EXHIBIT 10.11
INGLES MARKETS, INCORPORATED
INVESTMENT/PROFIT SHARING PLAN
THIS INDENTURE is made on the 25th day of September, 2002, by INGLES
MARKETS, INCORPORATED (hereinafter called the "Primary Sponsor") and MILKCO,
INC., an Affiliate of the Primary Sponsor, corporations duly organized and
existing under the laws of the State of North Carolina.
INTRODUCTION
The Primary Sponsor established the Ingles Markets, Incorporated
Investment/Profit Sharing Plan (the "Plan") by indenture dated September 25,
1972, and the Plan was last restated in its entirety by indenture dated February
2, 1994.
The Primary Sponsor now wishes to amend and restate the Plan primarily
to comply with and make changes permitted by the provisions of the Uniformed
Service Employees Employment and Reemployment Rights Act of 1994, the Small
Business Job Protection Act of 1996, the Taxpayer Relief Act of 1997, and the
Community Renewal Tax Relief Act of 2000, to amend the Plan to the extent
currently possible to comply with the provisions of the Economic Growth and Tax
Relief Reconciliation Act of 2001, and to incorporate into the Plan the
provisions relating to the merger into the Plan of the Ingles Distribution
Division Savings and Retirement Plan (the "Distribution Division Plan") that was
effective as of September 1, 2000.
The Plan is intended to be a profit sharing plan within the meaning of
Treasury Regulations Section 1.401-1(b)(1)(ii) and also contains a cash or
deferred arrangement as described in Section 401(k) of the Internal Revenue Code
of 1986.
The provisions of the Plan, as amended and restated herein, shall apply
to Plan Years beginning after September 27, 1997, except to the extent the
provisions are required to apply at an earlier date to comply with applicable
law.
NOW, THEREFORE, the Primary Sponsor does hereby amend and restate the
Plan in its entirety, generally effective as of September 28, 1997, except as
otherwise provided herein, to read as follows:
INGLES MARKETS, INCORPORATED
INVESTMENT/PROFIT SHARING PLAN
PAGE
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ARTICLE 1 DEFINITIONS....................................................................1
ARTICLE 2 ELIGIBILITY...................................................................13
ARTICLE 3 CONTRIBUTIONS.................................................................13
ARTICLE 4 INDIVIDUAL FUNDS AND INVESTMENT OF TRUST ASSETS...............................17
ARTICLE 5 PLAN LOANS....................................................................19
ARTICLE 6 WITHDRAWALS DURING EMPLOYMENT.................................................24
ARTICLE 7 PAYMENT OF BENEFITS ON TERMINATION OF EMPLOYMENT..............................25
ARTICLE 8 PAYMENT OF BENEFITS ON RETIREMENT OR DISABILITY...............................28
ARTICLE 9 DEATH BENEFITS................................................................28
ARTICLE 10 GENERAL RULES ON DISTRIBUTIONS................................................28
ARTICLE 11 ADMINISTRATION OF THE PLAN....................................................35
ARTICLE 12 CLAIM REVIEW PROCEDURE........................................................37
ARTICLE 13 ANTI-ALIENATION, INCOMPETENT DISTRIBUTEE & UNCLAIMED PAYMENTS.................40
ARTICLE 14 PROHIBITION AGAINST DIVERSION.................................................41
ARTICLE 15 LIMITATION OF RIGHTS..........................................................41
ARTICLE 16 AMENDMENT TO OR TERMINATION OF THE PLAN AND THE TRUST.........................41
ARTICLE 17 ADOPTION OF PLAN BY AFFILIATES................................................43
ARTICLE 18 QUALIFICATION AND RETURN OF CONTRIBUTIONS.....................................43
ARTICLE 19 INCORPORATION OF SPECIAL LIMITATIONS..........................................44
APPENDIX A LIMITATION ON ALLOCATIONS....................................................1
APPENDIX B TOP-HEAVY PROVISIONS.........................................................1
APPENDIX C SPECIAL NONDISCRIMINATION RULES..............................................1
ARTICLE 1
DEFINITIONS
Wherever used herein, the masculine pronoun shall be deemed to include
the feminine, and the singular to include the plural, unless the context clearly
indicates otherwise and the following words and phrases shall, when used herein,
have the meanings set forth below:
1.1 "Account" means a Participant's aggregate balance in the
following accounts, as adjusted pursuant to the Plan as of any given date:
(a) "Employee 401(k) Contribution Account," which shall
reflect a Participant's interest in contributions made by a Plan
Sponsor under Section 3.1.
(b) "Employer Match Account," which shall reflect a
Participant's interest in Matching Contributions made by a Plan Sponsor
under Section 3.2.
(c) "Employer Profit Sharing Account," which shall
reflect a Participant's interest in Profit Sharing Contributions made
by a Plan Sponsor under Section 3.3 and forfeitures of Profit Sharing
Contributions allocated under Section 3.5.
(d) "Rollover Account," which shall reflect a
Participant's interest in Rollover Amounts contributed to the Plan by
the Participant.
(e) "qmac/qnec Account," which shall reflect a
Participant's interest in Qualified Matching Contributions and/or
Qualified Nonelective Contributions made by a Plan Sponsor pursuant to
Appendix C.
(f) "Prior Plan Account," which shall reflect a
Participant's interest in amounts transferred into the Plan from the
Distribution Division Plan. The "Prior Plan Account" shall consist of
the following sub-accounts: the "Prior Plan Employee Contribution
Subaccount," the "Prior Rollover Subaccount," the "Prior Plan Company
Match Subaccount," the "Prior Plan Profit Sharing Subaccount," and the
"Prior Plan QMAC/QNEC Subaccount."
In addition, the Plan Administrator shall allocate the interest of a Participant
in any amounts transferred to the Plan in a trust-to-trust transfer (other than
Rollover Amounts) or pursuant to the merger of another tax-qualified retirement
plan with the Plan among the above accounts as the Plan Administrator determines
best reflects the interest of the Participant.
1.2 "Affiliate" means:
(a) any corporation which is a member of the same
controlled group of corporations (within the meaning of Code Section
414(b)) as is a Plan Sponsor,
(b) any other trade or business (whether or not
incorporated) under common control (within the meaning of Code Section
414(c)) with a Plan Sponsor,
(c) any other corporation, partnership or other
organization which is a member of an affiliated service group (within
the meaning of Code Section 414(m)) with a Plan Sponsor, and
(d) any other entity required to be aggregated with a
Plan Sponsor pursuant to regulations under Code Section 414(o).
1.3 "Alternate Payee" means any spouse, former spouse, child or
other dependent of a Participant who is recognized by a domestic relations order
as having a right to receive all, or a portion of, the benefits payable under
the Plan with respect to such Participant.
1.4 "Annual Compensation Limit" means $150,000, which amount shall
be adjusted in subsequent Plan Years based on changes in the cost of living as
announced by the Secretary of the Treasury. For the short Plan Year beginning
September 29, 2002 and ending on December 31, 2002, the "Annual Compensation
Limit" shall be an amount equal to $50,556 ($200,000 multiplied by a fraction,
the numerator of which is the number of months in such Plan Year (3.0333) and
the denominator of which is 12). For the Plan Year beginning on January 1, 2003,
the "Annual Compensation Limit" means $200,000, which amount may be adjusted for
each subsequent Plan Year based on changes in the cost of living as announced by
the Secretary of Treasury.
1.5 "Beneficiary"
(a) A Participant's Beneficiary is the person or trust
that a Participant designated most recently in writing to the Plan
Administrator on such form and in such manner as is reasonably required
by the Plan Administrator. Except as outlined in Subsection (c) below,
a Participant may change his Beneficiary at any time by providing a new
written election to the Plan Administrator on such form and in such
manner as is reasonably required by the Plan Administrator.
(b) If the Participant has failed to make a designation,
no person designated is alive, no trust has been established, or no
Beneficiary or successor Beneficiary has been designated who is alive,
the term "Beneficiary" means:
(1) the Participant's spouse; or
(2) if no spouse is alive, the deceased
Participant's estate.
(c) Nonspouse Beneficiaries
(1) Notwithstanding the foregoing, the spouse of
a married Participant shall be his Beneficiary unless that
spouse has consented in writing to the designation by the
Participant of some other person or trust and the spouse's
consent acknowledges the effect of the designation and is
witnessed by a notary public or a Plan representative.
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(2) A Participant may change his designation of
a nonspouse beneficiary at any time. However, a Participant
may not change his designation without further consent of his
spouse unless the spouse's consent permits designation of
another person or trust without further spousal consent and
acknowledges that the spouse has the right to limit consent to
a specific beneficiary and that the spouse voluntarily
relinquishes this right.
(3) The spouse's consent shall not be required
if the Participant establishes to the satisfaction of the Plan
Administrator that
(A) the spouse cannot be located,
(B) the Participant has a court order
indicating that he is legally separated or has been
abandoned (within the meaning of local law) unless a
"qualified domestic relations order" (as defined in
Code Section 414(p)) provides otherwise, or
(C) there are other circumstances as
the Secretary of the Treasury prescribes.
If the spouse is legally incompetent to give consent, consent
by the spouse's legal guardian shall be deemed to be consent
by the spouse.
(d) If, subsequent to the death of a Participant, the
Participant's Beneficiary dies while entitled to receive benefits under
the Plan, the successor Beneficiary, if any, or the Beneficiary listed
under Subsection (b)(1) or, if no spouse is alive, Subsection (b)(2)
shall be the Beneficiary.
1.6 "Board of Directors" means the Board of Directors of the
Primary Sponsor.
1.7 "Break in Service" means the failure of an Employee, in
connection with a Termination of Employment other than by reason of death,
Disability, or reaching a Retirement Date, to complete more than 500 Hours of
Service in any Plan Year. For the short Plan Year beginning September 29, 2002
and ending December 31, 2002, a Break in Service means the failure of an
Employee, in connection with a Termination of Employment other than by reason of
death, Disability or reaching a Retirement Date, to complete more than 500 Hours
of Service in the fifty-two week period beginning on September 29, 2002, and
ending on September 27, 2003.
1.8 "Catch-Up Contribution" means a contribution on behalf of a
Participant pursuant to Section 3.1(c).
1.9 "Code" means the Internal Revenue Code of 1986, as amended.
1.10 "Company Stock" means the class A and class B common stock of
the Primary Sponsor.
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1.11 "Company Stock Fund" means the Ingles Class A Fund and the
Ingles Class B Fund.
1.12 "Compensation" means W-2 Compensation, to the extent not in
excess of the Annual Compensation Limit for all purposes under the Plan except
for purposes of determining who are Highly Compensated Employees.
Notwithstanding the above, Compensation shall be determined as follows:
(a) for purposes of determining, with respect to each
Plan Sponsor, the amount of contributions and allocations made by or on
behalf of an Employee under Section 3 and for purposes of applying the
provisions of Appendix C hereto for such Plan Years as the Secretary of
the Treasury may allow, Compensation shall only include amounts
received for the portion of the Plan Year during which the Employee was
a Participant;
(b) for purposes of determining, with respect to each
Plan Sponsor, for purposes of Appendix B hereto, Compensation shall
include amounts received by the Employee for the entire Plan Year;
(c) for purposes of determining, with respect to each
Plan Sponsor, the amount of contributions and allocations made by or on
behalf of an Employee under Article 3, Compensation shall not include
amounts paid by any Affiliate that is not a Plan Sponsor or amounts
realized from the exercise of non-qualified stock options;
(d) for all purposes under the Plan, except as provided
in Subsection (e) of this Section, Compensation shall include any
amount which would have been paid during a Plan Year, but was
contributed by a Plan Sponsor on behalf of an Employee pursuant to a
salary reduction agreement which is not includable in the gross income
of the Employee under Code Section 125 [cafeteria plans], 402(g)(3)
[salary deferrals to 401(k), 403(b), and simple XXX plans] or 457
[certain plans of state and local governments and tax-exempt
organizations], and effective September 30, 2001, Code Section
132(f)(4) [pre-tax parking plans]; and
(e) effective until September 26, 1998, for purposes of
applying the annual addition limits in Appendix A, Compensation shall
not include the amounts described in Subsection (d).
1.13 "Deferral Amount" means a contribution of a Plan Sponsor on
behalf of a Participant pursuant to Section 3.1(a).
1.14 "Direct Rollover" means a payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.
1.15 "Disability" means a disability of a Participant within the
meaning of Code Section 72(m)(7), to the extent that the Participant is entitled
to disability retirement benefits under the federal Social Security Act as
determined by the Social Security Administration.
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1.16 "Distributee" means an Employee or former Employee. In
addition, the Employee's or former Employee's surviving spouse and the
Employee's or former Employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order (as defined in Code Section
414(p)), are Distributees with regard to the interest of the spouse or former
spouse.
1.17 "Early Retirement Date" means the date on which the
Participant terminates employment on or after the later of (a) reaching age 60;
or (b) completing ten (10) years of Vesting Service with the Plan Sponsor.
1.18 "Elective Deferrals" means, with respect to any taxable year
of the Participant, the sum of:
(a) any Deferral Amounts;
(b) any contributions made by or on behalf of a
Participant under any other qualified cash or deferred arrangement as
defined in Code Section 401(k), whether or not maintained by a Plan
Sponsor, to the extent such contributions are not or would not, but for
Code Section 402(g)(1) be included in the Participant's gross income
for the taxable year; and
(c) any other contributions made by or on behalf of a
Participant pursuant to Code Section 402(g)(3).
1.19 "Eligibility Service" means:
(a) Effective for Plan Years beginning before September
29, 2002, a twelve-consecutive-month period during which the Employee
completes no less than 1,000 Hours of Service beginning on the date on
which the Employee first performs an Hour of Service upon his
employment or reemployment with a Plan Sponsor or, in the event the
Employee fails to complete 1,000 Hours of Service in that
twelve-consecutive-month period, any Plan Year thereafter during which
the Employee completes no less than 1,000 Hours of Service, including
the Plan Year which includes the first anniversary of the date the
Employee first performed an Hour of Service upon his employment or
reemployment.
(b) Effective for Plan Years beginning on September 29,
2002 and thereafter, means a twelve-consecutive-month period during
which the Employee completes no less than 1,000 Hours of Service
beginning on the date on which the Employee first performs an Hour of
Service upon his employment or reemployment with a Plan Sponsor or, in
the event the Employee fails to complete 1,000 Hours of Service in that
twelve-consecutive-month period, any twelve-consecutive-month period
thereafter that begins on the first day of a month during which the
Employee completes no less than 1,000 Hours of Service, including all
such periods that occur during the Employee's first year of employment
or reemployment.
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1.20 "Eligible Employee" means any Employee of a Plan Sponsor other
than an Employee who is:
(a) covered by a collective bargaining agreement between
a union and a Plan Sponsor, provided that retirement benefits were the
subject of good faith bargaining, unless the collective bargaining
agreement provides for participation in the Plan;
(b) a Leased Employee with respect to a Plan Sponsor;
(c) deemed to be an Employee of a Plan Sponsor pursuant
to regulations under Code Section 414(o);
(d) a nonresident alien (within the meaning of Code
Section 7701(b)(1)(B)) who received no earned income (within the
meaning of Code Section 911(d)(2)) from a Plan Sponsor which
constitutes income from sources within the United States (within the
meaning of Code Section 861(a)(3)); or
(e) any person who is initially classified by a Plan
Sponsor as an independent contractor for federal income tax purposes
regardless of any subsequent determination that any such person should
have been characterized as a common law employee of the Plan Sponsor
for the period in question.
1.21 "Eligible Retirement Plan" means an individual retirement
account described in Code Section 408(a), an individual retirement annuity
described in Code Section 408(b), an annuity plan described in Code Section
403(a) or a qualified trust described in Code Section 401(a) that accepts the
Distributee's Eligible Rollover Distribution. For Plan Years beginning on or
after September 29, 2002, Eligible Retirement Plan shall also include an annuity
contract described in Code Section 403(b) and an eligible plan under Code
Section 457(b) which is maintained by a state or political subdivision of a
state, or any agency or instrumentality of a state or political subdivision and
which agrees to separately account for amounts transferred into such Plan from
this Plan.
1.22 "Eligible Rollover Distribution" means any distribution of all
or any portion of the Distributee's Account, except that an Eligible Rollover
Distribution does not include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently than annually) made
for the life (or life expectancy) of the Distributee or the joint lives (or
joint life expectancies) of the Distributee and the Distributee's designated
Beneficiary, or for a specified period of ten years or more; any distribution to
the extent such distribution is required under Code Section 401(a)(9); the
portion of any distribution that is not includable in gross income (determined
without regard to the exclusion for net unrealized appreciation with respect to
employer securities); and, effective for distributions made after December 31,
2000, any hardship distributions of Deferral Amounts or Catch-Up Contributions
pursuant to Section 7.1.
1.23 "Employee" means any person who is:
(a) a common law employee of a Plan Sponsor or an
Affiliate;
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(b) a Leased Employee with respect to a Plan Sponsor; or
(c) deemed to be an employee of a Plan Sponsor pursuant
to regulations under Code Section 414(o).
1.24 "Entry Date" means:
(a) prior to September 29, 2002, the first (1st) and the
one hundred eighty-second (182nd) day of the Plan Year; and
(b) beginning September 29, 2002, the first day of the
third month following a Participant's satisfaction of the requirements
of Article 2 hereof.
1.25 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
1.26 "Fiduciary" means each Named Fiduciary and any other person
who exercises or has any discretionary authority or control regarding management
or administration of the Plan, any other person who renders investment advice
for a fee or has any authority or responsibility to do so with respect to any
assets of the Plan, or any other person who exercises or has any authority or
control respecting management or disposition of assets of the Plan.
1.27 "Fund" means the amount at any given time of cash and other
property held by the Trustee pursuant to the Plan.
1.28 "Highly Compensated Employee" means, with respect to a Plan
Year, each Employee who:
(a) was at any time during the Plan Year or the
immediately preceding Plan Year an owner of more than five percent (5%)
of the outstanding stock of a Plan Sponsor or Affiliate or more than
five percent (5%) of the total combined voting power of all stock of a
Plan Sponsor or Affiliate; or
(b) received Compensation in excess of $80,000 during the
immediately preceding Plan Year ($85,000 during the preceding Plan Year
for determining Highly Compensated Employees for the Plan Years
beginning after September 30, 2000), which amount shall be adjusted for
changes in the cost of living as provided in regulations issued by the
Secretary of the Treasury and was in the top-paid group of employees
for such preceding year.
(c) is a former Employee who met the requirements of
Subsection (a) or (b) at the time the former Employee separated from
service with the Plan Sponsor or an Affiliate or at any time after the
former Employee reached age 55.
For purposes of determining who is a Highly Compensated
Employee for the Plan Year beginning on January 1, 2003, the calendar
year beginning on January 1, 2002 and ending December 31, 2002 shall be
considered to be the "preceding Plan Year."
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1.29 "Hour of Service" means:
(a) Each hour for which an Employee is paid, or entitled
to payment, for the performance of duties for a Plan Sponsor or any
Affiliate during the applicable computation period, and such hours
shall be credited to the computation period in which the duties are
performed;
(b) Each hour for which an Employee is paid, or entitled
to payment, by a Plan Sponsor or any 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, bereavement, jury
duty, military duty or leave of absence;
(c) Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by a Plan Sponsor
or any Affiliate, and such hours shall be credited to the computation
period or periods to which the award or agreement for back pay pertains
rather than to the computation period in which the award, agreement or
payment is made; provided, that the crediting of Hours of Service for
back pay awarded or agreed to with respect to periods described in
Subsection (b) of this Section shall be subject to the limitations set
forth in Subsection (f);
(d) Solely for purposes of determining whether a Break in
Service has occurred, each hour during any period that the Employee is
absent from work (1) by reason of the pregnancy of the Employee, (2) by
reason of the birth of a child of the Employee, (3) by reason of the
placement of a child with the Employee in connection with the adoption
of the child by the Employee, or (4) for purposes of caring for such
child for a period immediately following its birth or placement shall
be credited (A) only in the computation period in which the absence
from work begins, if the Employee would be prevented from incurring a
Break in Service in that year solely because of that credit, or (B), in
any other case, in the next following computation period;
(e) Without duplication of the Hours of Service counted
pursuant to Subsection (d) hereof and solely for such purposes as
required pursuant to the Family and Medical Leave Act of 1993 and the
regulations thereunder (the "FMLA"), each hour (as determined pursuant
to the FMLA) for which an Employee is granted leave under the FMLA (1)
for the birth of a child, (2) for placement with the Employee of a
child for adoption or xxxxxx care, (3) to care for the Employee's
spouse, child or parent with a serious health condition, or (4) for a
serious health condition that makes the Employee unable to perform the
functions of the Employee's job;
(f) The Plan Administrator shall credit Hours of Service
in accordance with the provisions of Section 2530.200b-2(b) and (c) of
the U.S. Department of Labor Regulations or such other federal
regulations as may from time to time be applicable and determine Hours
of Service from the employment records of a Plan Sponsor or in any
other manner consistent with regulations promulgated by the Secretary
of Labor, and shall construe any ambiguities in favor of crediting
Employees with Hours of Service.
8
Notwithstanding any other provision of this Section, in no event shall
an Employee be credited with more than 501 Hours of Service during any
single continuous period during which he performs no duties for the
Plan Sponsor or Affiliate; and
(g) In the event that a Plan Sponsor or an Affiliate acquires
substantially all of the assets of another corporation or entity or a
controlling interest of the stock of another corporation or merges with
another corporation or entity and is the surviving entity, or if an
Employee of a Plan Sponsor was previously employed by an entity that is
under common control or ownership with the Plan Sponsor, as determined
by the Board of Directors of the Plan Sponsor, then service of an
Employee who was employed by the prior corporation or entity shall be
counted in the manner provided, with the consent of the Primary
Sponsor, in resolutions adopted by the Plan Sponsor which authorizes
the counting of such service.
1.30 "Individual Fund" means individual subfunds of the Fund as may
be established by the Plan Administrator from time to time for the investment of
the Fund, other than the Company Stock Funds.
1.31 "Ingles Class A Fund" means the individual subfund of the Fund
which is invested primarily in the class A common stock of the Primary Sponsor.
1.32 "Ingles Class B Fund" means the individual subfund of the Fund
which is invested primarily in the class B common stock of the Primary Sponsor.
1.33 "Investment Committee" means a committee, which may be
established to direct the Trustee with respect to investments of the Fund.
1.34 "Investment Manager" means a Fiduciary, other than the
Trustee, the Plan Administrator, or a Plan Sponsor, who may be appointed by the
Primary Sponsor:
(a) who has the power to manage, acquire, or dispose of
any assets of the Fund or a portion thereof; and
(b) who
(1) is registered as an investment adviser under
the Investment Advisers Act of 1940;
(2) is a bank as defined in the Investment
Advisers Act of 1940; or
(3) is an insurance company qualified to perform
services described in Subsection (a) above under the laws of
more than one state; and
(c) who has acknowledged in writing that he is a
Fiduciary with respect to the Plan.
9
1.35 "Leased Employee" means an Employee (other than a common law
employee of the Plan Sponsor or an Affiliate) who, pursuant to an agreement
between the Plan Sponsor or an Affiliate and any other person, has performed
services for the Plan Sponsor or an Affiliate (or for the Plan Sponsor and
related persons determined in accordance with Code Section 414(n)(6)), on a
substantially full-time basis for a period of at least one year, and such
services are performed under the primary direction or control of the Plan
Sponsor or an Affiliate.
1.36 "Matching Contribution" means a contribution made by a Plan
Sponsor pursuant to Section 3.2.
1.37 "Named Fiduciary" means only the following:
(a) the Plan Administrator;
(b) the Trustee;
(c) the Investment Committee; and
(d) the Investment Manager.
1.38 "Normal Retirement Age" means age 65.
1.39 "Normal Retirement Date" means the date on which the
Participant terminates employment on or after reaching Normal Retirement Age.
1.40 "Participant" means any Employee or former Employee who has
become a participant in the Plan for so long as his vested Account has not been
fully distributed pursuant to the Plan.
1.41 "Plan Administrator" means the organization or person
designated to administer the Plan by the Primary Sponsor and, in lieu of any
such designation, means the Primary Sponsor.
1.42 "Plan Sponsor" means individually the Primary Sponsor and any
Affiliate or other entity which has adopted the Plan and Trust.
1.43 "Plan Quarter" means:
(a) prior to September 29, 2002, the approximate three
(3) month period beginning on the day after the last day of the
immediately prior Plan Quarter and ending on the last Saturday in
March, June, September and December; and
(b) the period beginning September 29, 2002 and ending
December 31, 2002; and
(c) effective January 1, 2003, each three (3) month
period ending March 31, June 30, September 30 and December 31 of each
year.
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1.44 "Plan Year" means:
(a) prior to September 29, 2002, the
fifty-two/fifty-three week period beginning on the day after the last
day of the immediately preceding Plan Year and ending on the last
Saturday in September of each year;
(b) the period beginning on September 29, 2002 and ending
on December 31, 2002; and
(c) the calendar year beginning January 1, 2003 and each
calendar year that begins thereafter.
1.45 "Profit Sharing Contribution" means a contribution made by a
Plan Sponsor pursuant to Section 3.3.
1.46 "Qualified Joint and Survivor Annuity" means an immediate
annuity for the life of the Participant with a survivor annuity for the life of
his spouse which is equal to fifty percent (50%) of the annuity payable during
the joint lives of the Participant and his spouse. A Qualified Joint and
Survivor Annuity for an unmarried Participant means an annuity for the life of
the Participant.
1.47 "Qualified Preretirement Survivor Annuity" means an immediate
annuity for the life of a Participant's spouse, the present value of which is
equal to fifty percent (50%) of the Participant's vested Account as of the
earlier of (a) the Participant's date of death, or (b) the Participant's
Termination of Employment.
1.48 "Retirement Date" means the Early Retirement Date or the
Normal Retirement Date.
1.49 "Rollover Amount" means any amount transferred to the Fund by
a Participant, which amount qualifies as an Eligible Rollover Distribution under
Code Section 402(c)(4), or for rollover treatment under Code Sections 403(a)(4),
403(b)(8), 408(d)(3)(A)(ii), or 457(e)(16) and any regulations issued
thereunder.
1.50 "Termination Completion Date" means the last day of the fifth
consecutive Break in Service computation period, determined under the Section
which defines Break in Service, in which a Participant completes a Break in
Service.
1.51 "Termination of Employment" means the termination of
employment of an Employee from all Plan Sponsors and Affiliates for any reason
other than death, Disability, or attainment of a Retirement Date. Any absence
from active employment of the Plan Sponsor and Affiliates by reason of an
approved leave of absence shall not be deemed for any purpose under the Plan to
be a Termination of Employment. Transfer of an Employee from one Plan Sponsor to
another Plan Sponsor or to an Affiliate shall not be deemed for any purpose
under the Plan to be a Termination of Employment. In addition, transfer of an
Employee to another employer (other than a Plan Sponsor or an Affiliate) in
connection with a corporate transaction involving a sale of assets, merger, or
sale of stock, shall not be deemed to be a Termination of Employment,
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for purposes of the timing of distributions under Section 7.1, if the employer
to which such Employee is transferred agrees with the Plan Sponsor to accept a
transfer of assets from the Plan to its tax-qualified plan in a trust-to-trust
transfer meeting the requirements of Code Section 414(l). If the employer to
which such Employee is transferred does not agree to accept a transfer of assets
from the Plan to its tax-qualified Plan, Section 7.6 is applicable in the event
that such Termination of Employment is not a distributable event under Code
Section 401(k)(10).
1.52 "Trust" means the trusts (collectively or individually)
established under agreements between the Primary Sponsor and the respective
Trustees to hold the Fund or any successor agreement. The Fund shall be held in
three (3) separate trusts, which shall be referred to as "Trust A," which shall
hold the Individual Funds; "Trust B," which shall hold the Ingles Class B Fund;
and "Trust C," which shall hold the Ingles Class A Fund.
1.53 "Trustee" means the trustee under each Trust established
pursuant to the Plan.
1.54 "Valuation Date" means each regular business day or any other
day which the Plan Administrator declares to be a Valuation Date, provided,
however, that the last business day of each Plan Year will always be a Valuation
Date and the selection of other Valuation Dates may not result in discrimination
prohibited by Code Section 401(a)(4).
1.55 "Vesting Service" means each Plan Year during which an
Employee has completed no less than 1,000 Hours of Service. Notwithstanding
anything contained herein to the contrary, Vesting Service shall not include:
(a) In the case of an Employee who completes five
consecutive Breaks in Service for purposes of determining the vested
portion of his Account derived from Plan Sponsor contributions which
accrued before his Termination Completion Date, all service in Plan
Years after his Termination Completion Date.
(b) In the case of an Employee who completes five
consecutive Breaks in Service and at that time does not have any vested
right in Plan Sponsor contributions, all service before those Breaks in
Service commenced.
For the short Plan Year beginning on September 29, 2002 and ending on December
31, 2002, a Participant will receive one year of Vesting Service if he completes
at least 1,000 Hours of Service for the fifty-two/fifty-three week period
beginning on September 29, 2002 and ending on September 27, 2003. In addition, a
Participant will receive one year of Vesting Service if he completes at least
1,000 Hours of Service for the Plan Year beginning January 1, 2003 and ending
December 31, 2003.
1.56 "W-2 Compensation" means wages within the meaning of Code
Section 3401(a) (for purposes of income tax withholding at the source) and all
other amounts paid to an Employee by a Plan Sponsor and Affiliates during a Plan
Year (but without regard to any rules that limit the remuneration included in
wages based on the nature or location of the employment or the services
performed, such as the exception for agricultural labor in Code Section
3401(a)(2)) for which the Plan Sponsor is required to furnish the employee a
written statement under Code Sections 6041(d); 6051(a)(3) and 6052.
12
ARTICLE 2
ELIGIBILITY
2.1 New Hires. Each Eligible Employee shall become a Participant
as of the Entry Date coinciding with or next following the date on which he has
both:
(a) completed his Eligibility Service, and
(b) attained age 18.
2.2 Existing Participants. Each individual who was a Participant
on September 27, 1997 shall continue to be a Participant as of September 28,
1997. Each individual who was a participant in the Distribution Division Plan on
August 31, 2000 shall be a Participant in the Plan as of September 1, 2000. Each
individual who is a Participant on the adoption date of this amended and
restated Plan as reflected in the first paragraph on page one of this Plan shall
continue to be a Participant as of such date.
2.3 Former Participants Rehired. Each former Participant who is
reemployed by a Plan Sponsor shall become a Participant as of the date of his
reemployment as an Eligible Employee.
2.4 Former Employees Rehired. Each former Employee who completes
his Eligibility Service but terminates employment with a Plan Sponsor before
becoming a Participant shall become a Participant as of the latest of the date
he:
(a) is reemployed;
(b) would have become a Participant if he had not
incurred a Termination of Employment; or
(c) becomes an Eligible Employee.
ARTICLE 3
CONTRIBUTIONS
3.1 401(k) Contributions
(a) Deferral Amounts.
(1) Each Participant who is an Eligible Employee
may elect to defer a portion of the Compensation otherwise
payable to him for a payroll period and to have such portion
contributed by the Plan Sponsor to the Fund. A Participant may
elect to defer any whole percent of his Compensation between
one percent (1%) and fifty percent (50%) for a payroll period.
The election must be made
13
before the Compensation is payable to the Participant. The
election must be made in such manner and subject to such rules
and limitations as the Plan Administrator may prescribe, and
shall specify the percentage of Compensation that the
Participant desires to defer and to have contributed to the
Fund. Notwithstanding the foregoing, the Plan Administrator
may restrict the amount which Highly Compensated Employees may
elect to defer under this Section.
(2) Each payroll period, the Plan Sponsor shall
deduct the portion of the Compensation that the Participant
elected to defer in Subparagraph (1) above from the
Participant's payroll for such period and will contribute such
amount to the Fund. Amounts contributed pursuant to this
Section 3.1 shall be allocated to the Employee 401(k)
Contribution Account of the Participant on whose behalf such
contributions were made as soon as reasonably practicable
following the date of withholding by the Plan Sponsor and
receipt by the Trustee.
(3) Once a Participant has made a deferral
election for a Plan Year, the Participant may revoke or modify
his election to increase or reduce the rate of future
deferrals, as provided in the administrative procedures
established by the Plan Administrator.
(b) Limitation on Elective Deferrals.
(1) In no event may the total Elective Deferrals
for a Participant exceed the Section 402(g) Limitation in any
one taxable year of the Participant, except to the extent
permitted under Subsection (c) of this Section 3.1.
(2) The "Section 402(g) Limitation" is the
amount designated in Code Section 402(g)(1), which is $11,000
for 2002, and which shall be adjusted for changes in the cost
of living as provided by the Secretary of the Treasury.
(3) If the amount of Elective Deferrals
contributed on behalf of a Participant to the Plan or to any
other plan exceeds the Section 402(g) Limitation in any one
taxable year then, not later than the March 1 following such
taxable year, the Participant may notify the Plan
Administrator that a portion of the Participant's Deferral
Amounts consists of excess Elective Deferrals. If such
notification is made, the Trustee shall distribute to the
Participant the amount of such excess Elective Deferrals, as
adjusted to reflect income, gain, or loss attributable to such
amount through the end of the Plan Year on or before the
following April 15th.
(4) The amount to be distributed under
subparagraph (1) above shall be reduced by any "Excess
Deferral Amounts," as defined in Appendix C hereto, previously
distributed or recharacterized with respect to the Participant
for the Plan Year beginning with or within that taxable year.
14
(5) The payment of the excess Elective
Deferrals, as adjusted and reduced, from the Plan shall be
made to the Participant without regard to any other provision
in the Plan.
(6) If a Participant's total Elective Deferrals
under the Plan and other plans of the Plan Sponsor and its
Affiliates exceed the Section 402(g) Limitation in any taxable
year, the Participant shall be deemed to have designated for
distribution under the Plan the lesser of (A) the amount of
such excess Elective Deferrals or (B) the amount of Elective
Deferrals under this Plan, as adjusted and reduced pursuant to
subparagraphs (1) and (2) above.
(c) Catch-Up Contributions.
(1) Effective as of January 1, 2003, a
Participant who has reached age fifty (50) prior to or during
a Plan Year shall be eligible to defer a portion of
Compensation otherwise payable to him for the Plan Year and to
have such portion contributed to the Fund on his behalf as
Catch-Up Contributions in accordance with, and subject to the
limitations of, Code Section 414(v). Such Catch-Up
Contributions shall not be taken into account for purposes of
implementing the Section 402(g) Limitation and the annual
addition limitations in Appendix A hereto. The Plan shall not
be treated as failing to satisfy the provisions of Appendix B
of the Plan, Appendix C of the Plan or the requirements of
Code Section 410(b), as applicable, by reason of the making of
such Catch-Up Contributions.
(2) Any election under this Subsection (c) must
be made before the Compensation that the Participant desires
to defer is payable and may only be made in such manner and
subject to such rules and limitations as the Plan
Administrator may prescribe and shall specify the amount of
Compensation that the Participant desires to defer and to have
contributed to the Fund.
(3) Once a Participant has made an election for
a Plan Year, the Participant may revoke or modify his election
to increase or reduce the rate of future deferrals under this
Subsection (c), in accordance with the administrative
procedures provided by the Plan Administrator.
3.2 Matching Contributions.
(a) For Plan Years beginning prior to September 29, 2002.
(1) The Plan Sponsor shall, in its discretion,
determine the amount of Matching Contributions to be
contributed to the Fund for a given Plan Quarter.
(2) The Matching Contribution for a Plan Quarter
shall be allocated to Participants' Accounts within a
reasonable time after the amount is deposited to the Plan by
the Plan Sponsor, in the same proportion that the Deferral
Amounts contributed on behalf of each eligible Participant
under Section 3.1 for the Plan
15
Quarter to which the Matching Contribution relates (not to
exceed five percent (5%) of the Participant's Compensation
payable for such Plan Quarter) bear to the total Deferral
Amounts contributed for all eligible Participants during the
Plan Quarter to which the Matching Contribution relates. Such
amount shall be allocated to each eligible Participant who is
employed by a Plan Sponsor on the last day of a Plan Quarter.
(b) For Plan Years beginning on or after September 29,
2002.
(1) The Plan Sponsor shall, in its discretion,
determine the amount of Matching Contributions to be
contributed to the Fund for each payroll period.
(2) The Matching Contributions for a payroll
period shall be allocated to each eligible Participant's
Employer Match Account within a reasonable time after such
amount is deposited to the Plan by the Plan Sponsor in the
same proportion that the total of all Deferral Amounts and
Catch-Up Contributions contributed on behalf of each eligible
Participant under Section 3.1 for the payroll period to which
such Matching Contribution relates (not to exceed five percent
(5%) of the Participant's Compensation payable during such
payroll period) bears to the Deferral Amounts and Catch-Up
Contributions contributed for all eligible Participants for
the payroll period to which the Matching Contribution relates.
3.3 Profit Sharing Contribution. The Plan Sponsor shall, in its
discretion, determine the amount of the Profit Sharing Contribution to be
contributed to the Fund for a given Plan Year. Such amount shall be allocated as
of the last day of the Plan Year to the Employer Profit Sharing Account of each
Participant who: (a) is an Eligible Employee during the Plan Year; (b) is
employed by a Plan Sponsor on the last day of the Plan Year; and (c) has
completed at least 1,000 Hours of Service with a Plan Sponsor during the Plan
Year. The Profit Sharing Contribution for such Plan Year shall be allocated to
each eligible Participant's Employer Profit Sharing Account in the same
proportion that each eligible Participant's Compensation for the Plan Year bears
to the Compensation of all eligible Participants for such Plan Year.
3.4 Rollover Contributions. Any Participant may, with the consent
of the Plan Administrator and subject to such rules and conditions as the Plan
Administrator may prescribe, transfer a Rollover Amount to the Fund; provided,
however, that the Plan Administrator shall not administer this provision in a
manner which is discriminatory in favor of Highly Compensated Employees.
3.5 Forfeitures.
(a) For Plan Years beginning on or after September 28,
1997 and ending prior to September 26, 1999. Forfeitures of Matching
Contributions and Profit Sharing Contributions shall be used first to
restore Participant's Accounts in accordance with Section 7.3 hereof.
Any remaining forfeitures shall be used to reduce Plan Sponsor
contributions made for the Plan Year in which the forfeitures arose or
for the following Plan Year and not to increase benefits.
16
(b) For Plan Years beginning on or after September 26,
1999 and ending prior to September 29, 2002. Forfeitures of Matching
Contributions and Profit Sharing Contributions shall first be used to
restore Participant's Accounts in accordance with Section 7.3 hereof.
Any remaining forfeitures of Matching Contributions shall be used to
reduce Plan Sponsor contributions made for the Plan Year in which the
forfeitures arose or for the following Plan Year and not to increase
benefits. Any remaining forfeitures of Profit Sharing Contributions
shall be reallocated among the Employer Profit Sharing Accounts of
Participants who are eligible to receive an allocation pursuant to
Section 3.3. Profit Sharing Contributions to be reallocated under this
Section 3.5 shall be allocated to each eligible Participant's Employer
Profit Sharing Account in the same proportion that each eligible
Participant's Compensation for the Plan Year bears to the Compensation
of all eligible Participants for such Plan Year.
(c) For Plan Years beginning on or after September 29,
2002. Forfeitures of Matching Contributions and Profit Sharing
Contributions shall be used first to restore Participant's Accounts in
accordance with Section 7.3 hereof and then, at the discretion of the
Plan Administrator, to pay Plan expenses. Any remaining forfeitures
will be used to reduce Plan Sponsor contributions made for the Plan
year in which the forfeitures arose or for the following Plan Year and
not to increase benefits.
3.6 Form of Contributions. Contributions may be made only in cash
or other property which is acceptable to the Trustee.
3.7 Military Service. Effective December 12, 1994, notwithstanding
any provision of the Plan to the contrary, contributions, benefits and service
credit with respect to qualified military service will be provided in accordance
with Section 414(u) of the Code.
3.8 Corrective Actions. Notwithstanding any provision of the Plan
to the contrary, the Plan Sponsor may make corrective distributions,
contributions, allocations, or other remedial action as required or permitted to
comply with any remedial or fiduciary correction program promulgated by the
Internal Revenue Service, U.S. Treasury Department, or U.S. Department of Labor.
ARTICLE 4
INDIVIDUAL FUNDS AND INVESTMENT OF TRUST ASSETS
4.1 Participant Direction of Investment of Contributions.
(a) Until such time as the Plan Administrator may direct
otherwise, each Participant and each Beneficiary of a deceased
Participant may direct the Plan Administrator to invest contributions
to his Account, other than Profit Sharing Account (except as provided
in Section 4.2), in one or more Individual Funds and, effective as of
April 1, 1999, the Ingles Class A Fund.
(b) All investment directions, or changes in investment
directions, of contributions shall be made in accordance with the
procedures established by the Plan
17
Administrator. New investment directions shall be effective as of the
date that such directions are processed by the Plan Administrator in
accordance with the procedures established for such purpose.
(c) An investment direction, once given, shall be deemed
to be a continuing direction until changed as otherwise provided
herein. If no direction is effective for the date on which a
contribution is to be made, all contributions which are to be made for
such date shall be invested in such Individual Funds as the Plan
Administrator, the Investment Manager, the Investment Committee, or the
Trustee, as applicable, may determine. To the extent permissible by
law, no Fiduciary shall be liable for any loss, which results from a
Participant's exercise or failure to exercise his investment election
with respect to that portion of the Fund which is held in Trust A and
Trust C.
(d) Notwithstanding the foregoing, the Plan Administrator
may limit the availability of investments in Trust C by Participants
who are executive officers of the Plan Sponsor.
4.2 Investment of Profit Sharing Contributions. Profit Sharing
Contributions made to a Participant's Employer Profit Sharing Account pursuant
to Section 3.3 shall be invested solely in the Ingles Class B Fund. Effective
until September 25, 1999, a Participant who is an Employee of a Plan Sponsor may
elect, according to the procedures established by the Plan Administrator, to
transfer up to ten percent (10%) of the balance in his Employer Profit Sharing
Account to one or more Individual Funds and, effective as of April 1, 1999, the
Ingles Class A Fund.
4.3 Participant Directions to Transfer Among Individual Funds.
Subject to the limitations in Section 4.2, a Participant may elect, according to
the procedures established by the Plan Administrator, to transfer the investment
of his Account among Individual Funds, and, effective April 1, 1999, the Ingles
Class A Fund. An election under this Section 4.3 shall be effective as of the
date that such election is processed by the Plan Administrator in accordance
with the procedures established for such purpose.
4.4 Application of Investment Directions. A Participant who makes
an election pursuant to Section 4.1 or 4.3 may apply the new investment
direction to his current Account, all future contributions (except as limited
under Sections 4.1 and 4.2), or both his current Account and all future
contributions.
4.5 Allocation of Net Income and Loss. As of each Valuation Date,
the Trustee of the Trust shall allocate the net income or net loss of each
Individual Fund or the Company Stock Fund to each Account in the proportion that
the value of the Account as of the Valuation Date bears to the value of all
Accounts invested in that Individual Fund or the Company Stock Fund as of the
Valuation Date.
4.6 Loan Fund. A Loan Fund shall be established by the Trustee on
behalf of each Participant for whom a loan is made pursuant to Article 5. The
Loan Fund shall be credited with the amount of any loan made by the Plan to the
Participant and shall be debited with all principal and interest repayments of
any such loans. Under rules established by the Plan Administrator, a
18
Participant's interest in the Individual Funds shall be debited by the amount
credited to the Participant's Loan Fund. All principal and interest repayments
debited to the Loan Fund shall be invested as contributions to the Participant's
Account pursuant to Section 4.1. Each Loan Fund shall be invested in a note or
notes made by the Participant evidencing the promised repayment of monies loaned
to the Participant from the Fund.
4.7 Employer Securities. The Trustee for Trust B and Trust C may
acquire and hold shares of Company Stock that are "qualifying employer
securities" (within the meaning of ERISA Section 407(d)(5)).
ARTICLE 5
PLAN LOANS
5.1 Eligible Individuals.
(a) Subject to the provisions of the Plan and the Trust,
each Participant who is an Employee shall have the right, subject to
prior approval by the Plan Administrator, to borrow from his Account as
provided in this Section.
(b) (1) Beginning September 28, 1997 and ending
December 31, 1999, a loan shall be withdrawn on a pro rata
basis from a borrower's Employee 401(k) Contribution Account.
(2) Beginning January 1, 2000 and ending
December 31, 2000, a loan shall be withdrawn on a pro rata
basis from a borrower's Employee 401(k) Contribution Account,
Rollover Account and Employer Match Account.
(3) Beginning January 1, 2001 and ending
September 28, 2002, a loan shall be withdrawn from the
borrower's Account in the following order:
(i) Prior Plan Employee Contribution
Subaccount,
(ii) Prior Rollover Subaccount,
(iii) Prior Plan Company Match
Subaccount,
(iv) Prior Plan Profit Sharing
Subaccount,
(v) Employee 401(k) Contribution
Account,
(vi) Rollover Account, and
(vii) Employer Match Account.
(4) Beginning September 29, 2002, a loan shall
be withdrawn on a pro rata basis from each portion of a
borrower's Account listed in Subsection (3).
19
5.2 Application. In order to apply for a loan, a borrower must
complete and submit to the Plan Administrator documents or information required
by the Plan Administrator for this purpose in whatever form or manner the Plan
Administrator may prescribe. Furthermore, the borrower must consent to have the
loan repaid through payroll deduction, and a borrower's failure or refusal to
provide such consent shall constitute grounds for the Plan Administrator's
denial of the application for a loan. A borrower must wait at least twelve (12)
months between loan applications.
5.3 Equivalent Basis. Loans shall be available to all eligible
borrowers on a reasonably equivalent basis which may take into account the
borrower's creditworthiness, ability to repay, and ability to provide adequate
security. Loans shall not be made available to Highly Compensated Employees,
officers or shareholders of a Plan Sponsor in an amount greater than the amount
made available to other borrowers. This provision shall be deemed to be
satisfied if all borrowers have the right to borrow the same percentage of their
interest in the Participant's vested Account, notwithstanding that the dollar
amount of such loans may differ as a result of differing values of Participants'
vested Accounts.
5.4 Interest Rate. Each loan shall bear a "reasonable rate of
interest" and provide that the loan be amortized in substantially level
payments, made no less frequently than quarterly, over a specified period of
time. A "reasonable rate of interest" shall be that rate that provides the Plan
with a return commensurate with the interest rates charged by persons in the
business of lending money for loans which would be made under similar
circumstances. Notwithstanding the foregoing, to the extent that any loan
interest rate is subject to the provisions of the Soldiers and Sailors Relief
Act of 1940, it shall not exceed six percent (6%) per annum.
5.5 Security. Each loan shall be adequately secured at the time
taken, with the security for the outstanding balance of all loans to the
borrower to consist of one-half (1/2) of the borrower's interest in the
Participant's vested Account. Furthermore, the total loan taken shall not exceed
the value of the Participant's Account exclusive of the Participant's Employer
Profit Sharing Account.
5.6 Loan Limit. Subject to Section 5.5 above, each loan, when
added to the outstanding balance of all other loans to the borrower from all
retirement plans of the Plan Sponsor and its Affiliates which are qualified
under Section 401 of the Code, shall not exceed the lesser of:
(a) $50,000, reduced by the excess, if any, of
(1) the highest outstanding balance of loans
made to the borrower from all retirement plans qualified under
Code Section 401 of the Plan Sponsor and its Affiliates during
the one (1) year period immediately preceding the day prior to
the date on which such loan was made, over
(2) the outstanding balance of loans made to the
borrower from all retirement plans qualified under Code
Section 401 of the Plan Sponsor and its Affiliates on the date
on which such loan was made, or
20
(b) one-half (1/2) of the value of the borrower's
interest in the vested Account attributable to the Participant's
Account.
For purposes of this Section, the value of the vested Account attributable to a
Participant's Account shall be established as of the latest preceding Valuation
Date, or any later date on which an available valuation was made, and shall be
adjusted for any distributions or contributions made through the date of the
origination of the loan.
5.7 Loan Term. Each loan, by its terms, shall be repaid within
five (5) years, except that, if allowed pursuant to loan procedures established
by the Plan Administrator, any loan which is used to acquire any dwelling unit
which within a reasonable time is to be used (determined at the time the loan is
made) as the principal residence of the borrower may, by its terms, be repaid
within ten (10) years. Notwithstanding the provisions of this Section 5.7, each
loan which previously existed under the Distribution Division Plan that was
merged into the Plan on September 1, 2000 shall continue to be repaid according
to each loan's original repayment schedule, even if the original repayment
schedule exceeds ten (10) years.
5.8 Minimum Amount. Except as may otherwise be provided pursuant
to loan procedures established by the Plan Administrator, each loan shall be
made in an amount of no less than $500.
5.9 Limit on Number of Loans. Except as may otherwise be provided
pursuant to loan procedures established by the Plan Administrator, a borrower is
permitted to have only two (2) loans existing under the Plan at any one time.
5.10 Repayment by Payroll Deduction. All loans hereunder shall be
repaid by the borrower through automatic deduction from the borrower's payroll
with the Plan Sponsor.
5.11 Default.
(a) A loan shall be in default if:
(1) a borrower fails to make any loan payment
when due;
(2) a Participant ceases to be an Employee and
is not otherwise a "party in interest" as defined in ERISA
Section 3(14);
(3) the vested Account held as security under
the Plan for the borrower will, as a result of an impending
distribution or withdrawal, be reduced to an amount less than
the amount of all unpaid principal and accrued interest then
outstanding under the loan;
(4) a borrower makes any untrue representations
or warranties in connection with the obtaining of the loan;
21
(5) a tax lien is filed against a borrower or an
attachment or garnishment should be issued against any of the
collateral securing the note evidencing the loan, including,
without limitation, the starting of an action or proceeding to
seize any of the borrower's interest in the Plan; or
(6) if the borrower revokes his or her payroll
deduction authorization for repayment of the note evidencing
the loan without the consent of the Plan Administrator.
(b) If a default occurs, the Plan Administrator may take
such steps as it deems necessary to preserve the assets of the Plan,
including, but not limited to, directing the Trustee to make any
permissible distribution to the borrower of an offset amount (i.e., a
deduction of the unpaid principal sum, accrued interest, and any other
applicable charge under the note evidencing the loan from the
Participant's Account).
(c) If a distribution of an offset amount would violate
the requirements of Section 401(a) or 401(k) (because for example, the
deduction would have to be made from the Participant's Employee 401(k)
Contribution Account while the Participant is an Employee), the entire
outstanding balance of the loan (including accrued interest) shall be a
deemed distribution as provided in Treasury Regulations under Code
Section 72(p). Thereafter, a distribution of an offset amount may be
made at the earliest date legally permissible or deferred, at the Plan
Administrator's discretion applied on a basis not discriminatory in
favor of Highly Compensated Employees, until the borrower receives
another distribution from the Plan.
(d) Notwithstanding the foregoing, a loan may be
satisfied upon a Participant's Termination of Employment (including a
Termination of Employment arising from the Participant's transfer to
another employer (other than a Plan Sponsor or an Affiliate) in
connection with a corporate transaction involving a sale of assets,
merger, or sale of stock) by distributing the note evidencing the debt
as part of an Eligible Rollover Distribution. The distribution of the
note is permitted only if the trustee, custodian, or administrator for
the Eligible Retirement Plan indicates its willingness to accept such
property. Any distribution of such note must be accomplished prior to
the end of the maximum permissible grace period under subparagraph (e)
below.
(e) If an event occurs under subparagraph (a) above that
would constitute a default, the Plan Administrator may, in its sole
discretion and on a nondiscriminatory basis, provide a grace period for
an employee to cure the default. Such grace period may not extend past
the date that is the last day of the calendar quarter following the
calendar quarter in which the default event occurred.
(f) If any part of the indebtedness under the note
evidencing the loan is collected by law or through an attorney, the
borrower shall be liable for attorneys' fees in an amount equal to ten
percent (10%) of the amount then due and all costs of collection.
22
5.12 Certain Leaves of Absence.
(a) Except as may otherwise be established pursuant to
loan procedures established by the Plan Administrator, if an Employee
is on an approved bona fide leave of absence (not longer than one
year), either without pay from the Plan Sponsor or an Affiliate or at a
rate of pay (after income and employment tax withholding) that is less
than the amount of the installment payments required under the terms of
the loan, the requirement of loan repayment shall be suspended during
the leave of absence.
(b) The suspension of the requirement of loan repayment
may not extend beyond the later of:
(1) the last day of the loan's original term; or
(2) the latest day on which the loan would have
been required to be repaid under Section 5.7 for the type of
loan taken.
(c) Upon the return of the Participant to service, the
payments under such loan shall resume at the rate necessary to repay
the remaining balance of the loan (plus interest accrued during the
leave of absence) in equal installments for a period not extending
beyond the latest day on which the loan would have been required to be
repaid under Section 5.7 for the type of loan taken. Notwithstanding
the foregoing, the loan payment shall not be less than the payment at
the time the leave began.
(d) If a Participant is absent from employment due to his
performing service in the uniformed service, the requirement of loan
repayment will be suspended for the period of such service in the
uniformed services. When the Participant resumes employment, loan
payments will resume and must be completed by the end of the period
equal to the original term of the loan plus the period of such military
service.
5.13 Regulations. Each loan shall be made only in accordance with
regulations and rulings of the Internal Revenue Service and the Department of
Labor and any supplemental loan procedures established by the Plan
Administrator. The Plan Administrator shall be authorized to administer the loan
program of this Section and shall act in his sole discretion to ascertain
whether the requirements of such regulations and rulings and this Section have
been met.
5.14 Spousal Consent. Prior to January 1, 2003, if a Participant's
vested Account is payable in the form of an annuity and the Participant wishes
to obtain a loan from the Plan in accordance with Article 5, the Participant's
spouse must, within the ninety (90) day period preceding the date the loan is
made, consent to the loan and the possibility of a reduction in the
Participant's vested Account resulting in its non-payment.
23
ARTICLE 6
WITHDRAWALS DURING EMPLOYMENT
6.1 Hardship Withdrawals.
(a) The Trustee shall, upon the direction of the Plan
Administrator, withdraw all or a portion of a Participant's Employee 401(k)
Contribution Account consisting of Deferral Amounts and Catch-Up Contributions
(but not earnings thereon) prior to the time such account is otherwise
distributable. A hardship withdrawal shall only be made only if the Participant
is an Employee and demonstrates that he is suffering from "hardship." For
purposes of this Section, a withdrawal will be deemed to be an account of
hardship only if the withdrawal is on account of:
(1) unreimbursed expenses for medical care described in
Code Section 213(d) incurred by the Participant, his spouse, or any
dependents of the Participant (as defined in Section 152 of the Code)
or necessary for these persons to obtain medical care described in Code
Section 213(d);
(2) purchase (excluding mortgage payments) of a principal
residence for the Participant;
(3) payment of tuition and related educational fees for
the next twelve (12) months of post-secondary education for the
Participant, his spouse, children, or dependents;
(4) the need to prevent the eviction of the Participant
from his principal residence or foreclosure on the mortgage of the
Participant's principal residence; or
(5) any other contingency determined by the Internal
Revenue Service to constitute an "immediate and heavy financial need"
within the meaning of Treasury Regulations Section 1.401(k)-l(d).
(b) Additional Hardship Withdrawal Requirements. In addition to
the requirements set forth in Section 6.1, any withdrawal pursuant to Section
6.1 shall not be in excess of the amount necessary to satisfy the need
determined under Section 6.1 and shall also be subject to the following
requirements:
(1) The Participant shall first obtain all withdrawals,
other than hardship withdrawals, and all nontaxable loans currently
available under all plans maintained by the Plan Sponsor;
(2) the Plan Sponsor shall not permit Elective Deferrals
or Catch-Up Contributions to be made to the Plan or any other plan
maintained by the Plan Sponsor, for a period of twelve (12) months
(effective September 29, 2002, six (6) months) after the Participant
receives the withdrawal pursuant to this Section.
(3) Effective until September 29, 2002, the Plan Sponsor
shall not permit Elective Deferrals to be made to the Plan or any other
plan maintained by the Plan
24
Sponsor for the Participant's taxable year immediately following the
taxable year of the hardship withdrawal in excess of the limit under
Section 3.1(b) for the taxable year, less the amount of the Elective
Deferrals made to the Plan or any other plan maintained by the Plan
Sponsor for the taxable year in which the withdrawal under this Section
occurs.
(c) Hardship withdrawals shall be made only in accordance with
such other rules, policies, procedures, restrictions, and conditions as the Plan
Administrator may from time to time adopt. Any determination of the existence of
hardship and the amount to be withdrawn on account thereof shall be made by the
Plan Administrator (or such other person as may be required to make such
decisions) in accordance with the foregoing rules as applied in a uniform and
nondiscriminatory manner.
(d) Unless the Participant requests otherwise, a hardship
withdrawal shall include the amount necessary to pay any federal, state and
local income taxes and penalties reasonably anticipated to result from the
withdrawal.
(e) A hardship withdrawal shall be made in a lump sum to the
Participant.
6.2 Age 59 1/2 Withdrawals. A Participant who has attained at
least age 59 1/2 may elect to receive a distribution of all or a portion of his
vested Employee 401(k) Contribution Account, Employer Match Account, Rollover
Account, QMAC/QNEC Account and Prior Plan Account.
6.3 Age 70 1/2 Withdrawals. A Participant who has attained at
least age 70 1/2 may elect to receive a distribution of all or a portion of his
Account.
ARTICLE 7
PAYMENT OF BENEFITS ON TERMINATION OF EMPLOYMENT
7.1 Eligibility for Payment. A Participant who has a Termination
of Employment shall be eligible to receive payment of his vested Account as
outlined in Article 10.
7.2 Vesting. That portion of a Participant's Account in which he
is vested at any given time shall be:
(a) his Employee 401(k) Contribution Account, Rollover
Account, and QMAC/QNEC Account, all of which shall be fully vested and
nonforfeitable at all times; and
(b) effective for Plan Years beginning on or after
September 29, 2002, for all Participants who complete an Hour of
Service after such date, his Employer Match Account, Employer Profit
Sharing Account, and Prior Plan Account computed according to the
following vesting schedule:
25
Full Years of Percentage
Vesting Service Vested
----------------- --------
Less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
(c) for Participants who do not complete at least one
Hour of Service after September 28, 2002 and became a Participant in
the Plan prior to October 1, 1989, his Employer Match Account, Employer
Profit Sharing Account, and Prior Plan Account computed according to
the following vesting schedule:
Full Years of Percentage
Vesting Service Vested
----------------- --------
Less than 1 0%
1 10%
2 20%
3 30%
4 40%
5 60%
6 80%
7 or more 100%
(d) for Participants who do not complete at least one
Hour of Service after September 28, 2002 and become a Participant in
the Plan on or after October 1, 1989, his Employer Match Account,
Employer Profit Sharing Account, and Prior Plan Account computed
according to the following vesting schedule:
Full Years of Percentage
Vesting Service Vested
----------------- --------
Less than 3 0%
3 20%
4 40%
5 60%
6 80%
7 or more 100%
(e) If a Participant receives a distribution from these
accounts at any time when the Participant is less than one hundred
percent (100%) vested, then until the earlier of the date the
Participant forfeits his nonvested Account or the Participant's
Termination Completion Date, the vested portion of these accounts of
the Participant at any time shall be equal to "X" computed according to
the formula X=P(AB+D)-D. For purposes of the formula, "P" is the vested
percentage at the relevant time, "AB" is the Account balance at the
relevant time, and D is the amount of the distribution(s).
26
7.3 Forfeiture Timing and Cash-out/Buyback.
(a) The nonvested portion of the Account of a Participant
who has had a Termination of Employment shall be forfeited as of the
earlier of the date the Participant receives a distribution of the
vested portion of his Account or the first day of the Plan Year
following the Participant's Termination Completion Date. For such
purposes, a Participant who has had a Termination of Employment and who
is not vested in any portion of his Account, the Participant shall be
deemed to have received a distribution of his Account as of the date of
such Termination of Employment.
(b) (1) If a Participant who has received a
distribution of the vested portion of his Account is
reemployed by a Plan Sponsor or an Affiliate prior to his
Termination Completion Date, any portion of his Account that
was forfeited shall be restored if the Participant repays to
the Fund all of that portion of his vested Account which was
paid to him no later than the fifth anniversary of the
Participant's reemployment by the Plan Sponsor or an
Affiliate.
(2) If a Participant who was not vested in any
portion of his Account had a Termination of Employment and is
reemployed by a Plan Sponsor or an Affiliate prior to his
Termination Completion Date, any portion of his Account which
was forfeited shall be restored.
(3) Any restoration made pursuant to Subsection
(b)(1) or (2) above shall be effective on the Valuation Date
coinciding with or next following the repayment or the
Participant's reemployment, as applicable.
(4) The restoration on any Valuation Date of the
forfeited portion of the Account of a Participant pursuant to
this Subsection (b) shall be made first from forfeitures
available for allocation on that Valuation Date, to the extent
available, and secondly from contributions by the Plan
Sponsor. Only after restorations have been made shall the
remaining forfeitures be available under Section 3.5.
7.4 Changes to Vesting Schedule. If a Plan amendment directly or
indirectly changes the vesting schedule, the vesting percentage for each
Participant in his Account accumulated to the date when the amendment is adopted
shall not be reduced as a result of the amendment. In addition, any Participant
with at least three (3) years of Vesting Service may irrevocably elect to remain
under the pre-amendment vesting schedule with respect to all of his benefits
accrued both before and after the amendment. If the pre-amendment vesting
schedule provides a Participant with a vested percentage, at each time prior to
the Participant becoming one hundred percent (100%) vested, that is more
favorable to a Participant than the amended vesting schedule, all affected
Participants with at least three (3) years of Vesting Service shall be deemed to
have elected to remain under the preamendment vesting schedule.
7.5 Suspension for Rehires. If a Participant has a Termination of
Employment and is subsequently reemployed by a Plan Sponsor or an Affiliate
prior to receiving a distribution of his
27
Account under the Plan, such Participant shall not be entitled to a distribution
under this Article 7 while he is an Employee.
7.6 Suspension for Nondistributable Events. If a Participant has a
Termination of Employment which is not a distributable event as provided under
Code Section 401(k)(10), the Plan Sponsor is not required to distribute such
Participant's Account to the Participant prior to the time for distribution as
otherwise provided under the Plan.
ARTICLE 8
PAYMENT OF BENEFITS ON RETIREMENT OR DISABILITY
8.1 Eligibility for Payment. A Participant who has reached a
Retirement Date or incurs a Disability while an Employee shall be eligible to
receive payment of his Account as outlined in Article 10.
8.2 Vesting. The Account of a Participant who has reached a
Retirement Date, has attained Normal Retirement Age while employed, or has
incurred a Disability while an Employee shall be fully vested and
nonforfeitable.
ARTICLE 9
DEATH BENEFITS
9.1 Eligibility for Payment. If a Participant dies before
receiving a full distribution of his vested Account, his Beneficiary shall be
eligible to receive payment of the Participant's vested Account as outlined in
Article 10 below. If a Participant dies after beginning to receive a
distribution of his vested Account that is payable in a form other than a lump
sum (for Plan years during which such alternate form is available), his
Beneficiary shall continue to receive the undistributed portion of his vested
Account in the form selected by the Participant before his death.
9.2 Vesting. Accounts of deceased Participants shall be vested to
the extent provided pursuant to Article 7 or 8, as applicable. In addition, the
Account of a Participant who dies while an Employee shall be fully vested and
nonforfeitable.
ARTICLE 10
GENERAL RULES ON DISTRIBUTIONS
10.1 Form and Timing of Distributions On or After January 1, 2003
(a) If the vested Account balance of a Participant or a
Beneficiary of a deceased Participant (not including any balance in the
Participant's Rollover Account) is $5,000 or less, it shall be
distributed in one lump sum not earlier than the Plan Quarter following
the Plan Quarter in which the Participant or Beneficiary becomes
eligible for a distribution pursuant to Article 7, 8 or 9, as
applicable.
28
(b) If the vested Account balance of a Participant or a
Beneficiary of a deceased Participant (not including any balance in the
Participant's Rollover Account) exceeds $5,000 and the Participant or
Beneficiary is eligible for a distribution pursuant to Article 7, 8 or
9, as applicable, the Participant or Beneficiary will receive payment
of his Account in the form of one lump sum payment during the Plan
Quarter following the Plan Quarter in which the Participant or
Beneficiary is eligible for a distribution or, if later, the date on
which the Participant or Beneficiary consents to receive such
distribution.
(c) Notwithstanding the foregoing, a Participant or a
Beneficiary of a deceased Participant may elect to receive a
distribution of the Prior Plan Account in one lump sum as soon as
administratively feasible following eligibility to receive a
distribution pursuant to Article 7, 8, or 9, as applicable.
(d) In lieu of distributions under Paragraphs (a), (b),
and (c), a Participant (or a Beneficiary that is the spouse of the
Participant) may elect to have the vested Account balance paid in the
form of a Direct Rollover pursuant to Section 10.5 below.
10.2 Form and Timing of Distributions Prior to January 1, 2003
(a) If the vested Account balance of a Participant or a
Beneficiary of a deceased Participant (in the case of a deceased
Participant who did not begin to receive payment of his vested Account
balance before his death) is $3,500 ($5,000, effective September 27,
1998) or less, it shall be distributed in one lump sum not earlier than
the Plan Quarter following the date on which the Participant or
Beneficiary becomes eligible for a distribution pursuant to Article 7,
8 or 9, as applicable. Effective for Plan Years beginning on or after
September 29, 2002, the determination of whether the Participant's
Account exceeds $5,000 shall be made without taking into account any
balance in the Participant's Rollover Account.
(b) If the vested Account balance of a Participant or a
Beneficiary of a deceased Participant (in the case of a deceased
Participant who did not begin to receive payment of his vested Account
balance before his death) exceeds $3,500 ($5,000, effective September
27, 1998) and the Participant or Beneficiary is eligible for a
distribution pursuant to Article 7, 8 or 9, as applicable, the
Participant or Beneficiary will receive payment of his Account as
follows:
(1) A married Participant will receive payment
of his Account in the form of a Qualified Joint and Survivor
Annuity, unless the Participant elects during the Applicable
Election Period (as hereinafter defined) not to receive
payments in this form and any required spousal consent is
obtained. An unmarried Participant will receive payment of his
Account in the form of a life annuity, unless the Participant
elects during the Applicable Election Period not to receive
payments in this form.
29
(2) A Participant who makes a valid election not
to receive payment in the form described in Subparagraph (1)
above may elect to receive payment of his Account in one of
the forms listed below:
(A) a lump-sum payment in cash;
(B) payment in annual installments over
a period to be determined by the Participant or his
Beneficiary but not to exceed the life expectancy of
the Participant or the joint lives of the Participant
and his Beneficiary;
(C) a single life annuity; or
(D) a joint and survivor annuity with
or without a term certain; provided, however, that a
joint and survivor annuity optional form of benefit
shall not be available as a method of distribution
with respect to the Alternate Payee and his or her
subsequent spouse or to a Beneficiary and his or her
spouse.
(3) For Plan Years beginning on or after
September 29, 2002, the determination of whether the
Participant's Account exceeds $5,000 shall be made without
taking into account any balance in the Participant's Rollover
Account.
(c) If the Participant's Account is payable in the form
of a life annuity, and the Participant dies before he begins to receive
payments from the Fund, the Participant's spouse shall receive a
"Qualified Preretirement Survivor Annuity." Notwithstanding the
foregoing, the surviving spouse of a Participant who is entitled to
receive a Qualified Preretirement Survivor Annuity may elect a lump sum
payment prior to the date the annuity is purchased or distributions
begin, unless the Participant makes an election during the Applicable
Election Period not to receive the applicable annuity and his spouse
consents to such election.
(d) If an annuity is to be paid from the Plan, such
annuity may be purchased with the Participant's Account from an
insurance company designated by the Committee or its designee in
writing to the insurance company and may be distributed to the
Participant or his Beneficiary in full satisfaction of the benefits to
which the Participant or his Beneficiary is entitled under the Plan.
The amount of the annuity shall be the actuarial equivalent of the
Participant's Account (reduced by any commissions or other costs
charged by the insurance company) based on factors used by the
insurance company from which the annuity is purchased.
(e) Annuity Rules. The provisions of this Section shall
apply only in the event the Participant receives payment of his Account
in the form of an annuity described in Section 10.2(b).
(1) The Plan Administrator shall furnish to the
Participant a written explanation of:
30
(A) the terms and conditions of the
Qualified Joint and Survivor Annuity and the
Qualified Preretirement Survivor Annuity;
(B) the Participant's right to make,
and the effect of, an election not to receive the
Qualified Joint and Survivor Annuity or the Qualified
Preretirement Survivor Annuity;
(C) the rights of the Participant's
spouse as described below; and
(D) the right to make and the effect of
an election pursuant to this paragraph.
(2) In the case of a Qualified Joint and
Survivor Annuity, the written explanation shall be provided to
the Participant no less than thirty (30) days and no more than
ninety (90) days prior to the first date on which he is
entitled to commencement of payments from the Fund.
Notwithstanding the foregoing, a Participant may elect to
waive the requirement that the written explanation be provided
at least thirty (30) days prior to commencement of payments,
provided that the first payment from the Fund occurs more than
seven (7) days from the date the explanation is received by
the Participant. In the case of the Qualified Preretirement
Survivor Annuity, the written explanation shall be provided to
the Participant in whichever of the following periods ends
last:
(A) the period beginning with the first
day of the Plan Year in which the Participant attains
age 32 and ending with the close of the Plan Year
preceding the Plan Year in which the Participant
attains age 35;
(B) the period beginning one year
before and ending one year after the Employee first
becomes a Participant;
(C) the period beginning one year
before and ending one year after the provisions of
this Subsection apply to the Participant; or
(D) a reasonable period of time after
separation from service in the case of a Participant
who separates from service before attaining age 35.
(3) The Participant may elect during the
Applicable Election Period not to receive the Qualified Joint
and Survivor Annuity or Qualified Preretirement Survivor
Annuity by execution and delivery to the Plan Administrator of
a form provided for that purpose by the Plan Administrator.
"Applicable Election Period" means, with respect to a
Qualified Joint and Survivor Annuity, the 90-day period ending
on the first date on which the Participant is entitled to
commencement of payment from the Fund. In the event the
Participant waives the minimum 30-day requirement for the
written explanation, the Applicable Election Period shall not
end before the period ending thirty (30) days after the
Participant receives the written explanation. Notwithstanding
the foregoing, if the Participant receives the written
31
explanation of the Qualified Joint and Survivor Annuity and
affirmatively elects a form of distribution, the payments from
the Fund may commence less than thirty (30) days after the
Participant receives the written explanation provided that the
Participant may revoke the affirmative distribution election
until the later of the time payments from the Fund are to
begin or the expiration of the 7-day period which begins on
the day after the Participant receives the written
explanation. With respect to a Qualified Preretirement
Survivor Annuity, the Applicable Election Period means the
period which begins on the first day of the Plan Year in which
the Participant attains age 35 and ends on the date of the
Participant's death.
(4) In the case of a married Participant, no
election shall be effective unless:
(A) the spouse of the Participant
consents in writing to the election and the consent
acknowledges the effect of the election (including,
if applicable, the identity of any Beneficiary other
than the Participant's spouse and the alternate form
of payment) and is witnessed by a notary public, or
(B) it is established to the
satisfaction of the Plan Administrator that the
consent required pursuant to Subsection (A) of this
Section (4) may not be obtained because there is no
spouse, the spouse cannot be located, the Participant
has a court order indicating that he is legally
separated or has been abandoned (within the meaning
of local law) unless a qualified domestic relations
order provides otherwise, or of any other
circumstances as permitted by regulations promulgated
by the Department of the Treasury. If the spouse is
legally incompetent to give consent, consent by the
spouse's legal guardian shall be deemed to be consent
by the spouse.
(5) Any consent by a spouse (or establishment
that the consent of a spouse may not be obtained) shall be
effective only with respect to that spouse. If an election is
made, the Participant's vested Account shall be paid in the
alternate form of payment set forth in Section 10.2(b) chosen
by the Participant by written instrument delivered to the Plan
Administrator. Any waiver of a Qualified Preretirement
Survivor Annuity made prior to the first day of the Plan Year
in which the Participant attains age 35 shall become invalid
as of the first day of the Plan Year in which the member
attains age 35 and a Qualified Preretirement Annuity shall be
provided, unless a new waiver is obtained. The Participant may
revoke any election not to receive payment in the form of a
Qualified Joint and Survivor Annuity at any time prior to
commencement of payments from the Fund, and may make a new
election at any time prior to the commencement of payments
from the Fund.
32
10.3 Additional Distribution Rules
(a) Except as specified in Subsections 10.1(a) and
10.2(a) above, no distribution of the vested Account balance of a
Participant will be made without his consent (and, where required, the
consent of his spouse) before he reaches Normal Retirement Age.
(b) Payment of a Participant's vested Account to the
Participant will commence not later than sixty (60) days after the last
day of the Plan Year in which falls the later of (1) the Participant
reaching Normal Retirement Age, or (2) the Participant reaching a
Retirement Date or becoming subject to a Disability while an Employee.
However, a Participant may elect to delay his distribution to a later
date (subject to Section 10.6). If the amount of the payment required
to commence on the date determined under this Subsection cannot be
ascertained by such date, or if it is not possible to make such payment
on such date because the Plan Administrator has been unable to locate
the Participant after making reasonable efforts to do so, a payment
retroactive to such date may be made no later than sixty (60) days
after the earliest date in which the amount of such payment can be
ascertained for the date on which the Participant is located.
(c) Payment of a Participant's Account will be made in
cash. However, if the value of a Participant's Account exceeds the fair
market value of one hundred (100) shares of class A common stock of the
Primary Sponsor as of the date on which the distribution is made, a
Participant or his designated Beneficiary may elect to receive payment
of his Account in the form of such class A shares.
(d) Payment of any portion of a Participant's Account
(other than amounts attributable to the Participant's Employer Profit
Sharing Account) to an Alternate Payee under Section 13.1 after the
Alternative Payee is entitled to a distribution under Section 13.1 will
be paid in the form of one lump sum payment during the Plan Quarter
following the Plan Quarter in which the Alternate Payee becomes
entitled to a distribution under Section 13.1 or, if later, the date on
which the Alternate Payee consents to receive such distribution
10.4 Adjustments for Income. Except for installment distributions,
Accounts shall not be adjusted for earnings or losses incurred after the
Valuation Date with respect to which the Account is valued for imminent payout
purposes coinciding with or preceding the date of distribution of the Account.
Except for those situations in which a Participant has elected, pursuant to
Section 5.9(d), to effect a transfer or Direct Rollover of a loan to another
plan, prior to distribution of an Account, the Account shall be reduced by the
amount necessary to satisfy the unpaid principal, accrued interest, and
penalties on any loan made to the Participant.
10.5 Direct Rollovers. Notwithstanding any provisions of the Plan
to the contrary that would otherwise limit a Distributee's election under this
Article 10, a Distributee may elect, at the time and in the manner prescribed by
the Plan Administrator, to have any portion of a distribution pursuant to this
Section which is an Eligible Rollover Distribution paid directly to an Eligible
Retirement Plan specified by the Distributee in a Direct Rollover so long as all
Eligible
33
Rollover Distributions to a Distributee for a calendar year total or are
expected to total at least $200 and, in the case of a Distributee who elects to
directly receive a portion of an Eligible Rollover Distribution and directly
roll the balance over to an Eligible Retirement Plan, the portion that is to be
directly rolled over totals at least $500. If the Eligible Rollover Distribution
is one to which Code Sections 401(a)(11) and 417 do not apply, such Eligible
Rollover Distribution may commence less than thirty (30) days after the notice
required under Treasury Regulations Section 1.411(a)-11(c) is given, provided
that:
(a) the Plan Administrator clearly informs the
Distributee that the Distributee has a right to a period of at least
thirty (30) days after receiving the notice to consider the decision of
whether or not to elect a distribution (and, if applicable, a
particular distribution option), and
(b) the Distributee, after receiving the notice,
affirmatively elects a distribution.
10.6 Required Minimum Distributions. Subject to Subsection (d)
below, and notwithstanding any other provisions of the Plan,
(a) Prior to the death of a Participant, all retirement
payments hereunder shall:
(1) be distributed to the Participant not later
than the Required Beginning Date (as defined below), or
(2) be distributed, commencing not later than
the Required Beginning Date -
(A) in accordance with regulations
prescribed by the Secretary of the Treasury, over the
life of the Participant or over the lives of the
Participant and his designated individual
Beneficiary, if any, or
(B) in accordance with regulations
prescribed by the Secretary of the Treasury, over a
period not extending beyond the life expectancy of
the Participant or the joint life and last survivor
expectancy of the Participant and his designated
individual Beneficiary, if any.
(b) Death distributions.
(1) If the distribution of a Participant's
retirement payments have begun in accordance with Subsection
(a)(2) of this Section, and the Participant dies before his
entire vested Account has been distributed to him, then the
remaining portion of his vested Account shall be distributed
in a lump sum at least as rapidly as under the method of
distribution being used under Subsection (a)(2) of this
Section as of the date of his death.
34
(2) If a Participant dies before the
commencement of retirement payments hereunder, the entire
interest of the Participant shall be distributed in a lump sum
within five (5) years after his death.
(3) If any portion of a Participant's vested
Account is payable to or for the benefit of the Participant's
designated individual Beneficiary and if such designated
individual Beneficiary is the Participant's surviving spouse,
then -
(A) the date on which the lump sum
distribution is required to made shall not be earlier
than the date on which the Participant would have
attained age 70 1/2, and
(B) if the surviving spouse dies before
the distribution to such spouse is made, this
Subsection (3) shall be applied as if the surviving
spouse were the Participant.
(c) For purposes of this Section, the term Required
Beginning Date means April 1 of the calendar year following the
calendar year in which the Participant attains age 70 1/2.
(d) With respect to determining the amount of the minimum
required distributions under the Plan made in the 2002 calendar year,
the Plan will apply the minimum distribution requirements of Code
Section 401(a)(9) in accordance with the regulations under Code Section
401(a)(9) that were proposed in January 2001, notwithstanding any
provision of the Plan to the contrary. With respect to distributions
under the Plan made in calendar years beginning on or after January 1,
2003, the Plan will apply the minimum distribution requirements of Code
Section 401(a)(9) in accordance with the final and proposed regulations
under Code Section 401(a)(9) that were issued in April, 2002 ("2002
Regulations"), notwithstanding anything in the Plan to the contrary.
The use of the proposed portion of the 2002 Regulations shall continue
in effect until the end of the last calendar year beginning before the
effective date of final regulations under Code Section 401(a)(9) that
supersede such proposed regulations or such other date as may be
specified in guidance published by the Internal Revenue Service.
ARTICLE 11
ADMINISTRATION OF THE PLAN
11.1 Trust Agreement. The Primary Sponsor shall enter into one or
more Trust Agreements to establish one or more Trusts with the Trustee
designated by the Board of Directors for the management of the Fund, which Trust
Agreement(s) shall form a part of the Plan and is incorporated herein by
reference.
11.2 Operation of the Plan Administrator. The Primary Sponsor shall
appoint a Plan Administrator. If an organization is appointed to serve as the
Plan Administrator, then the Plan Administrator may designate in writing one or
more persons who may act on behalf of the Plan
35
Administrator. If more than one person is so designated with respect to the same
administrative function, a majority of such persons shall constitute a quorum
for the transaction of business and shall have the full power to act on behalf
of the Plan Administrator. The Primary Sponsor shall have the right to remove
the Plan Administrator at any time by notice in writing. The Plan Administrator
may resign at any time by written notice of resignation to the Trustee and the
Primary Sponsor. Upon removal or resignation of the Plan Administrator, or in
the event of the dissolution of the Plan Administrator, the Primary Sponsor
shall appoint a successor.
11.3 Fiduciary Responsibility.
(a) The Plan Administrator, as a Named Fiduciary, may
allocate its fiduciary responsibilities among Fiduciaries other than
the Trustee, designated in writing by the Plan Administrator and may
designate in writing persons other than the Trustee to carry out its
fiduciary responsibilities under the Plan. The Plan Administrator may
remove any person designated to carry out its fiduciary
responsibilities under the Plan by notice in writing to such person.
(b) The Plan Administrator and each other Fiduciary may
employ persons to perform services and to render advice with regard to
any of the Fiduciary's responsibilities under the Plan. Charges for all
such services performed and advice rendered may be paid from the Fund
to the extent permitted by ERISA.
(c) Each Plan Sponsor shall indemnify and hold harmless
each person constituting the Plan Administrator or the Investment
Committee, except those individuals who are not a Plan Sponsor or an
employee of a Plan Sponsor, if any, from and against any and all
claims, losses, costs, expenses (including, without limitation,
attorney's fees and court costs), damages, actions or causes of action
arising from, on account of or in connection with the performance by
such person of his duties in such capacity, other than such of the
foregoing arising from, on account of or in connection with the willful
neglect or willful misconduct of such person.
11.4 Duties of the Plan Administrator.
(a) The Plan Administrator shall advise the Trustee with
respect to all payments under the terms of the Plan and shall direct
the Trustee in writing to make such payments from the Fund; provided,
however, in no event shall the Trustee make such payments if the
Trustee has actual knowledge that such payments are contrary to the
terms of the Plan and the Trust.
(b) The Plan Administrator shall from time to time
establish rules, not contrary to the provisions of the Plan and the
Trust, for the administration of the Plan and the transaction of its
business. All elections and designations under the Plan by a
Participant or Beneficiary shall be made on forms prescribed by the
Plan Administrator. The Plan Administrator shall have discretionary
authority to construe the terms of the Plan and shall determine all
questions arising in the administration, interpretation and application
of the Plan, including, but not limited to, those concerning
eligibility for benefits and it shall not act so as to discriminate in
favor of any person. All
36
determinations of the Plan Administrator shall be conclusive and
binding on all Employees, Participants, Beneficiaries and Fiduciaries,
subject to the provisions of the Plan and the Trust and subject to
applicable law.
(c) The Plan Administrator shall furnish Participants and
Beneficiaries with all disclosures now or hereafter required by ERISA
or the Code. The Plan Administrator shall file, as required, the
various reports and disclosures concerning the Plan and its operations
as required by ERISA and by the Code, and shall be solely responsible
for establishing and maintaining all records of the Plan and the Trust.
(d) The statement of specific duties for a Plan
Administrator in this Section is not in derogation of any other duties
which a Plan Administrator has under the provisions of the Plan or the
Trust or under applicable law.
11.5 Investment Manager. The Primary Sponsor may, by action in
writing provided to the Trustee, appoint an Investment Manager. Any Investment
Manager may be removed in the same manner in which appointed, and in the event
of any removal, the Investment Manager shall, as soon as possible, but in no
event more than thirty (30) days after notice of removal, turn over all assets
managed by it to the Trustee or to any successor Investment Manager appointed,
and shall make a full accounting to the Primary Sponsor with respect to all
assets managed by it since its appointment as an Investment Manager.
11.6 Investment Committee. The Primary Sponsor may, by action in
writing certified by notice to the Trustee, appoint an Investment Committee. The
Primary Sponsor shall have the right to remove any person on the Investment
Committee at any time by notice in writing to such person. A person on the
Investment Committee may resign at any time by written notice of resignation to
the Primary Sponsor. Upon such removal or resignation, or in the event of the
death of a person on the Investment Committee, the Primary Sponsor may appoint a
successor. Until a successor has been appointed, the remaining persons on the
Investment Committee may continue to act as the Investment Committee.
11.7 Action by a Plan Sponsor. Any action to be taken by a Plan
Sponsor shall be taken by persons duly authorized by the Plan Sponsor, except,
subject to Section 16.1, amendments to, termination of, or termination of a Plan
Sponsor participation in, the Plan or the Trust, or the determination of the
basis of any Plan Sponsor contributions, may be made only to the extent
authorized by written resolution or written direction of the board of directors
or appropriate governing body. Nothing herein shall be construed to prohibit the
board of directors or appropriate governing body from delegating to any officer
or other appropriate person of a Plan Sponsor the authority to take any such
actions as may be specified in such resolution or written direction.
ARTICLE 12
CLAIM REVIEW PROCEDURE
12.1 Notice of Denial. If a Participant or Beneficiary is denied a
claim for benefits under a Plan, the Plan Administrator shall provide to the
claimant written notice of the denial
37
within ninety (90) days after the Plan Administrator receives the claim, unless
special circumstances require an extension of time for processing the claim. If
such an extension of time for processing is required, written notice of the
extension shall be furnished to the claimant prior to the termination of the
initial 90-day period. In no event shall the extension exceed a period of ninety
(90) days from the end of such initial period. The extension notice shall
indicate the special circumstances requiring an extension of time and the date
by which the Plan Administrator expects to render the final decision.
12.2 Contents of Notice of Denial. If a Participant or Beneficiary
is denied a claim for benefits under a Plan, the Plan Administrator shall
provide to such claimant written notice of the denial which shall set forth:
(a) the specific reasons for the denial;
(b) specific references to the pertinent provisions of
the Plan on which the denial is based;
(c) a description of any additional material or
information necessary for the claimant to perfect the claim and an
explanation of why such material or information is necessary; and
(d) an explanation of the Plan's claim review procedures,
and the time limits applicable to such procedures, including a
statement of the claimant's right to bring a civil action under
Sections 502(a) of ERISA following an adverse benefit determination on
review.
12.3 Right to Review. After receiving written notice of the denial
of a claim or that a domestic relations order is a qualified domestic relations
order, a claimant or his representative shall be entitled to:
(a) request a full and fair review of the denial of the
claim or determination that a domestic relations order is a qualified
domestic relations order by written application to the Plan
Administrator;
(b) request, free of charge, reasonable access to, and
copies of, all documents, records, and other information relevant to
the claim;
(c) submit written comments, documents, records, and
other information relating to the denied claim to the Plan
Administrator; and
(d) a review that takes into account all comments,
documents, records, and other information submitted by the claimant
relating to the claim, without regard to whether such information was
submitted or considered in the initial benefit determination.
12.4 Application for Review. If the claimant wishes such a review
of the decision denying his claim to benefits under the Plan or if a claimant
wishes to appeal a decision that a
38
domestic relations order is a qualified domestic relations order, the claimant
must deliver such written application to the Plan Administrator within sixty
(60) days after receiving written notice of the denial or notice that the
domestic relations order is a qualified domestic relations order. Delivery shall
be considered effective only upon actual receipt by the Plan Administrator.
12.5 Hearing. Upon receiving such written application for review,
the Plan Administrator may schedule a hearing for purposes of reviewing the
claimant's claim, which hearing shall take place not more than thirty (30) days
from the date on which the Plan Administrator received such written application
for review.
12.6 Notice of Hearing. At least ten (10) days prior to the
scheduled hearing, the claimant and his representative designated in writing by
him, if any, shall receive written notice of the date, time, and place of such
scheduled hearing. The claimant or his representative, if any, may request that
the hearing be rescheduled, for his convenience, on another reasonable date or
at another reasonable time or place.
12.7 Counsel. All claimants requesting a review of the decision
denying their claim for benefits may employ counsel for purposes of the hearing.
12.8 Decision on Review. No later than sixty (60) days following
the receipt of the written application for review, the Plan Administrator shall
submit its decision on the review in writing to the claimant and to his
representative, if any, unless the Plan Administrator determines that special
circumstances (such as the need to hold a hearing) require an extension of time,
to a day no later than one-hundred twenty (120) days after the date of receipt
of the written application for review. If the Plan Administrator determines that
the extension of time is required, the Plan Administrator shall furnish to the
claimant written notice of the extension before the expiration of the initial
sixty (60) day period. The extension notice shall indicate the special
circumstances requiring an extension of time and the date by which the Plan
Administrator expects to render its decision on the review. In the case of a
decision adverse to the claimant, the decision shall include:
(a) specific reasons for the decision;
(b) specific references to the pertinent provisions of
the Plan on which the decision is based;
(c) a statement that the claimant is entitled to receive,
upon request and free of charge, reasonable access to, and copies of,
all documents, records, and other information relevant to the
claimant's claim for benefits; and
(d) a statement of the claimant's right to bring an
action under Section 502(a) of ERISA.
39
ARTICLE 13
ANTI-ALIENATION, INCOMPETENT DISTRIBUTEE & UNCLAIMED PAYMENTS
13.1 Anti-Alienation. No benefit which shall be payable under the
Plan to any person shall be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance or charge, and any attempt to
anticipate, alienate, sell, transfer, assign, pledge, encumber or charge the
same shall be void; and no such benefit shall in any manner be liable for, or
subject to, the debts, contracts, liabilities, engagements or torts of any
person, nor shall it be subject to attachment or legal process for, or against,
such person, and the same shall not be recognized under the Plan, except to such
extent as may be required by law. Notwithstanding the above, this Section shall
not apply to a "qualified domestic relations order" (as defined in Code Section
414(p)), and benefits may be paid pursuant to the provisions of such an order.
The Plan Administrator shall develop procedures (in accordance with applicable
federal regulations) to determine whether a domestic relations order is
qualified, and, if so, the method and the procedures for complying therewith. In
addition, a distribution to an Alternate Payee shall be permitted if such
distribution is authorized by a qualified domestic relations order, but no
earlier than the date the affected Participant separates from service or reaches
the "earliest retirement age" (as defined in Code Section 414(p)), or upon the
death or Disability of the Alternate Payee. Any distribution made to an
Alternate Payee shall be made in accordance with the provisions of Article 10.
13.2 Exception to Anti-Alienation. Notwithstanding any other
provision of the Plan, effective August 5, 1997, the benefit of a Participant
shall be subject to legal process and may be assigned, alienated or attached
pursuant to a court judgment or settlement provided:
(a) such Participant is ordered or required to pay the
Plan in accordance with the following:
(1) a judgment or conviction for a crime
involving the Plan;
(2) a civil judgment entered by a court in an
action brought in connection with a violation of part 4 of
subtitle B of Title I of ERISA; or
(3) a settlement agreement between such
Participant and the Secretary of Labor, in connection with a
violation (or alleged violation) of part 4 of subtitle B of
Title I of ERISA by a fiduciary or any other person; and
(b) the judgment, order, decree, or settlement agreement
shall expressly provide for the offset of all or part of the amount
ordered or required to be paid to the Plan against such Participant's
benefits under the Plan.
13.3 Minors and Incompetents. Whenever any benefit which shall be
payable under the Plan is to be paid to or for the benefit of any person who is
then a minor or determined to be incompetent by qualified medical advice, the
Plan Administrator need not require the appointment of a guardian or custodian,
but shall be authorized to cause the same to be paid over to the person having
custody of such minor or incompetent, or to cause the same to be paid to such
minor or incompetent without the intervention of a guardian or custodian, or to
cause the
40
same to be paid to a legal guardian or custodian of such minor or incompetent if
one has been appointed or to cause the same to be used for the benefit of such
minor or incompetent.
13.4 Missing Participants. If the Plan Administrator cannot
ascertain the whereabouts of any Participant to whom a payment is due under the
Plan, the Plan Administrator may direct that the payment and all remaining
payments otherwise due to the Participant be cancelled on the records of the
Plan and the amount thereof applied as a forfeiture in accordance with Plan
provisions except that, in the event the Participant later notifies the Plan
Administrator of his whereabouts and requests the payments due to him under the
Plan, the forfeited amount shall be restored either from Trust income or by a
special contribution by the Plan Sponsor to the Plan, as determined by the Plan
Administrator, in an amount equal to the payment to be paid to the Participants.
ARTICLE 14
PROHIBITION AGAINST DIVERSION
At no time shall any part of the Fund be used for or diverted to
purposes other than the exclusive benefit of the Participants or their
Beneficiaries, subject, however, to the payment of all taxes and administrative
expenses and subject to the provisions of the Plan with respect to returns of
contributions. Expenses incurred in the administration of the Plan shall be paid
from the Trust, to the extent permitted by ERISA, unless such expenses are paid
by the Plan Sponsor; provided, further, that the Plan Sponsor may be reimbursed
by the Fund, to the extent permitted by ERISA, for Plan expenses originally paid
by the Plan Sponsor.
ARTICLE 15
LIMITATION OF RIGHTS
Participation in the Plan shall not give any Employee any right or
claim except to the extent that such right is specifically fixed under the terms
of the Plan. The adoption of the Plan and the Trust by any Plan Sponsor shall
not be construed to give any Employee a right to be continued in the employ of a
Plan Sponsor or as interfering with the right of a Plan Sponsor to terminate the
employment of any Employee at any time.
ARTICLE 16
AMENDMENT TO OR TERMINATION OF THE
PLAN AND THE TRUST
16.1 Right of Primary Sponsor to Amend or Terminate. The Primary
Sponsor reserves the right at any time to modify or amend or terminate the Plan
or the Trust in whole or in part; provided, however, that the Primary Sponsor
shall have no power to modify or amend the Plan in such manner as would cause or
permit any portion of the funds held under a Plan to be used for, or diverted
to, purposes other than for the exclusive benefit of Participants or their
Beneficiaries, or as would cause or permit any portion of a fund held under the
Plan to become the property of a Plan Sponsor; and provided further, that the
duties or liabilities of the Trustee shall not be
41
increased without its written consent. No such modifications or amendments shall
have the effect of retroactively changing or depriving Participants or
Beneficiaries of rights already accrued under the Plan. No Plan Sponsor other
than the Primary Sponsor shall have the right to so modify, amend or terminate
the Plan or the Trust. Notwithstanding the foregoing, each Plan Sponsor may
terminate its own participation in the Plan and Trust pursuant to the Plan.
16.2 Right of Plan Sponsor to Terminate Participation. Each Plan
Sponsor other than the Primary Sponsor shall have the right to terminate its
participation in the Plan and Trust by resolution of its board of directors or
other appropriate governing body and notice in writing to the Primary Sponsor
and the Trustee unless such termination would result in the disqualification of
the Plan or the Trust or would adversely affect the exempt status of the Plan or
the Trust as to any other Plan Sponsor. If contributions by or on behalf of a
Plan Sponsor are completely terminated, the Plan and Trust shall be deemed
terminated as to such Plan Sponsor. Any termination by a Plan Sponsor, shall not
be a termination as to any other Plan Sponsor.
16.3 Plan Termination.
(a) If the Plan is terminated by the Primary Sponsor or
if contributions to the Trust should be permanently discontinued, it
shall terminate as to all Plan Sponsors and the Fund shall be used,
subject to the payment of expenses and taxes, for the benefit of
Participants and Beneficiaries, and for no other purposes, and the
Account of each affected Participant shall be fully vested and
nonforfeitable, notwithstanding the provisions of the Section of the
Plan which sets forth the vesting schedule.
(b) In the event of the partial termination of the Plan,
each affected Participant's Account shall be fully vested and
nonforfeitable, notwithstanding the provisions of the Section of the
Plan which sets forth the vesting schedule.
16.4 Payments Upon Plan Termination. In the event of the
termination of the Plan or the Trust with respect to a Plan Sponsor, the
Accounts of the Participants with respect to the Plan as adopted by such Plan
Sponsor shall be distributed in accordance with the applicable distribution
provisions of the Plan pursuant to the instructions of the Plan Administrator;
provided that the Trustee shall not be required to make any distribution until
it receives a copy of an Internal Revenue Service determination letter to the
effect that the termination does not affect the qualified status of the Plan or
the exempt status of the Trust or, in the event that such letter is applied for
and is not issued, until the Trustee is reasonably satisfied that adequate
provision has been made for the payment of all taxes which may be due and owing
by the Trust.
16.5 Plan Merger. In the case of any merger or consolidation of the
Plan with, or any transfer of the assets or liabilities of the Plan to, any
other plan qualified under Code Section 401, the terms of the merger,
consolidation or transfer shall be such that each Participant would receive (in
the event of termination of the Plan or its successor immediately thereafter) a
benefit which is no less than the benefit which the Participant would have
received in the event of termination of the Plan immediately before the merger,
consolidation or transfer.
16.6 Optional Benefits. Notwithstanding any other provision of the
Plan, an amendment to the Plan -
42
(a) which eliminates or reduces an early retirement
benefit, if any, or which eliminates or reduces a retirement-type
subsidy (as defined in regulations issued by the Department of the
Treasury), if any, or
(b) which eliminates an optional form of benefit (except
to the extent otherwise provided in Treasury Regulations)
shall not be effective with respect to benefits attributable to service before
the amendment is adopted. In the case of a retirement-type subsidy described in
Subsection (a) above, this Section shall be applicable only to a Participant who
satisfies, either before or after the amendment, the preamendment conditions for
the subsidy. This prohibition on the elimination of optional benefits shall not
apply to the elimination of optional forms of benefit which is permitted under
Code Section 411(d)(6) and Treasury Regulations Section 1.411(d)(6)-4.
ARTICLE 17
ADOPTION OF PLAN BY AFFILIATES
Any corporation or other business entity related to the Primary Sponsor
by function or operation and any Affiliate, if the corporation, business entity
or Affiliate is authorized to do so by written direction adopted by the Board of
Directors, may adopt the Plan and the related Trust by action of the board of
directors or other appropriate governing body of such corporation, business
entity or Affiliate. Any adoption shall be evidenced by certified copies of the
resolutions of the foregoing board of directors or governing body indicating the
adoption and by the execution of the Trust by the adopting corporation, or
business entity or Affiliate. The resolution shall state and define the
effective date of the adoption of the Plan by the Plan Sponsor and, for the
purpose of Code Section 415, the "limitation year" as to such Plan Sponsor.
Notwithstanding the foregoing, however, if the Plan and Trust as adopted by an
Affiliate or other corporation or business entity under the foregoing provisions
shall fail to receive the initial approval of the Internal Revenue Service as a
qualified Plan and Trust under Code Sections 401(a) and 501(a), any
contributions by the Affiliate or other corporation or business entity after
payment of all expenses will be returned to such Plan Sponsor free of any trust,
and the Plan and Trust shall terminate, as to the adopting Affiliate or other
corporation or business entity.
ARTICLE 18
QUALIFICATION AND RETURN OF CONTRIBUTIONS
18.1 Initial Qualification Failure. If the Plan and the related
Trust fail to receive the initial approval of the Internal Revenue Service as a
qualified plan and trust, within one (1) year after the date of denial of
qualification
(a) the contribution of a Plan Sponsor after payment of
all expenses will be returned to a Plan Sponsor free of the Plan and
Trust,
43
(b) contributions made by a Participant shall be returned
to the Participant who made the contributions, and
(c) the Plan and Trust shall thereupon terminate.
18.2 Deductibility. All Plan Sponsor contributions to the Plan are
contingent upon deductibility. To the extent permitted by the Code and other
applicable laws and regulations thereunder, upon a Plan Sponsor's request, a
contribution which was made by reason of a mistake of fact or which was
nondeductible under Code Section 404, shall be returned to a Plan Sponsor within
one (1) year after the payment of the contribution, or the disallowance of the
deduction (to the extent disallowed), whichever is applicable. In the event of a
contribution which was made by reason of a mistake of fact or which was
nondeductible, the amount to be returned to the Plan Sponsor shall be the excess
of the contribution above the amount that would have been contributed had the
mistake of fact or the mistake in determining the deduction not occurred, less
any net loss attributable to the excess. Any net income attributable to the
excess shall not be returned to the Plan Sponsor. No return of any portion of
the excess shall be made to the Plan Sponsor if the return would cause the
balance in a Participant's Account to be less than the balance would have been
had the mistaken contribution not been made.
ARTICLE 19
INCORPORATION OF SPECIAL LIMITATIONS
Appendices A, B, and C to the Plan, attached hereto, are incorporated
by reference and the provisions of the same shall apply notwithstanding anything
to the contrary contained herein.
IN WITNESS WHEREOF, the Primary Sponsor and the participating Plan
Sponsor have caused this indenture to be executed as of the date first above
written.
INGLES MARKETS, INCORPORATED
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------------
Title: Vice President-Finance
---------------------------------------
MILKCO, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------------
Title: President
---------------------------------------
44
APPENDIX A
LIMITATION ON ALLOCATIONS
SECTION 1
LIMIT ON ANNUAL ADDITION
(a) For Plan Years beginning before September 29, 2002, the Annual
Addition for any Participant for any one Limitation Year may not exceed the
lesser of:
(i) $30,000, as adjusted under Code Section 415(d); or
(ii) twenty-five percent (25%) of the Participant's
Compensation.
(b) For Plan Years beginning on or after September 29, 2002,
except to the extent permitted under Section 3.1(c) and Code Section 414(v), the
Annual Addition for any Participant for any one Limitation Year may not exceed
the lesser of:
(i) $40,000, as adjusted for changes in the cost of
living as provided in regulations issued by the Secretary of the
Treasury; or
(ii) one hundred percent (100%) of the Participant's
Compensation.
(iii) In the event a change in the Limitation Year results
in a short limitation period, the amount in subsection (b)(i) of this
Section shall be multiplied by a fraction, the numerator of which is
the number of months (including fractions thereof) in the short
limitation period and the denominator of which is twelve (12), for the
short limitation period. For the Plan Year beginning September 29, 2002
and ending December 31, 2002, the amount in Subsection (a) shall be
equal to $10,111 ($40,000 multiplied by the fraction 3.0333/12).
SECTION 2
DEFINITIONS
For the purposes of this Appendix A, the following definitions shall
apply:
(a) The term "Annual Addition" for any Participant means for any
Limitation Year, the sum of certain Plan Sponsor, Affiliate, and Participant
contributions, forfeitures, as determined in Code Section 415(c)(2) in effect
for that Limitation Year. Participant contributions shall be determined without
regard to Rollover Amounts, employee contributions to a simplified employee
pension which are excludable from gross income under Code Section 408(k)(6), and
catch-up contributions as described in Code Section 414(v).
A-1
(b) The term "Affiliate" shall have the same meaning as such term
is given in Section 1.2 except that the definition of Affiliate (within the
meaning of Code Sections 414(b) and (c)) shall be as modified by Code Section
415(h).
(c) For purposes of determining the Participant's Compensation
under this Appendix A, the definition in Section 1.12 shall apply, except that
the definition of Affiliate (within the meaning of Code Sections 414(b) and (c))
shall be modified by Code Section 415(h).
(d) For purposes of this Appendix A, the term "Limitation Year"
shall mean a Plan Year unless a Plan Sponsor elects, by adoption of a written
resolution, to use any other twelve month period adopted in accordance with
regulations issued by the Secretary of the Treasury. For the short Plan Year
beginning September 29, 2002 and ending December 31, 2002, the Limitation Year
shall be this short Plan Year.
SECTION 3
COMBINED PLAN LIMITATION
Effective until September 30, 2000, in the event that a Plan Sponsor or
an Affiliate maintains a defined benefit plan under which a Participant also
participates, the sum of the Defined Benefit Plan Fraction and the Defined
Contribution Plan Fraction for any Limitation Year for any Participant may not
exceed 1.0.
(a) The Defined Benefit Plan Fraction for any Limitation
Year is a fraction:
(i) the numerator of which is the projected
annual benefit of the Participant under the defined benefit
plan (determined as of the close of such year); and
(ii) the denominator of which is the lesser of
(A) the product of 1.25, multiplied by
the maximum annual benefit allowable under Code
Section 415(b)(1)(A), or
(B) the product of
(I) 1.4, multiplied by
(II) the maximum amount which
may be taken into account under Section
415(b)(1)(B) of the Code with respect to the
Participant under the defined benefit plan
for the Limitation Year (determined as of
the close of the Limitation Year).
(b) The Defined Contribution Plan Fraction for any
Limitation Year is a fraction:
A-2
(i) the numerator of which is the sum of a
Participant's Annual Additions as of the close of the
Limitation Year; and
(ii) the denominator of which is the sum of the
lesser of the following amounts determined for the Limitation
Year and for all prior Limitation Years during which the
Participant was employed by a Plan Sponsor or an Affiliate:
(A) the product of 1.25, multiplied by
the dollar limitation in effect under Code Section
415(c)(1)(A) for the Limitation Year (determined
without regard to Section 415(c)(6) of the Code); or
(B) the product of
(I) 1.4, multiplied by
(II) the amount which may be
taken into account under Code Section
415(c)(1)(B) (or Code Section 415(c)(7), if
applicable) with respect to the Participant
for the Limitation Year.
SECTION 4
AGGREGATION OF PLANS
For purposes of applying the limitations of this Appendix A, all
defined contribution plans maintained or deemed to be maintained by a Plan
Sponsor shall be treated as one defined contribution plan, and all defined
benefit plans now or previously maintained or deemed to be maintained by a Plan
Sponsor shall be treated as one defined benefit plan. In the event any of the
actions to be taken pursuant to Section 6 of this Appendix A or pursuant to any
language of similar import in another defined contribution plan are required to
be taken as a result of the annual additions of a Participant exceeding the
limitations set forth in Section 1 of this Appendix A, because of the
Participant's participation in more than one defined contribution plan, the
actions shall be taken first with regard to this Plan.
SECTION 5
CORRECTION OF EXCESS ANNUAL ADDITIONS
(a) An "Excess Annual Addition" shall be:
(i) that amount allocated to a Participant's
Account in excess of the limitations set forth in Section 1
above, as a result of the allocation of forfeitures to the
Account of a Participant, a reasonable error in estimating the
Participant's Compensation, a reasonable error in determining
the amount of Elective Deferrals, or other similar
circumstances;
(ii) that amount allocated to a Participant's
Account in excess of the limitations set forth in Section 3
above (after any reductions in the benefits or
A-3
Annual Additions in any other plan required to be aggregated
with this Plan under Section 5).
(b) A Participant's Annual Addition shall be reduced by
distributing to the Participant the lesser of :
(i) the amount of the Excess Annual Addition, or
(ii) the contributions made by the Plan Sponsor
on behalf of the Participant pursuant to Section 3.1 with
respect to which no contribution is made under Section 3.2;
(c) If further reduction is necessary, the Participant's
Annual Addition shall be further reduced by distributing to the
Participant an amount equal to contributions made by the Plan Sponsor
on behalf of the Participant pursuant to Section 3.1 and contributions
of the Plan Sponsor thereon pursuant to Section 3.2 (including
forfeitures) shall be reduced in the amount of the remaining excess.
The amount of the reduction under Section 3.1 shall be distributed to
the Participant. The amount of the reduction under Section 3.2 shall be
reallocated to the Employer Match Accounts of Participants who are not
affected by the limitation in the same proportion as the contribution
of the Plan Sponsor for the year is allocated under Section 3.2 to the
Accounts of such Participants;
(d) If further reduction is necessary, contributions made
by the Plan Sponsor on behalf of the Participant pursuant to Section
3.3 shall be reduced in the amount of the remaining excess. The amount
of the reduction shall be reallocated to the Accounts of Participants
who are not affected by the limitations in the same proportion as the
contribution of the Plan Sponsor for the year is allocated under
Section 3.3 to the Accounts of such Participants; and
(e) If further reduction is necessary, forfeitures
allocated to the Participant's Account shall be reduced by the amount
of the remaining excess. The amount of the reduction shall be
reallocated to the Employer Profit Sharing Accounts of Participants who
are not affected by the limitations in the same proportions as the
contributions of the Plan Sponsor for the Plan Year are allocated to
the Employer Profit Sharing Accounts of such Participants;
(f) If the contribution of the Plan Sponsor and
forfeitures would cause the annual additions to exceed the limitations
set forth herein with respect to all Participants under the Plan, the
portion of such contribution and forfeitures in excess of the
limitations shall be segregated in a suspense account. While the
suspense account is maintained, (i) no Plan Sponsor contributions under
the Plan shall be made which would be precluded by this Appendix A,
(ii) income, gains and loses of the Fund shall not be allocated to such
suspense account and (iii) amounts in the suspense account shall be
allocated in subsequent Limitation Years as Plan Sponsor contributions
and forfeitures under the Plan as of each Valuation Date on which Plan
Sponsor contributions may be allocated for each such Limitation Year
until the suspense account is exhausted. In the
A-4
event of the termination of the Plan, the amounts in the suspense
account shall be returned to the Plan Sponsor to the extent that such
amounts may not then be allocated to Participants' Accounts.
(g) Notwithstanding anything contained in the Plan to the
contrary, the Plan Administrator may modify the provisions of this
Section 6 with respect to reduction of the Participant's accounts in
accordance with such procedures as the Plan Administrator may establish
with respect to catch-up contributions described in Code Section
414(v).
X-0
XXXXXXXX X
TOP-HEAVY PROVISIONS
SECTION 1
DEFINITIONS
As used in this Appendix B, the following words shall have the
following meanings:
(a) "Determination Date" means, with respect to any Plan
Year, the last day of the preceding Plan Year, or, in the case of the
first Plan Year, means the last day of the first Plan Year.
(b) "Key Employee" means an Employee or former Employee
(including a Beneficiary of a Key Employee or former Key Employee) who
at any time during the Plan Year containing the Determination Date or,
for Plan Years beginning before September 29, 2002, any of the four (4)
preceding Plan Years:
(i) Was at any time an includible officer of the
Plan Sponsor or of any Affiliate. Includible officers include:
(A) For Plan Years beginning before
September 29, 2002, any officer whose Compensation
was greater than fifty percent (50%) of the amount in
effect under Code Section 415(b)(1)(A) for the
calendar year in which the Plan Year ends.
(B) For Plan Years beginning on or
after September 29, 2002, any officer whose
Compensation was greater than $130,000 (adjusted for
changes in the cost of living as provided in
regulations issued by the Secretary of the Treasury
for Plan Years beginning after December 31, 2002)..
(C) For all Plan Years under this
Appendix B, the term "officer" means an
administrative executive in regular and continual
service to the Plan Sponsor or Affiliate; provided,
however, that in no event shall the number of
officers exceed the lesser of:
(I) fifty (50) Employees; or
(II) the greater of three (3)
Employees or ten percent (10%) of the number
of Employees during the Plan Year, with any
non-integer being increased to the next
integer.
If for any year no officer of the Plan Sponsor is an
includible officer, the highest paid officer of the Plan
Sponsor for the Plan Year shall be considered an officer for
purposes of this Subparagraph (b)(i);
B-1
(ii) For Plan Years beginning before September
29, 2002, one of the ten (10) Employees owning both (A) more
than one-half percent (1/2%) of the outstanding stock of the
Plan Sponsor or an Affiliate, more than one-half percent
(1/2%) of the total combined voting power of all stock of the
Plan Sponsor or an Affiliate, or more than one-half percent
(1/2%) of the capital or profits interest in the Plan Sponsor
or an Affiliate, and (B) the largest percentage ownership
interests in the Plan Sponsor or any of its Affiliates, and
whose Compensation is equal to or greater than the amount in
effect under Section l(a) of Appendix A to the Plan for the
calendar year in which the Determination Date falls; or
(iii) An owner of more than five percent (5%) of
the outstanding stock of the Plan Sponsor or an Affiliate or
more than five percent (5%) of the total combined voting power
of all stock of the Plan Sponsor or an Affiliate; or
(iv) An owner of more than one percent (1%) of
the outstanding stock of the Plan Sponsor or an Affiliate or
more than one percent (1%) of the total combined voting power
of all stock of the Plan Sponsor or an Affiliate, and who in
such Plan Year had Compensation from the Plan Sponsor and all
of its Affiliates of more than $150,000.
Employees other than Key Employees are sometimes referred to in this
Appendix B, as "non-key employees."
(c) "Required Aggregation Group" means:
(i) each plan of the Plan Sponsor and its
Affiliates which qualifies under Code Section 401 (a) in which
a Key Employee is a participant, and
(ii) each other plan of the Plan Sponsor and its
Affiliates which qualifies under Code Section 401 (a) and
which enables any plan described in Subsection (a) of this
Section to meet the requirements of Section 401(a)(4) or 410
of the Code.
(d) (i) "Top-Heavy" means:
(A) if the Plan is not included in a
Required Aggregation Group, the Plan's condition in a
Plan Year for which, as of the Determination Date:
(I) the present value of the
cumulative Accounts (excluding Catch-Up
Contributions for the current Plan Year)
under the Plan for all Key Employees exceeds
sixty percent (60%) of the present value of
the cumulative Accounts (excluding Catch-Up
Contributions for the current Plan Year)
under the Plan for all Participants; and
B-2
(II) the Plan, when included in
every potential combination, if any, with
any or all of:
(aa) any Required
Aggregation Group, and
(bb) any plan of the
Plan Sponsor which is not part of
any Required Aggregation Group and
which qualifies under Code Section
401 (a)
is part of a Top-Heavy Group (as defined in
Paragraph (ii) of this Subsection); and
(B) if the Plan is included in a
Required Aggregation Group, the Plan's condition in a
Plan Year for which, as of the Determination Date:
(I) the Required Aggregation
Group is a Top-Heavy Group (as defined in
Paragraph (2) of this Subsection); and
(II) the Required Aggregation
Group, when included in every potential
combination, if any, with any or all of the
plans of the Plan Sponsor and its Affiliates
which are not part of the Required
Aggregation Group and which qualify under
Code Section 401(a), is part of a Top-Heavy
Group (as defined in Paragraph (2) of this
Subsection).
(C) For purposes of Subparagraphs (A)
(II) and (B)(II) of this Paragraph (i), any
combination of plans must satisfy the requirements of
Sections 401(a)(4) and 410 of the Code.
(ii) A group shall be deemed to be a Top-Heavy
Group if:
(A) the sum, as of the Determination
Date, of the present value of the cumulative accrued
benefits for all Key Employees under all plans
included in such group exceeds
(B) sixty percent (60%) of a similar
sum determined for all participants in such plans.
(iii) (A) For purposes of this Section, the
present value of the accrued benefit for any
participant in a defined contribution plan as of any
Determination Date or last day of a plan year shall
be the sum of:
(I) as to any defined
contribution plan other than a simplified
employee pension, the account balance as of
the most recent valuation date occurring
within the plan year ending on the
Determination Date or last day of a plan
year, and
B-3
(II) as to any simplified
employee pension, the aggregate employer
contributions, and
(III) an adjustment for
contributions due as of the Determination
Date or last day of a plan year.
In the case of a plan that is not subject to the
minimum funding requirements of Code Section 412, the
adjustment in Clause (III) of this Subparagraph (A)
shall be the amount of any contributions actually
made after the valuation date but on or before the
Determination Date or last day of the plan year to
the extent not included under Clause (I) or (II) of
this Subparagraph (A); provided, however, that in the
first plan year of the plan, the adjustment in Clause
(III) of this Subparagraph (A) shall also reflect the
amount of any contributions made thereafter that are
allocated as of a date in such first plan year. In
the case of a plan that is subject to the minimum
funding requirements, the account balance in Clause
(I) and the aggregate contributions in Clause (II) of
this Subparagraph (A) shall include contributions
that would be allocated as of a date not later than
the Determination Date or last day of a plan year,
even though those amounts are not yet required to be
contributed, and the adjustment in Clause (III) of
this Subparagraph (A) shall be the amount of any
contribution actually made (or due to be made) after
the valuation date but before the expiration of the
extended payment period in Code Section 412(c)(10) to
the extent not included under Clause (I) or (II) of
this Subparagraph (A).
(B) For purposes of this Subsection,
the present value of the accrued benefit for any
participant in a defined benefit plan as of any
Determination Date or last day of a plan year must be
determined as of the most recent valuation date which
is within a 12-month period ending on the
Determination Date or last day of a plan year as if
such participant terminated as of such valuation
date; provided, however, that in the first plan year
of a plan, the present value of the accrued benefit
for a current participant must be determined either
(I) as if the participant terminated service as of
the Determination Date or last day of a plan year or
(II) as if the participant terminated service as of
such valuation date, but taking into account the
estimated accrued benefit as of the Determination
Date or last day of a plan year. For purposes of this
Subparagraph (B), the valuation date must be the same
valuation date used for computing plan costs for
minimum funding, regardless of whether a valuation is
performed that year. The actuarial assumptions
utilized in calculating the present value of the
accrued benefit for any participant in a defined
benefit plan for purposes of this Subparagraph (B)
shall be established by the Plan Administrator after
consultation with the actuary for the plan, and shall
be reasonable in the aggregate and shall comport with
the requirements set forth by the Internal Revenue
Service in Q&A T-26 and T-27 of Regulation Section
1.416-1.
B-4
(C) For purposes of determining the
present value of the cumulative accrued benefit under
a plan for any participant in accordance with this
Subsection, the present value shall be increased by
the aggregate distributions made with respect to the
participant (including distributions paid on account
of death to the extent they do not exceed the present
value of the cumulative accrued benefit existing
immediately prior to death) under each plan being
considered, and under any terminated plan which if it
had not been terminated would have been in a Required
Aggregation Group with the Plan, during the 5-year
period (or, for Plan Years beginning on or after
September 29, 2002, one-year period) ending on the
Determination Date or last day of the plan year that
falls within the calendar year in which the
Determination Date falls. For Plan Years beginning
after September 29, 2002, in the case of a
distribution made with respect to a Participant for a
reason other than separation from service, death, or
disability, this provision shall be applied by
substituting a 5-year period for the one-year period.
(D) For purposes of this Paragraph
(iii), participant contributions which are deductible
as "qualified retirement contributions" within the
meaning of Code Section 219 or any successor, as
adjusted to reflect income, gains, losses, and other
credits or charges attributable thereto, shall not be
considered to be part of the accrued benefits under
any plan.
(E) For purposes of this Paragraph
(iii), if any employee is not a Key Employee with
respect to any plan for any plan year, but such
employee was a Key Employee with respect to such plan
for any prior plan year, any accrued benefit for such
employee shall not be taken into account.
(F) For purposes of this Paragraph
(iii), if any employee has not performed any service
for any Plan Sponsor or Affiliate maintaining the
plan during the five-year period (or, for Plan Years
beginning on or after September 29, 2002, the
one-year period) ending on the Determination Date,
any accrued benefit for that employee shall not be
taken into account.
(G) (I) In the case of an
"unrelated rollover" (as defined below)
between plans which qualify under Code
Section 401(a), (a) the plan providing the
distribution shall count the distribution as
a distribution under Subparagraph (C) of
this Paragraph (iii), and (b) the plan
accepting the distribution shall not
consider the distribution part of the
accrued benefit under this Section; and
(II) in the case of a "related
rollover" (as defined below) between plans
which qualify under Code Section 401(a), the
plan
B-5
providing the distribution shall not count
the distribution as a distribution under
Subparagraph (C) of this Paragraph (iii),
and the plan accepting the distribution
shall consider the distribution part of the
accrued benefit under this Section.
For purposes of this Subparagraph (G), an
"unrelated rollover" is a rollover as
defined in Code Section 402(c)(4) or
408(d)(3) or a plan-to-plan transfer which
is both initiated by the participant and
made from a plan maintained by one employer
to a plan maintained by another employer
where the employers are not Affiliates. For
purposes of this Subparagraph (G), a
"related rollover" is a rollover as defined
in Code Section 402(c)(4) or 408(d)(3) or a
plan-to-plan transfer which is either not
initiated by the participant or made to a
plan maintained by the employer or an
Affiliate.
SECTION 2
TOP-HEAVY CONTRIBUTION
(a) Notwithstanding anything contained in the Plan to the
contrary, except as otherwise provided in Subsection (b) of this
Section, in any Plan Year during which the Plan is Top-Heavy,
allocations of Plan Sponsor contributions and forfeitures for the Plan
Year for the Account of each Participant who is not a Key Employee and
who has not separated from service with the Plan Sponsor prior to the
end of the Plan Year shall not be less than three percent (3%) of the
Participant's Compensation. For purposes of this Subsection, an
allocation to a Participant's Account resulting from any Plan Sponsor
contribution attributable to a salary reduction or similar arrangement
shall not be taken into account.
(b) (i) The percentage referred to in Subsection (a)
of this Section for any Plan Year shall not exceed the
percentage at which allocations are made or required to be
made under the Plan for the Plan Year for the Key Employee for
whom the percentage is highest for the Plan Year. For purposes
of this Paragraph, an allocation to the Account of a Key
Employee resulting from any Plan Sponsor contribution
attributable to a salary reduction or similar agreement shall
be taken into account, but an allocation that constitutes a
Catch-Up Contribution shall not be taken into account.
(ii) For purposes of this Subsection (b), all
defined contribution plans which are members of a Required
Aggregation Group shall be treated as part of the Plan.
(iii) This Subsection (b) shall not apply to any
plan which is a member of a Required Aggregation Group if the
plan enables a defined benefit plan which is a member of the
Required Aggregation Group to meet the requirements of Code
Section 401(a)(4) or 410.
B-6
(iv) If the Plan Sponsor maintains a defined
benefit plan which is qualified under Code Section 401(a) and
which would be Top-Heavy within the meaning of the Plan for
its plan year ending within or coincident with the Plan Year,
no allocation shall be made pursuant to Subsection (a) of this
Section on behalf of any Participant who participates in the
defined benefit plan and acquires a year of service within the
meaning of paragraphs (4), (5) and (6) of Code Section 411(a)
under the defined benefit plan for the plan year, if the
defined benefit plan provides generally that the accrued
benefit of the Participant when expressed as an annual
retirement benefit shall not, when expressed as a percentage
of the Participant's Compensation, be less than the lesser of
(A) two percent (2%) multiplied by the number of such years of
service in plan years during which such plan was Top-Heavy, or
(B) twenty percent (20%).
SECTION 3
COMBINED PLAN LIMITATION
Effective until September 30, 2000, in any limitation year (as defined
in Section 4 of Appendix A to the Plan) which contains any portion of a Plan
Year in which the Plan is Top-Heavy, the number "1.0" shall be substituted for
the number "1.25" in Section 3 of Appendix A to the Plan.
SECTION 4
TOP-HEAVY VESTING SCHEDULE
Notwithstanding anything contained in the Plan to the contrary, in any
Plan Year during which the Plan is Top-Heavy, a Participant's interest in his
Account shall not vest at any rate which is slower than the following schedule,
effective as of the first day of that Plan Year:
Full Years of Percentage
Vesting Service Vested
--------------- ------
Less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
The Schedule set forth above in this Section 4 shall be inapplicable to a
Participant who has failed to perform an Hour of Service after the Determination
Date on which the Plan has become Top-Heavy. When the Plan ceases to be
Top-Heavy, the Schedule set forth above in this Section 4 shall cease to apply;
provided however, that the provisions of the Section dealing with changes in the
vesting schedule shall apply.
B-7
APPENDIX C
SPECIAL NONDISCRIMINATION RULES
SECTION 1
DEFINITIONS
As used in this Appendix, the following words shall have the following meanings:
(a) "Actual Deferral Percentage" shall mean the percentage as
determined in Section 2(b) below.
(b) "Actual Contribution Percentage" shall mean the percentage as
determined in Section 5(b) below.
(c) "Eligible Participant" means a Participant who is an Employee
during the Plan Year.
(d) "Highly Compensated Eligible Participant" means any Eligible
Participant who is a Highly Compensated Employee.
(e) "Matching Contribution" means any contribution made by a Plan
Sponsor to the Employer Matching Contribution Account and any other
contributions made to a plan by a Plan Sponsor or an Affiliate on behalf of an
Employee on account of a contribution made by the Employee or on account of an
Elective Deferral.
(f) "Qualified Matching Contributions" means Matching
Contributions of the Plan Sponsor or an Affiliate that are immediately
nonforfeitable when made, and which may not be distributed, except upon one of
the events described under Code Section 401(k)(2)(B) and the regulations
thereunder. Such contributions, if made to the Plan, shall be allocated as
described in this Appendix C to the QMAC/QNEC Account for each affected
Participant.
(g) "Qualified Nonelective Contributions" means contributions of
the Plan Sponsor or an Affiliate, other than Matching Contributions or Elective
Deferrals that are immediately nonforfeitable when made, and which may not be
distributed, except upon one of the events described under Code Section
401(k)(2)(B) and the regulations thereunder. Such contributions, if made to the
Plan, shall be allocated as described in this Appendix C to the QMAC/QNEC
Account for each affected Participant.
SECTION 2
ACTUAL DEFERRAL PERCENTAGE TEST
(a) In addition to any other limitations set forth in the Plan,
for each Plan Year, one of the following tests must be satisfied:
(i) The 125 Percent Test. The Actual Deferral Percentage
for the Highly Compensated Eligible Participants for the Plan Year must
not be more than the Actual
Deferral Percentage for all other Eligible Participants for the Plan
Year, multiplied by 1.25.
(ii) The Two Times Test. The Actual Deferral Percentage
for the Highly Compensated Eligible Participants for the Plan Year must
not be more than the lesser of:
(A) the Actual Deferral Percentage for all other
Eligible Participants for the Plan Year plus two (2)
percentage points; or
(B) the Actual Deferral Percentage for all other
Eligible Participants for the Plan Year, multiplied by two
(2).
(b) The "Actual Deferral Percentage" for a group of Eligible
Participants is equal to the average of the ratios, calculated separately for
each Eligible Participant in such group, of the Deferral Amounts contributed by
the Plan Sponsor on behalf of the Eligible Participant for the Plan Year to the
Compensation of the Eligible Participant for the Plan Year. For purposes of this
calculation:
(i) the Deferral Amounts for Eligible Participants who
are not Highly Compensated Eligible Participants that are in excess of
the maximum amount permitted under Code Section 401(a)(30) (e.g.,
$11,000 for the 2002 calendar year) shall not be taken into account;
and
(ii) at the election of the Plan Administrator, all or
part of the Qualified Matching Contributions and Qualified Nonelective
Contributions made under the Plan may be treated as Deferral Amounts,
subject to the limitations of Treasury Regulation Section
1.401(k)-1(b)(5) and any other applicable regulations promulgated by
the Secretary of the Treasury.
SECTION 3
DETERMINATION AND CORRECTION OF EXCESS CONTRIBUTIONS
(a) If the Deferral Amounts contributed on behalf of the Highly
Compensated Eligible Participants exceed the amount permitted under the Actual
Deferral Percentage test for any Plan Year, such excess amounts shall be
considered to be "Excess Contributions." The Plan Sponsor will determine the
amount of Excess Contributions under Subparagraph (b) below and will determine
what share of the Excess Contributions is attributable to each Highly
Compensated Eligible Participant under Subparagraph (c) below. The Plan Sponsor
may then implement one or more of the corrective actions discussed in
Subparagraphs (d) and (e) below to resolve the failure of the Actual Deferral
Percentage test so that it is considered to be passed for the Plan Year.
(b) Determination of Total Excess Contributions. For purposes of
this Section 3, "Total Excess Contributions" means, with respect to a Plan Year,
the excess of:
(i) the aggregate amount of Deferral Amounts contributed
by a Plan Sponsor on behalf of Highly Compensated Eligible Participants
for the Plan Year, over
(ii) the maximum amount of Deferral Amounts permitted
under Section 2 of this Appendix C for the Plan Year, which shall be
determined by reducing the Deferral Amounts contributed on behalf of
Highly Compensated Eligible Participants in order of the actual
deferral percentages beginning with the highest of such percentages.
(c) Allocation of Total Excess Contributions Among Highly
Compensated Eligible Participants. The Excess Contribution for any Plan Year
attributable to a given Highly Compensated Eligible Participant (for purposes of
distribution under Subsection (d) below) shall be determined by the Plan Sponsor
as follows:
(i) The Deferral Amounts allocated to the Highly
Compensated Eligible Participant with the highest dollar amount of
Deferral Amounts for the Plan Year shall be reduced by the amount
required to cause that Highly Compensated Eligible Participant's
remaining Deferral Amounts for the Plan Year to be equal to the dollar
amount of the Deferral Amounts allocated to the Highly Compensated
Eligible Participant with the next highest dollar amount of Deferral
Amounts for the Plan Year. This amount is then the Excess Contribution
attributable to such Highly Compensated Eligible Participant with the
highest dollar amount of Deferral Amounts which shall be distributed
under subparagraph (d) below, unless a smaller reduction equals the
total Excess Contributions.
(ii) If the total amount determined under Paragraph (i) of
this Section 3(c) is less than the total Excess Contributions, the
procedure in Paragraph (i) shall be successively repeated with the
Highly Compensated Eligible Participant who has the next highest dollar
amount of Deferral Amounts for the Plan Year, and continuing as
required until the total dollar amount allocated to the Highly
Compensated Eligible Participants is equal to the total Excess
Contributions attributable to Highly Compensated Eligible Participants.
(d) Distribution of Excess Contributions.
(i) To the extent permitted by regulations issued by the
Secretary of the Treasury, the Plan Sponsor may distribute the Total
Excess Contributions determined in Subparagraphs (b) and (c) above,
plus the income or loss thereon, to the Highly Compensated Eligible
Participants to whom such Excess Contributions were allocated. The
income or loss attributable to the Excess Contributions shall be
determined in a manner similar to that described in Section 4.2 of the
Plan.
(ii) The Excess Contributions to be distributed under
subparagraph (i) above shall be reduced by Deferral Amounts previously
distributed for the taxable year ending in the same Plan Year, and
shall also be reduced by Deferral Amounts previously distributed for
the Plan Year beginning in such taxable year, and by any excess
Elective Deferrals as determined pursuant to Plan Section 3.1
previously distributed to the Participant for the Participant's taxable
year ending with or within the Plan Year.
(iii) Effective for Plan Years beginning on or before
September 29, 2002, if the multiple use of the Two Times Test of
Sections 2(a)(ii) and 5(a)(ii) of this Appendix C, pursuant to Treasury
Regulations section 1.401(m)-2, as promulgated by the Secretary of the
Treasury, requires a corrective distribution such distribution shall be
made pursuant to this Section 3, and not Section 6, of this Appendix C.
(iv) Any Matching Contribution that was based on the
portion of the Deferral Amount that is distributed under this Section
as an Excess Contribution shall be forfeited upon such distribution.
If a distribution of the Excess Deferral Amounts attributable to the
Highly Compensated Eligible Participants is made in accordance with this
Subsection (d), the limitations in Section 2 of this Appendix C shall be treated
as being met regardless of whether the Actual Deferral Percentage, if
recalculated after such distributions, would have satisfied the requirements of
Section 2.
(e) Contribution of Qualified Nonelective Contributions or
Qualified Matching Contributions. Not later than twelve (12) months after the
end of the Plan Year, the Plan Sponsor may make a special Qualified Nonelective
Contribution or Qualified Matching Contribution on behalf of all or certain
Eligible Participants who are not Highly Compensated Eligible Participants in an
amount sufficient to satisfy (or to prevent an anticipated failure of) the
Actual Deferral Percentage test. Such contribution shall be allocated to the
Participant's QMAC/QNEC Account in one of the following manners, as elected by
the Plan Sponsor the time the Qualified Nonelective Contribution or Qualified
Matching Contribution is made, until Actual Deferral Percentage test is
satisfied, or until such Eligible Participant who is not a Highly Compensated
Eligible Participant has received his maximum Annual Addition as described in
Section 1 of Appendix A:
(i) Per Capita: under this method, the Qualified
Nonelective Contribution is allocated to the QMAC/QNEC Account of each
Eligible Participant who is not a Highly Compensated Eligible
Participant who is employed with the Plan Sponsor or an Affiliate on
the last day of the Plan Year in an equal amount.
(ii) Pro-Rata to Compensation: under this method, the
Qualified Nonelective Contribution is allocated to the QMAC/QNEC
Account of each Eligible Participant who is not a Highly Compensated
Eligible Participant who is employed with the Plan Sponsor or an
Affiliate on the last day of the Plan Year in the same ratio that such
Eligible Participant's Compensation for such Plan Year bears to the
total Compensation of all such Eligible Participants for such Plan
Year.
(iii) Pro-Rata to Deferrals: This method is used for
Qualified Matching Contributions. Under this method, the Qualified
Matching Contribution is allocated to the QMAC/QNEC Account of each
Eligible Participant who is not a Highly Compensated Eligible
Participant who is employed with the Plan Sponsor or an Affiliate on
the last day of the Plan Year in the same ratio that such Eligible
Participant's Deferral Amounts for such Plan Year bears to the total
Deferral Amounts of all such Eligible Participants for such Plan Year.
(iv) Bottom-Up: under this method, the Qualified
Nonelective Contribution is allocated first to the QMAC/QNEC Account of
the Eligible Participant who is not a Highly Compensated Eligible
Participant, whose Compensation for such Plan Year is the least of all
such Participants, and who is employed on the last day of the Plan
Year, in an amount equal to the lesser of: (A) the maximum amount which
will allow the Annual Additions to the Eligible Participant's Account
to remain within the limits of Section 1 of Appendix A; or (B) such
percentage of Compensation as the Employer shall designate. Once such
maximum allocation has been made to the QMAC/QNEC Account of such
Participant, this process shall be repeated with regard to the
QMAC/QNEC Account of successive Eligible Participants who are not
Highly Compensated Eligible Participants who are employed with a Plan
Sponsor or an Affiliate on the last day of the Plan Year, in the order
of increasing Compensation, until the entire Qualified Nonelective
Contribution has been allocated. If more than one such Eligible
Participant has Compensation for the Plan Year of a given amount, the
Qualified Nonelective Contribution shall be allocated among all such
Eligible Participants with equal Compensation in alphabetical order
(last name first, then first name, then middle name) until either all
such Eligible Participants with equal Compensation have received the
appropriate Qualified Nonelective Contribution or the entire Qualified
Nonelective Contribution has been allocated.
Notwithstanding the foregoing, nothing in this Section shall be deemed
to prevent a Plan Sponsor, in the event of an uncorrected failure of the Actual
Deferral Percentage test, from taking any corrective measures available pursuant
to Plan Section 3.8 above.
SECTION 4
PLAN ADMINISTRATOR TO MONITOR AND MAINTAIN COMPLIANCE
The Plan Administrator shall have the responsibility of monitoring the
Plan's compliance with the limitations of this Appendix C and shall have the
power to take all steps it deems necessary or appropriate to ensure compliance,
including, without limitation, restricting the amount which Highly Compensated
Eligible Participants can elect to have contributed pursuant to Plan Section
3.1(a). Any actions taken by the Plan Administrator pursuant to this Section 4
shall be pursuant to non-discriminatory procedures consistently applied.
SECTION 5
ACTUAL CONTRIBUTION PERCENTAGE TEST
(a) In addition to any other limitations set forth in the Plan,
Matching Contributions under the Plan and the amount of nondeductible employee
contributions under the Plan, for each Plan Year must satisfy one of the
following tests:
(i) The 125 Percent Test. The Actual Contribution
Percentage for Highly Compensated Eligible Participants for the Plan
Year must not exceed one hundred twenty-five percent (125%) of the
Actual Contribution Percentage for all other Eligible Participants for
the Plan Year; or
(ii) The Two Times Test. The Actual Contribution
Percentage for Highly Compensated Eligible Participants for the Plan
Year must not exceed the lesser of:
(A) two hundred percent (200%) of the Actual
Contribution Percentage for all other Eligible Participants
for the Plan Year, and
(B) the Actual Contribution Percentage for all
other Eligible Participants for the Plan Year plus two (2)
percentage points.
(b) Notwithstanding the foregoing, for purposes of this Section 5,
the terms Highly Compensated Eligible Participant and Eligible Participant shall
not include any Participant who is not eligible to receive a Matching
Contribution under the provisions of the Plan, other than as a result of the
Participant failing to contribute to the Plan or failing to have an Elective
Deferral contributed to the Plan on the Participant's behalf.
(c) Notwithstanding the foregoing, if Qualified Matching
Contributions are taken into account for purposes of applying the Actual
Deferral Percentage test, they shall not be taken into account under this
Section 5.
(d) In applying the above tests, the Plan Administrator shall
comply with any regulations promulgated by the Secretary of the Treasury which
prevent or restrict the use of the Two Times Test for purposes of passing both
the Actual Deferral Percentage test and the Actual Contribution Percentage test.
(e) The "Actual Contribution Percentage" for a group of Eligible
Participants is equal to the average of the ratios, calculated separately for
each Participant, of (A) to (B), where (A) is the amount of Matching
Contributions under the Plan (excluding Qualified Matching Contributions which
are used to apply the test set forth in Section 2 of this Appendix C or Matching
Contributions which are used to satisfy the minimum required contributions to
the Accounts of Eligible Participants who are not Key Employees pursuant to
Section 1 of Appendix B to the Plan) and nondeductible employee contributions
made under the Plan for the Eligible Participant for the Plan Year, and where
(B) is the Compensation of the Eligible Participant for the Plan Year. Except to
the extent limited by Treasury Regulation Section 1.401(m)-l(b)(5) and any other
applicable regulations promulgated by the Secretary of the Treasury, a Plan
Sponsor may elect to treat Deferral Amounts and Qualified Nonelective
Contributions as Matching Contributions for purpose of determining the Actual
Contribution Percentage, provided the Deferral Amounts, excluding those treated
as Matching Contributions, satisfy the test set forth in Section 2 of Appendix
C.
SECTION 6
DETERMINATION AND CORRECTION OF EXCESS AGGREGATE CONTRIBUTION AMOUNTS
(a) If either:
(i) the Matching Contributions and, if taken into account
under Section 5 of this Appendix C, the Deferral Amounts, Qualified
Nonelective Contributions, and/or Qualified Matching Contributions made
on behalf of Highly Compensated Eligible Participants, or
(ii) the nondeductible employee contributions made by
Highly Compensated Eligible Participants
exceed the amount permitted under the Actual Contribution Percentage test for
any Plan Year, such excess amounts shall be considered to be "Excess Aggregate
Contributions." The Plan Sponsor will determine the amount of Excess Aggregate
Contributions under subparagraph (b) below, and will determine what share of the
Excess Aggregate Contributions is attributable to each Highly Compensated
Eligible Participant under Subparagraph (c) below. The Plan Sponsor may then
implement one or more of the corrective actions discussed in Subparagraphs (d)
and (e) below to resolve the failure of the Actual Contribution Percentage test
so that it is considered to be passed for the Plan Year.
(b) Determination of Total Excess Aggregate Contributions. For
purposes of this Section 6, with respect to any Plan Year, "Total Excess
Aggregate Contributions" means the excess of:
(i) the aggregate amount of the Matching Contributions,
nondeductible employee contributions, any Qualified Nonelective
Contributions or Qualified Matching Contributions, and, if taken into
account under Section 5 of this Appendix C, the Deferral Amounts
(excluding Catch-Up Contributions) actually made on behalf of Highly
Compensated Eligible Participants for the Plan Year, over
(ii) the maximum amount of contributions permitted under
the limitations of Section 5 of this Appendix C, determined by reducing
contributions made on behalf of Highly Compensated Eligible
Participants in order of their contribution percentages, beginning with
the highest of such percentages.
The determination of the Total Excess Aggregate Contributions under
this Section 6 shall be made after first determining the excess Elective
Deferrals under Section 3.1(b) of the Plan and then determining the Excess
Contributions under Section 3 of this Appendix C.
(c) Allocation of Total Excess Aggregate Contributions Among
Highly Compensated Eligible Participants. The Excess Aggregate Contributions for
any Plan Year allocable to a given Highly Compensated Eligible Participant (for
purposes of distribution under Subsection (d) below) shall be determined by the
Plan Sponsor as follows:
(i) The Matching Contributions and nondeductible employee
contributions allocated to the Highly Compensated Eligible Participant
with the highest dollar amount of such contributions for the Plan Year
shall be reduced by the amount required to cause that Highly
Compensated Eligible Participant's remaining Matching Contributions and
nondeductible employee contributions for the Plan Year to be equal to
the dollar amount of such contributions allocated to the Highly
Compensated Eligible Participant with the next highest dollar amount of
Matching Contributions and nondeductible employee contributions for the
Plan Year. This amount is then the Excess Aggregate Contributions
attributable to such Highly Compensated Eligible Participant with the
highest dollar amount of Matching Contributions and nondeductible
employee contributions that shall be distributed or forfeited, unless a
smaller reduction equals the total Excess Aggregate Contributions.
(ii) If the total amount distributed under Paragraph (i)
is less than the total Excess Aggregate Contributions, the procedure in
Paragraph (i) shall be successively repeated with the Highly
Compensated Eligible Participant who has the next highest dollar amount
of Matching Contributions and nondeductible employee contributions for
the Plan Year, and continuing as required until the total dollar amount
of Matching Contributions and nondeductible employee contributions
allocated to the Highly Compensated Eligible Participants is equal to
the total Excess Aggregate Contributions attributable to Highly
Compensated Eligible Participants.
(d) Distribution or Forfeiture of Excess Aggregate Contributions
(i) Before the end of the Plan Year following the Plan
Year for which the Total Excess Aggregate Contributions were made, the
amount of the Total Excess Aggregate Contributions attributable to the
Plan for the Plan Year, as adjusted to reflect any income, gain, or
loss attributable to such contributions shall be distributed or, if the
Excess Aggregate Contributions are forfeitable, forfeited.
(ii) The distribution or forfeiture for any given Highly
Compensated Eligible Participant shall be equal to the amount of the
Excess Aggregate Contribution that was allocated to such Participant
under Subsection (c) above. Such amount shall first be attributed to
nondeductible employee contributions made by the Participant during the
Plan Year for which no corresponding Plan Sponsor contribution is made,
second to any remaining nondeductible employee contributions made by
the Participant during the Plan Year, and third to any Matching
Contributions thereon.
(iii) The income allocable to an Excess Aggregate
Contribution shall be determined in a manner similar to that described
in Section 4.2 of the Plan.
(iv) If a Participant who is to receive a distribution or
forfeiture of his nondeductible employee contributions or Matching
Contributions for the year is a participant in another plan or plans
maintained by the Plan Sponsor in which Excess Aggregate Contributions
for a Plan Year are held, each such plan shall distribute or forfeit a
pro-rata share of each class of contribution based on the respective
amounts of a class of contributions made to each plan during the Plan
Year.
(v) The distribution of Excess Aggregate Contributions
shall be made without regard to any other provision in the Plan.
(vi) Effective for Plan Years beginning before September
29, 2002, if the multiple use of the Two Times Test requires a
corrective distribution pursuant to Treasury Regulation Section
1.401(m)-2, such distribution shall be made pursuant to Section 3 of
this Appendix C and not this Section 6.
(vii) Excess Aggregate Contributions, including forfeited
Matching Contributions, shall be treated as Plan Sponsor contributions
for purposes of Code sections 404 and 415, even if they are distributed
from the Plan. Forfeited Matching Contributions that are reallocated to
Participants' Accounts shall be treated as Annual Additions under
Appendix A for the Participants to whose Accounts they are allocated,
and for the Participants from whose Accounts they are forfeited.
If a distribution or forfeiture of the total Excess Aggregate
Contributions is made in accordance with this Section 6(d), the limitations in
Section 5 of this Appendix C shall be treated as being met regardless of whether
the Actual Contribution Percentage, if recalculated after such distributions,
would have satisfied the requirements of Section 5.
(e) Contribution of Qualified Nonelective Contributions or
Qualified Matching Contributions. Not later than twelve (12) months after the
end of the Plan Year, the Plan Sponsor may make a special Qualified Nonelective
Contribution or a Qualified Matching Contribution on behalf of Eligible
Participants who are not Highly Compensated Eligible Participants in an amount
sufficient to satisfy (or to prevent an anticipated failure of) one of the tests
set forth in Subsection 5 above. Such contribution shall be allocated to the
QMAC/QNEC Account of one or more Eligible Participants who are not Highly
Compensated Eligible Participants in one of the methods described in Subsection
3(e) above, as elected by the Plan Sponsor at the time the Qualified Nonelective
Contribution or Qualified Matching Contribution is made.
Notwithstanding the foregoing, nothing in this Section shall be deemed
to prevent a Plan Sponsor, in the event of an uncorrected failure of the Actual
Contribution Percentage Test, from taking any corrective measures available
pursuant to Plan Section 3.8 above.
SECTION 7
MULTIPLE PLANS
Except to the extent limited by rules promulgated by the Secretary of
the Treasury, if a Highly Compensated Eligible Participant is a participant in
any other plan of the Plan Sponsor or any Affiliate which includes Matching
Contributions, deferrals under a cash or deferred arrangement pursuant to Code
Section 401(k), or nondeductible employee contributions, any contributions made
by or on behalf of the Participant to the other plan shall be allocated with the
same class of contributions under the Plan for purposes of determining the
Actual Deferral Percentage and Actual Contribution Percentage under the Plan;
provided, however, contributions that are made under an "employee stock
ownership plan" (within the meaning of Code Section
4975(e)(7)) shall not be combined with contributions under any plan which is not
an employee stock ownership plan (within the meaning of Code Section
4975(e)(7)).
Except to the extent limited by rules promulgated by the Secretary of
the Treasury, if the Plan and any other plans which include Matching
Contributions, deferrals under a cash or deferred arrangement pursuant to Code
Section 401(k), or nondeductible employee contributions are considered as one
plan for purposes of Code Section 401(a)(4) and 410(b)(1), any contributions
under the other plans shall be allocated with the same class of contributions
under the Plan for purposes of determining the Actual Contribution Percentage
and Actual Deferral Percentage under the Plan; provided, however, contributions
that are made under an "employee stock ownership plan" (within the meaning of
Code Section 4975(e)(7)) shall not be combined with contributions under any plan
which is not an employee stock ownership plan (within the meaning of Code
Section 4975(e)(7)).
SECTION 8
ALTERNATIVE METHOD FOR NONDISCRIMINATION TESTING
Effective January 1, 1999, notwithstanding any other provision in this
Appendix C to the contrary, to the extent otherwise applicable, the limitations
expressed in this Appendix C shall not apply with respect to those Plan Years in
which the Plan satisfies the requirements of Code Sections 401(k)(11) and/or
401(k)(12).
