF EXCESS CONTRIBUTIONS
15.01
In General
Notwithstanding any other provision of the plan, Excess Contributions
and income allocable thereto shall be distributed no later than the last day of
each plan year beginning after December 31, 1987, to Participants on whose
behalf such Excess Contributions were made for the preceding Plan Year.
15.02
Excess Contributions
"Excess Contributions" shall mean the amount of deferred contributions
described in Code Section 401(k) (3) (B) made by Highly Compensated Employees
which cause the plan to fail the annual contribution percentages test of Article
13.01 of this plan. Excess Contributions of participants who are subject to the
family member aggregation rules shall be allocated among the family members in
proportion to the Elective Deferrals (and amounts treated as Elective Deferrals)
of each family member that is combined to determine the combined ADP.
15.03
Allocable Income for the Plan Year
Excess Contributions shall be adjusted for any income or loss up to the
date of distribution. The income or loss allocable to Excess Contributions is
the sum of: (1) income or loss allocable to the participant's Elective Deferral
account (and, if applicable, the Qualified Non-elective Contribution account or
the Qualified Matching Contributions account or both) for the Plan Year
multiplied by a fraction, the numerator of which is such participant's Excess
Contributions for the year and the denominator is the Participant's account
balance attributable to Elective Deferrals (and Qualified Non-Elective
Contributions or Qualified Matching Contributions, or both, if any of such
contributions are included in the ADP test) without regard to any income or loss
occurring during such Plan Year; and (2) ten percent 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.
15.04
Maximum Distribution Amount
The Excess Contributions which would otherwise be distributed to the
Participant shall be adjusted for income and reduced (in accordance with IRS
regulations) by the amount of Excess Deferrals distributed to the Participant.
If there is a loss allocable to the Excess Contributions, it shall in no event
be less than the lesser of the Participant's account under the plan or the
Participant's Elective Deferrals and Qualified Employer Deferral Contributions
for the Plan Year.
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15.05
Accounting for Excess Contributions
Excess Contributions shall be distributed from the participant's
Elective Deferral account and Qualified Matching Contribution account (if
applicable) in proportion to the participant's Elective Deferrals and Qualified
Matching Contributions (to the extent used in the ADP test) for the Plan Year.
Excess Contributions shall be distributed from the participant's Qualified
Non-elective Contribution account only to the extent that such Excess
Contributions exceed the balance in the participant's Elective Deferral account
and Qualified Matching Contribution account.
"Excess Contributions" shall mean with respect to any Plan Year, the
excess of the aggregate amount of employer contributions actually taken into
account in computing the ADP of Highly Compensated Employees for such Plan Year,
over, the maximum amount of such contributions permitted by the ADP test
(determined by reducing contributions made on behalf of Highly Compensated
Employees in order of the ADPs, beginning with the highest of such percentages).
15.06
Family Aggregation Rules
In the case of a highly compensated employee whose actual deferral ratio
(ADR) is determined under the family aggregation rules, the determination of the
amount of excess contributions shall be made as follows:
(a) If the highly compensated employee's ADR is determined by combining
the contributions and compensation of only those family members who are highly
compensated without regard to family aggregations, then the ADR is reduced in
accordance with the "leveling" method described in section l.401(k)-l(f) (2) of
the regulations and the excess contributions for the family unit are allocated
among the family members in proportion to the contributions and compensation of
each family member that have been combined.
(b) If the highly compensated employee's ADR is determined by combining
the contributions and compensation of all family members, then the ADR is
reduced in accordance with the leveling method but not below the ADR of eligible
non-highly compensated family members. Excess contributions are determined by
taking into account the contributions of the eligible family members who are
highly compensated without regard to family aggregation and are then allocated
among such family members in proportion to their contributions. If further
reductions of the ADR are required, excess aggregate contributions resulting
from this reduction are determined by taking into account the contributions of
all eligible family members and are allocated in the amount to each family
member in proportion to their contribution.
(c) In the case of a highly compensated employee whose actual deferral
ratio (ADR) is determined under the family aggregation rules, the determination
of the amount of excess contributions shall be made as follows: The ADR is
reduced in accordance with the "leveling" method described in section
l.401(k)-l(f) (2) of the regulations and the excess contributions are
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allocated among the family members in proportion to the contributions of each
family member that have been combined.
(d) The amount of excess contributions for a highly compensated employee
will be determined in the following manner. First, the actual deferral ratio
(ADR) of the highly compensated employee with the highest ADR is reduced to the
extent necessary to satisfy the actual deferral percentage (ADP) test or cause
such ratio to equal the ADR of the highly compensated employee with the next
highest ratio. Second, this process is repeated until the ADP test is satisfied.
The amount of excess contributions for a highly compensated employee is then
equal to the total of elective and other contributions taken into account for
the ADP test minus the product of the employee's contribution ratio as
determined above and the employee's compensation.
(e) The amount of excess contributions to be distributed shall be
reduced by excess deferrals previously distributed for the taxable year ending
in the same plan year and excess deferrals to be distributed for a taxable year
will be reduced by excess contributions previously distributed for the plan
beginning in such taxable year.
15.07
Correction of Excess Deferrals
(a) The amount of excess deferrals for a highly compensated employee for
a plan year is the amount (if any) by which the employee's elective contribution
must be reduced for the employee's actual deferral ratio to equal the highest
permitted ratio under the plan. To calculate the highest permitted actual
deferral ratio (ADR) under the plan, the (ADR) of the highly compensated
employee with the highest (ADR) is reduced by the amount required to cause the
employee's (ADR) to equal the ratio of the highly compensated employee with the
next highest (ADR). If a lesser reduction would enable the arrangement to
satisfy the actual deferral percentage (ADP) test, only this lesser reduction
may be made. This process must be repeated until the cash or deferred
arrangement satisfies the (ADP) test. The highest (ADR) remaining under the plan
after leveling shall be the highest permitted (ADR). In no case may the amount
of excess deferrals be distributed for the plan year with respect to any highly
compensated employee, exceed the amount of elective contributions made on behalf
of the highly compensated employee for the plan year.
(b) The amount of excess contributions to be distributed shall be
reduced by excess deferrals previously distributed for the taxable year ending
in the same plan year, and excess deferrals to be distributed for a taxable year
will be reduced by excess contributions previously distributed for the plan
beginning in such taxable year.
15.08
Failure to Correct Excess Contribution
Failure to correct excess contributions by the close of the plan year
following the plan year for which they were made will cause the cash or deferred
arrangement to fail to satisfy the requirements of Code section 401(k) (3) for
the plan year for which the excess contributions were
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made and for all subsequent years they remain in the trust. Also, the employer
will be liable for a 10% excise tax on the amount of excess contributions and
any excess aggregate contributions unless they are corrected within 2 1/2 months
after the close of the plan year for which they were made.
15.09
Record Keeping
The Trustee shall correct excess contributions by distributions to
highly compensated employee(s). Records shall be kept by the Employer that
demonstrate compliance with the nondiscrimination requirements of Code Section
401(k) including the extent to which qualified nonelective contributions and
qualified matching contributions are taken into account.
15.10
Non-Elective and Matching Contributions
(a) Non-elective contributions and/or matching contributions may be
treated as elective contributions only if each of the following applicable
conditions are satisfied:
(1) The amount of nonelective contributions, including those
qualified nonelective contributions treated as elective contributions for the
purposes of the actual deferral percentage test, satisfies the requirements of
section 401(a) (4).
(2) The amount of nonelective contributions, excluding those
qualified nonelective contributions treated as elective contributions for
purposes of the actual deferral percentage test and those qualified nonelective
contributions treated as matching contributions under Section l.401(m)-l(b) (5)
for purposes of the actual contribution percentage test, satisfies the
requirements of section 401(a)(4).
(3) For plan years beginning before January 1, 1987, or such
later date provided in Treasury Regulation l.401(k)-l(h), the matching
contributions, including those qualified matching contributions treated as
elective contributions for purposes of the actual deferral percentage test,
satisfy the requirements of section 401 (a) (4).
(4) For plan years beginning before January 1, 1987, or such
later date provided in Treasury Regulation 4.101(k)-l(h), the matching
contributions excluding those matching contributions treated as elective
contributions for purposes of the actual deferral percentage test, satisfy the
requirements of section 401 (a) (4).
(5) The qualified nonelective contributions and qualified
matching contributions satisfy the requirements of this section for the plan
year as if the contributions were elective contributions.
(6) For plan years beginning after December 31, 1988, or such
later date provided in Treasury Regulation l.401(k)-l(h), the plan that includes
the cash or deferred arrangement and the plan or plans to which the
nonelective contributions and qualified
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matching contributions are made, could be aggregated for purposes of section
410(b) (other than the average benefit percentage test). If the plan year of the
plan that includes the cash or deferred arrangement is changes to satisfy the
requirement under section 410(b) that aggregated plans have the same plan year,
the qualified nonelective contributions and qualified matching contributions may
be taken into account in the resulting short plan year only if the contributions
satisfy the requirements of paragraph (b) (4) (i) of this section with respect
to the short year as if the contributions were elective contributions and the
aggregated plans could otherwise be aggregated for purposes of section 410(b) of
the Code.
(b) Non-elective contributions and matching contributions may be treated
as elective contributions for purposes of the actual deferral percentage test of
section 401(k) only if such contributions are nonforfeitable when made and
subject to the same distributions restrictions that apply to elective
contributions. Non-elective contributions and matching contributions which may
be treated as elective contributions must satisfy these requirements without
regard to whether they are actually taken into account as elective
contributions.
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ARTICLE XVI -- DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS
16.01
In General
Excess Aggregate Contributions, Matching Contributions, and income
allocable thereto, are corrected by distributing such excess aggregate and
matching contributions and allocable income as designated by the employer as a
distribution of excess aggregate contributions, matching, (and income) and
distributing the funds to the appropriate highly compensated employees after the
close of the plan year in which the excess aggregate contributions arose and
within twelve months after the close of the following plan year. In the event of
the complete termination of the plan during the plan year in which an excess
aggregate contributions arose, such distributions are to be made after
termination of the plan and before the close of the twelve-month period
immediately following such termination.
16.02
Excess Aggregate Contributions
For purposes of this Plan "Excess Aggregate Contributions" shall mean
with respect to any plan year, the excess of:
(a) the aggregate amount of the matching contributions and employee
elective contributions (and any qualified nonelective contribution or elective
contribution taken into account in computing the contribution percentage)
actually made on behalf of highly compensated employees for such plan year, over
(b) the maximum amount of such contributions permitted under the
limitations of (determined by reducing contributions made on behalf of highly
compensated employees in order of their contribution percentages beginning with
the highest of such percentages).
(c) The determination of the amount of excess aggregate contributions
shall be made after first determining the excess deferrals within the meaning of
Code Section 402(g) and then determining the excess contributions under Code
Section 401(k).
16.03
Income Allocable to Excess Contributions
Excess Aggregate Contributions shall be adjusted for any income or loss
up to the date of distribution. The income or loss allocable to Excess Aggregate
Contributions is the sum of: (1) income or loss allocable to the participant's
Employee Contribution account, Matching Contribution account, Qualified Matching
Contribution account (if any, and if all amounts therein are not used in the ADP
test) and, if applicable, Qualified Non-elective Contribution account and
Elective Deferral account for the Plan Year multiplied by a fraction, the
numerator of which is such participant's Excess Aggregate Contributions for the
year and the denominator is the participant's account balance(s) attributable to
Contribution Percentage Amounts without
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regard to any income or loss occurring during such Plan Year; and (2) ten
percent 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.
16.04
Distribution Amount
The Excess Aggregate Contributions to be distributed to a Participant
shall be adjusted for income, and, if there is a loss allocable to the Excess
Aggregate Contribution, shall in no event be less than the lesser of the
Participant's account under the plan or the Participant's Employee Contributions
and Matching Contributions for the Plan Year. The Excess Aggregate Contribution
to be distributed shall start at the last dollar contributed and any matching
related to that last dollar. Employee contributions that exceed the matching
limit of the employer shall be distributed first for any highly compensated
employee who's contribution percentage is the highest and then pro-rata for all
highly compensated employees unless one highly compensated employee voluntarily
agrees to take an additional excess aggregate contribution. Any distributions or
forfeitures of excess aggregate contributions for any plan year shall be made on
the basis of the respective portions of such amounts attributable to each highly
compensated employee.
16.05
Allocation of Excess Aggregate Contributions
Notwithstanding any other provision of this plan, Excess Aggregate
Contributions plus any income and minus any loss allocable thereto, shall be
forfeited, if forfeitable, or if not forfeitable, distributed no later than the
last day of each Plan Year to participants to whose accounts such Excess
Aggregate Contributions were allocated for the preceding Plan Year.
16.06
Allocation of Forfeitures
Amounts forfeited by Highly Compensated Employees under this Article XVI
shall be:
(a) Treated as Annual Additions;
(b) Applied to reduce employer contributions; and
(c) Notwithstanding the foregoing, no forfeitures arising under this
Article shall be allocated to the account of any Highly Compensated Employee.
16.07
Correction of Excess Contribution
If there are excess contributions by the highly compensated employees
and the nonhighly compensated employees contributions are not increased to bring
up their ratios then the amount
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of excess aggregate contributions which shall include income allocable thereto
from the time of the excess contribution to the time of the distribution of the
excess aggregate contribution for a highly compensated employee under the
requirements of Code Section 401(m) will be corrected in the following manner.
First, the actual contribution ratio (ACR) of the highly compensated employee
with the highest ACR is reduced to the extent necessary to satisfy the Actual
Contribution Percentage (ACP) test or cause such ratio to equal the ACR of the
highly compensated employee with the next highest ratio. Second, this process is
repeated until the ACP test is satisfied. The amount of excess aggregate
contributions for a highly compensated employee is then equal to the total of
employee matching and other contributions taken into account for the ACP test
minus the product of the employee's contribution ratio as determined above and
the employee's compensation. This correction is set out in regulations of the
Department of the Treasury section 401(m)-l(e).
16.08
Family Aggregation Rules
(a) The amount of excess aggregate contributions in the case of a highly
compensated employee's ACP or a highly compensated employee's ACR which has been
determined under the family aggregation rules shall be determined as follows:
(1) If the highly compensated employee's ACR is determined by
combining the contributions and compensation of only those family members who
are highly compensated without regard to family aggregation, then the ACR is
reduced by reducing the actual contribution ratio and allocating the excess
aggregate contributions for the family group among the family members in
proportion to the employee and matching contributions of each family member that
are combined to determine the actual contribution ratio and the excess aggregate
contributions for the family unit are allocated among family members in
proportion to the contributions of each family member that have been combined.
(2) If the highly compensated employee's ACR is determined by
combining the contributions and compensation of only those family members who
are highly compensated without regard to family aggregation, then the ACR is
reduced in accordance with the leveling method but not below the ACR of eligible
nonhighly compensated family members. Excess aggregate contributions are
determined by taking into account the contributions of the eligible family
members who are highly compensated without regard to family aggregation and are
allocated among such family members in proportion to their contributions.
(3) In the case of a highly compensated employee who is either a
5% owner or one of the ten most highly compensated employees and is thereby
subject to the family aggregation rules of section 414(q)(6), the actual
contribution ratio (ACR) for the family group (which is treated as one highly
compensated employee) is the greater of (1) the ACR determined by combining the
contributions and compensation of all eligible family members who are highly
compensated without regard to family aggregation, and (2) the ACR determined by
combining the contributions and compensation of all eligible family members.
Except to the extent taken into account in the preceding sentence, the
contributions and compensation of all family
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members are disregarded in determining the actual contribution percentages for
the groups of highly compensated employees and nonhighly compensated employees.
(4) In the case of a highly compensated employee whose actual
contribution ratio (ACR) is determined under the family aggregation rules, the
determination of the amount of excess contributions shall be made as follows:
the ADR is reduced by the amount required to cause the employee's actual
deferral ratio to equal the ratio of the highly compensated employee with the
next highest actual deferral ratio. If a lesser reduction would enable the
arrangement to satisfy the actual deferral percentage test, only this lesser
reduction may be made. This process must be repeated until the excess
contributions are allocated among the family members in proportion to the
contributions of each family member that have been combined.
(b) The amount of excess contributions for a highly compensated employee
will be determined in the following manner: first, the actual contribution ratio
(ACR) of the highly compensated employee with the highest ACR is reduced to the
extent necessary to satisfy the actual contribution percentage (ACP) test or
cause such ratio to equal the ACR of the highly compensated employee with the
next highest ratio; and second, this process is repeated until the ACP test is
satisfied. The amount of excess contributions for a highly compensated employee
is then equal to the total of elective and other contributions taken into
account for the ACP test minus the product of the employee's contribution ratio
as determined above.
(c) The amount of excess contributions to be distributed shall be
reduced by excess deferrals previously distributed for the taxable year ending
in the same plan year and excess deferrals to be distributed for a taxable year
will be reduced by excess contributions previously distributed for the plan
beginning in such taxable year.
(d) Excess Aggregate Contributions of participants who are subject to
the family member aggregation rules shall be allocated among the family members
in proportion to the Employee and Matching Contributions (or amounts treated as
Matching Contributions) of each family member that is combined to determine the
combined ACP.
16.09
Failure to Correct Excess Contribution
Failure to correct excess contributions by the close of the plan year
following the plan year for which they were made will cause the Plan to fail to
satisfy the requirements for the plan year for which the excess contributions
were made and for all subsequent years they remain in the trust. Also, the
employer will be liable for a 10% excise tax on the amount of excess
contributions unless they are corrected within 2 1/2 months after the close of
the plan year for which they are made. Excess Aggregate Contributions shall be
treated as annual additions under the Plan.
16.10
Recordkeeping By Employer
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The Employer shall maintain records sufficient to demonstrate
satisfaction of the ACP test and the amount of Qualified Non-elective
Contributions or Qualified Matching Contributions, or both, used in such test.
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ARTICLE XVII-INTEGRATION WITH SOCIAL SECURITY
17.01
Profit Sharing Plan Integration
(a) Employer contributions for the plan year plus any forfeitures will
be allocated to participants' accounts as follows:
(1) Contributions and forfeitures will be allocated to each
participant's account in the ratio that each participant's total compensation
bears to all participants' total compensation, but not in excess of 3% of each
participant's compensation
(2) Any contributions and forfeitures remaining after the
allocation in Step One will be allocated to each participant's account in the
ratio that each participant's compensation for the plan year in excess of the
integration level bears to the excess compensation of all participants, but not
in excess of 3%. Steps one and two shall apply only in years in which the plan
is top heavy. Steps one and two, if the Plan is top heavy, shall not require an
employer contribution, but shall be the allocation method if employer
contributions are made or forfeitures are allocated in the Plan Year.
(3) Any contributions and forfeitures remaining after the
allocation in Step Two will be allocated to each participant's account in the
ratio that the sum of each participant's total compensation and compensation in
excess of the integration level bears to the sum of all participants total
compensation and compensation in excess of the integration level, but not in
excess of the profit-sharing maximum disparity rate.
(4) Any remaining employer contributions or forfeitures will be
allocated to each participant's account in the ratio that each participant's
total compensation for the plan year bears to all participants' total
compensation for that year.
17.02
Integration Level
(a) The integration level shall be equal to the taxable wage base or
such lesser amount elected by the employer in the adoption agreement. The
taxable wage base is the contribution and benefit base in effect under section
230 of the social Security Act at the beginning of the plan year.
The maximum profit sharing disparity rate is equal to the lesser of:
(1) 2.7%
(2) the applicable percentage determined in accordance with the table
below.
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(b) If the Integration Level is more than but not more than the
applicable percentage is:
$0 X* 2.7%
X* 80% of TWB 1.3%
80% of TWB Y** 2.4%
*X = the greater of $10,000 or 20 percent of the TWB
**Y = any amount more than 80% of the TWB but less than 100% of the
TWB.
(c) If the integration level used is equal to the taxable wage base, the
applicable percentage is 2.7%.
(d) Integration can only be based upon the compensation of all eligible
employees and not on employee elective deferrals.
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ARTICLE XVIII-ELIGIBLE ROLLOVERS
18.01
Distributions
This Article 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 Article, 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.
18.02
Definitions
(a) Eligible rollover distribution means any distribution of all or any
portion of the balance to the credit of the distributee, except that an eligible
rollover distribution does not include: any distribution that is one of a series
of substantially equal periodic payments (not less frequently than annually)
made for the life (or life expectancy) of the distributee or the joint lives (or
joint life expectancies) of the distributee and the distributee's designated
beneficiary, or for a specified period of ten year or more; any distribution to
the extent such distribution is required under section 401(a) (9) of the Code;
and the portion of any distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized appreciation with
respect to employer securities).
(b) Eligible retirement plan means an individual retirement account
described in section 408(a) of the Code, an individual retirement annuity
described in section 408(b) of the Code, an annuity plan described in section
403(a) of the Code, or a qualified trust described in section 401(a) of the
Code, that accepts the distributee's eligible rollover distribution. However, in
the case of an eligible rollover distribution to the surviving spouse, an
eligible retirement plan is an individual retirement account or individual
retirement annuity.
(c) 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 section 414(p) of the Code,
are distributees with regard to the interest of the spouse or former spouse.
(d) Direct rollover means payment by the Plan to the eligible retirement
plan specified by the distributee.
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