EXHIBIT 10.14
AUTOMATIC DATA PROCESSING
PROTOTYPE 401(k) PLAN
Expanded Non-Standardized Adoption Agreement
(Plan 003)
Upon acceptance by the Trustee, the undersigned Company adopts the Automatic
Data Processing Prototype 401(k) Plan (the "Plan") incorporated by this
reference, agrees to the terms of the Plan, certifies the accuracy of the
following information, and makes the following elections under the Plan:
I. COMPANY AND PLAN REGISTRATION INFORMATION
A. Company Information
1. Name and address of Company
NetVantage, Inc.
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1800 Xxxxxxx Xx. Xxx. R.
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Santa Monica, CA 90404
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2. Telephone number: (000) 000-0000
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3. Type of business entity (choose one):
[_] Sole Proprietorship [_] Partnership
[X] Corporation [_] Subchapter S Corporation
[_] Other (specify)
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4. Date of incorporation or date business began: 3-12-91
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5. Employer Identification Number: 00-0000000
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B. Plan Information
1. Name of Plan: NetVantage 401(k) Profit Sharing Plan
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2. Plan Number: 001
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3. Effective date of this Plan: Jan. 1, 1996
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C. Plan Administration
1. Plan Year (Plan Article I) means the calendar year.
2. The initial Plan Year begins on the effective date of this Plan and
ends on the following December 31.
II. ELIGIBILITY AND PARTICIPATION REQUIREMENTS
A. Eligible Employees (Plan Article I)
Choose one:
[_] All Employees of an Employer are eligible to participate in the
Plan.
All Employees of an Employer are eligible to participate in the Plan, except
(choose desired):
[_] Salaried Employees
[_] Hourly Employees
[_] Any nondiscriminatory classification of Employees employed in or by
one or more specified divisions, plants, locations, job categories, or
other identifiable groups of Employees as determined by the Board of
Directors. Please specify:
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[_] Employees included in a bargaining unit covered by a collective
bargaining agreement with the Employer in the negotiation of which
retirement benefits were the subject of good faith bargaining (unless
the bargaining agreement provides for participation in the Plan).
Please specify:
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[_] Employees covered under any other tax-qualified retirement plan with
respect to which the Employer is obligated to contribute. Please
specify:
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[X] Leased employees.
B. Minimum Age for Participation (Plan Section 2.1.1(a))
Choose one:
[_] no minimum age requirement; or
[X] after reaching age 21 (in whole years, not to exceed 21).
C. Minimum Service for Participation (Plan Section 2.1.1(b))
Choose one:
[_] immediate participation
[_] after completing one Year of Eligibility Service
[X] after completing 1 month (not to exceed 6) months in a year.
III. COMPENSATION (Plan Article I)
Choose one:
[X] Compensation is the compensation paid to a Participant during a
Plan Year as reflected on a Form W-2, with no exclusions.
Except for nondiscrimination testing under Code Sections 401(k)(3) (the
Actual Deferral Percentage test) and 401(m) (the Average Contribution
Percentage test), the following items are excluded from Compensation
(choose as desired):
[_] overtime [_] employee business expenses
[_] bonuses [_] sick pay payable from 3rd party
[_] commissions [_] group-term life insurance
[_] severance pay [_] moving expenses
[_] dependent care [_] nonqualified plan distributions
[_] company car [_] other noncash fringe benefits
[_] tips
[_] all of the above
IV. CONTRIBUTIONS
A. Matching Contributions
The Matching Contribution equals 25% (insert 0 - 100% in multiples of
5) on the first 6% of the Participant's Elective Deferral.
B. Elective Deferrals
The minimum percentage of Compensation a Participant may elect to defer
is 1% (at least 1) and the maximum percentage of Compensation a
Participant may elect to defer is 15%.
Nonelective Contributions
Nonelective Contributions are permitted under the Plan.
V. VESTING (Plan Article IV)
A. Vesting Schedule:
Each Participant whose employment terminates for reasons other than
death, Disability, or attainment of Normal Retirement Age is entitled
to a nonforfeitable right to his or her Employer Contribution Account
based on the following schedule (choose one):
[_] immediate 100% nonforfeitability
[_] 100% nonforfeitability after 5 Years of Service
[_] 100% nonforfeitability after 3 Years of Service
[X] graded vesting as set forth below:
Nonforfeitable
Years of Service Percentage Percentage
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Less than 2...................................... 0%
At least 2, but less than 3...................... 20%
At least 3, but less than 4...................... 40%
At least 4, but less than 5...................... 60%
At least 5, but less than 6...................... 80%
6 or more........................................100%
B. Vesting Service
(Choose one):
[X] All Years of Service are credited to determine a Participant's
Vesting Service.
[_] All Years of Service are credited to determine a Participant's
Vesting Service except Years of Service before the Employer
maintained this Plan or a predecessor plan.
VI. MISCELLANEOUS
A. Other Plans
Does the Company maintain, or has the Company ever maintained, another
qualified plan in which any Participant in this Plan is (or was) a
participant or could possibly become a participant?
[_] Yes
[X] No
If the answer is Yes, the Addendum For Employers Who Maintain Another
Plan must be completed and signed.
B. Inquiries
If you have any questions about the legal and tax implications of
adopting the Plan, you should consult with your attorney. However, if you
have any questions about either the Prototype Plan or the Adoption
Agreement, please write to the sponsoring organization at the following
address:
Automatic Data Processing Federal Credit Union
Xxx XXX Xxxxxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Att: 401(k) Plan Administrator
201/994-5000
C. Notification
The plan sponsor will notify you as adopting Company of any amendments
made to the Plan, or the discontinuance or abandonment of the Plan.
D. Cautionary Statement
It is important that you complete the Adoption Agreement with great care.
Failure to fill out the Adoption Agreement properly may result in
disqualification of the Plan.
X. Xxxxxxxx on Opinion Letter
The adopting Company may not rely on an opinion letter issued by the
National Office of the Internal Revenue Service, or a notification letter
issued by a Key District Office, as evidence that the Plan is qualified
under Code Section 401. To obtain reliance with respect to Plan
qualification, the Company must apply to the appropriate Key District
Office for a determination letter. This Adoption Agreement may be used
only in conjunction with basic plan document No. 01.
IN WITNESS WHEREOF, the Company has caused this Plan to be adopted
effective as of Jan 1, 1996.
NETVANTAGE, INC.
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(Company Name)
/s/ [SIGNATURE APPEARS HERE] By: /s/ Xxxxxx X. Xxxxx
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Witness
Date: 12-21-95 Title: Vice President Finance
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AUTOMATIC DATA PROCESSING
PROTOTYPE 401(k) PLAN
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TABLE OF CONTENTS
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TABLE OF CONTENTS............................................................i
ARTICLE I....................................................................1
Definitions and Rules of Construction......................................1
1.1 Definitions..........................................................1
"Account"...........................................................1
"Account Balance"...................................................1
"Administrative Committee"..........................................1
"Adoption Agreement"................................................1
"Affiliate".........................................................1
"Beneficiary".......................................................1
"Benefit Commencement Date".........................................1
"Board of Directors"................................................1
"Code"..............................................................1
"Company"...........................................................1
"Compensation"......................................................1
"Determination Year"................................................2
"Early Retirement Age"..............................................2
"Earned Income".....................................................2
"Effective Date"....................................................2
"Elective Deferrals"................................................2
"Eligible Employee".................................................2
"Employee"..........................................................2
"Employer"..........................................................2
"Employer Contribution Account".....................................2
"Employment"........................................................2
"Entry Date"........................................................2
"ERISA".............................................................2
"Family Member".....................................................2
"Highly Compensated Employee".......................................2
"Hour of Service"...................................................3
"Investment Fund"...................................................3
"Look-Back Year"....................................................3
"Matching Contribution".............................................3
"Nonelective Contributions".........................................3
"Non-Highly Compensated Employee"...................................4
"Normal Retirement Age".............................................4
"Owner-Employee"....................................................4
"Participant".......................................................4
"Participant 401(k) Account"........................................4
"Participant 401(k) Election".......................................4
"Participating Affiliate"...........................................4
"Period of Severance"...............................................4
"Plan"..............................................................4
"Plan Year".........................................................4
"Qualified Domestic Relations Order"................................4
"Qualified Matching Contributions"..................................4
"Qualified Nonelective Contribution"................................4
"Rollover Contribution".............................................4
"Self-Employed Individual"..........................................5
"Sponsor"...........................................................5
"Transfer Contribution".............................................5
"Trust".............................................................5
"Trustee"...........................................................5
"Valuation Date"....................................................5
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"Vesting Service"........................................5
"Year of Eligibility Service"............................5
"Years of Service".......................................5
1.2 Additional Definitions....................................5
1.3 Rules of Construction.....................................5
1.4 Controlling Law...........................................6
1.5 Savings Clause............................................6
ARTICLE II.............................................................7
Participation.....................................................7
2.1 Admission as a Participant................................7
2.2 Termination of Participation..............................7
2.3 Provision of Information..................................7
2.4 Minimum Number of Participants............................7
ARTICLE III............................................................8
Contributions and Account Allocations.............................8
3.1 Employer Contributions....................................8
3.2 General Provisions Concerning Employer Contributions......8
3.3 Rollover Contributions....................................8
3.4 Transfer Contributions....................................8
3.5 Establishing of Accounts..................................9
3.6 Multiple Trades and Businesses............................9
ARTICLE IV............................................................10
Vesting..........................................................10
4.1 Determination of Vesting.................................10
4.2 Rules for Crediting Vesting Service......................10
4.3 Forfeitures..............................................10
ARTICLE V.............................................................11
Amount and Payment of Account Balances...........................11
5.1 Termination of Employment................................11
5.2 Payment of Account Balances on Termination of Employment.11
5.3 Death Benefit............................................11
5.4 Beneficiaries............................................11
5.5 Limitation on Commencement of Benefits...................12
5.6 Withdrawals before Termination of Employment.............12
5.7 Loans....................................................13
5.8 Additional Distribution Events...........................14
ARTICLE VI............................................................15
Forms of Payment of Accounts.....................................15
6.1 Normal Form of Payment...................................15
6.2 Optional Form of Payment.................................15
6.3 Election of Optional Form................................15
6.4 Limitation on Options....................................15
6.5 Change in Form or Timing of Payment......................15
6.6 Conditions to Distribution...............................15
ARTICLE VII...........................................................16
Fiduciaries......................................................16
7.1 Named Fiduciaries........................................16
7.2 Employment of Advisers...................................16
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7.3 Multiple Fiduciary Capacities..................................16
7.4 Payment of Expenses............................................16
7.5 Indemnification................................................16
ARTICLE VIII................................................................17
Plan Administration....................................................17
8.1 Administrative Committee.......................................17
8.2 Xxxxxx and Duties of the Administrative Committee..............17
8.3 Delegation of Responsibility...................................17
8.4 Trustee........................................................17
8.5 Investment of Accounts.........................................18
8.6 Valuation of Accounts..........................................18
ARTICLE IX..................................................................19
Plan Amendment or Termination..........................................19
9.1 Plan Amendment.................................................19
9.2 Limitations on Plan Amendment..................................19
9.3 Right of the Company to
Terminate Plan or Discontinue Contributions...................19
9.4 Effect of Partial or Complete Termination
or Complete Discontinuance of Contributions...................20
9.5 Distribution Upon Termination..................................20
9.6 Bankruptcy.....................................................20
9.7 Action by Company..............................................20
ARTICLE X...................................................................21
Miscellaneous Provisions...............................................21
10.1 Exclusive Benefit of Participants.............................21
10.2 Plan Not a Contract of Employment.............................21
10.3 Type of Plan..................................................21
10.4 Source of Benefits............................................21
10.5 Benefits Not Assignable.......................................21
10.6 Merger or Transfer of Assets..................................21
10.7 Participation in the Plan by an Affiliate.....................22
10.8 Conditional Adoption..........................................22
10.9 Inability to Locate Participant or Beneficiary................22
10.10 Application of Prior Plan....................................22
10.11 Failure of Qualified Status..................................22
APPENDIX A..................................................................23
Limitations on Elective Deferrals and Matching Contributions...........23
A.1 Definitions....................................................23
"Actual Deferral Percentage"..................................23
"Aggregate Limit".............................................23
"Average Actual Deferral Percentage"..........................23
"Average Contribution Percentage".............................23
"Contribution Percentage".....................................23
"Eligible Participant"........................................23
"Excess Aggregate Contributions"..............................23
"Excess Contributions"........................................23
"Excess Deferral Amount"......................................23
A.2 Maximum Amount of Elective Deferrals...........................24
A.3 Excess Deferral Amounts........................................24
A.4 Actual Deferral Percentage Test................................24
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A.5 Excess Contributions............................................... 25
A.6 Average Contribution Percentage Test............................... 26
A.7 Excess Aggregate Contributions..................................... 27
A.8 Coordination of Distributions of Excess Deferral Amounts,
Excess Contributions, and Excess Aggregate Contributions.......... 27
A.9 Multiple Use of Alternative Limitation............................. 27
APPENDIX B................................................................. 28
Limitations on Annual Additions.......................................... 28
B.1 Definitions
"Annual Addition"................................................. 28
"Controlled Group Member"......................................... 28
"Defined Benefit Fraction"........................................ 28
"Defined Contribution Dollar Limitation".......................... 28
"Defined Contribution Fraction"................................... 28
"Excess Amount"................................................... 29
"Limitation Compensation"......................................... 29
"Limitation Year"................................................. 29
"Master or Prototype Plan"........................................ 29
"Projected Annual Benefit"........................................ 29
B.2 Maximum Annual Addition............................................ 29
B.3 Excess Amounts..................................................... 30
APPENDIX C................................................................. 32
Top-Heavy Provisions..................................................... 32
C.1 Definitions........................................................ 32
"Aggregated Plans"................................................ 32
"Determination Date".............................................. 32
"Group Participant"............................................... 32
"Key Employee".................................................... 32
"Non-Key Employee"................................................ 32
"Top-Heavy Ratio"................................................. 32
C.2 Top-Heavy Plan..................................................... 33
C.3 Minimum Benefits or Contributions.................................. 33
C.4 Adjustment to Maximum Benefits..................................... 34
C.5 Discontinuance of Appendix......................................... 34
APPENDIX D................................................................. 35
Distribution Requirements................................................ 35
D.1 Definitions........................................................ 35
"Applicable Life Expectancy"...................................... 35
"Distribution Calendar Year"...................................... 35
"Participant's Benefit"........................................... 35
"Required Beginning Date"......................................... 35
D.2 General Rules...................................................... 35
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ARTICLE I
Definitions and Rules of Construction
1.1 Definitions
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These terms have the following meanings in this Plan:
Account: The Participant 401(k) Account and/or Employer Contribution Account.
Account Balance: The value of an Account determined as of any Valuation Date.
Administrative Committee: The committee appointed under, and having the
responsibilities specified in, Articles VII and VIII.
Adoption Agreement: The instrument executed by the Company by which it agrees
to adopt the Plan. The Adoption Agreement contains all the options that the
Company may select under the Plan and is an integral part of the Plan.
Affiliate: Any corporation, partnership, or other entity (other than the
Company) which is:
(a) a member of a "controlled group of corporations" (as defined in Code Section
414(b)) of which the Company is a member;
(b) a member of any trade or business under "common control" (as defined in Code
Section 414(c)) with the Company;
(c) a member of an "affiliated service group" (as defined in Code Section
414(m)) which includes the Company;
(d) a "leasing organization" which "leases" (as defined in Code Section 414(n))
its employees to the Company and which otherwise satisfies the requirements
of Code Sections 414(n)(I) through (4) and which employees who are so leased
to the Company are (i) not covered by a money purchase pension plan
providing (A) a nonintegrated employer contribution rate of at least 10% of
compensation as defined in Code Section 415(c)(3) (but including amounts
contributed under a salary reduction agreement which are excludable from the
Employee's gross income under Code Sections 125, 402(a)(8), 402(h), or
403(b)), (B) immediate participation (other than an individual whose
compensation from the leasing organization in each Plan Year during the 4-
year period ending with the Plan Year is less than $1,000), and (C) full and
immediate vesting or (ii) if covered by such a money purchase pension plan,
constitute more than 20% of the Company's non-highly compensated workforce
within the meaning of Code Section 414(n)(5)(C)(ii); or
(e) an entity described in regulations promulgated by the Secretary of the
Treasury under Code Section 414(o).
Beneficiary: Any person, trust, estate, or charitable organization designated
or deemed designated by a Participant to receive payment of Plan benefits due
after the Participant's death, except to the extent the designation or deemed
designation is superseded by a state statute which is not preempted by ERISA.
Benefit Commencement Date: The first day on which all events have occurred
which entitle the Participant or Beneficiary to a Plan benefit.
Board of Directors: The Company's board of directors or other governing body.
Code: The Internal Revenue Code of 1986, as amended from time to time.
Reference to a specific Code provision includes any valid regulation promulgated
under that provision.
Company: The entity that executes the Adoption Agreement, and any of its
successors.
Compensation: The compensation paid to a Participant during a Plan Year, as
reflected on the Form W-2 filed by the Employer with respect to the Participant
for the Plan Year, and includes Employer contributions made pursuant to a salary
reduction agreement which are not includible in the Participant's gross income
under Code Section 125, 402(a)(8), 402(b), or 403(b). However, except for
determining the Actual Deferral Percentage and the Contribution Percentage under
Appendix A, and except for computing the minimum contribution under Appendix C
if the Plan becomes top-heavy, the Company may elect in Section III. A of the
Adoption Agreement to exclude overtime, bonuses, commissions, severance pay,
and/or other extraordinary remuneration.
For any Self-Employed Individual, Compensation means Earned Income.
Compensation is determined from the Employer's records.
A Participant's Compensation may not exceed $200,000 (as adjusted at the same
time and in the same manner as under Code Section 415(d)). In determining the
Compensation of a Participant under this limitation, the family aggregation
rules of Code Section 414(q)(6) apply. However, in applying those rules,
"family" includes 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, by applying the family aggregation rules, the adjusted $200,000 limitation
would be exceeded,
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then the limitation is prorated among the affected individuals in proportion to
each individual's Compensation as determined before the application of the
$200,000 limitation.
Determination Year: The period for which Highly Compensated Employees are being
identified. If the Plan Year is a calendar year, the Plan Year is the
Determination Year. Otherwise, the months in the Plan Year which follow the
Look-back Year are the Determination Year.
Early Retirement Age: Age 55.
Earned Income: The 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 are
determined without regard to items not included in gross income and the
deductions allocable to those items. Net earnings are reduced by contributions
by an Employer to a qualified plan to the extent deductible under Code Section
404. Earned Income is determined with regard to the deduction allowed by Code
Section 164(f) for taxable years beginning after December 31, 1989.
Effective Date: The date designated in Section I.B.3 of the Adoption Agreement
as the date on which the Plan, as originally adopted or as amended and restated,
will apply.
Elective Deferrals: Employer contributions made to the Plan under Participant
401(k) Elections.
Eligible Employee: All Employees of an Employer, except nonresident aliens with
no earned income from the Company or an Affiliate which constitutes United
States source income and those employees in the job classifications specified in
Section II.A of the Adoption agreement.
The Eligible Employees of a Participating Affiliate are those Employees
designated as eligible for the Plan by the Participating Affiliate under
Section 10.8.1.
Employee: All common law or contract employees employed by the Company or an
Affiliate. Employee also includes leased employees within the meaning of Code
Section 414(n)(2). However, if the leased employees constitute less than 20% of
the Employer's non-highly compensated work force within the meaning of Code
Section 414(n)(1)(C)(ii), Employee does not include leased employees covered by
a plan described in Code Section 414(n)(5) unless otherwise provided by this
Plan.
Employer: The Company or Participating Affiliate by whom an Employee is
employed.
Employer Contribution Account: The account under the Plan established for a
Participant under Section 3.5.2.
Employment: An Employee's employment with the Company or an Affiliate. An
Employee will not have terminated Employment while on a leave of absence for
required military service or on a leave of absence for any other purpose
authorized in writing by the Company or an Affiliate under uniform and
nondiscriminatory rules if the Employee completes an Hour of Service with the
Company or an Affiliate within 90 days after his separation from military
service or within 90 days after the expiration of his other leave of absence.
If the Employee does not complete an Hour of Service during the 90-day period,
the Employee will be deemed to have terminated Employment as of the first day of
his leave of absence.
Entry Date: The first day of any month.
ERISA: The Employee Retirement Income Security Act of 1974, as amended from
time to time. Reference to a specific provision of ERISA includes any valid
regulation promulgated under that provision.
Family Member: An individual described in Code Section 414(q)(6)(B); namely,
the spouse of an Employee, the lineal ascendants of an Employee, the lineal
descendants of an Employee, the spouses of lineal ascendants of the Employee,
and the spouses of lineal descendants of the Employee. Under this definition,
Employee refers only to a 5-percent owner of the Company or a top ten Highly
Compensated Employee.
Highly Compensated Employee: An individual described in Code Section 414(q),
including both Highly Compensated active Employees and Highly Compensated former
Employees. A Highly Compensated active Employee is an Employee who performs
service for an Employer during the Determination Year and who, during the
Look-Back Year (a) received Compensation in excess of $75,000 (as adjusted under
Code Section 415(d)), (b) received Compensation from an Employer in excess of
$50,000 (as adjusted under Code Section 415(d)) and was a member of the top-paid
group for that year, or (c) was an officer of an Employer and received
Compensation during that year that is greater than 50% of the dollar limitation
in effect under Code Section 415(b)(1)(A). Highly Compensated active Employees
also include (a) an Employee who is described in the preceding sentence if the
term "Determination Year" is substituted for the term "Look-Back Year" and who
is one of the 100 Employees who received the most Compensation from the Employer
during the Determination Year, and (b) an Employee who is a 5-percent owner at
any time during the Look-Back Year or Determination Year.
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The highest paid officer for a year is treated as a Highly Compensated
Employee if no officer has Compensation in excess of 50% of the dollar
limitation in effect under Code Section 415(b)(1)(A) during either a
Determination Year or a Look-Back Year.
A Highly Compensated former Employee includes any Employee who separated from
service (or was deemed to have separated) before the Determination Year,
performs no service for an Employer during the Determination Year, and was a
Highly Compensated active Employee for either the Determination Year during
which he separated from service (or was deemed to have separated) or any
Determination Year ending on or after the Employee's 55th birthday.
The determination of who is a Highly Compensated Employee, including the
determination of the number and identity of the Employees in the top-paid group,
the top 100 Employees, the number of Employees treated as officers, and the
Compensation that is considered, is made in accordance with Code Section 414(q)
and the following:
(a) Leased Employees covered by a safe harbor pension plan are not treated as
Employees with respect to retirement plans.
(b) In determining Compensation, accrued (not paid) compensation is not used
and amounts other than wages, fees, bonuses, commissions, etc. are ignored
in accordance with Treasury Regulation Section 1.415-2(d)(8).
(c) The top-paid group is the highest paid 20% of the number of "Employees"
employed by the Employer during the testing year, excluding:
(i) nonresident aliens with no U.S. earned income;
(ii) leased Employees covered by a safe harbor pension plan who are not
treated as Employees;
(iii) bargaining unit workers if this Plan excludes all bargaining unit
workers and 90% or more of the Employer's work force consists of
bargaining unit workers;
(iv) probationary Employees who have not completed 6 months of service;
(v) part time Employees who normally work fewer than 17.5 hours per week;
(vi) seasonal workers who normally work during less than 6 months in any
testing year; and
(vii) Employees who have not attained age 21 in any testing period.
(d) The simplified method for determining Highly Compensated Employees under
Code Section 414(q)(12) does not apply.
Hour of Service:
(a) Each hour for which an Employee is paid, or entitled to payment, for the
performance of duties for the Company or an Affiliate. These hours are
credited to the Employee for the computation period in which the duties are
performed; and
(b) Each hour for which an Employee is paid, or entitled to payment, by the
Company or an Affiliate 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 may be credited under this paragraph for any
single continuous period (whether or not the period occurs in a single
computation period). Hours under this paragraph are calculated and credited
pursuant to section 2530.200b-2 of the Department of Labor Regulations
which is incorporated by this reference; and
(c) Each hour for which back pay, irrespective of mitigation of damages, is
either awarded or agreed to by the Company or an Affiliate. The same Hours
of Service are not credited both under paragraph (a) or paragraph (b), as
the case may be, and under this paragraph (c). These hours are credited to
the Employee for the computation period or periods to which the award or
agreement pertains rather than the computation period in which the award,
agreement, or payment is made.
If an Adoption Agreement allows an Employer to elect to determine an
Employee's eligibility for participation based on months of service, an
Employee will be credited with 190 Hours of Service for a month if the
Employee would be credited with at least 1 Hour of Service during that
month.
Investment Fund: An investment fund selected by the Administrative Committee
under Section 8.5.
Look-Back Year: If the Plan Year is a calendar year, the Look-Back Year is the
preceding calendar year. Otherwise, the Look-Back Year is the calendar year
ending within the Plan Year.
Matching Contribution: An Employer contribution to the Plan for the benefit of a
Participant because of the Participant's Elective Deferral.
Nonelective Contributions: An Employer contribution to the Plan (other than a
Matching Contribution or Qualified Matching Contribution) which the Participant
could not have elected to receive in cash or as another taxable benefit.
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Non-Highly Compensated Employee: An Employee who is neither a Highly Compensated
Employee nor a Family Member.
Normal Retirement Age: Age 65.
Owner-Employee: A sole proprietor, or a partner who owns more than a 10% of
either the capital or profits interest of the partnership.
Participant: An Employee who has commenced, but not terminated, participation in
the Plan under Article II.
Participant 401(k) Account: The account under the Plan established for a
Participant under Section 3.5.1.
Participant 401(k) Election: The election by a Participant to have part of the
amount that otherwise would be paid as Compensation converted to an Employer
contribution in accordance with Section 3.1.1.
Participating Affiliate: An Affiliate which adopts, and has not terminated
participation in or withdrawn from, the Plan in accordance with Section 10.8.
Period of Severance: A period of at least 12 consecutive months beginning on the
later of (a) the date an Employee quits, retires, is discharged, or dies, or (b)
the first anniversary of the date that the Employee is absent from work (with or
without pay) for any other reason, and ending on the date he again becomes an
Employee. A Period of Severance is measured in years with each annual
anniversary of the date on which the Period of Severance began measured as one
year.
However, a Period of Severance does not begin if the Participant is:
(a) on a leave of absence authorized by his Employer in accordance with standard
personnel policies applied in a nondiscriminatory manner to all Employees
similarly situated and returns to active Employment by an Employer within 90
days after expiration of the leave of absence;
(b) on military leave while the Employee's reemployment rights are protected by
law and returns to active Employment by an Employer within 90 days after his
discharge or release (or such longer period as may be prescribed by law); or
(c) on layoff and returns to work within such period and in such a manner as to
maintain seniority according to the rules of the Company in effect on the
date of return.
Solely,to determine whether a Period of Severance has occurred for
participation and vesting purposes for a Participant who is absent from work
for maternity or paternity reasons, the 24-consecutive month period
beginning on the first anniversary of the first date of the absence is not a
Period of Severance. However, the Participant is not credited for a Year of
Service for the 12-month period between the first and second anniversaries
of the absence. An absence from work for maternity or paternity reasons
means an absence (a) because of the Participant's pregnancy, (b) because of
the birth of the Participant's child, (c) because of the placement of a
child with the Participant in connection with the Participant's adoption of
the child, or (d) for caring for the child for a period beginning
immediately after the birth or placement.
Plan: The name of Plan as indicated in Section I.B.1 of the Adoption
Agreement.
Plan Year: The 12-month period specified in Sections I.C.1 & I.C.2 of the
Adoption Agreement.
Qualified Domestic Relations Order: A "qualified domestic relations order"
as defined in Code Section 414(p), or any domestic relations order entered
before January 1, 1985, if either payment of benefits under the order has
begun as of that date or the Administrative Committee decides to treat the
order as a "qualified domestic relations order" within the meaning of Code
Section 414(p) even if it does not otherwise qualify as such.
Qualified Matching Contributions: Matching Contributions which are subject
to the distribution and nonforfeitability requirements of Code Section
401(k) when made.
Qualified Nonelective Contribution: Nonelective Contributions which are
subject to the distribution and nonforfeitability requirements of Code
Section 401(k) when made.
Rollover Contribution: An amount received from a deferred compensation plan
which qualifies under Code Section 401 or Code Section 403(a) and which is
rolled over to the Plan under Code Section 402(a)(5). The following
conditions must be satisfied before a Rollover Contribution can be made:
(a) the transfer to the Plan must occur within 60 days after the Employee's
receipt of the last distribution from the other plan; and
(b) the amount transferred must equal any portion of the distribution the
Employee received from the other plan, subject to the maximum rollover
provision of Code Section 402(a)(5)(B), limiting the amount to the fair
-4-
market value of all property received in the distribution reduced by
employee contributions as defined in Code Section 402(a)(5)(E).
However, if an Employee had deposited a "qualified total distribution"
within the meaning of Code Section 402(a)(5)(E) into an individual retirement
account as defined in Code Section 408, he may transfer the amount of the
distribution plus earnings thereon from the individual retirement account to the
Plan; provided that the rollover amount is deposited with the Trustee within 60
days after receipt from the individual retirement account.
Self-Employed Individual: An individual who has Earned Income for the taxable
year from the trade or business for which the plan is established; also, an
individual who would have had Earned Income except that the trade or business
had no net profits for the taxable year.
Sponsor: Automatic Data Processing Federal Credit Union.
Transfer Contribution: A cash amount transferred on behalf of a Participant to
the Plan in a trust to trust transfer from a deferred compensation plan which
qualifies under Code Section 401 or Code Section 403(a) and in which the
Participant has a 100% nonforfeitable interest.
Trust: The trust established under the Plan to which Plan contributions are made
and in which Plan assets are held.
Trustee: The person appointed as trustee under, and having the responsibilities
specified in, Article VII and VIII, and any successor trustee.
Valuation Date: The last business day of each month.
Vesting Service: The Years of Service credited to a Participant under Section
4.2 for determining the Participant's nonforfeitable percentage in the Account
Balance of his Employer Contribution Account.
Year of Eligibility Service: A 12-consecutive month period during which an
Employee completes 1,000 Hours of Service. The initial 12-month period begins on
the date the Employee first performs an Hour of Service. The succeeding 12-month
periods begin with first Plan Year commencing after the date the Employee first
performs an Hour of Service.
Years of Service: An Employee's period of service with the Company or an
Affiliate. The Employee's Years of Service equals the sum of:
(a) the period beginning on the date the Employee first performs an Hour of
Service and ending on the date the Employee quits, retires, is discharged,
dies, or is absent from work (with or without pay) for any other reason;
and
(b) (i) if the Employee quits, retires, or is discharged, the period beginning
on the date the Employee terminates Employment and ending on the first
date on which the Employee again performs an Hour of Service, if that
date is within 12 months of the date on which the Employee last
performed an Hour of Service; or
(ii) if the Employee is absent from work for any other reason and, within
12 months of the first day of the absence, the Employee quits,
retires, or is discharged, the period beginning on the first date of
the absence and ending on the first day the Employee again performs an
Hour of Service if that date is within 12 months of the date the
absence began.
If the Company maintains this Plan as the plan of a predecessor employer,
service with the predecessor employer is treated as Years of Service. If the
Company does not maintain this Plan as the plan of a predecessor employer,
services with the predecessor employer is treated as Years of Service only if
approved by the Board of Directors.
1.2 Additional Definitions
--------------------------
Additional definitions which relate only to a specific Appendix in the Plan
can be located as follows:
(a) Limitations on Elective Deferrals and Matching Contributions - Section A.1;
(b) Maximum Annual Addition - Section B.1;
(c) Top-Heavy Provisions - Section C.1;
(d) Distribution Requirements - Section D.1.
1.3 Rules of Construction
-------------------------
1.3.1 As used in this Plan, a pronoun or adjective in the masculine gender
includes the feminine gender and the singular includes the plural (and vice
versa), unless the context clearly indicates otherwise. Any reference to
-5-
Article, Section, Appendix, or paragraph means the Article, Section, Appendix,
or paragraph so delineated in this Plan.
1.3.2 The titles and headings to Articles, Sections, and Appendices are for
convenience of reference. In case of any conflict, the text of the Plan, rather
than the titles and headings, controls.
1.4 Controlling Law
-------------------
The Plan is intended to qualify under Code Section 401(a) and to comply with
ERISA, and its terms will be interpreted accordingly. If any Plan provision is
subject to more than one construction, the ambiguity will be resolved in favor
of the interpretation or construction which is consistent with that intent.
Similarly, in the event of any conflict between any provisions of the Plan or
between any Plan provision and Beneficiary designation form or any other form
submitted to the Administrative Committee, the Plan provisions necessary to
retain qualified status under Code Section 401(a) will prevail. Otherwise, to
the extent not preempted by ERISA or as expressly provided, the laws of New
Jersey (other than its conflict of law provisions) will control the
interpretation and performance of the Plan.
1.5 Savings Clause
------------------
Each Plan provision is independent of each other provision. If any provision
proves, or is held by any court, or tribunal, board, or authority of competent
jurisdiction, to be void or invalid as to any Participant or group of
Participants, that provision will be disregarded and deemed to be void and no
part of the Plan. However, the invalidation of any provision will not impair or
affect this Plan or any other provision.
-6-
ARTICLE II
Participation
2.1 Admission as a Participant
------------------------------
2.1.1 An Eligible Employee becomes a Participant on the Entry Date coincident
with or next following the date he:
(a) attains the age elected in Section II.B of the Adoption Agreement; and
(b) completes the service requirement elected in Section II.C of the Adoption
Agreement.
However, if this Plan is a restatement of an existing Plan, an Eligible
Employee who was a Participant in the existing Plan on the day before the
Effective Date will continue as a Participant on the Effective Date.
2.1.2 An Employee, who is not an Eligible Employee but who has met the age
and service requirements of Section 2.1.1, will become a Participant on the
Entry Date immediately after he becomes an Eligible Employee.
2.1.3 A former Participant who again becomes an Eligible Employee with credit
for at least the minimum service requirement (if any) elected in Section II.C of
the Adoption Agreement will become a Participant on the Entry Date coincident
with or next following the date on which he again is an Eligible Employee.
2.2 Termination of Participation
--------------------------------
A Participant ceases to be a Participant:
(a) upon his death; or
(b) upon payment to the Participant of all benefits due to him under the Plan.
2.3 Provision of Information
----------------------------
Each Employee who becomes a Participant must execute such forms as the
Administrative Committee requires and must make available to the Administrative
Committee any information reasonably requested. By virtue of participation in
this Plan, an Employee agrees, on his own behalf and on behalf of all persons
who may have or claim any right by the Employee's participation in the Plan, to
be bound by all provisions of the Plan and the trust agreement.
2.4 Minimum Number of Participants
----------------------------------
2.4.1 The minimum number of Employees deriving a benefit from the Plan must
equal the lesser of:
(a) 50; or
(b) 40% or more of the Employees of the Company and its Affiliates.
An Employee is treated as deriving a benefit from the Plan if he is eligible
to make an Elective Deferral, regardless of whether the Employee makes a
Participant 401(k) Election.
2.4.2 To determine the total number of Employees under subsection 2.4.1(b),
the following Employees are disregarded:
(a) Employees who are included in a bargaining unit covered by a collective
bargaining agreement between the Company (or an Affiliate) and Employee
representatives (provided that "Employee representatives" does not include
an organization more than half of whose members are Employees who are
owners, officers, or executives of the Company or an Affiliate), in the
negotiation of which retirement benefits were the subject of good faith
bargaining (unless the bargaining agreement provides for participation in
the Plan); and
(b) Employees who have not satisfied the age and service requirements of
Section 2.1.1.
2.4.3 With the consent of the Secretary of the Treasury, the Company may
apply this Section on a separate line of business basis within the meaning of
Code Section 414(r) (but without regard to paragraph (7) thereof).
-7-
ARTICLE III
Contributions and Account Allocations
3.1 Employer Contributions
--------------------------
3.1.1 An Employer shall contribute Elective Deferrals to the Trust for
each Participant who has a Participant 401(k) Election in effect.
3.1.2 If elected by the Company in Section IV.A of the Adoption Agreement,
an Employer shall contribute to the Trust each month a Matching Contribution for
each Participant who has a Participant 401(k) Election in effect.
3.1.3 Each Employer may elect in its sole discretion to make a Nonelective
Contribution for any Plan Year only if the Company executes an Adoption
Agreement which expressly permits Nonelective Contributions to be made. The
Employer shall determine whether the Nonelective Contribution for a Plan Year is
allocated to the Employer Contribution Account for all Participants or only for
Non-Highly Compensated Employees. The allocation is made in the ratio that the
Compensation paid to the Participant for whom the Nonelective Contribution is
made bears to the total Compensation for the Plan Year of all Participants for
whom the Contribution is made.
3.2 General Provisions Concerning Employer Contributions
--------------------------------------------------------
3.2.1 A Participant 401(k) Election must be in 1% increments and cannot be
less than the minimum percentage, or greater than the maximum percentage,
elected in Section IV.B of the Adoption Agreement. No Participant 401(k)
Election may be made retroactively and no Participant 401(k) Election is
effective before approval by the Administrative Committee.
3.2.2 The amount of the Matching Contribution equals the amount of the
Participant's Elective Deferral multiplied by the percentage elected in Section
IV.A of the Adoption Agreement. The amount of the Matching Contribution is
subject to the maximum percentage of Compensation elected in Section IV.A of the
Adoption Agreement.
3.2.3 All Elective Deferrals are made by payroll deduction.
3.2.4 The Administrative Committee may reduce the amount of any
Participant 401(k) Election, or make such other modifications as necessary so
that the Plan complies with Code Section 401(k).
3.2.5 A Participant 401(k) Election remains in effect until changed or
terminated. The Administrative Committee shall adopt rules and procedures under
which a Participant may make, suspend, reinstate, change, or terminate his
Participant 401(k) Election not less frequently than once a year.
3.2.6 A Participant's initial Participant 401(k) Election and any election
to suspend, reinstate, or change a Participant 401(k) Election must be given to
the Administrative Committee, on a form provided by the Administrative
Committee, and within the time specified by the Administrative Committee.
3.2.7 A Participant 401(k) Election is suspended automatically while a
Participant is not an Eligible Employee.
3.2.8 Contributions to the Plan are not integrated with Social Security.
3.2.9 Contributions to the Plan are subject to the limitations on Elective
Deferrals and Matching Contributions in Appendix A, the limitations on Annual
Additions in Appendix B, and the top-heavy provisions in Appendix C.
3.3 Rollover Contributions
--------------------------
Any Participant may make a Rollover Contribution to the Plan in cash. If
an Employee makes a contribution that is intended to be a Rollover Contribution
which the Administrative Committee later discovers not to be a Rollover
Contribution, the Administrative Committee will distribute to the Participant as
soon as practicable after discovery that portion of his Participant 401(k)
Account attributable to the mistaken Rollover Contribution. The amount to be
distributed will be determined as of the Valuation Date coincident with or
immediately preceding the discovery.
3.4 Transfer Contributions
--------------------------
The Trustee may accept, only at the direction of the Administrative
Committee, as part of the Trust a Transfer Contribution. The Administrative
Committee may not approve a Transfer Contribution that would:
-8-
(a) subject the Plan to the requirements of Code Sections 401(a)(11) and 417;
(b) require the Plan to offer a benefit other than a lump sum payment or a
period certain installment; or
(c) include after-tax Employee contributions.
3.5 Establishing of Accounts
----------------------------
3.5.1 The Administrative Committee shall establish a Participant 401(k)
Account for each Participant to record all Elective Deferrals that are made on
behalf of a Participant and the earnings and losses allocated to the Elective
Deferrals. The Administrative Committee shall establish separate sub-accounts
(if applicable) within a Participant's Participant 401(k) Account to record:
(a) Rollover Contributions made by a Participant to the Trust and any earnings
or losses allocated to the Rollover Contributions; and
(b) Transfer Contributions transferred to the Trust on behalf of a Participant
and any earnings or losses allocated to the Transfer Contributions.
3.5.2 The Administrative Committee shall establish an Employer Contribution
Account for each Participant to record any Matching Contributions and
Nonelective Contributions that are made to the Trust on behalf of a Participant
and any earnings or losses allocated to those contributions.
3.6 Multiple Trades and Businesses
----------------------------------
3.6.1 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 all plans established
for the other trades or businesses must, when looked at as a single plan,
satisfy Code Section 401(a) and (d) for the Employees of this and the other
trades or businesses.
3.6.2 If this Plan provides contributions and benefits for one or more
Owner-Employees who control one or more other trades or businesses, the
Employees of each other trade or business must be included in a plan which
satisfies Code Section 401(a) and (d) and which provides contributions and
benefits not less favorable than provided for the Owner-Employees under this
Plan.
3.6.3 If an individual is covered as an Owner-Employee under the plans of two
or more trades or businesses, then the contributions or benefits of the
Employees under a plan of a trade or business which the Owner-Employee controls
must be as favorable as those provided for the Owner-Employee under the most
favorable trade or business which he does not control.
3.6.4 An Owner-Employee is considered to control a trade or business if the
Owner-Employee, either alone or with other Owner-Employees;
(a) owns the entire interest in an unincorporated trade or business; or
(b) in the case of a partnership, owns more than 50% of either the capital
interest or the profits interest in the partnership.
An Owner-Employee is treated as owning any interest in a partnership which is
owned, directly or indirectly, by another partnership controlled by the
Owner-Employee, either alone or with other Owner-Employees.
-9-
ARTICLE IV
Vesting
4.1 Determination of Vesting
----------------------------
4.1.1 A Participant has a nonforfeitable percentage of 100% at all times in
the Account Balance of his Participant 401(k) Account.
4.1.2 If the Company elects in Section V of the Adoption Agreement that
Matching Contributions and Nonelective Contributions be immediately 100%
nonforfeitable then Matching Contributions are Qualified Matching Contributions
and Nonelective Contributions are Qualified Nonelective Contributions.
Otherwise, a Participant has a nonforfeitable percentage in the Account Balance
of his Employer Contribution Account determined as follows:
(a) 100%, if he terminates Employment (i) after attaining Normal Retirement Age
or (ii) because of death or disability; or
(b) in accordance with Section V of the Adoption Agreement, if he terminates
Employment for any other reason.
Under this Section, a disability is a physical or mental condition which
results in the Participant becoming eligible for disability benefits under:
(a) the Employer's long term disability plan; or
(b) the Social Security Act, if the Employer does not maintain a long term
disability plan covering the Participant.
4.2 Rules for Crediting Vesting Service
---------------------------------------
4.2.1 Unless otherwise elected in Section V of the Adoptation Agreement, all
Years of Service are credited to determine a Participant's Vesting Service.
4.2.2 An Employee's Vesting Service after a Period of Severance of at least 5
years is not counted in computing the nonforfeitable percentage in his Employer
Contribution Account derived from contributions accrued before the Period of
Severance.
4.3 Forfeitures
---------------
4.3.1 The non-vested portion of the Employer Contribution Account of a
Participant who has terminated Employment is forfeited as of the date on which
he has a 5-year Period of Severance or, if earlier, upon distribution or deemed
distribution of the Participant's entire Account Balance.
4.3.2 If a Participant who has terminated Employment elects to have
distributed less than the entire nonforfeitable portion of his Employer
Contribution Account, the non-vested portion that is forfeited 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 denominator
of which is the total value of the nonforfeitable portion of his Employer
Contribution Account. The forfeiture will be used to reduce Employer
Contributions. The forfeiture will be restored, however, if the Participant
returns Employment as an Eligible Employee and the Participant repays to the
Plan the full amount of the distribution attributable to his Employer
Contribution Account before the earlier of 5 years after the first date on which
the Participant is subsequently reemployed by an Employer, or the date the
Participant incurs a 5-year Period of Severance following the date of
distribution. For a Participant who has been deemed to have received a
distribution, the forfeiture will be restored, upon reemployment, to the amount
on the date of the deemed distribution, if the Participant returns to Employment
as an Eligible Employee before the Participant incurs a 5-year Period of
Severance.
-10-
ARTICLE V
Amount and Payment of Account Balances
5.1 Termination of Employment
-----------------------------
Upon termination of Employment, a Participant shall receive, subject to the
rules described below, the sum of:
(a) the Account Balance of his Employer Contribution Account as of the
Valuation Date coincident with or immediately after the date the
Participant terminates Employment, multiplied by his nonforfeitable
percentage determined under Article IV; and
(b) the Account Balance of his Participant 401(k) Account as of that Valuation
Date.
5.2 Payment of Account Balances on Termination of Employment
------------------------------------------------------------
5.2.1 If the nonforfeitable portion of a Participant's Account Balances as
of the Valuation Date coincident with or immediately after the termination of
Employment is not more than $3,500, the nonforfeitable portion of the Account
Balances will be paid in a lump sum as soon as practicable thereafter.
5.2.2 If the nonforfeitable portion of a Participant's Account Balances as
of the Valuation Date coincident with or immediately after termination of
Employment is more than $3,500, the Administrative Committee shall notify the
Participant of the right to defer payment of the nonforfeitable portion. The
notification must describe the material features and, if applicable, explain the
relative values of the optional forms of payment available under the Plan in a
manner that would satisfy the notice requirements of Code Section 417(a)(3). The
notification must be provided not less than 30 or more than 90 days before the
Benefit Commencement Date. The nonforfeitable portion of the Participant's
Account Balances will be distributed as soon as practicable after the
Participant elects to receive the distribution, but not later than the close of
the Plan Year in which the Participant attains Normal Retirement Age.
5.2.3 A Participant is deemed to have received a distribution if the
nonforfeitable percentage in his Employer Contribution Account is 0% on
termination of Employment.
5.3 Death Benefit
-----------------
5.3.1 The benefit payable to a Beneficiary on the death of a Participant
before the commencement of benefits equals the sum of the Participant's Account
Balances as of the Valuation Date coincident with or immediately after the date
of the Participant's death. The benefit payable to a Beneficiary on the death of
a Participant after distribution of his interest has begun, but before
distribution has been completed, equals the remaining portion of the
Participant's interest. The Beneficiary will be paid the benefit in a lump sum
within 90 days after the Administrative Committee has been notified of the
Participant's death unless payment is impracticable or the Beneficiary cannot be
located.
5.4 Beneficiaries
-----------------
5.4.1 Each Participant shall designate one or more direct or contingent
Beneficiaries to receive any amounts which may become payable under the Plan
upon the Participant's death. A Participant's designation of a Beneficiary must
be filed with the Administrative Committee on a form provided by the
Administrative Committee.
5.4.2 Any designation of a Beneficiary may be revoked by filing a later
designation or an instrument of revocation with the Administrative Committee in
a time and manner designated by the Administrative Committee. The last
designation received by the Administrative Committee is controlling over any
testamentary or other disposition. However, no designation, or change or
cancellation of a designation, is effective unless received by the
Administrative Committee before the Participant's death, and in no event may it
be effective as of a date before receipt.
5.4.3 A married Participant's spouse must consent to a designation of a
Beneficiary other than the spouse. The spouse's consent to the designation must
be witnessed by a notary public or by a Plan representative and is effective
only with respect to the Beneficiary or Beneficiaries specified in the
designation (unless the consent expressly provides that the designation may be
changed without further consent from the spouse). If the Participant establishes
to the satisfaction of a Plan representative that written consent cannot be
obtained because there is no spouse or the spouse cannot be located, the
designation will be deemed effective. In addition, if the spouse is legally
incompetent to give consent, then the spouse's legal guardian, even if the
guardian is the Participant, may give consent. If a Participant is legally
abandoned or has been separated (under the state law of the Participant's
-11-
residence) and the Participant has a court order to that effect, spousal
consent is not required unless a Qualified Domestic Relations Order provides
otherwise. Any consent necessary under this provision is valid only with respect
to the spouse who signs the consent. A Participant may revoke a prior waiver
without the consent of the spouse at any time before the commencement of
benefits. The number of revocations is not limited.
5.5.4 If a Participant is not married and fails to designate a Beneficiary,
or if no designated Beneficiary survives the Participant, any amounts due after
the Participants death will be paid to his then living issue, per stirpes, but
if the Participant is not survived by issue, then to the legal representative of
his estate in a single lump sum.
5.4.5 Subject to any Qualified Domestic Relations Order procedures as may be
established, if at any time any doubt exists about the right of any person to
any payment under the Plan, or about the amount or time of the payment, the
Administrative Committee may direct the Trustee to (a) hold the sum as
segregated amount in trust until the right, amount, or time is determined or
until there is an order of a court of competent jurisdiction, (b) pay the sum
into court in accordance with appropriate rules of law in such case then
provided, or (c) pay the sum only upon receipt of a bond or similar
indemnification (in such amount and in such form as is satisfactory to the
Administrative Committee).
5.4.6 If a period certain distribution is elected, and a Beneficiary dies
after the death of the Participant but before distribution of the Participant's
entire Account Balances, then the remainder is paid to the estate of the
Beneficiary.
5.4.7 No Beneficiary has any rights to benefits under the Plan unless he
survives the Participant.
5.4.8 A Participant's former spouse is treated as his spouse to the extent
provided under a Qualified Domestic Relations Order.
5.4.9 If the Participant and his Beneficiary die so that it is not possible
to determine who died first, it is presumed that the Participant survived the
Beneficiary.
5.5 Limitation on Commencement of Benefits
------------------------------------------
5.5.1 A Participant must begin to receive his benefits no later than the
60th day after the close of the Plan Year in which the latest of the following
occurs:
(a) the Participant attains Normal Retirement Age;
(b) the 10th anniversary of the year in wich the Participant commenced
participation; or
(c) the Participant terminates Employment.
If the amount of benefits payable cannot be determined within the 60-day
period, or if it is not possible to pay the benefits within that period because
the Administrative Committee has been unable to locate the Participant after
making reasonable efforts to do so, then a payment, retroactive to the 60th day,
will be made no later than 60 days after the earliest date on which the amount
of the benefits can be determined or the Participant can be located, as the case
may be.
5.5.2 In addition, a Participant must begin to receive his benefits no later
than the first day of April following the calendar year in which he attains age
70 1/2. All distributions under this Plan must be made in accordance with
Appendix D.
5.6 Withdrawals Before Termination of Employment
------------------------------------------------
5.6.1 Each Participant who has attained age 59 1/2 may withdraw, as of the
Valuation Date immediately preceding the filing of an application with the
Administrative Committee, all or any part of the nonforfeitable portion of his
Account Balances.
5.6.2 Each Participant who has not attained age 59 1/2 may make a hardship
withdrawal from his Participant 401(k) Account if he demonstrates to the
Administrative Committee that the withdrawal is necessitated by the
Participant's immediate and heavy financial need and the Participant lacks the
available resources. A hardship withdrawal may not exceed the amount of the
immediate and heavy financial need and is limited to the Participant's Elective
Deferrals, Rollover Contributions, and Transfer Contributions and may not
include amounts treated as Elective Deferrals under Section A.4.
5.6.3 A distribution is deemed to be made on account of an immediate or
heavy financial need of the Participant only if the distribution is on account
of:
(a) medical expenses described in Code Section 213(d), incurred by the
Participant, Participant's spouse, or any dependents of the Participant
(within the meaning of Code Section 152);
-12-
(b) purchase (excluding mortgage payments) of a principal residence for the
Participant;
(c) payment of tuition for the next semester or quarter of post-secondary
education for the Participant, his spouse, children, or dependents; or
(d) the need to prevent the eviction of the Participant from his principal
residence or foreclosure on the mortgage of the Participant's principal
residence.
5.6.4 Before receiving a hardship withdrawal, a Participant must obtain all
distributions and all nontaxable loans under all plans maintained by the Company
or an Affiliate.
5.6.5 A Participant who receives a hardship withdrawal is suspended from
making any Elective Deferrals for 12 months after receiving the distribution.
The maximum amount of Elective Deferrals for the Participant's taxable year
after the taxable year of the hardship withdrawal is the dollar limit under
Section A.2 less the amount of the Participant's Elective Deferrals for the
taxable year of the hardship withdrawal.
5.6.6 The minimum hardship withdrawal is $500.
5.6.7 The Adminstrative Committee shall establish rules and procedures with
respect to any withdrawal, including (a) the requirements for requesting and
receiving the hardship withdrawals and (b) suspension from further Elective
Deferrals.
5.7 Loans
---------
5.7.1 A Participant may submit an application to borrow from his Participant
401(k) Account and Employer Contribution Account (on such terms and conditions
as the Administrative Committee may prescribe). The amount of the loan may not
exceed the lesser of: (a) $50,000 reduced by the excess (if any) of the highest
outstanding balance of all other loans from the Plan during the one-year period
ending on the date on which the loan was made, over the outstanding balance of
loans from the Plan on the date on which the loan was made or (b) 50% of the sum
of the Account Balance in his Participant 401(k) Account and the nonforfeitable
portion of the Account Balance in his Employer Contribution Account on the
Valuation Date coincident with or immediately preceding the filing of the loan
application with the Administrative Committee.
5.7.2 If approved, each loan must comply with the following conditions:
(a) it must be evidenced by a negotiable promissory note;
(b) the rate of interest payable on the unpaid balance of the loan must equal
the prevailing interest rate charged by a bank for a secured personal loan,
but may not exceed the rate that may be imposed by the state's usury law,
if violation of that law subjects the violator to criminal sanctions;
(c) the loan, by its terms, must be entirely repaid within 5 years;
(d) the loan must be secured by the Participant's interest in his Account
Balances and such additional collateral as the Administrative Committee may
from time to time consider prudent;
(e) the loan must be repaid with respect to both principal and interest in
substantially equal payments over the life of the loan, with payments not
less frequently than quarterly;
(f) the minimum loan under the Plan will be $500;
(e) no more than one loan may be outstanding at any time; and
(h) in the event of the Participant's termination from Employment, the
remaining payments on the loan will be due immediately.
The level amortization requirement in paragraph (e) does not apply to a period
when a Participant is on leave of absence without pay for up to one year.
Nothing in the Plan precludes repayment or acceleration of the loan before the
end of the commitment period or the use of a variable interest rate under
paragraph (b).
5.7.3 If a Participant is granted a loan, the Administrative Committee shall
establish a "loan account" for the Participant. The Trustee shall hold all loan
accounts as part of the Trust. The Trustee shall transfer the amount of the loan
to the loan account from the Participant 401(k) Account and Employer
Contribution Account on a pro rata basis. The amounts transferred shall be
--- ----
withdrawn from the Investment Funds in accordance with rules established by the
Administrative Committee. The Trustee shall deposit the promissory note executed
by the Participant in his loan account. For purposes of the Plan, the promissory
note is deemed to have a fair market value at any given time equal to the unpaid
balance of the note plus accrued but unpaid interest.
5.7.4 Principal and interest payments of a Participant's loan are credited
initially to that Participant's loan account and are transferred as soon as
reasonably practicable to the Participant's Accounts from which the loan amount
was originally withdrawn on a pro rata basis. The amounts transferred are
--- ----
reinvested in the Investment Funds in accordance with rules established by the
Administrative Committee.
5.7.5 Any loss caused by nonpayment or other default on a Participant's loan
obligations is borne solely by the Participant's loan account. The the extent
permissable at law, in the event of a default, foreclosure on the promissory
note and attachment of security will not occur until an event occurs that would
allow or require a distribution of a Participant's Account Balances.
-13-
5.7.6 All fees and expenses incurred in connection with a Participant's loan
obligation are borne solely by the Participant's loan account.
5.7.7 The Administrative Committee shall make loans available to all
Participants and Beneficiaries who are parties in interest with respect to the
Plan within the meaning of ERISA Section 3(14).
5.7.8 Loans may not be made available to Highly Compensated Employees in an
amount greater than that available to other Employees.
5.7.9 A Participant's loan request will be cancelled if the Participant dies
before the loan amount requested is actually distributed.
5.7.10 No loans may be made available to any shareholder-employee or
Owner-Employee unless the Plan receives an exemption from the Department of
Labor for such loan which exemption is received wholly at the Employee's
expense. A shareholder-employee is an employee or officer of an electing small
business (Subchapter S) corporation who owns (or is considered as owning under
Code Section 318(a)(1)), on any day during the taxable year of the Corporation,
more than 5% of the outstanding stock of the Corporation.
5.8 Additional Distribution Events
----------------------------------
In addition to the other distribution events set forth in this Article and
Appendix A, a Participant is eligible to receive a distribution from the Plan,
either total or partial, upon the occurrence of any of the following events:
(a) termination of the Plan without the establishment of another defined
contribution plan;
(b) 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 disposition, but only with respect to Employees
who continue employment with the corporation acquiring such assets; or
(c) 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 such subsidiary.
-14-
ARTICLE VI
Forms of Payment of Accounts
6.1 Normal Form of Payment
--------------------------
The normal form of payment is a lump sum benefit.
6.2 Optional Form of Payment
----------------------------
The only optional form of payment is in installments over a period certain.
The period may not extend beyond the life expectancy of the Participant or the
joint life expectancy of the Participant and his beneficiary.
6.3 Election of Optional Form
-----------------------------
6.3.1 Not more than 90 nor less than 30 days before a Participant's Benefit
Commencement Date, the Administrative Committee shall furnish the Participant
with a notice containing information about electing the form in which benefits
are to be paid. Each participant may elect in writing not to take the normal
form of payment and to elect the optional form of payment. The election period
is the 90-day period ending on the Participant's Benefit Commencement Date. The
Administrative Committee may, on a uniform and nondiscriminatory basis, provide
for other periods that comply with regulations issued under Code Section
401(a)(11) and Code Section 417.
6.3.2 A Participant may revoke an election to take an optional form of
payment, and elect the normal form of payment, at any time during the election
period.
6.4 Limitation on Options
-------------------------
A Participant or a Beneficiary may not elect to receive benefits in either
of the following forms:
(a) a benefit in such form that, as of the time payment commences, the present
value of the benefits payable to the Participant or Beneficiary is less
than 50% of the total benefits payable or that would violate the incidental
death benefit rule; or
(b) a benefit in such form that all or any portion of the value of the benefit
otherwise payable to the Participant during his lifetime is either (i) paid
instead to his Beneficiary or (ii) set aside for payment to his survivor at
death.
6.5 Change in the Form or Timing of Payment
--------------------------------------------
Any Participant or Beneficiary whose payments are being deferred or who is
receiving installment payments may request acceleration or other
modification of the form of distribution.
6.6 Conditions to Distribution
------------------------------
Before any distribution is made, the Participant or Beneficiary must furnish
the Administrative Committee with all applications, certificates, tax waivers,
signature guarantees, and any other documents which the Administrative Committee
considers necessary or advisable.
-15-
ARTICLE VII
Fiduciaries
7.1 Named Fiduciaries
---------------------
7.1.1 The Board of Directors, the Administrative Committee, and the Trustee
are each a "named fiduciary" of the Plan, as that term is defined in ERISA
Section 402(a)(2), but only for the specific responsibilities of each described
in the Plan or the trust agreement establishing the Trust.
7.1.2 The Board of Directors has the sole authority to appoint and remove the
members of the Administrative Committee and the Trustee. The Administrative
Committee has the sole authority to control and manage the operation and
administration of the Plan, other than authority to manage and control Plan
assets. The Administrative Committee has the sole authority to approve the
Investment Funds established by the Trustee. The Administrative Committee is the
"administrator" and "plan administrator" of the Plan, as those terms are defined
in ERISA Section 3(16)(A) and in Code Section 414(g), respectively. The Trustee
has the sole authority to manage and control all Trust assets.
7.2 Employment of Advisers
--------------------------
A named fiduciary, and any fiduciary appointed by a named fiduciary, may
employ one or more persons to render advice with regard to any responsibility of
the named fiduciary or fiduciary under the Plan.
7.3 Multiple Fiduciary Capacities
---------------------------------
Any fiduciary may serve in more than one fiduciary capacity with respect to
the Plan.
7.4 Payment of Expenses
-----------------------
7.4.1 The Administrative Committee may elect that all transactional costs or
charges imposed or incurred for an Investment Fund be charged to the Account of
the Participant directing the investment. Transactional costs and charges
include charges for the acquisition, sale, or exchange of assets, brokerage
commissions, service charges, loan expenses, and professional fees.
7.4.2 All other Plan expenses, including expenses of the Administrative
Committee and the Trustee, to the extent permitted by law, are paid by the
Trust. However, an Employer may elect to pay these expenses.
7.5 Indemnification
-------------------
To the extent not prohibited by state or federal law, the Company or an
Affiliate will indemnify and hold harmless any named fiduciary or any other
Employee, officer, or director of the Company or an Affiliate from all claims
for liability, loss, or damage (including payment of expenses in connection with
defense against any claim) which result from any exercise or failure to exercise
any responsibilities with respect to the Plan, other than willful misconduct or
willful failure to act.
-16-
ARTICLE VIII
Plan Administration
8.1 Administrative Committee
----------------------------
8.1.1 Unless the Board of Directors otherwise provides, any member of the
Administrative Committee who is an Employee of the Company or an Affiliate when
appointed will be considered to have resigned from the Administrative Committee
when no longer an Employee. Employees of the Company or an Affiliate may receive
no compensation for their services rendered to or as members of the
Administrative Committee.
8.1.2 The Administrative Committee shall act by a majority of its members at
the time in office and any action may be taken either by a vote at a meeting or
in writing without a meeting. However, if less than three members are appointed,
the Administrative Committee shall act only upon the unanimous consent of its
members. The Administrative Committee may authorize in writing any person to
execute any document or documents on its behalf. Any interested person, upon
receipt of notice of the authorization directed to it may accept and rely on any
document executed by the authorized person until the Administrative Committee
delivers to the interested person a written revocation of the authorization.
8.1.3 A member of the Administrative Committee who is also a Participant may
not vote or act upon any matter relating to himself.
8.2 Powers and Duties of the Administrative Committee
-----------------------------------------------------
8.2.1 The Administrative Committee has discretionary authority to construe
the Plan and determine all questions of fact or interpretation that may arise.
Any construction or determination is conclusively binding on all persons
interested in the Plan.
8.2.2 The Administrative Committee may promulgate such rules and procedures
and issue such forms as it considers necessary or proper for the administration
of the Plan.
8.2.3 The Administrative Committee shall maintain or cause to be maintained
sufficient records of employment, compensation, and other relevant data
pertaining to Participants, including records which demonstrate compliance with
the nondiscrimination requirements with Code Section 401(k) (including the
extent to which Qualified Matching Contributions are treated as Elective
Deferrals) and 401(m) (including the extent to which Elective Deferrals are
treated as Matching Contributions).
8.2.4 Subject to the terms of the Plan, the Administrative Committee shall
determine the time and manner in which all elections authorized by the Plan will
be made or revoked.
8.2.5 The Administrative Committee shall establish a claims procedure.
8.2.6 The Administrative Committee may require a Participant or Beneficiary
to file an application for a benefit and to furnish all pertinent information it
may request. The Administrative Committee may rely on all information furnished,
including the Participant's or Beneficiary's current mailing address.
8.2.7 The Administrative Committee may make and deal with any investment of
the Trust in any manner consistent with the Plan which it considers advisable.
8.2.8 The Administrative Committee shall establish and carry out a funding
policy consistent with the objectives of the Plan and the requirements of ERISA.
8.2.9 The Administrative Committee has all the rights, power, duties, and
obligations granted or imposed upon it elsewhere in the Plan.
8.2.10 The Administrative Committee must exercise its responsibilities in a
uniform and nondiscriminatory manner.
8.3 Delegation of Responsibility
--------------------------------
The Administrative Committee may designate persons, including persons other
than named fiduciaries, to carry out the specified responsibilities of the
Administrative Committee and will not be liable for any act or omission of a
person so designated.
8.4 Trustee
-----------
8.4.1 The Trustee shall accept its appointment by executing a trust agreement
as Trustee.
-17-
8.4.2 The Trustee may make and deal with any investment of the Trust in any
manner consistent with the Plan and the trust agreement which it considers
advisable.
8.4.3 The Trustee has all the rights, powers, duties, and obligations granted
or imposed upon it elsewhere in the Plan or in the trust agreement.
8.4.4 The Trustee must exercise all of its responsibilities in a uniform and
nondiscriminatory manner.
8.4.5 The Trustee may designate persons, including persons other than named
fiduciaries, to carry out the specified responsibilities of the Trustee and will
not be liable for any act or omission of a person so designated.
8.4.6 The Trustee shall be paid such reasonable compensation, in addition to
its expenses, as the Board of Directors and the Trustee agree upon from time to
time; provided, however, that no compensation may be paid to any person who is
an Employee.
8.5 Investment of Accounts
--------------------------
8.5.1 It is intended that the Plan meet the requirements of ERISA Section
404(c). In this regard, the Trustee, with the approval of the Administrative
Committee, shall establish, or terminate, Investment Funds for the investment of
a Participant's Accounts. Each Investment Fund shall have the investment
objective or objectives as established by the Trustee in accordance with ERISA
Section 404(c). The Trustee's selection of Investment Funds must comply with the
following rules:
(a) no assets of the Trust, excluding assets which have been invested in an
Investment Fund, shall be invested in any security issued by the Company
or any affiliate of the Company;
(b) each Investment Fund shall limit investment in any security issue by any
Company which establishes a plan using the Sponsor's prototype documents or
by any affiliate of any such Company to the extent required for the
exemption contained in Section 3(a)(2) of the Securities Act of 1933, as
amended, to be available with respect to the plan and the interests
therein; and
(c) each Investment Fund shall, to the extent required to satisfy the
requirements of ERISA Section 404(c), prohibit investment in any security
issued by any Company which establishes a Plan using the Sponsor's
prototype documents or by any affiliate of any such Company.
8.5.2 The Trustee shall adopt rules and procedures for the Investment Funds in
accordance with ERISA Section 404(c) that, among other things, (a) allow
Participants to determine the portion of their Accounts that will be invested
in each Investment Fund and (b) determine what transfers between Investment
Funds will be allowed.
8.6 Valuation of Accounts
-------------------------
A Participant's Accounts are revalued at fair market value on each Valuation
Date. On that date, the earnings and losses of the Investment Funds are
allocated in the ratio that the portion of the Participant's Account Balances
invested in a particular Investment Fund bears to the total amount invested in
that Investment Fund. The Trustee shall adopt rules and procedures for valuing a
Participant's Account Balances and allocating earnings and losses of the
Investment Funds.
-18-
ARTICLE IX
Plan Amendment or Termination
9.1 Plan Amendment
------------------
9.1.1 The Sponsor may amend any part of the Plan at any time including
retroactive amendments necessary to assure that the Plan qualifies or continues
to qualify under the Code, Regulations, Revenue Rulings, and any other
guidelines published by the Internal Revenue Service. The Sponsor shall provide
written notice of any amendment to the Company.
9.1.2 The Company may at any time amend the choice of options in the Adoption
Agreement, by an instrument in writing, effective retroactively or otherwise.
9.1.3 The Company may at any time amend the Plan by adding overriding
language to the Adoption Agreement where the language is necessary to satisfy
Code Sections 415 or 416 because of the required aggregation of multiple plans
under those sections.
9.1.4 The Company also may at any time amend the Plan by adding model
amendments published by the Internal Revenue Service and which specifically
provide that their adoption will not cause the Plan to be treated as
individually designed.
9.1.5 In accordance with the preceding provisions, the Company shall give the
Sponsor an executed copy of any amendment to the Adoption Agreement or the Plan.
9.1.6 Except for amendments described in this Section, a Company that amends
any portion of this Plan and its Adoption Agreement (other than to change the
choice of options) will be deemed to have adopted an individually designed plan.
In addition, the Sponsor may deem any amendment described in Sections 9.1.3 and
9.1.4 as causing the Plan to be treated as an individually designed plan, and
the Company will no longer be an adopting employer of the Sponsor's "prototype
plan" (as defined in Section 3.02 of Rev. Proc. 89-9).
9.2 Limitations on Plan Amendment
---------------------------------
9.2.1 No Plan amendment, including the revision of any option selected in the
Adoption Agreement or the adoption of a new "prototype plan" (as defined in
Section 3.02 of Rev. Proc. 89-9), may:
(a) authorize any part of the Trust to be used for, or diverted to, purposes
other than for the exclusive benefit of Participants or their
Beneficiaries;
(b) increase the duties or liabilities of the Trustee or affect the Trustee's
fees for services, unless the Trustee consents in writing;
(c) decrease the accrued benefits of any Participant or Beneficiary under the
Plan except to the extent permissible under Code Section 412(c)(8);
(d) eliminate an optional form of benefit of any Participant or Beneficiary for
the payment of Account Balances attributable to Employment before the
amendment, except to the extent permissible by law;
(e) reduce the nonforfeitable percentage of any Employee who is a Participant
as of the date the amendment is (i) adopted or if later, (ii) effective; or
(f) change the vesting schedule, unless each Participant having not less than 3
years of Vesting Service is permitted to elect, within a reasonable period
specified by the Administrative Committee after the adoption of the
amendment, to have his nonforfeitable percentage computed without regard to
the amendment. However, no election need be provided to any Participant
whose nonforfeitable percentage under the Plan, as amended, at any time
cannot be less than the percentage determined without regard to the
amendment.
9.2.2 The period during which the election may be made will commence with the
date the amendment is adopted and end as the later of:
(a) 60 days after the amendment is adopted;
(b) 60 days after the amendment becomes effective; or
(c) 60 days after the Participant is issued written notice by the
Administrative Committee.
9.3 Right of the Company to
Terminate Plan or Discontinue Contributions
-----------------------------------------------
The Company has the bona fide intention and expectation that from year to year
it will be able to and will consider it advisable to continue this Plan in
effect and to make contributions. However, the Company reserves the right to
terminate the Plan with respect to its Employees at any time by an instrument in
writing delivered to the Administrative Committee or to completely discontinue
its contributions at any time.
-19-
9.4 Effect of Partial or Complete Termination
or Complete Discontinuance of Contributions
-----------------------------------------------
9.4.1 As of the date of a partial termination of the Plan no further
contributions or allocations of forfeitures will be made after that date with
respect to each affected Participant, and each affected Participant who is then
an Employee will become 100% vested in his Employer Contribution Account.
9.4.2 As of the date of the complete termination of the Plan, or the complete
discontinuance of contributions under the Plan:
(a) no further contributions or allocations of forfeitures will be made after
that date;
(b) no Employee may become a Participant after that date; and
(c) each Participant who is then an Employee will become 100% vested in his
Employer Contribution Account.
9.4.3 All other provisions of the Plan will remain in effect unless otherwise
amended.
9.5 Distribution Upon Termination
---------------------------------
As soon as administratively feasible after the date of termination of the
Plan, the Participant's Account will, without the Participant's consent, be
distributed to the Participant or transferred to another defined contribution
plan (other than an employee stock ownership plan as defined in Code Section
4975(e)(7)) maintained by the Company or an Affiliate.
9.6 Bankruptcy
--------------
If the Company is at any time judicially declared bankrupt or insolvent
without any provision being made for the continuation of this Plan, the Plan
will be completely terminated in accordance with Section 9.4.2.
9.7 Action by Company
---------------------
If the Company is a corporation, any action by the Company under this Plan
must be by resolution of its Board of Directors, or by any person duly
authorized by resolution of the Board to take the action.
If the Company is a partnership, then any action by the Company must be by
written action of any general partner, and if the Company is a self-employed
business, then by its sole proprietor.
-20-
ARTICLE X
Miscellaneous Provisions
10.1 Exclusive Benefit of Participants
--------------------------------------
At no time may any part of the Trust (other than such part as is required to
pay expenses) be used for, or diverted to, purposes other than for the exclusive
benefit of Participants or their Beneficiaries, except that, upon the direction
of the Administrative Committee:
(a) any contribution made by an Employer by a mistake of fact will be returned
by the Trustee within 1 year after the payment of the contribution;
(b) any contribution made by an Employer will be returned by the Trustee within
1 year after the denial of initial qualification of the Plan under Code
Section 401(a); and
(c) any contribution made by an Employer will be returned by the Trustee to the
extent disallowed as a deduction under Code Section 404 within 1 year after
the disallowance.
10.2 Plan Not a Contract of Employment
--------------------------------------
The Plan is not a contract of Employment. The terms of Employment of any
Employee are not affected in any way by the Plan or related instruments except
as specifically provided therein.
10.3 Type of Plan
-----------------
The Plan is a profit sharing plan for purposes of Code Sections 401(a), 402,
412, and 417.
10.4 Source of Benefits
-----------------------
Benefits under the Plan are paid or provided for solely from the Trust, and
the Company, Participant Affiliates, and any fiduciary to the Plan assume no
liability therefor. No Employee, Participant, former Participant, or Beneficiary
has any right to, or interest in, any assets of the Trust on termination of
Employment or otherwise, except as specifically provided under the Plan.
10.5 Benefits Not Assignable
----------------------------
Benefits provided under the Plan may not be assigned or alienated either
voluntarily or involuntarily, except for loans as provided in Section 5.7 or as
may otherwise by required by law. The preceding sentence also applies to the
creation, assignment, or recognition of a right to any benefit payable with
respect to a Participant pursuant to a domestic relations order, unless the
order is determined to be a Qualified Domestic Relations Order. The
Administrative Committee has all powers necessary with respect to the Plan for
the proper operation of Code Section 414(p) with respect to Qualified Domestic
Relations Orders including, but not limited to, the power to establish all
necessary or appropriate procedures, to authorize the establishment of new
accounts with such assets and subject to such investment control by the
Administrative Committee as the Administrative Committee may consider
appropriate, and the Trustee may decide upon and make appropriate distributions
therefrom.
10.6 Merger or Transfer of Assets
---------------------------------
10.6.1 The merger or consolidation of an Employer with any other person, or
the transfer of the assets of an Employer to any other person, or the merger of
the Plan with any other plan will not constitute a termination of the Plan.
10.6.2 The Plan may not merge or consolidate with, or transfer any assets or
liabilities to, any other plan, unless each Participant would (if the Plan then
terminated) receive a benefit immediately after the merger, consolidation, or
transfer equal to or greater than the benefit he would have been entitled to
receive immediately before the merger, consolidation, or transfer (if the Plan
had then terminated).
-21-
10.7 Participation in the Plan by an Affiliate
----------------------------------------------
10.7.1 With the Company's consent, any Affiliate, by appropriate action of
its board of directors, a general partner, or the sole proprietor, as the case
may be, may adopt the Plan. The Affiliate will determine the classes of its
Employees eligible to participate in this Plan.
10.7.2 A Participating Affiliate may terminate its participation in the Plan
with the Company's consent.
10.7.3 A Participating Affiliate may withdraw from the Plan and the Trust
with the Company's consent. The withdrawal will be deemed an adoption by the
Participating Affiliate of a plan and trust identical to the Plan and the
Trust, except that all references to the Company will be deemed to refer to the
Participating Affiliate. At such time and in such manner as the Trustee directs,
the assets of the Trust allocable to Employees of the Participating Affiliate
will be transferred to the trust deemed adopted by the Participating Affiliate.
10.7.4 A Participating Affiliate has no power with respect to the Plan
except as specifically provided in the Plan.
10.8 Conditional Adoption
-------------------------
The Company has adopted the Plan on the express condition that the Internal
Revenue Service will consider it as initially qualifying under Code Section
401(a) and the Trust qualifying for exemption from taxation under Code Section
501(a). If the Internal Revenue Service determines that the Plan or Trust does
not so qualify, the Plan may be amended or terminated as decided by the Company.
If the Plan is terminated, the Company may withdraw its contributions and the
rights of all Employees will cease as if the Plan had never been adopted.
10.9 Inability to Locate Participant or Beneficiary
---------------------------------------------------
If, after the exercise of due diligence by the Administrative Committee, a
Participant or Beneficiary to whom Plan benefits are due cannot be located, the
Trustee shall hold benefits as a segregated amount in trust for a period one
month less than the relevant state escheat law to the extent that the escheat
law is not preempted by XXXXX. If not claimed by that date, the amount will be
treated as a forfeiture and used to reduce future Employer contributions.
However, if the Participant or Beneficiary is subsequently located and makes a
claim for Plan benefits, the amount forfeited under the preceding sentence will
be restored.
10.10 Application of Prior Plan
-------------------------------
The Plan benefit of any Participant who terminates Employment is determined in
accordance with the provisions of the Plan in effect on the date of the
termination of Employment.
Where the Plan constitutes a restatement and amendment of a predecessor plan
of the Company, that plan will be applied to the extent permitted by law in
determining the rights and duties of any persons with respect to any allocations
before the Effective Date.
10.11 Failure of Qualified Status
---------------------------------
If the Company fails to attain or retain this Plan as a plan which qualifies
under Code Section 401, then the Plan as adopted by the Company will no longer
represent a prototype plan covered by an opinion letter issued by the Internal
Revenue Service to the Sponsor as to the acceptability of the form of the Plan
under Code Section 401(a). Rather, it will be considered an individually
designed plan.
-22-
APPENDIX A
Limitations on Elective Deferrals
and Matching Contributions
A.1 Definitions
---------------
These terms have the following meanings in this Appendix:
Actual Deferral Percentage: The ratio of Elective Deferrals (and Qualified
Matching Contributions and Qualified Nonelective Contributions to the extent
treated as Elective Deferrals under Section A.4) on behalf of the Eligible
Participant for the Plan Year to the Eligible Participant's Compensation for the
Plan Year. In calculating the Actual Deferral Percentage, Elective Deferrals
include Excess Deferral Amounts, but do not include Elective Deferrals that are
taken into account in the Average Contribution Percentage Test (provided the
Actual Deferral Percentage test is satisfied both with and without the exclusion
of these Elective Deferrals). The Actual Deferral Percentage of an Eligible
Participant who does not make an Elective Deferral is zero. The amount of
Compensation taken into account for an Employee who is an Eligible Participant
at any time during the Plan Year, including the first Plan Year, equals the
total Compensation received by the Employee for the Plan Year Plan Year
(whether or not the Participant was an Eligible Participant for the entire Plan
Year).
Aggregate Limit: The greater of (a) or (b), where:
(a) is the sum of (i) 1.25 multiplied by the greater of the Average Actual
Deferral Percentage or the Average Contribution Percentage for Eligible
Participants who are Non-Highly Compensated Employees and (ii) the lesser
of 200% or 2 plus the lesser of the Average Actual Deferral Percentage or
the Average Contribution Percentage for Eligible Participants who are Non-
Highly Compensated Employees; and
(b) is the sum of (i) 1.25 multiplied by the lesser of the Average Actual
Deferral Percentage or the Average Contribution Percentage for Eligible
Participants who are Non-Highly Compensated Employees and (ii) the lesser
of 200% or 2 plus the greater of the Average Actual Deferral Percentage or
the Average Contribution Percentage for Eligible Participants who are Non-
Highly Compensated Employees.
Average Actual Deferral Percentage: The average of the Actual Deferral
Percentages of the Eligible Participants in a group.
Average Contribution Percentage: The average of the Contribution Percentages of
the Eligible Participants in a group.
Contribution Percentage: The ratio of Matching Contributions (and Elective
Deferrals and Qualified Nonelective Contributions to the extent treated as
Matching Contributions under Section A.6) on behalf of the Eligible Participant
for the Plan Year to the Eligible Participant's Compensation for the Plan Year.
Eligible Participant: To determine the Actual Deferral Percentage, any Employee
who is eligible to have Elective Deferrals allocated to his Participant 401(k)
Account for the Plan Year. To determine the Contribution Percentage, any
Employee who is eligible to have Matching Contributions allocated to his
Employer Contribution Account for the Plan Year.
Excess Aggregate Contributions: For any Plan Year, the excess of:
(a) the aggregate amount of Matching Contributions (and participant
contributions to another plan and, if applicable, Elective Deferrals and
Qualified Nonelective Contributions) actually made on behalf of Highly
Compensated Employees for the Plan Year, over
(b) the maximum amount of those contributions permitted under the Average
Contribution Percentage test in Section A.6 (determined by reducing
contributions made on behalf of Highly Compensated Employees in the order
of their Contribution Percentages beginning with the highest Contribution
Percentage).
Excess Contributions: For any Plan Year, the excess of:
(a) the aggregate amount of Elective Deferrals (and, if applicable, Qualified
Matching Contributions and Qualified Nonelective Contributions) actually
made on behalf of Highly Compensated Employees for the Plan Year, over
(b) the maximum amount of those contributions permitted under the Actual
Deferral Percentage test in Section A.4 (determined by reducing
contributions made on behalf of Highly Compensated Employees in the order
of their Actual Deferral Percentages beginning with the highest Actual
Deferral Percentage).
Excess Deferral Amount: The amount of Elective Deferrals for a calendar year
that are includible in a Par-
-23-
ticipant's gross income under Code Section 402(g) to the extent the
Participant's Elective Deferrals exceed the dollar limitation under Code Section
402(g).
Matching Contribution: Under this Appendix, Matching Contribution also includes
Employer contributions made to any other defined contribution plan on behalf of
a Participant on account of a participant contribution made to any other plan of
an Employer or on account of the Participant's Elective Deferrals to this or any
other plan of an Employer.
A.2 Maximum Amount of Elective Deferrals
----------------------------------------
No Employee may have Elective Deferrals under this Plan, or any other
qualified plan of an Employer, during any taxable year in excess of the dollar
limitation in Code Section 402(g) in effect at the beginning of that taxable
year.
A.3 Excess Deferral Amounts
---------------------------
A.3.1 Excess Deferral Amounts and income allocable to those amounts will be
distributed no later than April 15 of each year to Participants who claim
allocable Excess Deferral Amounts for the preceding calendar year.
A.3.2 The Participant's claim must be written and submitted to the
Administrative Committee no later than March 1. The claim must specify the
Participant's Excess Deferral Amount for the preceding calendar year and must be
accompanied by the Participant's written statement that if those amounts are not
distributed, the Excess Deferral Amount, when added to amounts deferred under
other plans or arrangements described in Code Section 401(k), 402(h)(1)(B),
403(b), 457, 501(c)(18) exceeds the limit imposed on the Participant by Code
Section 402(g) for the year in which the deferral occurred.
A.3.3 The Excess Deferral Amount distributed to a Participant is adjusted for
income or loss. Income and loss allocable to Excess Deferral Amounts equals the
sum of:
(a) income or loss allocable to the Participant's Elective Deferrals for the
taxable year multiplied by a fraction, the numerator of which is the
Participant's Excess Deferral Amount for the taxable year, and the
denominator is the Account Balance in his Participant 401(k) Account
attributable to Elective Deferrals on the last day of that taxable year
without regard to any income or loss occurring during that taxable year;
plus
(b) 10% of the amount determined under (a) multiplied by the number of 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 the month.
A.3.4 The Excess Deferral Amount distributed to a Participant is reduced by
any Excess Contributions previously distributed to the Participant for the Plan
Year beginning with or within that taxable year. In no event may the amount
distributed exceed the Participant's total Elective Deferrals for the taxable
year.
A.3.5 Excess Deferral Amounts are treated as Annual Additions under
Appendix B.
A.4 Actual Deferral Percentage Test
-----------------------------------
A.4.1 The Average Actual Deferral Percentage for Eligible Participants who
are Highly Compensated Employees for the Plan Year may not exceed:
(a) the Average Actual Deferral Percentage for Eligible Participants who are
Non-Highly Compensated Employees for the Plan Year multiplied by 1.25; or
(b) The Average Actual Deferral Percentage for Eligible Participants who are
Non-Highly Compensated Employees for the Plan Year multiplied by 2,
provided that the Average Actual Deferral Percentage for Eligible
Participants who are Highly Compensated Employees does not exceed the
Average Actual Deferral Percentage for Eligible Participants who are Non-
Highly Compensated Employees by more than 2 percentage points or such
lesser amount as the Secretary of the Treasury may prescribe to prevent the
multiple use of this alternative limitation with respect to any Highly
Compensated Employee.
A.4.2 The provisions of Code Section 401(k)(3) and Department of Treasury
Regulation 1.401(k)-1(b) are incorporated by reference.
A.4.3 To the extent Elective Deferrals are taken into account under Section
A.6, they are disregarded under this Section A.4.
A.4.4 The Administrative Committee shall determine for any Plan Year whether
Qualified Matching Con-
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tributions and/or Qualified Nonelective Contributions will be treated as
Elective Deferrals in the Actual Deferral Percentage test under this Section
A.4. The Administrative Committee shall also determine whether the amounts
treated as Elective Deferrals, subject to such other requirements as the
Secretary of the Treasury may prescribe are:
(a) all Qualified Matching Contributions;
(b) all Qualified Nonelective Contributions;
(c) such Qualified Matching Contributions as are needed to satisfy the Actual
Deferral Percentage test; or
(d) such Qualified Nonelective Contributions as are needed to satisfy the
Actual Deferral Percentage test.
A.4.5 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 allocated to his account under 2 or more plans or
arrangements described in Code Section 401(k) that are maintained by the Company
or an Affiliate is determined as if all Elective Deferrals (and, if applicable,
Qualified Matching Contributions and Qualified Nonelective Contributions) were
made under a single arrangement. If the cash or deferral arrangements have
different plan years, all cash or deferred arrangements ending within the same
calendar year are treated as a single arrangement.
A.4.6 If this Plan satisfies the requirements of Code Sections 401(a)(4),
401(k), or 410(b) only if aggregated with one or more other plans, or if one or
more other plans satisfy the requirements of those Code sections only if
aggregated with this Plan, then this Section A.4 is applied by determining the
Actual Deferral Percentage of Eligible Participants as if all the plans were a
single plan.
A.4.7 The Administrative Committee also may treat one or more plans as a
single plan with the Plan whether or not the aggregated plans satisfy Code
Sections 401(a)(4) and 410(b). However, those plans must then be treated as one
plan under Code Sections 401(a)(4), 401(k), and 410(b). Plans may be aggregated
under this Section A.4.7 only if they have the same plan year.
A.4.8 To determine the Actual Deferral Percentage of a Participant who is a
5-percent owner or one of the 10 most highly-paid Highly Compensated Employees,
the Elective Deferrals (and, if applicable, Qualified Matching Contributions and
Qualified Non-elective Contributions) and Compensation of the Participant
includes the Elective Deferrals (and, if applicable, Qualified Matching
Contributions and Qualified Nonelective Contributions) and Compensation of
Family Members. Family Members are disregarded as separate employees in
determining the Actual Deferral Percentage both for Participants who are Non-
Highly Compensated Employees and for Participants who are Highly Compensated
Employees.
A.4.9 Elective Deferrals, Matching Contributions, and Nonelective
Contributions are considered made for a Plan Year if made no later than the end
of the 12-month period beginning on the day after the close of the Plan Year.
A.4.10 The determination and treatment of the Elective Deferrals, Qualified
Matching Contributions, Qualified Nonelective Contributions, and Actual Deferral
Percentage of any Participant must satisfy such other requirements as the
Secretary of the Treasury may prescribe.
A.5 Excess Contributions
------------------------
A.5.1. Excess Contributions and income allocable to those contributions will
be distributed no later than the last day of each Plan Year to Participants to
whose Account the Excess Contributions were made for the preceding Plan Year.
Excess Contributions are allocated to Participants who are subject to the family
member aggregation rules of Code Section 414(q)(6) in the manner prescribed by
regulations. The Administrative Committee anticipates that the Excess
Contributions will be distributed to affected Participants within 2 1/2 months
after the close of the Plan Year in which the Excess Contribution occurred. If
Excess Contributions are not distributed to affected Participants within 2 1/2
months after the close of the Plan Year, the Employer will be subject to a 10%
excise tax under Code Section 4979.
A.5.2 The Excess Contributions distributed to a Participant are adjusted for
income and losses up to the date of distribution. The income or loss allocable
to Excess Contributions equals the sum of:
(a) income or loss allocable to the Participant's Elective Deferrals (and, if
applicable, Qualified Matching Contributions and Qualified Nonelective
Contributions treated as Elective Deferrals) for the Plan Year multiplied by
a fraction, the numerator of which is the Participant's Excess Contributions
for the Plan Year and the denominator is the Participant's Account Balances
attributable to Elective Deferrals (and, if applicable, Qualified Matching
Contributions and Qualified Nonelective Contributions) on the last day of
the Pan Year without regard to any income or loss occurring during that Plan
Year; plus
(b) 10% of the amount determined under (a) multiplied by the number of 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 the month.
-25-
A.5.3 The Excess Contributions distributed to a Participant are also reduced
by the amount of Excess Deferral Amounts distributed to the Participant.
A.5.4 Amounts distributed under this Section A.5 are first treated as
distributions from the Participant 401(k) Account and are treated as distributed
from the Participant's Employer Contribution Account only to the extent the
Excess Contributions exceed the balance in his Participant 401(k) Account.
A.5.5 Excess Contributions are treated as Annual Additions under Appendix B.
A.6 Average Contribution Percentage Test
----------------------------------------
A.6.1 The Average Contribution Percentage for Eligible Participants who are
Highly Compensated Employees for the Plan Year may not exceed:
(a) 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 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 2 percentage points or such lesser amount as the
Secretary of the Treasury may prescribe to prevent the multiple use of this
alternative limitation with respect to any Highly Compensated Employee.
A.6.2 The provisions of Code Section 401(m) and any regulations issued
thereunder are incorporated by reference.
A.6.3 To the extent that Qualified Matching Contributions are taken into
account under Section A.4, they are disregarded under this Section A.6.
A.6.4 The Administrative Committee shall determine for any Plan Year whether
Elective Deferrals and/or Qualified Nonelective Contributions will be treated as
Matching Contributions in the Average Contribution Percentage test under this
Section A.6. The Administrative Committee shall also determine whether the
amounts treated as Matching Contributions, subject to such other requirements as
the Secretary of the Treasury may prescribe, are:
(a) all Elective Deferrals;
(b) all Qualified Nonelective Contributions;
(c) such Elective Deferrals as are needed to satisfy the Average Contribution
Percentage test; or
(d) such Qualified Nonelective Contributions as are needed to satisfy the
Average Contribution Percentage test.
A.6.5 The Contribution Percentage for any Eligible Participant who is a
Highly Compensated Employee for the Plan Year and who is eligible to receive
Matching Contributions under 2 or more plans described in Code Section 401(a)
or arrangements described in Code Section 401(k) that are maintained by the
Company or an Affiliate is determined as if all Matching Contributions (and
participant contributions to another plan) (and, if applicable, Elective
Deferrals and Qualified Nonelective Contributions) were made under a single
plan. If the plans have different plan years, all plans ending within the same
calendar year are treated as a single plan.
A.6.6 If this Plan satisfies the requirements of Code Sections 401(a)(4),
401(m) or 410(b) only if aggregated with one or more other plans, or if one or
more other plans satisfy the requirements of those Code sections only if
aggregated with this Plan, then this Section A.6 is applied by determining the
Contribution Percentages of Eligible Participants as if all the plans were a
single plan. In calculating Contribution Percentages under this paragraph,
participant contributions to the other plans are considered.
A.6.7 The Administrative Committee may treat one or more plans as a single
plan with the Plan whether or not the aggregated plans satisfy Code Sections
401(a)(4) and 410(b). However, those plans must then be treated as one plan
under Code Sections 401(a)(4), 401(m), and 410(b). Plans may be aggregated under
this Section A.6.7 only if they have the same plan year.
A.6.8 To determine the Contribution Percentage of an Eligible Participant who
is a 5-percent owner or one of the 10 most highly-paid Highly Compensated
Employees, Matching Contributions (and participant contributions to another
plan) (and, if applicable, Elective Deferrals and Qualified Nonelective
Contributions) and Compensation of the Participant includes the Matching
Contributions (and participant contributions to another plan) (and, if
applicable, Elective Deferrals and Qualified Nonelective Contributions) and
Compensation of Family Members. Family Members are disregarded as separate
employees in determining the Contribution Percentage both for Eligible
Participants who are Non-Highly Compensated Employees and for Eligible
Participants who are Highly Compensated Employees.
A.6.9 Matching Contributions and Qualified Nonelective Contributions are
considered made for a Plan Year if made no later than the end of the 12-month
period beginning on the day after the close of the Plan Year.
-26-
A.6.10 The determination and treatment of the Contribution Percentage of any
Participant must satisfy such other requirements as the Secretary of the
Treasury may prescribe.
A.7 Excess Aggregate Contributions
----------------------------------
A.7.1 Excess Aggregate Contributions and income allocable to those
contributions are forfeited, if otherwise forfeitable under this Plan, or if not
forfeitable, distributed no later than the last day of each Plan Year, to
Participants to whose Accounts Matching Contributions were allocated for the
preceding Plan Year. Excess Aggregate Contributions are allocated to
Participants who are subject to the family member aggregation rules of Code
Section 414(q)(6) in the manner prescribed by regulations. The Administrative
Committee anticipates that the Excess Aggregate Contribution will be distributed
to affected Participants within 2 1/2 months after the close of the Plan Year in
which the Excess Aggregate Contribution occurred.
A.7.2 If Excess Aggregate Contributions are not distributed to affected
Participants within 2 1/2 months after the close of the Plan Year, the Employer
will be subject to a 10% excise tax under Code Section 4979.
A.7.3 The Excess Aggregate Contributions to be distributed are adjusted for
income and losses up to the date of distribution. The income or loss allocable
to Excess Aggregate Contributions equals the sum of:
(a) income or loss allocable to the Participant's Matching Contributions (and,
if applicable, Elective Deferrals and Qualified Nonelective Contributions
treated as Matching Contributions) for the Plan Year multiplied by a
fraction, the numerator of which is the Participant's Excess Aggregate
Contributions for the Plan Year and the denominator is the Participant's
Account Balances attributable to Matching Contributions (and, if
applicable, Elective Deferrals and Qualified Nonelective Contributions) on
the last day of the Plan Year without regard to any income or loss
occurring during that Plan Year; plus
(b) 10% of the amount determined under (a) multiplied by the number of 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 the month.
A.7.4 Amounts distributed under this Section A.7 are treated as distributions
from the Participant's Employer Contribution Account and, if applicable, on a
pro rata basis from his Participant 401(k) Account.
--------
A.7.5 Amounts forfeited by Highly Compensated Employees under this Section
A.7 are used to reduce Employer Contributions.
A.7.6 Excess Aggregate Contributions are treated as Annual Additions under
Appendix B.
A.8 Coordination of Distributions of Excess Deferral Amounts,
Excess Contributions, and Excess Aggregate Contributions
-------------------------------------------------------------
Excess Deferral Amounts, Excess Contributions, and Excess Aggregate
Contributions are calculated and distributed in that order.
A.9 Multiple Use of Alternative Limitation
------------------------------------------
If the sum of the Average Actual Deferral Percentage and the Average
Contribution Percentage for Eligible Participants who are Highly Compensated
Employees exceeds the Aggregate Limit, a multiple use of the alternative
limitation (within the meaning of Code Section 401(m)(9)) occurs. However,
multiple use does not occur if either the Average Actual Deferral Percentage or
the Average Contribution Percentage for Eligible Participants who are Highly
Compensated Employees does not exceed 1.25 multiplied by the Average Actual
Deferral Percentage or the Average Contribution Percentage, as applicable, for
Eligible Participants who are Non-Highly Compensated Employees. Under this
Section A.9, the Average Actual Deferral Percentage and the Average Contribution
Percentage for Eligible Participants who are Highly Compensated Employees are
determined after any corrections required to meet the Actual Deferral Percentage
test and the Average Contribution Percentage test. Multiple use is corrected by
reducing the Actual Deferral Percentage of all Highly Compensated Employees so
that the Aggregate Limit is not exceeded. The amount of the reduction is treated
as an Excess Contribution.
-27-
APPENDIX B
Limitations on Annual Additions
B.1 Definitions
---------------
These terms have the following meanings in this Appendix:
Annual Addition: The sum of the following amounts credited to a Participant's
Accounts for any Limitation Year:
(a) contributions made by any Controlled Group Member;
(b) participant contributions to any other qualified plan of a Controlled Group
Member even if withdrawn during the same Limitation Year;
(c) forfeitures allocated to any defined contribution plan maintained by a
Controlled Group Member;
(d) amounts attributable to post-retirement medical benefits, allocated to the
separate account of a key employee as defined in Code Section 419A(d)(3),
under all welfare benefit funds as defined in Code Section 419(e)
maintained by any Controlled Group Member; and
(e) amounts allocated to an individual medical account as defined in Code
Section 415(l)(l) which is part of a pension or annuity plan maintained by
any Controlled Group Member.
Any Excess Amount applied under Section B.3.1 and B.3.3 in the Limitation Year
to reduce Controlled Group Member contributions will be considered Annual
Additions for that Limitation Year.
Controlled Group Member: Any corporation during the time it is a member of a
"controlled group of corporations" (as defined in Code Section 414(b) as
modified by Code Section 415(h)) of which the Company is a member and any trade
or business during the time it is under "common control" (as defined in Code
Section 414(c) as modified by Code Section 414(h)) with the Company, or any
affiliated service group as defined in Code Section 414(m), or any other entity
required to be aggregated with the Employee under Code Section 414(o).
Defined Benefit Fraction: For any Participant, the fraction (determined as of
the last day of the Limitation Year) with a numerator equal to the Projected
Annual Benefit of the Participant and a denominator equal to the lesser of:
(a) 1.25 multiplied by the dollar limitation in effect under Code Section
415(b)(l)(A) and (d) for that Limitation Year; or
(b) 1.4 multiplied by the amount of the Participant's average Limitation
Compensation for the consecutive 3 Years of Service that produces the
highest average.
If the Participant was a participant as of the first day of the Limitation Year
beginning after December 31, 1986, in one or more defined benefit plans
maintained by a Controlled Group Member which were in existence on May 6, 1986,
the denominator of this fraction will not be less than 125 percent of the sum of
the annual benefits under those 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 requirements of Code Section 415 for
all Limitation Years beginning before January 1, 1987.
Defined Contribution Dollar Limitation: $30,000 or, if greater, 1/4 of the
dollar limitation in effect under Code Section 415(b)(l)(A) as in effect for the
Limitation Year.
Defined Contribution Fraction: For any Participant, the fraction (determined as
of the last day of the Limitation Year) with a numerator equal to the sum of all
the Participant's Annual Additions and a denominator equal to the sum of the
lesser of the following amounts determined for the Limitation Year and for each
prior Limitation Year for which the Participant was credited with a Year of
Service:
(a) 1.25 multiplied by the Defined Contribution Dollar Limitation in effect for
that Limitation Year; or
(b) 1.4 multiplied by 25% of the Participant's Limitation Compensation for that
Limitation Year.
If the Participant was a participant as of the first day of the Limitation
Year beginning after December 31, 1986, in one or more defined benefit plans
maintained by a Controlled Group Member 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, disregarding
any changes in the terms and conditions of the Plan after May 5, 1986, but using
the Code Section 415 limitation applicable to the first Limitation Year
beginning on or after January 1, 1987.
-28-
The Annual Addition for any Limitation Year beginning before January 1, 1987,
is not recomputed to treat all employee contributions as Annual Additions.
Excess Amount: The excess of the Participant's Annual Additions for the
Limitation Year over the maximum Annual Addition permitted under Section B.2.
Limitation Compensation: A Participant's earned income, wages, salaries, and
fees for professional services and other amounts received for personal services
actually rendered in the course of employment with the Controlled Group Member
maintaining the Plan (including, but not limited to, commissions paid to
salesmen, compensation for services on the basis of a percentage of profits,
commissions on insurance premiums, tips, and bonuses), and excluding the
following:
(a) Controlled Group Member contributions to a plan of deferred compensation
which are not includible in the Participant's gross income for the taxable
year in which contributed, or Controlled Group Member contributions under a
simplified employee pension plan to the extent those contributions are
deductible by the Participant, 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 Participant either becomes
freely transferable or is no longer subject to a substantial risk of
forfeiture;
(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 Controlled Group Member (whether or not under a salary reduction
agreement) toward the purchase of an annuity described in Code Section
403(b) (whether or not the amounts are actually excludible from the gross
income of the Participant).
Limitation Compensation for a Limitation Year is the compensation actually
paid or includible in gross income during that Limitation Year. However, for a
Non-Highly Compensated Employee who is permanently and totally disabled within
the meaning of Code Section 22(e)(3) and for whom contributions are
nonforfeitable when made, "Limitation Compensation" means the limitation
compensation the Participant would have received if the Participant was paid at
the same rate as immediately before becoming permanently and totally disabled.
Limitation Year: The Plan Year. All qualified plans maintained by a Controlled
Group Member must use the same Limitation Year. If the Limitation Year is
amended to a different 12-consecutive month period, the new Limitation Year must
begin on a date within the Limitation Year in which the amendment is made.
Master or Prototype Plan: A plan the form of which is the subject of a
favorable opinion letter from the Internal Revenue Service.
Projected Annual Benefit: The Participant's annual benefit payable in the form
of a straight life annuity or a qualified joint and survivor annuity under all
defined benefit plans qualified under Code Section 401 maintained at any time
(whether or not terminated) by the Company or any other Controlled Group Member.
The Projected Annual Benefit is computed assuming that the Participant will
remain employed until normal retirement age under the Plan (or his current age,
if later) and that the Participant's Compensation (and all other relevant
factors used to determine benefits) will remain at its current level until that
time.
B.2 Maximum Annual Addition
---------------------------
B.2.1 A Participant's Annual Addition in any Limitation Year may not exceed
the lesser of:
(a) the Defined Contribution Dollar Limitation; or
(b) 25% of the Participant's Limitation Compensation (other than any
contribution for medical benefits within the meaning of Code Sections
401(h) or 419A(f)(2) which is treated as an Annual Addition) for that
Limitation Year;
If a short Limitation Year is created by an amendment changing the Limitation
Year to a different 12-month period, the maximum Annual Addition may not exceed
the Defined Contribution Dollar Limitation multiplied by the following fraction;
number of months in the short Limitation Year over 12.
B.2.2 Before determining the Participant's actual Limitation Compensation for
the Limitation Year, the Employer may determine the maximum Annual Addition
under Section B.2.1 for a Participant on the basis of a reasonable estimation of
the Participant's Limitation Compensation for the Limitation Year, uniformly
determined for all Participants similarly situated.
B.2.3 As soon as administratively feasible after the end of the Limitation
Year, the maximum Annual Addition under Section B.2.1 will be determined on the
basis of the Participant's actual Limitation Compensation for the Limitation
Year.
-29-
B.3 Excess Amounts
------------------
B.3.1 If the Participant does not participate in, and has never participated
in another qualified plan maintained by a Controlled Group Member, a welfare
benefit fund as defined in Code Section 419(e) maintained by a Controlled Group
Member, or an individual medical account as defined in Code Section 415(1)(2)
maintained by a Controlled Group Member, which provides an Annual Addition, the
Employer contribution to this Plan that would otherwise be contributed or
allocated to the Participant's Account will be limited to ensure that there will
be no Excess Amount for the Limitation Year. If the Employer contribution that
would otherwise be contributed or allocated to the Participant's Account would
cause the Annual Addition for the Limitation Year to exceed the maximum Annual
Addition, the amount contributed or allocated will be reduced so that the Annual
Additions for the Limitation Year will equal the maximum Annual Addition.
However, if pursuant to Section B.2.3, there is an Excess Amount, the excess
will be disposed of as follows:
(a) If 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 that
Participant in the next Limitation Year, and each succeeding Limitation
Year if necessary;
(b) If the Participant is not covered by the Plan at the end of the Limitation
Year, the Excess Amount is held unallocated in a suspense account and will
be used to reduce future Employer contributions for all remaining
Participants in the next Limitation Year and each succeeding Limitation
Year, if necessary.
(c) A suspense account may not participate in the allocation of the gains and
losses of the Investment Funds. All amounts in the suspense account must be
allocated and reallocated to Participants' Accounts before any Employer
contributions may be made for that Limitation Year. Excess Amounts in a
suspense account may not be distributed to Participants or former
Participants.
B.3.2 This Section B.3.2 and Sections B.3.3 and B.3.4 apply if, in addition
to this Plan, the Participant is covered under another qualified defined
contribution Master or Prototype Plan maintained by a Controlled Group Member, a
welfare benefit fund, as defined in Code Section 419(e), maintained by a
Controlled Group Member, or an individual medical account, as defined in Code
Section 415(1)(2), maintained by a Controlled Group Member, which provides an
Annual Addition during any Limitation Year. The Annual Additions which may be
credited to a Participant's account under this Plan for any such Limitation Year
when added to the Annual Additions credited to a Participant's account under the
other plans and welfare benefit funds for the same Limitation Year may not
exceed the maximum Annual Addition under Section B.2.1. If the Annual Additions
with respect to the Participant under other defined contribution plans and
welfare benefit funds maintained by a Controlled Group Member are less than the
maximum Annual Addition under Section B.2.1 and the Controlled Group Member
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 Annual Addition under Section B.2.1.
If the Annual Additions with respect to the Participant under the other defined
contribution plans and welfare benefit funds in the aggregate are equal to or
greater than the maximum Annual Addition, no amount will be contributed or
allocated to the Participant's Account under this Plan for the Limitation Year.
B.3.3 If, pursuant to Section B.2.3 or as a result of the allocation of
forfeitures, a Participant's Annual Additions under this Plan and the 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 will be deemed to have been allocated first regardless of the actual
allocation date.
B.3.4 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 that date, times
(b) the ratio of (i) the Annual Additions allocated to the Participant for the
Limitation Year as of that date under this Plan to (ii) the total Annual
Additions allocated to the Participant for the Limitation Year as of that
date under this and all the other Master or Prototype Plans. Any Excess
Amount attributed to this Plan will be disposed in the manner described in
Section B.3.1.
B.3.5 This Section B.3.5 applies if the Participant is covered under another
qualified defined contribution plan maintained by a Controlled Group Member
which is not a Master or Prototype Plan. Annual Additions which may be credited
to the Participant's Account under this Plan for any Limitation Year will be
limited in accordance with Sections B.3.2 through B.3.4 as though the other plan
were a Master or Prototype Plan unless the Company provides other limitations in
Section I.A of the Addendum to the Adoption Agreement.
B.3.6 This Section B.3.6 applies in addition to the limitations of Section
B.2.1 if a Participant has participated in any defined benefit plan maintained
at any time (whether or not terminated) by the Company or any other
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Controlled Group Member. The sum of the Participant's Defined Benefit Fraction
and the Participant's Defined Contribution Fraction may not exceed 1.0. If
necessary, the Annual Addition which may be credited under this Plan for any
Limitation Year will be reduced in accordance with Section I.B of the Addendum
to the Adoption Agreement.
B.3.7 If this Plan is a restatement of a plan which satisfied Code Section
415 for all Limitation Years beginning before January 1, 1987, then, in
accordance with regulations promulgated by the Secretary of the Treasury, an
amount (not exceeding the numerator of the Defined Contribution Plan Fraction)
is subtracted from that numerator so that the sum of the Defined Benefit Plan
Fraction and the Defined Contribution Plan Fraction under Code Section 415(e)(1)
does not exceed 1.0 for the year. The adjustment described in the preceding
sentence is determined as if the Tax Reform Act of 1986 changes to the
limitation on contributions and benefits were in effect for the last year
beginning before January 1, 1987.
B.3.8 The amount of Employer contributions which may not be allocated to the
Participant 401(k) Account of a particular Participant because of the
limitations of this Section B.2 will be considered to have been made by mistake
of fact and will be returned to the Employer.
B.3.9 The limitations of this Appendix B are intended to comply with Code
Section 415 so that the maximum contributions and benefits provided by the
Company and Controlled Group Members will exactly equal the maximum amounts
allowed under Code Section 415. Any discrepancy between this Section and Code
Section 415 will be resolved so as to give full effect to Code Section 415.
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APPENDIX C
Top-Heavy Provisions
C.1 Definitions
---------------
These terms have the following meanings in this Appendix:
Aggregated Plans: (a) All plans of the Company or an Affiliate which must be
aggregated with the Plan, and (b) all plans of the Company or an Affiliate which
may be aggregated with the Plan and which the Administrative Committee elects to
aggregate with the Plan, in determining whether the Plan is top-heavy. A plan
must be aggregated with the Plan if the plan includes as a participant a Key
Employee or if the plan enables any plan of the Company or Affiliate in which a
Key Employee participates to qualify under Code Section 401(a)(4) or Section
410. A plan of the Company or an Affiliate may be aggregated with the Plan if
the plan satisfies the requirements of Code Sections 401(a)(4) and 410, when
considered together with this Plan and all plans which must be aggregated with
this Plan. No plan may be aggregated with this Plan unless it is a qualified
plan under Code Section 401. The top-heavy status of Aggregated Plans is
determined by aggregating the plans' respective top-heavy determinations that
are made as of the Determination Dates that fall within the same calendar year.
Determination Date: The date as of which it is determined whether a plan is
top-heavy or super top-heavy for the Plan Year immediately after the
Determination Date. The Determination Date for any Plan Year is the last day of
the preceding Plan Year, or for the first Plan Year, the last day of that year.
Group Participant: Anyone who is or was a participant in any Aggregated Plan as
of the Determination Date or any of the 4 immediately preceding Determination
Dates. Any Beneficiary of a Group Participant who has received, or is expected
to receive, a benefit from an Aggregated Plan is considered a Group Participant
solely for determining whether the Plan is top-heavy or super top-heavy.
Key Employee: Any Employee or former Employee, or their Beneficiaries, of the
Company or an Affiliate who, as of a Determination Date, or as of any of the 4
immediately preceding Determination Dates, was:
(a) an officer of the Company earning in excess of 50% of the amount in effect
under Code Section 415(b)(l)(A); or
(b) a 5-percent owner of the Company; or
(c) a 1-percent owner of the Company whose total annual compensation from the
Company and the Affiliates exceeds $150,000; or
(d) an Employee whose compensation equals or exceeds $30,000 (or such higher
amount as may be defined under Code Section 415(c)(l)(A)), and whose
ownership interest (determined in accordance with Code Section 51) in the
Company and the Affiliates is among the 10 largest.
Under this Appendix, "compensation" means compensation as defined in Code
Section 415(c)(3), but including Employer contributions made pursuant to a
salary reduction agreement which are not includible in the individual's gross
income under Code Section 125, 402(a)(8), 402(b), or 403(b).
The determination of who is a Key Employee is made in accordance with Code
Section 416(i)(l).
Non-Key Employee: Any Employee who is not a Key Employee including an Employee
who is a former Key Employee.
Top-Heavy Ratio:
(a) If the Employer maintains one or more defined contribution plans (including
any simplified employee pension plan) and the Employer has not maintained
any defined benefit plan which during the 5-year period ending on the
Determination Date(s) has or has had accrued benefits, the Top-Heavy Ratio
for Aggregated Plans 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 Code Section 416
and the regulations thereunder. Both the numerator and denominator of the
Top-Heavy Ratio are increased to reflect any contribution not actually made
as of the Determination Date, but which is required to be taken into
account on that date under Code Section 416 and the regulations thereunder.
(b) If the Employer maintains one or more defined contribution plans (including
any simplified employee pension plan) and the Employer maintains or has
maintained one or more defined plans which during the 5-year period ending
on the Determination Date(s) has or has had any accrued benefits, the Top-
Heavy
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Ratio for the Aggregated Plans is a fraction, the numerator of which is the
sum of Account Balances under the aggregated defined contribution plan or
plans for all Key Employees, determined in accordance with (a) above, and
the present value of accrued benefits under the aggregated defined benefit
plan or plans for all Key Employees as of the Determination Date(s), and
the denominator of which is the sum of the Account Balances under the
aggregated defined contribution plan or plans for all Participants,
determined in accordance with (a) above, and the present value of accrued
benefits under the defined benefit plan or plans for all Participants as of
the determination date(s), all determined in accordance with Code Section
416 and the regulations thereunder. The accrued benefits under a defined
benefit plan in both the numerator and denominator of the Top-Heavy Ratio
are increased for any distribution of an accrued benefit made in the 5-year
period ending on the Determination Date.
(c) For purposes of (a) and (b) above the value of Account Balances and the
present value of accrued benefits will be determined as of the most recent
valuation date that falls within or ends with the 12-month period ending on
the determination date, except as provided in Code Section 416 and the
regulations thereunder for the first and second plan years of a defined
benefit plan. The account balances and accrued benefits of a Participant
(1) who is not a Key Employee but who was a Key Employee in a prior year,
or (2) who has not been credited with at least one hour of service with
any Employer maintaining the plan at any time during the 5-year period
ending on the determination date will be disregarded. The calculation of
the Top-Heavy Ratio, and the extent to which distributions, rollovers, and
transfers are taken into account will be made in accordance with 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 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 Code Section
411(b)(1)(C).
C.2 Top-Heavy Plan
------------------
C.2.1 The rules in this Appendix apply to a Plan for the first Plan Year
beginning after the Determination Date as of which the Plan is top-heavy or
super top-heavy. Except where expressly indicated otherwise, those rules
continue to apply until, as of a later Determination Date, the Plan is no longer
top-heavy or super top-heavy. However, if the Plan changes from being super
top-heavy to being top-heavy, the rules for a top-heavy plan will apply and if
the Plan changes from being top-heavy to being super top-heavy, the rules for a
super top-heavy plan will apply.
C.2.2 For any Plan Year, the Plan is "top-heavy" if the Top-Heavy Ratio
exceeds 60% determined as of the Determination Date immediately before that Plan
Year.
C.2.3 For any Plan Year, the Plan is "super top-heavy" if the Top-Heavy Ratio
exceeds 90% determined as of the Determination Date immediately before that
Plan-Year.
C.2.4 The Value of Accumulated Benefits for Key Employees under all
Aggregated Plans and the Value of Accumulated Benefits for all Group
Participants under all Aggregated Plans are increased to reflect any
contributions not actually made as of the Determination Date, but which must be
taken into account on that date under Code Section 416.
C.3 Minimum Benefits or Contributions
-------------------------------------
C.3.1 For any Plan Year in which the Plan is top-heavy, the minimum rate of
contributions and forfeitures allocated to the account of any Participant
employed by the Company on the last day of the Plan Year is determined without
regard to any Social Security contribution and regardless of whether the
Participant has completed 1,000 Hours of Service (or any equivalent provided in
the Plan) or whether the Participant has compensation less than a stated amount.
The minimum contribution is equal to the lesser of:
(a) the highest rate of employer contributions and forfeitures (determined as a
percentage of Compensation) allocated to the account of any Key Employee;
and
(b) 3% (4% if the Plan is super top-heavy) of Compensation.
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C.3.2 If a Participant also participates in another defined contribution plan
of the Company or an Affiliate, the minimum allocation described above will be
provided under the other plan or this Plan as elected in Section VI.A of the
Adoption Agreement. If the Participant also participates in one or more defined
benefit plans of the Company or an Affiliate, the minimum required benefits or
allocations under Code Section 416 will be provided under either this Plan or
the defined benefit plan as elected in Section VI.B of the Adoption Agreement.
C.3.3 Neither Elective Deferrals nor Matching Contributions made on behalf of
Non-Key Employees may be used to satisfy the minimum contribution requirement of
this Section C.3.
C.4 Adjustment to Maximum Benefits
----------------------------------
For any Plan Year in which the Plan is top-heavy, the maximum benefit which
may be provided under Appendix B is determined by substituting "1.00" for "1.25"
wherever it appears in that Appendix. However, if the Plan is not super top-
heavy for that Plan Year, then the preceding sentence does not apply if "4%" is
substituted for 3% in Section C.3.1(b).
C.5 Discontinuance of Appendix
------------------------------
If any provision of this Appendix is no longer required to qualify the Plan
under the Code, then that provision will become void without the necessity of
further Plan amendment.
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APPENDIX D
Distribution Requirements
D.1 Definitions
---------------
These terms have the following meanings in this Appendix:
Applicable Life Expectancy:
(a) The life expectancy (or joint and last survivor expectancy) calculated
using the attained age of the Participant as of the Participant's birthday
in the applicable calendar year reduced by one for each calendar year which
has elapsed since the date life expectancy was first calculated.
(b) Life expectancy and joint and last survivor expectancy are computed by use
of the expected return multiples in Table V and VI of section 1.72-9 of the
income tax regulations.
Distribution Calendar Year: A calendar year for which a minimum distribution is
required. The first Distribution Calendar Year is the calendar year immediately
preceding the calendar year which contains the Participant's Required Beginning
Date.
Participant's Benefit:
(a) The Account Balances as of the last Valuation Date in the calendar year
immediately preceding the Distribution Calendar Year ("Valuation Calendar
Year") increased by the amount of any contributions 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.
(b) For purposes of paragraph (a) above, 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 is treated as if it had been made in the immediately preceding
Distribution Calendar Year.
Required Beginning Date: The first day of April of the calendar year following
the calendar year in which the Participant attains age 70 1/2.
D.2 General Rules
-----------------
D.2.1 The requirements of this Appendix apply to any distribution of the
Participant's interest and take precedence over any inconsistent provisions of
this Plan.
D.2.2 All distributions required under this Plan are determined and made in
accordance with the proposed regulations under Code Section 401(a)(9), including
the minimum distribution incidental benefit requirement of Section 1.401(a)(9)-2
of the proposed regulations.
D.2.3 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 lesser of (a)
the Applicable Life Expectancy or (b) if the Participant's spouse is not the
designated beneficiary, the applicable divisor determined from the table set
forth in Q&A 4 of proposed Treasury Regulation Section 1.401(a)(9)-1.
D.2.4 The minimum distribution required for the Participant's first
Distribution Calendar Year must be made on or before the Participant's Required
Beginning Date. The minimum distribution for other calendar years, including
the minimum distribution for the Distribution Calendar Year in which the
Participant's Required Beginning Date occurs, must be made on or before December
31 of that Distribution Calendar Year.
D.2.5 If an amount is transferred or rolled over from another plan to this
Plan the rules in Q&A J-2 and Q&A J-3 of proposed Treasury Regulation Section
1.401(a)(9)-1 apply.
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