AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 14, 2002
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
EXELIXIS, INC.
(Exact name of registrant as specified in its charter)
Delaware 04-3257395
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
170 Harbor Way
P.O. Box 511
South San Francisco, CA 94083
(650) 837-7000
(Address of principal executive offices)
EXELIXIS, INC. 401(k) Plan
(Full title of the plan)
Glen Y. Sato
Chief Financial Officer
Exelixis, Inc.
170 Harbor Way
P.O. Box 511
South San Francisco, CA 94083
(650) 837-7000
(Name, address, including zip code, and telephone number, including area code,of
agent for service)
Copies to:
ROBERT L. JONES, ESQ.
COOLEY GODWARD LLP
FIVE PALO ALTO SQUARE
3000 EL CAMINO REAL
PALO ALTO, CALIFORNIA 94306
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM
TITLE OF CLASS OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM OFFERING AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED(1) PRICE PER SHARE (2) PRICE (1) REGISTRATION FEE
- ------------------------------ ----------------- --------------------------- -------------------- -----------------
- ------------------------------ ----------------- --------------------------- -------------------- -----------------
Common Stock (par value $.001) 250,000 shares $ 11.225 $ 2,806,250 $ 258.18
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(1) Pursuant to Rule 416(a), this Registration Statement shall also cover
any additional shares of Registrant's common stock that become issuable under
the 401(k) Plan by reason of any stock dividend, stock split, recapitalization
or other similar transaction effected without receipt of consideration that
increases the number of outstanding shares of Registrant's common stock.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(h) under the Securities Act of 1933, as
amended (the "Act"). The offering price per share and aggregate offering price
are based upon the average of the high and low prices of the Registrant's common
stock as reported on the Nasdaq National Market System on February 8, 2002
pursuant to Rule 457(c) under the Act.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Exelixis, Inc. (the "Company") with the
Securities and Exchange Commission (the "SEC") are incorporated by reference
into this Registration Statement:
(A) The Company's annual report on Form 10-K for the fiscal year ended
December 31, 2000;
(B) The Company's definitive proxy statement on Schedule 14A filed on April
6, 2001;
(C) The Company's quarterly reports on Form 10-Q for the quarters ended
March 31, June 30 and September 30, 2001;
(D) The Company's current reports on Form 8-K filed on May 15, July 18,
July 26, December 20, 2001 and January 11, 2002; and
(E) The description of the Company's common stock which is contained in the
Registration Statement on Form 8-A filed on April 6, 2000, under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), including any amendment
or report filed for the purpose of updating such description.
All reports and other documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing
of a post-effective amendment which indicates that all securities offered have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference herein and to be a part of this
Registration Statement from the date of the filing of such reports and
documents.
DESCRIPTION OF SECURITIES
Not applicable.
INTERESTS OF NAMED EXPERTS AND COUNSEL
The legality of the common stock offered hereby will be passed upon for the
Company by Cooley Godward LLP, Palo Alto, California.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the Delaware General Corporation Law, the Company has
broad powers to indemnify its directors and officers against liabilities they
may incur in such capacities, including liabilities under the Securities Act.
The Restated Bylaws of the Company require the Company to indemnify its
directors and executive officers, and permit the Company to indemnify its other
officers, employees and other agents, to the extent permitted by Delaware law.
Under the Bylaws, indemnified parties are entitled to indemnification for
negligence, gross negligence and otherwise to the fullest extent permitted by
the Bylaws. The Bylaws also require the Company to advance litigation expenses
in the case of stockholder derivative actions, or other actions, against an
undertaking by the indemnified party to repay such advances if it is ultimately
determined that the indemnified party is not entitled to indemnification.
The Company has entered into indemnity agreements with each of its
directors and executive officers. Such indemnity agreements contain provisions
which are in some respects broader than the specific indemnification provisions
contained in Delaware law. The Company also maintains an insurance policy for
its directors and executive officers insuring against certain liabilities
arising in their capacities as such.
EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
EXHIBITS
EXHIBIT
NUMBER
4.1* Amended and Restated Certificate of Incorporation of the Company.
4.2* Restated Bylaws of the Company.
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Independent Accountants.
23.2 Consent of Cooley Godward LLP is contained in Exhibit 5.1 to this
Registration Statement.
24.1 Power of Attorney is contained on the signature pages to this
Registration Statement.
99.1 Exelixis, Inc. 401(k) Plan.
99.2 Exelixis, Inc. 401(k) Plan Adoption Agreement.
________________________
*Incorporated by reference to the Company's Registration Statement on Form S-1,
as amended (File No. 333-96335), originally filed with the SEC on February 7,
2000.
UNDERTAKINGS
1. The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this Registration
Statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;
provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference herein.
(b) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
2. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference herein shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
3. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of South San Francisco, State of California, on February
11, 2002.
EXELIXIS, INC.
By: /s/ George A. Scangos
-------------------------
George A. Scangos, Ph.D.
President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints George A. Scangos and Glen Y. Sato, and
each or any one of them, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitutes or substitute, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
SIGNATURE TITLE DATE
- ------------------------------ ---------------------------------- ------------------
/s/ George A. Scangos President, Chief Executive February 11, 2002
- ------------------------------ Officer and Director
George A. Scangos, Ph.D. (Principal Executive Officer)
/s/ Glen Y. Sato Chief Financial Officer February 11, 2002
- ------------------------------ (Principal Financial and
Glen Y. Sato Accounting Officer)
/s/ Stelios Papadopoulos Chairman of the Board of
- ------------------------------- Directors February 11, 2002
Stelios Papadopoulos, Ph.D.
- ------------------------------ Director
Charles Cohen, Ph.D.
------------------------------ Director
Jurgen Drews, M.D.
/s/ Geoffrey Duyk Director February 11, 2002
- -------------------------------
Geoffrey Duyk, M.D., Ph.D.
/s/ Jason Fisherman Director February 11, 2002
- -------------------------------
Jason S. Fisherman, M.D.
/s/ Jean-Francois Formela Director February 11, 2002
- -------------------------------
Jean-Francois Formela, M.D.
/s/ Vincent T. Marchesi Director February 11, 2002
- -------------------------------
Vincent T. Marchesi, Ph.D.
/s/ Peter Stadler Director February 11, 2002
- -------------------------------
Peter Stadler, Ph.D.
------------------------------ Director
Lance Willsey, M.D.
EXHIBITS
EXHIBIT
NUMBER
4.1* Amended and Restated Certificate of Incorporation of the Company.
4.2* Restated Bylaws of the Company.
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Independent Accountants.
23.2 Consent of Cooley Godward LLP is contained in Exhibit 5.1 to this
Registration Statement.
24.1 Power of Attorney is contained on the signature pages to this
Registration Statement.
99.1 Exelixis, Inc. 401(k) Plan.
99.2 Exelixis, Inc. 401(k) Plan Adoption Agreement.
________________________
*Incorporated by reference to the Company's Registration Statement on Form S-1,
as amended (File No. 333-96335), originally filed with the SEC on February 7,
2000.
EXHIBIT 5.1
Robert L. Jones, Esq.
Direct: (650) 843-5034
Internet: jonesrl@cooley.com
February 14, 2002
Exelixis, Inc.
170 Harbor Way
P.O. Box 511
South San Francisco, CA 94083
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Exelixis, Inc. (the "Company") of a Registration Statement on
Form S-8 (the "Registration Statement") with the Securities and Exchange
Commission covering the offering of an aggregate of 250,000 shares of the
Company's common stock, $.001 par value (the "Shares"), pursuant to the
Company's 401(k) Plan (the "Plan").
In connection with this opinion, we have examined the Registration Statement and
related Summary Plan Description, the Plan, your Amended and Restated
Certificate of Incorporation and Restated Bylaws and such other documents,
records, certificates, memoranda and other instruments as we deem necessary as a
basis for this opinion. We have assumed the genuineness and authenticity of all
documents submitted to us as originals, the conformity to originals of all
documents submitted to us as copies thereof and the due execution and delivery
of all documents where due execution and delivery are a prerequisite to the
effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when sold and issued in accordance with the Plan, the
Registration Statement and the related Summary Plan Description, will be validly
issued, fully paid and nonassessable (except as to shares issued pursuant to
certain deferred payment arrangements, which will be fully paid and
nonassessable when such deferred payments are made in full).
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
Cooley Godward LLP
By: /s/ Robert L. Jones
-------------------
Robert L. Jones
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8, relating to the 401(k) plan of our report dated February
2, 2001, relating to the consolidated financial statements, which appears in
Exelixis, Inc.'s Annual Report on Form 10-K for the year ended December 31,
2000.
/s/ PricewaterhouseCoopers LLP
San Jose, California
February 13, 2002
AUTOMATIC DATA PROCESSING
DEFINED CONTRIBUTION PLAN AND TRUST
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
TOP HEAVY PROVISIONS AND ADMINISTRATION
2.1 TOP HEAVY PLAN REQUIREMENTS 13
2.2 DETERMINATION OF TOP HEAVY STATUS 13
2.3 POWERS RESPOSIBILITIES OF THE EMPLOYER 16
2.4 DESIGNATION OF ADMINISTRATIVE AUTHORITY 16
2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES 16
2.6 POWERS AND DUTIES OF THE ADMINISTRATOR 17
2.7 RECORDS AND REPORTS 18
2.8 APPOINTMENT OF ADVISERS 18
2.9 INFORMATION FROM EMPLOYER 18
2.10 PAYMENT OF EXPENSES 18
2.11 MAJORITY ACTIONS 18
2.12 CLAIMS REVIEW PROCEDURE 18
2.13 CLAIMS REVIEW PROCEDURE 18
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY 20
3.2 EFFECTIVE DATE OT PARTICIPATION 20
3.3 DETERMINATION OF ELIGIBILITY 20
3.4 TERMINATION OF ELIGIBILITY 20
3.5 OMISSION OF ELIGIBLE EMPLOYEE 20
3.6 INCLUSION OF INELIGIBLE EMPLOYEE 20
3.7 ELECTION NOT TO PARTICIPATE 20
3.8 CONTROL OF ENTITIES BY OWNER-EMPLOYEE 20
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION 21
4.2 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION 22
4.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS 22
4.4 MAXIMUM ANNUAL ADDITIONS 26
4.5 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS 32
4.6 TRANSFERS FROM QUALIFIED PLANS 32
4.7 VOLUNTARY CONTRIBUTIONS 33
4.8 DIRECTED INVESTMENT ACCOUNT 34
4.9 QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS 34
4.10 ACTUAL CONTRIBUTION PERCENTAGE TESTS 35
4.11 INTEGRATION IN MORE THAN ONE PLAN 35
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND 35
5.2 METHOD OF VALUATION 35
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT 36
6.2 DETERMINATION OF BENEFITS UPON DEATH 36
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY 37
6.4 DETERMINATION OF BENEFITS UPON TERMINATION 37
6.5 DISTRIBUTION OF BENEFITS 40
6.6 DISTRIBUTION OF BENEFITS UPON DEATH 43
6.7 TIME OF SEGREGATION OR DISTRIBUTION 47
6.8 DISTRIBUTION FOR MINOR BENEFICIARY 47
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKOWN 47
6.10 PRE-RETIREMENT DISTRIBUTION 47
6.11 ADVANCE DISTRIBUTION FOR HARDSHIP 48
6.12 LIMITATIONS ON BENEFITS AND DISTRIBUTIONS 48
6.13 SPECIAL RULE FOR NON-ANNUITY PLANS 48
ARTICLE VII
TRUSTEE
7.1 TRUSTEE 49
7.2 BASIC RESPONSIBILITIES OF THE TRUSTEE 49
7.3 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE 50
7.4 OTHER POWERS OF THE TRUSTEE 51
7.5 LOANS TO PARTICIPANTS 53
7.6 DUTIES OF THE TRUSTEE REGARDING PAYMENTS 54
7.7 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES 55
7.8 ANNUAL REPORT OF THE TRUSTEE 55
7.9 AUDIT 55
7.10 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE 56
7.11 TRANSFER OF INTEREST 56
7.12 TRUSTEE INDEMNIFICATION 57
7.13 EMPLOYER SECURITIES AND REAL PROPERTY 57
7.14 POWERS AND DUTIES OF THE CUSTODIAN 57
ARTICLE VIII
AMENDMENT, TERMINATION, AND MERGERS
8.1 AMENDMENT 57
8.2 TERMINATION 58
8.3 MERGER OR CONSOLIDATION 58
ARTICLE IX
MISCELLANEOUS
9.1 EMPLOYER ADOPTIONS 59
9.2 PARTICIPANT'S RIGHTS 59
9.3 ALIENATION 59
9.4 CONSTRUCTION OF PLAN 60
9.5 GENDER AND NUMBER 60
9.6 LEGAL ACTION 60
9.7 PROHIBITION AGAINST DIVERSION OF FUNDS 60
9.8 BONDING 60
9.9 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE 61
9.10 INSURER'S PROTECTIVE CLAUSE 61
9.11 RECIPIENT AND RELEASE FOR PAYMENTS 61
9.12 ACTION BY THE EMPLOYER 61
9.13 NAMED FIDUCIARIES AND ALLOCATION OF RESPOSIBILITY 61
9.14 HEADINGS 62
9.15 APPROVAL BY INTERNAL REVENUE SERVICE 62
9.16 UNIFORMITY 62
9.17 PAYMENT OF BENEFITS 62
ARTICLE X
PARTICIPATING EMPLOYERS
10.1 ELECTION TO BECOME A PARTICIPANTING EMPLOYER 62
10.2 REQUIREMENTS OF PARTICIPATINF EMPLOYERS 62
10.3 DESIGNATION OF AGENT 63
10.4 EMPLOYEE TRANSFERS 63
10.5 PARTICIPATING EMPLOYER'S CONTRIBUTION AND FORFEITURES 63
10.6 AMENDMENT 63
10.7 DISCONTINUANCE OF PARTICIPATION 63
10.8 ADMINISTRATOR'S AUTHORITY 64
10.9 PARTICIPATING EMPLOYER CONTRIBUTION FOR AFFILIATE 64
ARTICLE XI
CASH OR DEFERRED RPOVISIONS
11.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION 64
11.2 PARTICIPANT'S SALARY REDUCTION ELECTION 65
11.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS 68
11.4 ACTUAL DEFERRAL PERCENTAGE TESTS 70
11.5 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS 72
11.6 ACTUAL CONTRIBUTION PERCENTAGE TESTS 75
11.7 ADJUSTMENT RO ACTUAL CONTRIBUTION PERCENTAGE TESTS 77
11.8 ADVANCE DISTRIBUTION FOR HARDSHIP 80
- --------------------------------------------------------------------------------
ARTICLE I
DEFINITIONS
- --------------------------------------------------------------------------------
As used in this Plan, the following words and phrases shall have the
meanings set forth herein unless a different meaning is clearly required by the
context:
1.1 "Act" means the Employee Retirement Income Security Act of 1974, as it
may be amended from time to time.
1.2 "Administrator" means the person(s) or entity designated by the
Employer pursuant to Sections 2.4 to administer the Plan on behalf of the
Employer.
1.3 "Adoption Agreement" means the separate Agreement which is executed by
the Employer and accepted by the Trustee which sets forth the elective
provisions of this Plan and Trust as specified by the Employer.
1.4 "Affiliated Employer" means the Employer and any corporation which is a
member of a controlled group of corporations ( as defined in Code Section
414(b)) which includes the Employer; any trade or business (whether or not
incorporated) which is under common control (as defined in Code Section 414 (c))
with the Employer; any organization (whether or not incorporated) which is a
member of an affiliated service group (as defined in Code Section 414(m)) which
includes the Employer; and any other entity required to be aggregated with the
Employer pursuant to Regulations under Code Section 414(o).
1.5 " Aggregate Account" means with respect to each Participant, the value
of all accounts maintained on behalf of a Participant, whether attributable to
Employer or Employee contributions, subject to the provisions of Section 2.2.
1.6 "Anniversary Date" means the anniversary date specified in C3 of the
Adoption Agreement.
1.7 "Beneficiary" means the person to whom a share or a deceased
Participant's interest in the Plan is payable, subject to the restrictions or
Sections 6.2 and 6.6.
1.8 " Code" means the Internal Revenue Code of 1986, as amended or replaced
from time to time.
1.9 "Compensation" with respect to any Participant means one of the
following as elected in the Adoption Agreement. However, Compensation for any
Self-Employed Individual shall be equal to his Earned Income.
(a) Information required to be reported under Sections 6041, 6051 and
6052 (wages, tips and Other Compensation Box on Form W-2). Compensation is
defined as wages, as defined in Code Section 3401(a), and all other
payments or Compensation to an Employee by the Employer (in the course or
the Employer's trade or business) for which the Employer is required to
furnish the Employee a written statement under Code Sections 6041(d) and
6051(a)(3). Compensation must be determined without regard to any rules
under Code Section 3401(a) that limit the remuneration included in wages
based on the nature or location or the employment or the services performed
(such as the exception for agricultural labor in Section 3401(a)(2)).
(b) Section 340l(a) wages. Compensation is defined as wages within the
meaning of Code Section 340l(a) for the purposes of income tax withholding
at the source but determined 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 340l(a)(2)).
(c) 415 safe-harbor compensation. Compensation is defined as wages,
salaries, and fees for professional services and other amounts received
(without regard to whether or not an amount is paid in cash) for personal
services actually rendered in the course of employment with the Employer
maintaining the Plan to the extent that the amounts are includible in gross
income (including, but not limited to, commissions paid salesmen,
compensation for services on the basis of a percentage of profits,
commissions on insurance premiums, tips, bonuses, fringe benefits, and
reimbursements, or other expense allowances under a nonaccountable plan (as
described in Regulation Section 1.62-2(c)) and excluding the following:
(1) Employer contributions to a plan of deferred compensation which
are not includible in the Employee's gross income for the taxable year
in which contributed, or Employer contributions under a simplified
employee pension plan to the extent such contributions arc deductible
by the Employee, or any distributions from a plan of deferred
compensation;
(2) Amounts realized from the exercise of a nonqualified stock option,
or when restricted stock (or property) held by the Employee either
becomes freely transferable or is no longer subject to a substantial
risk of forfeiture;
(3) Amounts realized from the sale, exchange or other disposition of
stock acquired under a qualified stock option; and
(4) Other amounts which received special tax benefits, or
contributions made by the Employer (whether or not under a salary
reduction agreement) towards the purchase or an annuity contract
described in section 403(b) or the Internal Revenue Code (whether or
not the contributions are actua1ly excludable from the gross income or
the Employee).
If, in connection with the adoption of any amendment, the definition of
Compensation has been modified, then, for Plan Years prior to the Plan Year
which includes the adoption date of such amendment, Compensation means
compensation determined pursuant to the Plan then in affect.
In addition, if specified in the Adoption Agreement, Compensation for all
Plan purposes shall also include compensation which is not currently includible
in the Participant's gross income by reason of the application of Code Sections
125, 402(a)(8), 402(h)(l)(B), or 403(b).
Compensation in excess of $200,000 shall be disregarded. Such amount shall
be adjusted at the same time and in such manner as permitted under Code Section
415(d). In applying this limitation, the family group of a Highly Compensated
Participant who is subject to the Family Member aggregation rules of Code
Section 414(q)(6) because such Participant is either a "five percent owner" of
the Employer or one of the ten (10) Highly Compensated Employees paid the
greatest "415 Compensation" during the year, shall be treated as a single
Participant, except that for this purpose Family Members shall include only the
affected Participant's spouse and any lineal descendants who have not attained
age nineteen (19) before the close of the year. If, as a result of the
application of such rules, the adjusted $200,000 limitation is exceeded, then
(except for purposes of determining the portion of Compensation up to the
integration level if this plan is integrated), the limitation shall be prorated
among the affected individuals in proportion to each such individual's
Compensation as determined under this Section prior to the application of this
limitation.
For Plan Years beginning prior to January 1, 1989, the $200,000 limit
(without regard to Family Member aggregation) shall apply only for Top Heavy
Plan Years and shall not be adjusted.
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan Years
beginning on or after January 1, 1994, the annual Compensation for each Employee
taken into account under the Plan shall not exceed the OBRA '93 annual
Compensation limit. The OBRA '93 annual Compensation limit is $150,000, as
adjusted by the Commissioner for increases in the cost of living in accordance
with Section 401(a)(17)(B) of the Internal Revenue Code. The cost-of-living
adjustment in effect for a calendar year applies to any period, not exceeding 12
months, over which Compensation is determined (determination period) beginning
each calendar year. If a determination period consists of fewer than 12 months,
the OBRA '93 annual Compensation limit will be multiplied by a fraction, the
numerator of which is the number of months in the determination period, and the
denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in this
Plan to the limitation under Section 401(a)(17) of the Code shall mean the OBRA
'93 annual Compensation limit set forth in this provision.
If Compensation for any prior determination period is taken into account in
determining an Employee's benefits accruing in the current Plan Year, the
Compensation for that prior determination period is subject to the OBRA '93
Compensation limit in effect for that prior determination period. For this
purpose, for determination periods beginning before the first day of the Plan
Year beginning on or after January 1, 1994, the OBRA '93 annual Compensation
limit is $150,000.
1.10 "Contract" or "Policy" means any life insurance policy, retirement
income policy, or annuity contract (group or individual) issued by the Insurer.
In the event of any conflict between the terms of this Plan and the terms of any
insurance contract purchased hereunder, the Plan provisions shall control.
1.11 "Custodian" means Chase Manhattan Bank. The Custodian may resign at
any time by giving thirty (30) days written notice to the Employer, and shall
cease to be Custodian upon delivery of all Plan assets in its possession to the
Trustee or a successor Custodian.
1.12 "Deferred Compensation" means, with respect to any Participant, that
portion of the Participant's total Compensation which has been contributed to
the Plan in accordance with the Participant's deferral election pursuant to
Section 11.2.
1.13 "Early Retirement Date" means the date specified in the Adoption
Agreement on which a Participant or Former Participant has satisfied the age and
service requirements specified in the Adoption Agreement (Early Retirement Age).
A Participant shall become fully Vested upon satisfying this requirement if
still employed at his Early Retirement Age.
A Former Participant who terminates employment after satisfying the service
requirement for Early Retirement and who thereafter reaches the age requirement
contained herein shall be entitled to receive his benefits under the Plan.
1.14 "Earned Income" means with respect to a Self-Employed Individual, the
net earnings from self-employment in the trade or business with respect to which
the Plan is established, for which the personal services of the individual are a
material income-producing factor. Net earnings will be determined without regard
to items not included in gross income and the deductions allocable to such
items. Net earnings are reduced by contributions by the Employer to a qualified
Plan to the extent deductible under the Code Section 404. In addition, for Plan
Years beginning after December 31, 1989, net earnings shall be determined with
regard to the deduction allowed to the Employer by Code Section 164(f).
1.15 "Elective Contribution" means the Employer's contributions to the Plan
that are made pursuant to the Participant's deferral election pursuant to
Section 11.2, excluding any such amounts distributed as "excess annual
additions" pursuant to Section 4.4. In addition, if selected in E3 of the
Adoption Agreement, the Employer's matching contribution made pursuant to
Section 11.1(b) shall or shall not be considered an Elective Contribution for
purposes of the Plan, as provided in Section 11.1(b). Elective Contributions
shall be subject to the requirements of Sections 11.2(b) and 11.2(c) and shall
further be required to satisfy the discrimination requirements of Regulation
1.40(k)-1(b)(3), the provisions of which are specifically incorporated herein by
reference.
1.16 "Eligible Employee" means any Employee specified in D1 of the Adoption
Agreement.
1.17 "Employee" means any person who is employed by the Employer, but
excludes any person who is employed as an independent contractor. The term
Employee shall also include Leased Employees as provided in Code Section 414(n)
or (o).
Except as provided in the Non-Standardized Adoption Agreement, all Employees of
all entities which are an Affiliated Employer will be treated as employed by a
single employer.
1.18 "Employer" means the entity specified in the Adoption Agreement, any
Participating Employer (as defined in Section 10.1) which shall adopt this Plan,
any successor which shall maintain this Plan and any predecessor which has
maintained this Plan.
1.19 "Excess Compensation" means, with respect to a Plan that is integrated
with Social Security, a Participant's Compensation which is in excess of the
amount set forth in the Adoption Agreement.
1.20 "Excess Contributions" means, with respect to a Plan Year, the excess
of Elective Contributions and Qualified Non-Elective Contributions made on
behalf of Highly Compensated Participants for the Plan Year over the maximum
amount of such contributions permitted under Section 11.4(a).
1.21 "Excess Deferred Compensation" means, with respect to any taxable year
of a Participant, the excess of the aggregate amount of such Participant's
Deferred Compensation and the elective deferrals pursuant to Section 11.2(f)
actually made on behalf of such Participant for such taxable year, over the
dollar limitation provided for in Code Section 402(g), which is incorporated
herein by reference. Excess Deferred Compensation shall be treated as an "annual
addition" pursuant to Section 4.4 when contributed to the Plan unless
distributed to the affected Participant not later than the first April 15th
following the close of the Participant's taxable year.
1.22 "Family Member" means, with respect to an affected Participant, such
Participant's spouse, and such Participant's lineal descendants and ascendants
and their spouses, all as described in Code Section 414(q)(6)(B).
1.23 "Fiduciary" means any person who (a) exercises any discretionary
authority or discretionary control respecting management of the Plan or
exercises any authority or control respecting management or disposition of its
assets, (b) renders investment advice for a fee or other compensation, direct or
indirect, with respect to any monies or other property of the Plan or has any
authority or responsibility to do so, or (c) has any discretionary authority or
discretionary responsibility in the administration of the Plan, including, but
not limited to, the Trustee, the Employer and it s representative body, and the
Administrator.
1.24 "Fiscal Year" means the Employer's accounting year as specified in the
Adoption Agreement.
1.25 "Forfeiture" means that portion of a Participant's Account that is not
Vested, and occurs on the earlier of:
(a) the distribution of the entire Vested portion of the Participant's
Account of a Former Participant who has severed employment with the
Employer, or
(b) the last day of the Plan Year in which the Participant incurs five
(5) consecutive 1-Year Breaks in Service.
Furthermore, for purposes of paragraph (a) above, in the case of a
Terminated Participant whose Vested benefit is zero, such Terminated Participant
shall be deemed to have received a distribution of his Vested benefit upon his
termination of employment. In addition, the term Forfeiture shall also include
amounts deemed to be Forfeitures pursuant to any other provision of the Plan.
1.26 "Former Participant" means a person who has been a Participant, but
who has ceased to be a Participant for any reason.
1.27 "414(s) Compensation" with respect to any Employee means his
Compensation as defined in Section 1.9. However, for purposes of this Section,
Compensation shall be Compensation paid and, if selected in the Adoption
Agreement, shall only be recognized as of an Employee's effective date of
participation. If, in connection with the adoption of any amendment, the
definition of "414(s) compensation" has been modified, then for Plan Years prior
to the Plan Year which includes the adoption date of such amendment, "414(s)
Compensation" means compensation determined pursuant to the Plan Year in effect.
In addition, if specified in the Adoption Agreement, "414(s) Compensation"
shall also include compensation which is not currently includible in the
Participant's gross income by reason of the application of Code Sections 125,
402(a)(8), 402(h)(1)(B), or 403(b), plus Elective Contributions attributable to
Deferred Compensation recharacterized as voluntary Employee contributions
pursuant to 11.5(a).
1.28 "415 Compensation" means compensation as defined in Section 4.4(f)(2).
If, in connection with the adoption of any amendment, the definition of
"415 Compensation" has been modified, then, for Plan Years prior to the Plan
Year which includes the adoption date of such amendment, "415 Compensation"
means compensation determined pursuant to the Plan then in effect.
1.29 " Highly Compensated Employee" means an Employee described in Code
Section 414(q) and the Regulations thereunder and generally means an Employee
who performed services for the Employer during the "determination year" and is
in one or more of the following groups:
(a) Employees who at any time during the "determination year" or
"look-back year" were "five percent owners" as defined in Section 1.36(c).
(b) Employees who received "415 Compensation" during the "look-back
year" from the Employer in excess of $75,000.
(c) Employees who received "415 Compensation" during the "look-back
year" from the Employer in excess of $50,000 and were in the Top Paid Group
of Employees for the Plan Year.
(d) Employees who during the "look-back year" were officers of the
Employer (as that term is defined within the meaning of the Regulations
under Code Section 416) and received "415 compensation" during the
"look-back year" from the Employer greater than 50 percent of the limit in
effect under Code Section 415(b)(1)(A) for any such Plan Year. The number
of officers shall be limited to the lesser of (i) 50 employees; or (ii) the
greater of 3 employees or 10 percent of all employees. If the Employer does
not have at least one officer whose annual "415 Compensation" is in excess
of 50 percent of the Code Section 415(b)(1)(A) limit, then the highest paid
officer of the Employer will be treated as a Highly Compensated Employee.
(e) Employees who are in the group consisting of the 100 Employees
paid the greatest "415 Compensation" during the "determination year" and
are also described in (b), (c) or (d) above when these paragraphs are
modified to substitute "determination year" for "look-back year."
The "determination year" shall be the Plan Year for which testing is being
performed, and the "look-back year" shall be the immediately preceding
twelve-month period. However, if the Plan Year is a calendar year, or if
another Plan of the Employer so provides, then the "look-back year" shall be the
calendar year ending with or within the Plan Year for which testing is being
performed, and the "determination year" (if applicable) shall be the period of
time, if any, which extends beyond the "look-back year" and ends on the last day
of the Plan Year for which testing is being performed (the "lag period"). With
respect to this election, it shall be applied on a uniform and consistent basis
to all plans entities, and arrangements of the Employer.
For purposes of this Section, the determination of "415 Compensation" shall
be made by including amounts that would otherwise be excluded form a
Participant's gross income by reason of the application of Code Sections 125,
402(a)(8), 402(h)(1)(B) and, in the case of Employer contributions made pursuant
to a salary reduction agreement, Code Section 403(b). Additionally, the dollar
threshold amounts specified in (b) and (c) above shall be adjusted at such time
and in such manner as is provided in Regulations. In the case of such an
adjustment, the dollar limits which shall be applied are those for the calendar
year in which the "determination year" or "look-back year" begins.
In determining who is a Highly Compensated Employee, Employees who are
non-resident aliens and who received no earned income (within the meaning of
Code Section 911(d) from the Employer constituting United States source income
within the meaning of Code Section 861(a)(3) shall not be treated as Employees.
Additionally, all Affiliated Employers shall be taken into account as a single
employer and Leased Employees within the meaning of Code Sections 414(n)(2) and
414(o)(2) shall be considered Employees unless such Leased Employees are covered
by a plan described in Code Section 414(n)(5) and are not covered in any
qualified plan maintained by the Employer. The exclusion of Leased Employees
for this purpose shall be applied on a uniform and consistent basis for all of
the Employer's retirement plans. In addition, Highly Compensated Former
Employees shall be treated as Highly Compensated Employees without regard to
whether they performed services during the "determination year."
1.30 " Highly Compensated Former Employee" means a former Employee who had
a separation year prior to the "determination year" and was a Highly Compensated
Employee in the year of separation form service or in any "determination year"
after attaining age 55. Notwithstanding the foregoing, an Employee who separated
from service prior to 1987 will be treated as Highly Compensated Former Employee
only if during the separation year (or year preceding the separation year) or
any year after the Employee attains age 55 (or the last year ending before the
Employee's 55th birthday), the Employee either received "415 Compensation" in
excess of $50,000 or was a "five percent owner." For purposes of the Section,
"determination year," "415 Compensation" and "five percent owner" shall be
determined in accordance with Section 1.29. Highly Compensated Former Employees
shall be treated as Highly Compensated Employees. The method set forth in this
Section for determining who is a "Highly Compensated Former Employee" shall be
applied on a uniform and consistent basis for all purposes for which the Code
Section 414(q) definition is applicable.
1.31 "Highly Compensated Participant" means any Highly Compensated Employee
who is eligible to participate in the Plan.
1.32 "Hour of Service" means (1) each hour for which an Employee is
directly or indirectly compensated or entitled to compensation by the Employer
for the performance of duties during the applicable computation period; (2) each
hour for which an Employee is directly or indirectly compensated or entitled to
compensation by the Employer (irrespective if whether the employment
relationship has terminated) for reasons other than performance of duties (such
as vacation, holiday, sickness, jury duty, disability, lay-off, military duty or
leave of absence) during the applicable computation period; (3) each hour for
which back pay is awarded or agreed to by the Employer without regard to
mitigation of damages. The same Hours of Service shall not be credited both
under (1) or (2), as the case may be, and under (3).
Notwithstanding the above, (i) no more than 501 Hours of Service are
required to be credited to an Employee on account of any single continuous
period during which the Employee performs no duties (whether or not such period
occurs in a single computation period); (ii) an hour for which an Employee is
directly or indirectly paid, or entitled to payment, on account of a period
during which no duties are performed is not required to be credited to the
Employee if such payment is made or due under a plan maintained solely for the
purpose of complying with applicable worker's compensation, or unemployment
compensation or disability insurance laws; and (iii) Hours of Service are not
required to be credited for a payment which solely reimburses an Employee for
medical or medically related expenses incurred by the Employee.
For purposes of this Section, a payment shall be deemed to be made by or
due from the Employer regardless of whether such payment is made by or due from
the Employer directly, or indirectly through, among others, a trust fund, or
insurer, to which the Employer contributes or pays premiums and regardless of
whether contributions made or due to the trust fund, insurer, or other entity
are for the benefit of particular Employees or are on behalf a group of
Employees in the aggregate.
An Hour of Service must be counted for the purpose of determining a Year of
Service, a year of participation for purposes of accrued benefits, a 1-Year
Break in Service, and employment commencement date (or reemployment commencement
date). The provisions of Department of Labor regulations 2530.200b-2(b) and (c)
are incorporated herein by reference.
Hours of Service will be credited for employment with all Affiliated
Employers and for any individual considered to be a Leased Employee pursuant to
Code Sections 414(n) or 414(o) and the Regulations there under.
Hours of Service will be determined on the basis of the method selected in
the Adoption Agreement.
1.33 " Insurer" means any legal reserve insurance company which shall issue
one or more policies under the plan.
1.34 " Investment Manager " means an entity that (a) has the power to
manage, acquire, or dispose of Plan assets and (b) acknowledges fiduciary
responsibility to the Plan in writing. Such entity must be a person, firm, or
corporation registered as an investment adviser under the Investment Advisers
Act of 1940, a bank, or an insurance company.
1.35 " Joint and Survivor Annuity " means an annuity for the life of a
Participant with a survivor annuity for the life of the Participant's spouse
which is not less than , nor greater than the amount of the annuity payable
during the joint lives of the Participant and the Participant's spouse. The
Joint and Survivor Annuity will be the amount of benefit which can be purchase
with the Participant's Vested interest in the Plan.
1.36 " Key Employee " means an Employee as defined in code Section 416(i)
and the Regulations there under. Generally, any Employee or former Employee (as
well as each of his Beneficiaries) is considered a Key Employee if he, at any
time during the Plan Year that contains the " Determination Date " or any of the
preceding four (4) Plan Years, has been included in one of the following
categories:
(a) an officer of the Employer (as that term is defined within the
meaning of the Regulations under Code Section 416) having annual "415
Compensation " greater than 50 percent of the amount in affect under code
Section 415(b)(1)(A) for any such Plan Year.
(b) one of the ten employees having annual " 415 Compensation" from
the Employer for a Plan Year greater than the dollar limitation in effect
under Code Section 415(c)(1)(A) for the calendar year in which such Plan
Year ends and owning (or considered as owning within the meaning of Code
Section 318) both more than one-half percent interest and the largest
interests in the Employer.
(c) A "five percent owner" of the Employer. "Five percent owner" means
any person who owns (or is considered as owning within the meaning of Code
Section 318) more than five percent (5%) of the outstanding stock of the
Employer or stock possessing more than five percent (5%) of the total
combined voting power of all stock of the Employer or, in the case of an
unincorporated business, any person who owns more than five percent (5%) of
the capital or profits interest in the Employer. In determining percentage
ownership hereunder, employers that would otherwise be aggregated under
Code Sections 414(b), (c), (m) and (o) shall be treated as separate
employers.
(d) A "one percent owner" of the Employer having an annual "415
Compensation" from the Employer of more that $150,000. "One percent owner"
means any persons who owns (or is considered as owning within the meaning
of Code Section 318) more than one percent (1%) of the outstanding stock of
the Employer or stock possessing more than one percent (1%) of the total
combines voting power of all stock of the Employer or, in the case of an
unincorporated business, any person who owns more than one percent (1%) of
the capital or profits interest in the Employer. In determining percentage
ownership hereunder, employers that would otherwise be aggregated under
Code Sections 414(b), (c), (m) and (o) shall be treated as separate
employers. However, in determining whether an individual has "415
Compensation" of more than $150,000, "415 Compensation" from each employer
required to be aggregated under Code Sections 414(b), (c), (m) and (o)
shall be taken into account.
For purposes of this Section, the determination of "415 Compensation"
shall be made by including amounts that would otherwise be excluded from a
Participant's gross income by reason of the application of Code Sections 125,
402(a)(8), 402(h)(1)(B) and, in the case of Employer contributions made
pursuant to a salary reduction agreement, Code Section 403(b).
1.37 "Late Retirement Date " means the date of , or the first day of the
month or the Anniversary Date coinciding with or next following, whichever
corresponds to the election made for the Normal Retirement Date, a Participant's
actual retirement after having reached his Normal Retirement Date.
1.38 "Leased Employee" means any person (other than an Employee of the
recipient) who pursuant to an agreement between the recipient and any other
person ("leasing organization") has performed services of the recipient (or for
the recipient 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 of a type historically performed by employees in the
business field of the recipient employer. Contributions or benefits provided a
leased employee by the leasing organization which are attributable to services
performed for the recipient employer shall be treated as provided by the
recipient employer.
A leased employee shall not be considered an Employee of the recipient
if; (i) such employee is covered by a money purchase pension plan providing :
(1) a nonintegrated employer contribution rate of at least 10 percent of
compensation, as defined in Code Section 415(c ) (3), but including amounts
contributed pursuant to a salary reduction agreement which are excludable from
the employee's gross income under Code Section 125, 402(a)(8), 402(h), or
403(b), (2) immediate participation, and (3) full and immediate vesting; and(ii)
leased employees do not constitute more than 20 percent of the recipient's
nonhighly compensated workforce.
1.39 "Net Profit" means with respect to any Fiscal Year the Employer's net
income or profit for such Fiscal Year determined upon the basis of the
Employer's books of account in accordance with generally accepted accounting
principles, without any reduction for taxes based upon income, or for
contributions made by the Employer to this Plan and any other qualified plan.
1.40 " Non-Elective Contribution " means the Employer's contributions to
the Plan other than those made pursuant to the Participant's deferral election
made pursuant to Section 11.2 and any Qualified Non-Elective Contribution. In
addition, if selected in E3 of the Adoption Agreement, the Employer's Matching
Contribution made pursuant to Section 4.3(b) shall be considered a Non-Elective
Contribution for purposes of the Plan.
1.41 " Non-Highly Compensated Participant" means any Participant who is
neither a Highly Compensated Employee nor a Family Member.
1.42 " Non-Key Employee " means any Employee or former Employee (and his
Beneficiaries) who is not a Key Employee.
1.43 "Normal Retirement Age" means the age specified in the Adoption
Agreement at which time a Participant shall become fully Vested in his
Participant's Account.
1.44 "Normal Retirement Date" means the date specified in the Adoption
Agreement on which a Participant shall become eligible to have his benefits
distributed to him.
1.45 "1-Year Break in Service" means the applicable computation period
during which an Employee has not completed more than 500 Hours of Service with
the Employer. Further, solely for the purpose of determining whether a
Participant has incurred a 1-Year Break in Service, Hours of Service shall be
recognized for "authorized leaves of absence" and "maternity and paternity
leaves of absence."
"Authorized leave of absence" means an unpaid, temporary cessation
from active employment with the Employer pursuant to an established
nondiscriminatory policy, whether occasioned by illness, military service, or
any other reason.
A "maternity or paternity leave of absence" means, for Plan Years
beginning after December 31, 1984, an absence from work for any period by
reasons of the Employee's pregnancy, birth of the Employee's child, placement of
a child with the Employee in connection with the adoption of such child, or any
absence for the purpose of caring for such child for a period immediately
following such birth or placement. For this purpose, Hours of Service shall be
credited for the computation period in which the absence from work begins, only
if credit therefore is necessary to prevent the Employee from incurring a 1-Year
Break in Service, or, in any other case, in the immediately following
computation period. The Hours of Service credited for a "maternity or paternity
leave of absence" shall be those which would normally have been credited but for
such absence, or in any case in which the Administrator is unable to determine
such hours normally credited, eight (8) Hours of Service per day. The total
Hours of Service required to be credited for a " maternity or paternity leave of
absence " shall not exceed 501.
1.46 " Owner-Employee" means a sole proprietor who owns the entire interest
in the Employer or a partner who owns more than 10% of either the capital
interest or the profits interest in the Employer and who receives income for
personal services from the Employer.
1.47 "Participant" means any Eligible Employee who participates in the Plan
as provided in Section 3.2 and has not for any reason become ineligible to
participate further in the Plan.
1.48 "Participant's Account" means the account established and maintained
by the Administrator for each Participant with respect to his total interest
under the Plan resulting from (a) the Employer's contributions in the case of a
Profit Sharing Plan or Money Purchase Plan, and (b) the Employer's Non-Elective
contribution in the case of a 401(k) Profit Sharing Plan.
1.49 "Participant's Combined Account" means the account established and
maintained by the Administrator for each Participant's with respect to his total
interest under the Plan resulting from the Employer's contribution.
1.50 "Participant's Elective Account" means the account established and
maintained by the Administrator for each Participant with respect to his total
interest in the Plan and Trust resulting from the Employer's Elective
Contributions and Qualified Non-Elective Contributions. A separate accounting
shall be maintained with respect to that portion of the Participant's Elective
Account attributable to Elective Contributions made pursuant to Section 11.2,
Employer matching contributions if they are deemed to be Elective Contributions,
and any Qualified Non-Elective Contributions.
1.51 " Participant's Rollover Account" means the account established and
maintained by the Administrator for each Participant with respect to his total
interest in the Plan resulting from amounts transferred from another qualified
plan or " conduit" Individual Retirement Account in accordance with Section 4.6.
1.52 "Plan" means this instrument (hereinafter referred to as Automatic
Data Processing Defined Contribution Plan and Trust Basic Plan Document #01)
including all amendments thereto, and the Adoption Agreement as adopted by the
Employer.
1.53 "Plan Year" means the Plan's accounting year as specified in C2 of the
Adoption Agreement.
1.54 "Pre-Retirement Survivor Annuity" means an immediate annuity for the
life of the Participant's spouse, the payments under which must be equal to the
actuarial equivalent of 50% of the Participant's Vested interest in the Plan as
of the date of death.
1.55 "Qualified Non-Elective Account" means the account established
hereunder to which Qualified Non-Elective Contributions are allocated.
1.56 "Qualified Non-Elective Contribution" means the Employer's
contributions to the Plan that are made pursuant to E5 of the Adoption Agreement
and Section 11.1(d) which are used to satisfy the "Actual Deferral Percentage"
tests. Qualified Non-Elective Contributions are nonforfeitable when made and are
distributable only as specified in Sections 11.2(c) and 11.8. In addition, the
Employer's contributions to the Plan that are made pursuant to Section 11.7(h)
and which are used to satisfy the "Actual Contribution Percentage" tests shall
be considered Qualified Non-Elective Contributions.
1.57 "Qualified Voluntary Employee Contribution Account" means the account
established and maintained by the Administrator for each Participant with
respect to his total interest under the Plan resulting from the Participant's
tax deductible qualified voluntary employee contributions made pursuant to
Section 4.9.
1.58 "Regulation" means the Income Tax Regulations as promulgated by the
Secretary of the Treasury or his delegate, and as amended from time to time.
1.59 "Retire Participant" means a person who has been a Participant , but
who has become entitled to retirement benefits under the Plan.
1.60 "Retirement Date" means the date as of which a Participant retires for
reasons other than Total and Permanent Disability, whether such retirement
occurs on a Participant's Normal Retirement Date, Early or Late Retirement Date
(see Section 6.1).
1.61 "Self-Employed Individual" means an individual who has earned income
for the taxable year from the trade or business for which the Plan is
established, and, also, an individual who would have had earned income but for
the fact that the trade or business had no net profits for the taxable year. A
Self-Employed Individual shall be treated as an Employee.
1.62 "Shareholder-Employee" means a Participant who owns more than five
percent (5%) of the Employer's outstanding capital stock during any year in
which the Employer elected to be taxed as a Small Business Corporation under the
applicable Code Section.
1.63 "Short Plan Year" means, if specified in the Adoption Agreement, that
the Plan Year shall be less than a 12 month period. If chosen, the following
rules shall apply in the administration of this Plan. In determining whether an
Employee has completed a Year of Service for benefit accrual purposes in the
Short Plan Year, the number of the Hours of Service required shall be
proportionately reduced based on the number of days in the Short Plan Year. The
determination of whether an Employee has completed a Year of Service for vesting
and eligibility purposes shall be made in accordance with Department of labor
Regulation 2530.203-2(c). In addition, if this Plan is integrated with Social
Security, the integration level shall also be proportionately reduced based on
the number of days in the Short Plan Year.
1.64 "Super Top Heavy Plan" means a plan described in Section 2.2(b).
1.65 "Taxable Wage Base" means, with respect to any year, the maximum
amount of earnings which may be considered wages for such year under Code
Section 3121(a)(1).
1.66 "Terminated Participant" means a person who has been a Participant,
but whose employment has been terminated other than by death, Total and
Permanent Disability or retirement.
1.67 "Top Heavy Plan" means a plan described in Section 2.2(a).
1.68 "Top Heavy Plan Year" means a Plan Year commencing after December 31,
1983 during which the Plan is a Top Heavy Plan.
1.69 "Top Paid Group" shall be determined pursuant to Code Section 414(q)
and the Regulations thereunder and generally means the top 20 percent of
Employees who performed services for the Employer during the applicable year,
ranked according to the amount of "415 Compensation" (as determined pursuant to
Section 1.29) received from the Employer during such year. All Affiliated
Employers shall be taken into account as a single employer, and Leased Employees
shall be treated as Employees pursuant to Code Section 414(n) or (o). Employees
who are non-resident aliens who received no earned income (within the meaning of
Code Section 911(d)(2) from the Employer constituting United States source
income within the meaning of Code Section 861(a)(3) shall not be treated as
Employees. Additionally, for the purpose of determining the number of active
Employees in any year, the following additional Employees shall also be
excluded, however, such Employees shall still be considered for the purpose of
identifying the particular Employees in the Top Paid Group:
(a) Employees with less than six (6) months of service;
(b) Employees who normally work less than 17 hours per week;
(c) Employees who normally work less than six (6) months during a
year; and
(d) Employees who have not yet attained age 21.
In addition, if 90 percent or more of the Employees of the Employer are
covered under agreements the Secretary of Labor finds to be collective
bargaining agreements between Employee representatives and the Employer, and the
Plan covers only Employees who are not covered under such agreements, then
Employees covered by such agreements shall be excluded from both the total
number of active Employees as well as from the identification of particular
Employees in the Top Paid Group.
The foregoing exclusions set forth in this section shall be applied on
a uniform and consistent basis for all purposes for which the Code Section
414(q) definition is applicable.
1.70 "Total and Permanent Disability" means the inability to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to last for a continuous period of not
less than 12 months. The disability of a Participant shall be determined by a
licensed physician chosen by the Administrator. However, if the condition
constitutes total disability under the federal Social Security Acts, the
Administrator may rely upon such determination that the Participant is Totally
and Permanently Disabled for the purposes of this Plan. The determination shall
be applied uniformly to all Participants.
1.71 "Trustee" means State Street Bank, or such other trustee as may be
appointed by the Employer.
1.72 "Trust Fund" means the assets of the Plan and Trust as the same shall
exist from time to time.
1.73 "Vested" means the nonforfeitable portion of any account maintained on
behalf of a Participant.
1.74 "Voluntary Contribution Account" means the account established and
maintained by the Administrator for each Participant with respect to his total
interest in the Plan resulting from the Participant's nondeductible voluntary
contributions made pursuant to Section 4.7.
1.75 "Year of Service" means the computation period of twelve (12)
consecutive months, herein set forth, and during which an Employee has completed
at least 1000 Hours of Service.
For purposes of eligibility for participation, the initial computation
period shall begin with the date on which the Employee first performs an Hour of
Service (employment commencement date). The computation period beginning after
a 1-Year Break in Service shall be measured from the date on which an Employee
again performs an Hour of Service. The succeeding computation periods shall
begin with the first anniversary of the Employee's employment commencement date.
However, if one (1) Year of Service or less is required as a condition of
eligibility, then after the initial eligibility computation period, the
eligibility computation period shall shift to the current Plan Year which
includes the anniversary of the date on which the Employee first performed an
Hour of Service. An Employee who is credited with 1,000 Hours of Service in
both the initial eligibility computation period and the first Plan Year which
commences prior to the first anniversary of the Employee's initial eligibility
computation period will be credited with two Years of Service for purposes of
eligibility to participate.
For vesting purposes, and all other purposes not specifically
addressed in this Section, the computation period shall be the Plan Year,
including periods prior to the Effective Date of the Plan unless specifically
excluded pursuant to the Adoption Agreement.
Years of Service and breaks in service will be measured on the same
computation period.
Years of Service with any predecessor Employer which maintained this
Plan shall be recognized. Years of Service with any predecessor Employer shall
be recognized as specified in the Adoption Agreement.
Years of Service with any Affiliated Employer shall be recognized.
ARTICLE II
TOP HEAVY PROVISIONS AND ADMINISTRATION
2.1 TOP HEAVY PLAN REQUIREMENTS
For any Top Heavy Plan Year, the Plan shall provide the special
vesting requirements of Code Section 416(b) pursuant to Section 6.4 of the Plan
and the special minimum allocation requirements of Code Section 416(c) pursuant
to Section 4.3(i) of the Plan.
2.2 DETERMINATION OF TOP HEAVY STATUS
(a) This Plan shall be a Top Heavy Plan for any Plan Year beginning
after December 31, 1983, in which, as of the Determination Date, (1) the
Present Value of Accrued Benefits of Key Employees and (2) the sum of the
Aggregate Accounts of Key Employees under this Plan and all plans of an
Aggregation Group, exceeds sixty percent (60%) of the Present Value of
Accrued Benefits and the Aggregate Accounts of all Key and Non-Key
Employees under this Plan and all plans of an Aggregation Group.
If any Participant is a Non-Key Employee for any Plan Year, but such
Participant was a Key Employee for any prior Plan Year, such Participant's
Present Value of Accrued Benefit and/or Aggregate Account balance shall not
be taken into account for purposes of determining whether this Plan is a
Top Heavy or Super Top Heavy Plan (or whether any Aggregation Group which
includes this Plan is a Top Heavy Group). In addition, if a Participant or
Former Participant has not performed any services for any Employer
maintaining the Plan at any time during the five year period ending on the
Determination Date, any accrued benefit for such Participant or Former
Participant shall not be taken into account for the purposes of determining
whether this Plan is a Top Heavy or Super Top Heavy Plan.
(b) This Plan shall be a Super Top Heavy Plan for any Plan Year
beginning after December 31, 1983, in which, as of the Determination Date,
(1) the Present Value of accrued Benefits of Key Employees and (2) the sum
of the Aggregate Accounts of Key Employees under this Plan and all plans of
an Aggregation Group, exceeds ninety percent (90%) of the Present Value of
Accrued Benefits and the Aggregate Accounts of all Key and Non-Key
Employees under this Plan and all plans of an Aggregation Group.
(c) Aggregate Account: A Participant's Aggregate Account as of the
Determination Date is the sum of:
(1) his Participant's Combined Account balances as of the most recent
valuation occurring within a twelve (12) month period ending on the
Determination Date;
(2) for a Profit Sharing Plan, an adjustment for any contributions due
as of the Determination Date. Such adjustment shall be the amount of
any contributions actually made after the valuation date but before
the Determination Date, except for the first Plan Year when such
adjustments shall also reflect the amount of any contributions made
after the Determination Date that are allocated as of a date in that
first Plan Year.
(3) for a Money Purchase Plan, contributions that would be allocated
as of a date not later than the Determination Date, even though those
amounts are not yet made or required to be made.
(4) any Plan distributions made within the Plan Year that includes the
Determination Date or within the four (4) preceding Plan Years.
However, in the case of distributions made after the valuation date
and prior to the Determination Date, such distributions are not
included as distributions for top heavy purposes to the extent that
such distributions are already included in the Participant's Aggregate
Account balance as of the valuation date. In the case of a
distribution of an annuity Contract, the amount of such distribution
is deemed to be the current actuarial value of the Contract,
determined on the date of the distribution. Notwithstanding anything
herein to the contrary, all distributions, including distributions
made prior to January 1, 1984, and distributions under a terminated
plan which if it had not been terminated would have been required to
be included in an Aggregation Group, will be counted. Further,
distributions from the Plan (including the cash value of life
insurance policies) of a Participant's account balance because of
death shall be treated as a distribution for the purpose of this
paragraph.
(5) any Employee contributions, whether voluntary or mandatory.
However, amounts attributable to tax deductible qualified voluntary
employee contributions shall not be considered to be a part of the
Participant's Aggregate Account balance.
(6) with respect to unrelated rollovers and plan-to-plan transfers
(ones which are both initiated by the Employee and made from a plan
maintained by one employer to a plan maintained by another employer),
if this Plan provides the rollovers or plan-to-plan transfers, it
shall always consider such rollovers or plan-to-plan transfers as a
distribution for the purposes of this Section. If this Plan is the
plan accepting such rollovers or plan-to-plan transfers, it shall not
consider such rollovers or plan-to-plan transfers accepted after
December 31, 1983, as part of the Participant's Aggregate Account
balance. However, rollovers or plan-to-plan transfers accepted prior
to January 1, 1984 shall be considered as part of the Participant's
Aggregate Account balance.
(7) with respect to related rollovers and plan-to-plan transfers (ones
either not initiated by the Employee or made to a plan maintained by
the same employer), if this Plan provides the rollover or plan-to-plan
transfer, it shall not be counted as a distribution for purposes of
this Section. If this Plan is the plan accepting such rollover or
plan-to-plan transfer, it shall consider such rollover or plan-to-plan
transfer as part of the Participant's Aggregate Account balance,
irrespective of the date on which such rollover or plan-to-plan
transfer is accepted.
(8) For the purposes of determining whether two employers are to be
treated as the same employer in 2.2(c)(6) and 2.2(c)(7) above, all
employers aggregated under Code Section 414(b), (c), (m) and (o) are
treated as the same employer.
(d) "Aggregation Group" means either a Required Aggregation Group or a
Permissive Aggregation Group as hereinafter determined.
(1) Required Aggregation Group: In determining a Required Aggregation
Group hereunder, each qualified plan of the Employer, including any
Simplified Employee Pension Plan, in which a Key Employee is a
participant in the Plan Year containing the Determination Date or any
of the four preceding Plan Years, and each other qualified plan of the
Employer which enables any qualified plan in which a Key Employee
participates to meet the requirements of Code Sections 401(a)(4) or
410, will be required to be aggregated. Such group shall be known as a
Required Aggregation Group.
In the case of a Required Aggregation Group, each plan in the group
will be considered a Top Heavy Plan if the Required Aggregation Group
is a Top Heavy Group. No plan in the Required Aggregation Group will
be considered a Top Heavy Plan if the Required Aggregation Group is
not a Top Heavy Group.
(2) Permissive Aggregation Group: The Employer may also include any
other plan of the Employer, including any Simplified Employee Pension
Plan, not required to be included in the Required Aggregation Group,
provided the resulting group, taken as a whole, would continue to
satisfy the provisions of Code Sections 401(a)(4) and 410. Such group
shall be known as a Permission Aggregation Group.
In the case of a Permissive Aggregation Group, only a plan that is
part of the Required Aggregation Group will be considered a Top Heavy
Plan if the Permissive Aggregation Group is a Top Heavy Group. No plan
in the Permissive Aggregation Group will be considered a Top Heavy
Plan if the Permissive Aggregation Group is not a Top Heavy Group.
(3) Only those plans of the Employer in which the Determination Dates
fall within the same calendar year shall be aggregated in order to
determine whether such plans are Top Heavy Plans.
(4) An Aggregation Group shall include any terminated plan of the
Employer if it was maintained within the last five (5) years ending on
the Determination Date.
(e) "Determination Date" means (a) the last day of the preceding Plan
Year, or (b) in the case of the first Plan Year, the last day of such Plan
Year.
(f) Present Value of Accrued Benefit: In the case of a defined benefit
plan, the Present Value of Accrued Benefit for a Participant other than a
Key Employee shall be as determined using the single accrual method used
for all plans of the Employer and Affiliated Employers, or if no such
single method exists, using a method which results in benefits accruing not
more rapidly than the slowest accrual rate permitted under Code Section
411(b)(1)(C). The determination of the Present Value of Accrued Benefit
shall be determined as of the most recent valuation date that falls within
or ends with the 12-month period ending on the Determination Date, except
as provided in Code Section 416 and the Regulations thereunder for the
first and second plan years of a defined benefit plan.
However, any such determination must include present value of accrued
benefit attributable to any Plan distributions referred to in Section
2.2(c)(4) above, any Employee contributions referred to in Section
2.2(c)(5) above or any related or unrelated rollovers referred to in
Sections 2.2(c)(6) and 2.2(c)(7) above.
(g) "Top Heavy Group" means an Aggregation Group in which, as of the
Determination Date, the sum of:
(1) the Present Value of Accrued Benefits of Key Employees under all
defined benefit plans included in the group, and
(2) the Aggregate Accounts of Key Employees under all defined
contribution plans included in the group,
exceeds sixty percent (60%) of a similar sum determined for all
participants.
(h) The Administrator shall determine whether this Plan is a Top Heavy
Plan on the Anniversary Date specified in the Adoption Agreement. Such
determination of the top heavy ratio shall be in accordance with Code
Section 416 and the Regulations thereunder.
2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER
(a) The Employer shall be empowered to appoint and remove the
Administrator from time to time as it deems necessary for the proper
administration of the Plan to assure that the Plan is being operated for
the exclusive benefit of the Participants and their Beneficiaries in
accordance with the terms of the Plan, the Code, and the Act.
(b) The Employer shall establish a "funding policy and method," i.e.,
it shall determine whether the Plan has a short run need for liquidity
(e.g., to pay benefits) or whether liquidity is a long run goal and
investment growth (and stability of same) is a more current need, or shall
appoint a qualified person to do so. The employer or its delegate shall
communicate such needs and goals to the Trustee, who shall coordinate such
Plan needs with its investment policy. The communication of such a "funding
policy and method" shall not, however, constitute a directive to the
Trustee as to investment of the Trust Funds. Such "funding policy and
method" shall be consistent with the objectives of this Plan and with the
requirements of Title I of the Act.
(c) The employer may, in its discretion, appoint an Investment Manager
to manage all or a designated portion of the assets of the Plan. In such
event, the Trustee shall follow the directive of the Investment Manager in
investing the assets of the Plan managed by the Investment Manager.
(d) The Employer shall periodically review the performance of any
Fiduciary or other person to whom duties have been delegated or allocated
by it under the provisions of this Plan or pursuant to procedures
established hereunder. This requirement may be satisfied by formal periodic
review by the Employer or by a qualified person specifically designated by
the Employer, through day-to-day conduct and evaluation, or through other
appropriate ways.
2.4 DESIGNATION OF ADMINISTRATIVE AUTHORITY
The Employer shall appoint one or more Administrators. Any person,
including, but not limited to, the Employees of the Employer, shall be eligible
to serve as an Administrator. Any person so appointed shall signify his
acceptance by filing written acceptance with the Employer. An Administrator may
resign by delivering his written resignation to the Employer or be removed by
the Employer by delivery of written notice of removal, to take effect at a date
specified therein, or upon delivery to the Administrator if no date is
specified.
The Employer, upon the resignation or removal of an Administrator,
shall promptly designate in writing a successor to this position. If the
Employer does not appoint an Administrator, the Employer will function as the
Administrator.
2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES
If more than one person is appointed as Administrator, the
responsibilities of each Administrator may be specified by the Employer and
accepted in writing by each Administrator. In the event that no such delegation
is made by the Employer, the Administrators may allocate the responsibilities
among themselves, in which event the Administrators shall notify the Employer
and the Trustee in writing of such action and specify the responsibilities of
each Administrator. The Trustee thereafter shall accept and rely upon any
documents executed by the appropriate Administrator until such time as the
Employer or the Administrators file with the Trustee a written revocation of
such designation.
2.6 POWERS AND DUTIES OF THE ADMINISTRATOR
The primary responsibility of the Administrator is to administer the
Plan for the exclusive benefit of the Participants and their Beneficiaries,
subject to the specific terms of the Plan. The Administrator shall administer
the Plan in accordance with its terms and shall have the power and discretion to
construe the terms of the Plan and determine all questions arising in connection
with the administration, interpretation, and application of the Plan. Any such
determination by the Administrator shall be conclusive and binding upon all
persons. The Administrator may establish procedures, correct any defect, supply
any information, or reconcile any inconsistency in such manner and to such
extent as shall be deemed necessary or advisable to carry out the purpose of the
Plan; provided, however, that any procedure, discretionary act, interpretation
or construction shall be done in a nondiscriminatory manner based upon uniform
principles consistently applied and shall be consistent with the intent that the
Plan shall continue to be deemed a qualified plan under the terms of Code
Section 401(a), and shall comply with the terms of the Act and all regulations
issued pursuant thereto. The Administrator shall have all powers necessary or
appropriate to accomplish his duties under this Plan.
The Administrator shall be charged with the duties of the general
administration of the Plan, including, but not limited to, the following:
(a) the discretion to determine all questions relating to the
eligibility of Employees to participate or remain a Participant hereunder
and to receive benefits under the Plan;
(b) to compute, certify, and direct the Trustee with respect to the
amount and the kind of benefits to which any Participant shall be entitled
hereunder;
(c) to authorize and direct the Trustee with respect to all
nondiscretionary or otherwise directed disbursements from the Trust Fund;
(d) to maintain all necessary records for the administration of the
Plan;
(e) to interpret the provisions of the Plan and to make and publish
such rules for regulation of the Plan as are consistent with the terms
hereof;
(f) to determine the size and type of any Contract to be purchased
from any Insurer, and to designate the Insurer from which such Contract
shall be purchased;
(g) to compute and certify to the Employer and to the Trustee from
time to time the sums of money necessary or desirable to be contributed to
the Trust Fund;
(h) to consult with the Employer and the Trustee regarding the short
and long-term liquidity needs of the Plan in order that the Trustee can
exercise any investment discretion in a manner designed to accomplish
specific objectives;
(i) to prepare and distribute to Employees a procedure for notifying
Participants and Beneficiaries of their rights to elect Joint and Survivor
Annuities and Pre-Retirement Survivor Annuities if required by the Code and
Regulations thereunder;
(j) to assist any Participant regarding his rights, benefits, or
elections available under the Plan.
2.7 RECORDS AND REPORTS
The Administrator shall keep a record of all actions taken and shall
keep all other books of account, records, and other data that may be necessary
for proper administration of the Plan and shall be responsible for supplying all
information and reports to the Internal Revenue Service, Department of Labor,
Participants, Beneficiaries and others as required by law.
2.8 APPOINTMENT OF ADVISERS
The Administrator, or the Trustee with the consent of the
Administrator, may appoint counsel, specialists, advisers, and other persons as
the Administrator or the Trustee deems necessary or desirable in connection with
the administration of this Plan.
2.9 INFORMATION FROM EMPLOYER
To enable the Administrator to perform his functions, the Employer
shall supply full and timely information to the Administrator on all matters
relating to the Compensation of all Participants, their Hours of Service, their
Years of Service, their retirement, death, disability or termination of
employment, and such other pertinent facts as the Administrator may require; and
the Administrator shall advise the Trustee of such of the foregoing facts as may
be pertinent to the Trustee's duties under the Plan. The Administrator may rely
upon such information as is supplied by the Employer and shall have no duty or
responsibility to verify such information.
2.10 PAYMENT OF EXPENSES
All expenses of administration may be paid out of the Trust Fund
unless paid by the Employer. Such expenses shall include any expenses incident
to the functioning of the Administrator, including, but not limited to, fees of
accountants, counsel, and other specialists and their agents, and other costs of
administering the Plan. Until paid, the expenses shall constitute a liability
of the Trust Fund. However, the Employer may reimburse the Trust Fund for any
administration expense incurred. Any administration expense paid to the Trust
Fund as a reimbursement shall not be considered an Employer contribution.
2.11 MAJORITY ACTIONS
Except where there has been an allocation and delegation of
administrative authority pursuant to Section 2.5, if there shall be more than
one Administrator, they shall act by a majority of their number, but may
authorize one or more of them to sign all papers on their behalf.
2.12 CLAIMS PROCEDURE
Claims for benefits under the Plan may be filed in writing with the
Administrator. Written notice of the disposition of a claim shall be furnished
to the claimant within 90 days after the application is filed. In the event the
claim is denied, the reasons for the denial shall be specifically set forth in
the notice in language calculated to be understood by the claimant, pertinent
provisions of the Plan shall be cited, and, where appropriate, an explanation as
to how the claimant can perfect the claim will be provided. In addition, the
claimant shall be furnished with an explanation of the Plan's claim review
procedure.
2.13 CLAIMS REVIEW PROCEDURE
Any Employee, former Employee, or Beneficiary of either, who has been
denied a benefit by a decision of the Administrator pursuant to Section 2.12
shall be entitled to request the Administrator to give further consideration to
his claim by filing with the Administrator a written request for a hearing.
Such request, together with a written statement of the reasons why the claimant
believes his claim should be allowed, shall be filed with the Administrator no
later than 60 days after receipt of the written notification provided for in
Section 2.12. The Administrator shall then conduct a hearing within the next 60
days, at which the claimant may be represented by an attorney or any other
representative of his choosing and expense and at which the claimant shall have
an opportunity to submit written and oral evidence and arguments in support of
his claim. At the hearing (or prior thereto upon 5 business days written notice
to the Administrator) the claimant or his representative shall have an
opportunity to review all documents in the possession of the Administrator which
are pertinent to the claim at issue and its disallowance. Either the claimant
or the Administrator may cause a court reporter to attend the hearing and record
the proceedings. In such event, a complete written transcript of the
proceedings shall be furnished to both parties by the court reporter. The full
expense of any such court reporter and such transcripts shall be borne by the
party causing the court reporter to attend the hearing. A final decision as to
the allowance of the claim shall be made by the Administrator within 60 days of
receipt of the appeal (unless there has been an extension of 60 days due to
special circumstances, provided the delay and the special circumstances
occasioning it are communicated to the claimant within the 60 day period). Such
communication shall be written in a manner calculated to be understood by the
claimant and shall include specific reasons for the decision and specific
references to the pertinent Plan provisions on which the decision is based.
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY
Any Eligible Employee shall be eligible to participate hereunder on
the date he has satisfied the requirements specified in the Adoption Agreement.
3.2 EFFECTIVE DATE OF PARTICIPATION
An Eligible Employee who has become eligible to be a Participant shall
become a Participant effective as of the day specified in the Adoption
Agreement.
In the event an Employee who has satisfied the Plan's eligibility
requirements and would otherwise have become a Participant shall go from a
classification of a noneligible Employee to an Eligible Employee, such Employee
shall become a Participant as of the date he becomes an Eligible Employee.
In the event an Employee who has satisfied the Plan's eligibility
requirements and would otherwise become a Participant shall go from a
classification of an Eligible Employee to a noneligible Employee and becomes
ineligible to participate and has not incurred a 1-Year Break in Service, such
Employee shall participate in the Plan as of the date he returns to an eligible
class of Employees. If such Employee does incur a 1-Year Break in Service,
eligibility will be determined under the Break in Service rules of the Plan.
3.3 DETERMINATION OF ELIGIBILITY
The Administrator shall determine the eligibility of each Employee for
participation in the Plan based upon information furnished by the Employer.
Such determination shall be conclusive and binding upon all persons, as long as
the same is made pursuant to the Plan and the Act. Such determination shall be
subject to review per Section 2.13.
3.4 TERMINATION OF ELIGIBILITY
In the event a Participant shall go from a classification of an
Eligible Employee to an ineligible Employee, such Former Participant shall
continue to vest in his interest in the Plan for each Year of Service completed
while a noneligible Employee, until such time as his Participant's Account shall
be forfeited or distributed pursuant to the terms of the Plan. Additionally, his
interest in the Plan shall continue to share in the earnings of the Trust Fund.
3.5 OMISSION OF ELIGIBLE EMPLOYEE
If, in any Plan Year, any Employee who should be included as a
Participant in the Plan is erroneously omitted and discovery of such omission is
not made until after a contribution by his Employer for the year has been made,
the Employer shall make a subsequent contribution, if necessary after the
application of Section 4.3(e), so that the omitted Employee receives a total
amount which the said Employee would have received had he not been omitted. Such
contribution shall be made regardless of whether or not it is deductible in
whole or in part in any taxable year under applicable provisions of the Code.
3.6 INCLUSION OF INELIGIBLE EMPLOYEE
If, in any Plan Year, any person who should not have been included as
a Participant in the Plan is erroneously included and discovery of such
incorrect inclusion is not made until after a contribution for the year has been
made, the Employer shall not be entitled to recover the contribution made with
respect to the ineligible person regardless of whether or not a deduction is
allowable with respect to such contribution. In such event, the amount
contributed with respect to the ineligible person shall constitute a Forfeiture
for the Plan Year in which the discovery is made.
3.7 ELECTION NOT TO PARTICIPATE
An Employee may, subject to the approval of the Employer, elect
voluntarily not to participate in the Plan. The election not to participate must
be communicated to the Employer, in writing, at least thirty (30) days before
the beginning of a Plan Year. For Standardized Plans, a Participant or an
Eligible Employee may not elect not to participate. Furthermore, the foregoing
election not to participate shall not be available with respect to partners in a
partnership.
3.8 CONTROL OF ENTITIES BY OWNER-EMPLOYEE
(a) If this Plan provides contributions or benefits for one or more
Owner-Employees who control both the business for which this Plan is
established and one or more other entities, this Plan and the plan
established for other trades or businesses must, when looked at as a single
Plan, satisfy Code Section 401(a) and (d) for the Employees of this and all
other entities.
(b) If the Plan provides contributions or benefits for one or more
Owner-Employees who control one or more other trades or businesses, the
employees of the other trades or businesses must be included in a plan
which satisfies Code Sections 401(a) and (d) and which provides
contributions and benefits not less favorable than provided for
Owner-Employees under this Plan.
(c) If an individual is covered as an Owner-Employee under the plans
of two or more trades or businesses which are not controlled and the
individual controls a trade or business, then the benefits or contributions
of the employees under the plan of the trades or business which are
controlled must be as favorable as those provided for him under the most
favorable plan of the trade or business which is not controlled.
(d) For purposes of the preceding paragraphs, an Owner-Employee, or
two or more Owner-Employees, will be considered to control an entity if the
Owner-Employee, or two or more Owner-Employees together:
(1) own the entire interest in an unincorporated entity, or
(2) in the case of a partnership, own more than 50 percent of either
the capital interest or the profits interest in the partnership.
(e) For purposes of the preceding sentence, an Owner-Employee, or two
or more Owner-Employees shall be treated as owning any interest in a
partnership which is owned, directly or indirectly, by a partnership which
such Owner-Employee, or such two or more Owner-Employees, are considered to
control within the meaning of the preceding sentence.
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION
(a) For a Money Purchase Plan -
(1) The Employer shall make contributions over such period of years as
the Employer may determine on the following basis. On behalf of each
Participant eligible to share in allocations, for each year of his
participation in this Plan, the Employer shall contribute the amount
specified in the Adoption Agreement. All contributions by the Employer
shall be made in cash or in such property as is acceptable to the
Trustee. The Employer shall be required to obtain a waiver from the
Internal Revenue Service for any Plan Year in which it is unable to
make the full required contribution to the Plan. In the event a waiver
is obtained, this Plan shall be deemed to be an individual designed
plan.
(2) For any Plan Year beginning prior to January 1, 1990, and if
elected in the non-standardized Adoption Agreement for any Plan Year
beginning on or after January 1, 1990, the Employer shall not
contribute on behalf of a Participant who performs less than a Year of
Service during any Plan Year, unless there is a Short Plan Year or a
contribution is required pursuant to 4.3(h).
(3) Notwithstanding the foregoing, the Employer's contribution for any
Fiscal Year shall not exceed the maximum amount allowable as a
deduction to the Employer under the provisions of Code Section 404.
However, to the extent necessary to provide the top heavy minimum
allocations, the Employer shall make a contribution even if it exceeds
the amount which is deductible under Code Section 404.
(b) For a Profit Sharing Plan -
(1) For each Plan Year, the Employer shall contribute to the Plan such
amount as specified by the Employer in the Adoption Agreement.
Notwithstanding the foregoing, however, the Employer's contribution
for any Fiscal Year Shall not exceed the maximum amount allowable as a
deduction to the Employer under the provisions of Code Section 404.
All contributions by the Employer shall be made in cash or in such
property as is acceptable to the Trustee
(2) Except, however, to the extent necessary to provide the top heavy
minimum allocations, the Employer shall make a contribution even if it
exceeds current or accumulated Net Profit or the amount which is
deductible under Code Section 404.
4.2 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION
The Employer shall generally pay to the Trustee its contribution to
the Plan for each Plan Year within the time prescribed by law, including
extensions of time, for the filing of the Employer's federal income tax return
for the Fiscal Year.
4.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS
(a) The Administrator shall establish and maintain an account in the
name of each Participant to which the Administrator shall credit as of each
Anniversary Date, or other valuation date, all amounts allocated to each
such Participants as set forth herein.
(b) The Employer shall provide the Administrator with all information
required by the Administrator to make proper allocation of the Employer's
contributions for each Plan Year. Within a reasonable period of time after
the date of receipt by the Administrator of such information, the
Administrator shall allocate such contribution as follows:
(1) For a Money Purchase Plan:
(i)The Employer's Contribution shall be allocated to each
Participant's Combined Account in the manner set forth in Section
4.1 herein and as specified in Section E2 of the Adoption
Agreement.
(2) For an Integrated Profit Sharing Plan:
(i) The Employer's contribution shall be allocated to each
Participant's Account, except as provided in Section 4.3(f), in a
dollar amount equal to 5.7% of the sum of each Participant's
total Compensation plus Excess Compensation. If the Employer does
not contribute such amount for all Participants, each Participant
will be allocated a share of the contribution in the same
proportion that his total Compensation plus his total Excess
Compensation for the Plan Year bears to the total Compensation
plus the total Excess Compensation of all Participants for that
year.
Regardless of the preceding, 4.3% shall be substituted for 5.7% above
if Excess Compensation is based on more than 20% and less than or
equal to 80% of the Taxable Wage Base. If Excess Compensation is based
on less than 100% and more than 80% of the Taxable Wage Base, then
5.4% shall be substituted for 5.7% above.
(ii) The balance of the Employer's contribution over the amount
allocated above, if any, shall be allocated to each Participant's
Combined Account in the same proportion that his total
Compensation for the Year bears to the total Compensation of all
Participants for such year.
(iii) Except, however, for any Plan Year beginning prior to
January 1, 1990, and if elected in the non-standardized Adoption
Agreement for any Plan Year beginning on or after January 1,
1990, a Participant who performs less than a Year of Service
during any Plan Year shall not share in the Employer's
contribution for that year, unless there is a Short Plan Year or
a contribution is required pursuant to Section 4.3(h).
(3) For a None-Integrated Profit Sharing Plan:
(i) The Employer's contribution shall be allocated to each
Participant's Account in the same proportion that each such
Participant's Compensation for the year bears to the total
Compensation of all Participants for such year.
(ii) Except, however, for any Plan Year beginning prior to
January 1, 1990, and if elected in the non-standardized Adoption
Agreement for any Plan Year beginning on or after January 1,
1990, a Participant who performs less than a Year of Service
during any Plan Year shall not share in the Employer's
contribution for that year, unless there is a Short Plan Year or
a contribution is required pursuant to Section 4.3(h).
(c) As of each Anniversary Date or other valuation date, before
allocation of Employer contributions and Forfeitures, any earnings or
losses (net appreciation or net depreciation) of the Trust Fund shall be
allocated in the same proportion that each Participant's and Former
Participant's nonsegregated accounts bear to the total of all Participants'
and Former Participants' nonsegregated accounts as of such date. If any
nonsegregated account of a Participant has been distributed prior to the
Anniversary Date or other valuation date subsequent to a Participant's
termination of employment, no earnings or losses shall be credited to such
account.
(d) Participants' Accounts shall be debited for any insurance or
annuity premiums paid, if any, and credited with any dividends or interest
received on insurance contracts.
(e) As of each Anniversary Date any amounts which became Forfeitures
since the last Anniversary Date shall first be made available to reinstate
previously forfeited account balances of Former Participants, if any, in
accordance with Section 6.4(g)(2) or be used to satisfy any contribution
that may be required pursuant to Section 3.5 and/or 6.9. The remaining
Forfeitures, if any, shall be treated in accordance with the Adoption
Agreement. Provided, however, that in the event the allocation of
Forfeitures provided herein shall cause the "annual addition" (as defined
in Section 4.4) to any Participant's Account to exceed the amount allowable
by the Code, the excess shall be reallocated in accordance with Section
4.5. Except, however, for any Plan Year beginning prior to January 1, 1990,
and if elected in the non-standardized Adoption Agreement for any Plan Year
beginning on or after January 1, 1990, a Participant who performs less than
a Year of Service during any Plan Year shall not share in the Plan
Forfeitures for the year, unless there is a Short Plan Year or a
contribution required pursuant to Section 4.3(h).
(f) Minimum Allocations Required for Top Heavy Plan Years:
Notwithstanding the foregoing, for any Top Heavy Plan Year, the sum of the
Employer's contributions and Forfeitures allocated to the Participant's
Combined Account of each Non-Key Employee shall be equal to at least three
percent (3%) of such Non-Key Employee's "415 Compensation" (reduced by
contributions and forfeitures, if any, allocated to each Non-Key Employee
in any defined contribution plan included with this plan in a Required
Aggregation Group). However, if (i) the sum of the Employer's contributions
and Forfeitures allocated to the Participant's Combined Account of each Key
Employee for such Top Heavy Plan Year is less than three percent (3%) of
each Key Employee's "415 Compensation" and (ii) this Plan is not required
to be included in an Aggregation Group to enable a defined benefit plan to
meet the requirements of Code Section 401(a)(4) or 410, the sum of the
Employer's contributions and Forfeitures allocated to the Participant's
Combined Account of each Non-Key Employee shall be equal to the largest
percentage allocated to the Participant's Combined Account of any Key
Employee.
However, for each Non-Key Employee who is a Participant in a paired
Profit Sharing Plan or 401(k) Profit Sharing Plan and a paired Money Purchase
Plan, the minimum 3% allocation specified above shall be provided in the Money
Purchase Plan.
If this is an integrated Plan, then for any Top Heavy Plan Year the
Employer's contribution shall be allocated as follows:
(1) An amount equal to 3% multiplied by each Participant's Compensation for
the Plan Year shall be allocated to each Participant's Account. If the
Employer does not contribute such amount for all Participants, the amount
shall be allocated to each Participant's Account in the same proportion
that his total Compensation for the Plan year bears to the total
Compensation of all Participants for such year.
(2) The balance of the Employer's contribution over the amount allocated
under subparagraph (1) hereof shall be allocated to each Participant's
Account in a dollar amount equal to 3% multiplied by a Participant's Excess
Compensation. If the Employer does not contribute such amount for all
Participants, each Participant will be allocated a share of the
contribution in the same proportion that his Excess Compensation bears to
the total Excess Compensation of all Participants for that year.
(3) The balance of the Employer's contribution over the amount allocated
under subparagraph (2) hereof shall be allocated to each Participant's
Account in a dollar amount equal to 2.7% multiplied by the sum of each
Participant's total Compensation plus Excess Compensation. If the Employer
does not contribute such amount for all Participants, each Participant will
be allocated a share of the contribution in the same proportion that his
total Compensation plus his total Excess Compensation for the Plan Year
bears to the total Compensation plus the total Excess Compensation of all
Participants for that year.
Regardless of the preceding, 1.3% shall be substituted for 2.7% above if
Excess Compensation is based on more than 20% and less than or equal to 80%
of the Taxable Wage Base. If Excess Compensation is based on less than 100%
and more than 80% of the Taxable Wage Base, then 2.4% shall be substituted
for 2.7% above.
(4) The balance of the Employer's contributions over the amount allocated
above, if any, shall be allocated to each Participant's Account in the same
proportion that his total Compensation for the Plan Year bears to the total
Compensation of all Participants for such year.
For each Non-Key Employee who is Participant in this Plan and another
non-paired defined contribution plan maintained by the Employer, the minimum 3%
allocation specified above shall be provided as specified in F3 of the Adoption
Agreement.
(g) For purposes of the minimum allocations set forth above, the
percentage allocated to the Participant's Combined Account of any Key
Employee shall be equal to the ratio of the sum of the Employer's
contributions and Forfeitures allocated on behalf of such Key Employee
divided by the "415 Compensation" for such Key Employee.
(h) For any Top Heavy Plan Year, the minimum allocations set forth in
this Section shall be allocated to the Participant's Combined Account of
all Non-Key Employees who are Participants and who are employed by the
Employer on the last day of the Plan Year, including Non-Key Employees who
have (1) failed to complete a Year of Service; or (2) declined to make
mandatory contributions (if required) or, in the case of a cash or deferred
arrangement, elective contributions to the Plan.
(i) Notwithstanding anything herein to the contrary, in any Plan Year
in which the Employer maintains both this Plan and a defined benefit
pension plan included in a Required Aggregation Group which is top heavy,
the Employer shall not be required to provide a Non-Key Employee with both
the full separate minimum defined benefit plan benefit and the full
separate defined contribution plan allocations. Therefore, if the Employer
maintains both a Defined Benefit and a Defined Contribution Plan that are a
Top Heavy Group, the top heavy minimum benefits shall be provided as
follows:
(1) Applies if F1b of the Adoption Agreement is Selected -
(i) The requirements of Section 2.1 shall apply except that each
Non-Key Employee who is a Participant in the Profit Sharing Plan
or Money Purchase Plan and who is also a Participant in the
Defined Benefit Plan shall receive a minimum allocation of five
percent (5%) of such Participant's "415 Compensation" from the
applicable Defined Contribution Plan(s).
(ii) For each Non-Key Employee who is a Participant only in the
Defined Benefit Plan the Employer will provide a minimum
non-integrated benefit equal to 2% of his highest five
consecutive year average "415 Compensation" for each Year of
Service while a Participant in the Plan, in which the Plan is top
heavy, not to exceed ten.
(iii) For each Non-Key Employee who is a Participant only in this
Defined Contribution Plan, the Employer shall provide a
contribution equal to 3% of his "415 Compensation."
(2) Applies if F1c of the Adoption Agreement is Selected -
(i) The minimum allocation specified in Section 4.3(i)(1)(i)
shall be 7 % If the Employer elects in the Adoption Agreement for
years in which the Plan is Top Heavy, but not Super Top Heavy.
(ii) The minimum benefit specified in Section 4.3 (i)(1)(ii)
shall be 3% if the Employer elects in the Adoption Agreement for
years in which the Plan is Top Heavy, but not Super Top Heavy.
(iii) The minimum allocation specified in Section 4.3(i)(1)(iii)
shall be 4% if the Employer elects to the Adoption Agreement for
years in which the Plan is Top Heavy, but not Super Top Heavy.
(j) For the purposes of this section, "415 Compensation" shall be
limited to $200,000 (unless adjusted in such manner as permitted under Code
Section 415(d). However, for Plan Years beginning prior to January 1, 1989,
the $200,000 limit shall apply only for Top Heavy Plan Years and shall not
be adjusted.
(k) Notwithstanding anything herein to the contrary, any Participant
who terminated employment during the Plan Year for reasons other than
death, Total and Permanent Disability, or retirement shall or shall not
share in the allocations of the Employer's Contributions and Forfeitures as
provided in the Adoption Agreement. Notwithstanding the foregoing, for Plan
Years beginning after 1989, if this is a standardized Plan, any such
terminated Participant shall share in the allocations as provided in this
Section provided such Participant completed more than 500 Hours of Service.
(l) Notwithstanding anything herein to the contrary, Participants
terminating for reasons of death, Total and Permanent Disability, or
retirement shall share in the allocations as provided in this Section
regardless of whether they completed a Year of Service during the Plan
Year.
(m) If a Former Participant is reemployed after five (5) consecutive
1-Year Breaks in Service, then separate accounts shall be maintained as
follows:
(1) one account for nonforfeitable benefits attributable to pre-break
service; and
(2) one account representing his employer derived account balance in
the Plan attributable to post-break service.
(n) Notwithstanding any election in the Adoption Agreement to the
contrary, if this is a non-standardized Plan that would otherwise fail to
meet the requirements of Code Sections 401(a)(26), 410(b)(1), or
410(b)(2)(A)(i) and the Regulations thereunder because Employer
Contributions have not been allocated to a sufficient number or percentage
of Participants for a Plan Year, then the following rules shall apply:
(1) The group of Participants eligible to share in the Employer's
contribution and Forfeitures for the Plan Year shall be expanded to
include the minimum number of Participants who would not otherwise be
eligible as are necessary to satisfy the applicable test specified
above. The specific participants who shall become eligible under the
terms of this paragraph shall be those who are actively employed on
the last day of the Plan Year and, when compared to similarly situated
Participants, have completed the greatest number of Hours of Service
in the Plan Year.
(2) If after application of paragraph (1) above, the applicable test
is still not satisfied, then the group of Participants eligible to
share in the Employer's contribution and Forfeitures for the Plan Year
shall be further expanded to include the minimum number of
Participants who are not actively employed on the last day of the Plan
Year as are necessary to satisfy the applicable test. The specific
Participants who shall become eligible to share shall be those
Participants, when compared to similarly situated Participants, who
have completed the greatest number of Hours of Service in the Plan
year before termination employment.
Nothing in this Section shall permit the reduction of a Participant's
accrued benefit. Therefore any amounts that have previously been allocated
to Participants may not be reallocated to satisfy these requirements. In
such event, the Employer shall make an additional contribution equal to the
amount such affected Participants would have received had they been
included in the allocations, even if it exceeds the amount which would be
deductible under Code Section 404. Any adjustment to the allocations
pursuant to this paragraph shall be considered a retroactive amendment
adopted by the last day of the Plan Year.
4.4 MAXIMUM ANNUAL ADDITIONS
(a)(1) If the Participant does not participate in, and has never
participated in another qualified plan maintained by the Employer, or a
welfare benefit fund (as defined in Code Section 419(e)), maintained by the
Employer, or an individual medical account (as defined in Code Section
415(1)(2)) maintained by the Employer, which provides Annual Additions, the
amount of Annual Additions which may be credited to the Participant's
accounts for any Limitation Year shall not exceed the lesser of the Maximum
Permissible Amount or any other limitation contained in this Plan. If the
Employer contribution that would otherwise be contributed or allocated to
the Participant's accounts would cause the Annual Additions for the
Limitation Year to exceed the Maximum Permissible Amount.
(2) Prior to determining the Participant's actual Compensation for the
Limitation Year, the Employer may determine the Maximum Permissible
Amount for a Participant on the basis of a reasonable estimation of
the Participant's Compensation for the Limitation Year, uniformly
determined for all Participants similarly situated.
(3) As soon as is administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for such Limitation
Year shall be determined on the basis of the Participant's actual
compensation for such Limitation Year.
(4) If there is an excess amount pursuant to Section 4.4(a)(2) or
Section 4.5, the excess will be disposed of in one of the following
manners, as uniformly determined by the Plan Administrator for all
Participants similarly situated:
(i) Any Deferred Compensation or nondeductible Voluntary Employee
Contributions, to the extent they would reduce the Excess Amount,
will be distributed to the Participant;
(ii) If, after the application of subparagraph (i), an Excess
Amount still exists, and the Participant is covered by the Plan
at the end of the Limitation Year, the Excess Amount in the
Participant's account will be used to reduce Employer
contributions (including any allocation of Forfeitures) for such
Participant in the next Limitation Year, and each succeeding
Limitation year if necessary;
(iii) If, after the application of subparagraph (i), an Excess
Amount still exists, and the Participant is not covered by the
Plan at the end of a Limitation Year, the Excess Amount will be
held unallocated in a suspense account. The suspense account will
be applied to reduce future Employer contributions (including
allocation of any Forfeitures) for all remaining Participants in
the next Limitation Year, and each succeeding Limitation Year if
necessary;
(iv) If a suspense account is in existence at any time during a
Limitation Year pursuant to this Section, it will not participate
in the allocation of investment gains and losses. If a suspense
account is in existence at any time during a particular
limitation year, all amounts in the suspense account must be
allocated and reallocated to participants' accounts before any
employer contributions or any employee contributions may be made
to the plan for that limitation year. Excess amounts may not be
distributed to participants or former participants.
(b)(1) This subsection applies if, in addition to this Plan, the
Participant is covered under another qualified Prototype defined
contribution plan maintained by the Employer, or a welfare benefit fund (as
defined in Code Section 419(e)) maintained by the Employer, or an
individual medical account (as defined in Code Section 415(1)(2))
maintained by the Employer, which provides Annual Additions, during any
Limitation Year. The Annual Additions which may be credited to a
Participant's accounts under this Plan for any such Limitation Year shall
not exceed the Maximum Permissible Amount reduced by the Annual Additions
credited to a Participant's accounts under the other plans and welfare
benefit funds for the same Limitation Year. If the Annual Additions with
respect to the Participant under other defined contribution plans and
welfare benefit funds maintained by the Employer are less than the Maximum
Permissible Amount and the Employer contribution that would otherwise be
contributed or allocated to the Participant's accounts under this Plan
would cause the Annual Additions for the Limitation Year to exceed this
limitation, the amount contributed or allocated will be reduced so that the
Annual Additions under all such plans and welfare benefit funds for the
Limitation Year will equal the Maximum Permissible Amount. If the Annual
Additions with respect to the Participant under such other defined
contribution plans and welfare benefit funds in the aggregate are equal to
or greater than the Maximum Permissible Amount, no amount will be
contributed or allocated to the Participant's account under this Plan for
the Limitation Year.
(2) Prior to determining the Participant's actual Compensation for the
Limitation Year, the Employer may determine the Maximum Permissible
Amount for a Participant in the manner described in Section 4.4(a)(2).
(3) As soon as is administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for the Limitation
Year will be determined on the basis of the Participant's actual
Compensation for the Limitation Year.
(4) If, pursuant to Section 4.4(b)(2) or Section 4.5, a Participant's
Annual Additions under this Plan and such other plans would result in
an Excess Amount for a Limitation Year, the Excess Amount will be
deemed to consist of the Annual Addition last allocated, except that
Annual Additions attributable to a welfare benefit fund or individual
medical account will be deemed to have been allocated first regardless
of the actual allocation date.
(5) If an Excess Amount was allocated to a Participant on an
allocation date of the Plan which coincides with an allocation date of
another plan, the Excess Amount attributed to this Plan will be the
product of:
(i) the total Excess Amount allocated as of such date, times
(ii) the ratio of (1) the Annual Additions allocated to the
Participant for the Limitation Year as of such date under this
Plan to (2) the total Annual Additions allocated to the
Participant for the Limitation Year as of such date under this
and all the other qualified defined contribution plans.
(6) Any Excess Amount attributed to this Plan will be disposed in the
manner described in Section 4.4(a)(4).
(c) If the Participant is covered under another qualified defined
contribution plan maintained by the Employer which is not a Prototype Plan,
Annual Additions which may be credited to the Participant's account under
this Plan for any Limitation Year will be limited in accordance with
Section 4.4(b), unless the Employer provides other limitations in the
Adoption Agreement.
(d) If the Employer maintains, or at any time maintained, a qualified
defined benefit plan covering any Participant in this Plan the sum of the
Participant's Defined Benefit Plan Fraction and Defined Contribution Plan
Fraction will not exceed 1.0 in any Limitation Year. The Annual Additions
which may be credited to the Participant's account under this Plan for any
Limitation Year will be limited in accordance with the Limitation on
Allocations Section of the Adoption Agreement.
Except, however, if the Plans are standardized paired plans, the rate
of accrual in the defined benefit plan will be reduced to the extent
necessary so that the sum of the Defined Contribution Fraction and Defined
Benefit Fraction will equal 1.0.
(e) For purposes of applying the limitations of Code Section 415, the
transfer of funds from one qualified plan to another is not an "annual
addition." In addition, the following are not Employee contributions for
the purposes of Section 4.4(f)(1)(2): (1) rollover contributions (as
defined in Code Sections 402(a)(5), 403(a)(4), 403(b)(8) and 408 (d)(3));
(2) repayments of loans made to a Participant from the Plan; (3) repayments
of distributions received by an Employee pursuant to Code Section
411(a)(7)(B) (cash-outs); (4) repayments of distributions received by an
Employee pursuant to Code Section 411(a)(3)(D) (mandatory contributions);
and (5) Employee contributions to a simplified employee pension excludable
from gross income under Code Section 408(k)(6).
(f) For purposes of the Section, the following terms shall be defined
as follows:
(1) Annual Additions means the sum credited to a Participant's
accounts for any Limitation Year of (1) Employer contributions, (2)
effective with respect to "limitation years" beginning after December
31, 1986, Employee contributions, (3) forfeitures, (4) amounts
allocated, after March 31, 1984, to an individual medical account, as
defined in Code Section 415(1)(2), which is part of a pension or
annuity plan maintained by the Employer and (5) amounts derived from
contributions paid or accrued after December 31, 1985, in taxable
years ending after such date, which are attributable to
post-retirement medical benefits allocated to the separate account of
a key employee (as defined in Code Section 419A(d)(3)) under a welfare
benefit fund (as defined in Code Section 419(e)) maintained by the
Employer. Except, however, the "415 Compensation" percentage
limitation referred to in paragraph (a)(2) above shall not apply to:
(1) any contribution for medical benefits (within the meaning of Code
Section 419A(f)(2)) after separation from service which is otherwise
treated as an "annual addition," or (2) any amount otherwise treated
as an "annual addition" under Code Section 415(l)(1). Notwithstanding
the foregoing, for "limitation years" beginning prior to January 1,
1987, only that portion of Employee contributions equal to the lesser
of Employee contributions shall be considered an "annual addition."
For this purpose, any Excess Amount applied under Sections 4.4(a)(4)
and 4.4(b)(6) in the Limitation Year to reduce Employer contributions
shall be considered Annual Additions for such Limitation Year.
(2) Compensation means a Participant's Compensation as elected in the
Adoption Agreement. However, regardless of any selection made in the
Adoption Agreement, "415 Compensation" shall exclude compensation
which is not currently includible in the Participant's gross income by
reason of the application of Code Sections 125, 402(a)(8),
402(h)(1)(B), or 403(b).
For limitation years beginning after December 31, 1991, for
purposes of applying the limitations of this article, compensation for
a limitation year is the compensation actually paid or made available
during such limitation year.
Notwithstanding the preceding sentence, compensation for a
participant in a defined contribution plan who is permanently and
totally disable (as defined in section 22(e)(3) of the Internal
Revenue Code) is the compensation such participant would have received
for the limitation year if the participant had been paid at the rate
of compensation paid immediately before becoming permanently and
totally disabled; such imputed compensation for the disable d
participant may be taken into account only if the participant is not a
Highly Compensated Employee and contributions made on behalf of such
participant are nonforfeitable when made.
(3) Defined Benefit Fraction means a fraction, the numerator of which
is the sum of the Participant's Projected Annual Benefits under all
the defined benefit plans (whether or not terminated) maintained by
the Employer, and the denominator of which is the lesser of 125
percent of the dollar limitation determined for the Limitation Year
under Code Sections 415(b) and (d) or 140 percent of his Highest
Average Compensation including any adjustments under Code Section
415(b).
Notwithstanding the above, if the Participant was a Participant as of
the first day of the first Limitation Year beginning after December
31, 1986, in one or more defined benefit plans maintained by the
Employer which were in existence on May 6, 1986, the denominator of
this fraction will not be less than 125 percent of the sum of the
annual benefits under such plans which the Participant had accrued as
of the end of the close of the last Limitation Year beginning before
January 1, 1987, disregarding any changes in the terms and conditions
of the plan after May 5, 1986. The preceding sentence applies only if
the defined benefit plans individually and in the aggregate satisfied
the requirements of Code Section 415 for all Limitation Years
beginning before January 1, 1987.
Notwithstanding the foregoing, for any Top Heavy Plan Year, 100 shall
be substituted for 125 unless the extra minimum allocation is being
made pursuant to the Employer's election in F1 of the Adoption
Agreement. However, for any Plan Year in which this Plan is a Super
Top Heavy Plan, 100 shall be substituted for 125 in any event.
(4) Defined Contribution Dollar Limitation means $30,000, or, if
greater, one-fourth of the defined benefit dollar limitation set forth
in Code Section 415(b)(1) as in effect for the Limitation Year.
(5) Defined Contribution Fraction means a fraction, the numerator of
which is the sum of the Annual Additions to the Participant's account
under all the defined contribution plans (whether or not terminated)
maintained by the Employer for the current and all prior Limitation
Year, (including the Annual Additions attributable to the
Participant's nondeductible voluntary employee contributions to any
defined benefit plans, whether or not terminated, maintained by the
Employer and the annual additions attributable to all welfare benefit
funds, as defined in Code Section 419(c), and individual medical
accounts, as defined in Code Section 415(1)(2), maintained by the
Employer), and the denominator of which is the sum of the maximum
aggregate amounts for the current and all prior Limitation Years of
Service with the Employer (regardless of whether a defined
contribution plan was maintained by the Employer). The maximum
aggregate amount in any Limitation Year is the lesser of 125 percent
of the Defined Contribution Dollar Limitation or 35 percent of the
Participant's Compensation for such year. For Limitation Years
beginning prior to January 1, 1987, the "annual addition" shall not be
recomputed to treat all Employee contributions as an Annual Addition.
If the Employee was a Participant as of the end of the first day of
the first Limitation Year beginning after December 31, 1986, in one or
more defined contribution plans maintained by the Employer which were
in existence on May 5, 1986, the numerator of this fraction will be
adjusted if the sum of this fraction and the Defined Benefit Fraction
would otherwise exceed 1.0 under the terms of the Plan. Under the
adjustment, an amount equal to the product of (1) the excess of the
sum of the fractions over 1.0 times (2) the denominator of this
fraction, will be permanently subtracted from the numerator of this
fraction. The adjustment is calculated using the fractions as they
would be computed as of the end of the last Limitation Year beginning
before January 1, 1987, and disregarding any changes in the terms and
conditions of the plan made after May 5, 1986, but using the Code
Section 415 limitation applicable to the first Limitation Year
beginning on or after January 1, 1987.
Notwithstanding the foregoing, for any Top Heavy Plan Year, 100 shall
be substituted for 125 unless the extra minimum allocation is being
made pursuant to the Employer's election in F1 of the Adoption
Agreement. However, for any Plan Year in which this Plan is a Super
Top Heavy Plan, 100 shall be substituted for 125 in any event.
(6) Employer means the Employer that adopts this Plan and all
Affiliated Employers, except that for purposes of this Section,
Affiliated Employers shall be determined pursuant to the modification
made by Code Section 415(h).
(7) Excess Amount means the excess of the Participant's Annual
Additions for the Limitation Year over the Maximum Permissible Amount.
(8) Highest Average Compensation means the average Compensation for
the three consecutive Years of Service with the Employer that produces
the highest average. A Year of Service with the Employer is the 12
consecutive month period defined in Section E1 of the Adoption
Agreement which is used to determine Compensation under the Plan.
(9) Limitation Year means the Compensation Year (a 12 consecutive
month period) as elected by the Employer in the Adoption Agreement.
All qualified plans maintained by the Employer must use the same
Limitation Year. If the Limitation Year is amended to a different 12
consecutive month period, the new Limitation Year must begin on a date
within the Limitation Year in which the amendment is made.
(10) Master or Prototype Plan means a plan the form of which is the
subject of a favorable opinion letter from the Internal Revenue
Service.
(11) Maximum permissible amount means the maximum Annual Addition that
may be contributed or allocated to a Participant's account under the
plan for any Limitation Year, which shall not exceed the lesser of:
(i) the Defined Contribution Dollar Limitation, or
(ii) 25 percent of the Participant's Compensation for the
Limitation Year.
The Compensation Limitation referred to in (ii) shall not apply
to any contribution for medical benefits (within the meaning of
Code Sections 401(h) or 419A(f)(2)) which is otherwise treated as
an annual addition under Code Sections 415(l)(1) or 419A(d)(2).
If a short Limitation Year is created because of an amendment changing
the Limitation Year to a different 12 consecutive month period, the
Maximum Permissible Amount will not exceed the Defined Contribution
Dollar Contribution multiplied by the following fraction:
NUMBER OF MONTHS IN THE SHORT LIMITATION YEAR
---------------------------------------------
12
(12)Projected Annual Benefit means the annual retirement benefit
(adjusted to an actuarially equivalent straight life annuity if such
benefit is expressed in a form other than a straight life annuity or
qualified Joint and Survivor Annuity) to which the Participant would
be entitled under the terms of the plan assuming:
(i) the Participant will continue employment until Normal
Retirement Age (for current age, if later), and
(ii) the Participant's Compensation for the current Limitation
Year and all other relevant factors used to determine benefits
under the Plan will remain constant for all future Limitation
Years.
(g) Notwithstanding anything contained in the Section to the contrary,
the limitations, adjustments and other requirements prescribed in this
Section shall at all times comply with the provisions of Code Section 415
and the Regulations thereunder, the terms of which are specifically
incorporated herein by reference.
4.5 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS
(a) If as a result of the allocation of Forfeitures, a reasonable
error in estimating a Participant's annual Compensation, a reasonable error
in determining the amount of elective deferrals (within the meaning of Code
Section 402(g)(3)) that may be made with respect to any Participant under
the limits of Section 4.4, or other facts and circumstances to which
Regulation 1.415-6(b)(6) shall be applicable, the "annual additions" under
this Plan would cause the maximum provided in Section 4.4 to be exceeded,
the Administrator shall treat the excess in accordance with Section
4.4(a)(4).
4.6 TRANSFERS FROM QUALIFIED PLANS
(a) If specified in the Adoption Agreement and with the consent of the
Administrator, amounts may be transferred from other qualified plans,
provided that the trust from which such funds are transferred permits the
transfer to be made and the transfer will not jeopardize the tax exempt
status of the Plan or create adverse tax consequences for the Employer. The
amounts transferred shall be set up in a separate account herein referred
to as a "Participant's Rollover Account." Such account shall be fully
Vested at all times and shall not be subject to forfeiture for any reason.
(b) Amounts in a Participant's Rollover Account shall be held by the
Trustee pursuant to the provisions of this Plan and may not be withdrawn
by, or distributed to the Participant, in whole of in part, except as
provided in Paragraphs (c) and (d) of this Section.
(c) Amounts attributable to elective contributions (as defined in
Regulation 1.401 (k)-1(g)(4)), including amounts treated as elective
contributions, which are transferred from another qualified plan in a
plan-to-plan transfer shall be subject to the distribution limitations
provided for in Regulation 1.401(k)-1(d).
(d) At Normal Retirement Date, or such other date when the Participant
or his Beneficiary shall be entitles to receive benefits, the fair market
value of the Participant's Rollover Account shall be used to provide
additional benefits to the Participant or his Beneficiary. Any
distributions of amounts held in a Participant's Rollover Account shall be
made in manner which is consistent with and satisfies the provisions of
Section 6.5, including, but not limited to, all notice and consent
requirements of Code Sections 411(a)(11) and 417 and the Regulations
thereunder. Furthermore, such amounts shall be considered as part of a
Participant's benefit in determining whether an involuntary cash-out of
benefits without Participants consent may be made.
(e) The administrator may direct that employee transfers made after a
valuation date be segregated into a separate account for each Participant
until such time as the allocations pursuant to this Plan have been made, at
which time they may remain segregated or be invested as part of the general
Trust Fund, to be determined by the Administrator.
(f) For purposes of this Section, the term "qualified plan" shall mean
any tax qualified plan under Code Section 401(a). The term "amounts
transferred from other qualified plans" shall mean: (i) amounts transferred
to this Plan directly from another qualified plan; (ii) lump-sum
distributions received by an Employee from another qualified plan which are
eligible for tax free rollover to a qualified plan and which are
transferred by the Employee to the Plan within sixty (60) days following
his receipts thereof; (iii) amounts transferred to this Plan from a conduit
individual retirement account provided that the conduit individual
retirement account has no assets other than assets which (A) were
previously distributed to the Employee by another qualified plan as a
lump-sum distribution (B) were eligible for tax-free rollover to a
qualified plan and (C) were deposited in such conduit individual retirement
account within sixty (60) days of receipt thereof and other than earnings
on said assets; and (iv) amounts distributed to the Employee from a conduit
individual retirement account meeting the requirements of clause (iii)
above, and transferred by the Employee to this Plan within sixty (60) days
of his receipt thereof from such conduit individual retirement account.
(g) Prior to accepting any transfers to which this Section applies,
the Administrator may require the Employee to establish that the amounts to
be transferred to this Plan meet the requirements of this Section and may
also require the Employee to provide an opinion of counsel satisfactory to
the Employer that the amounts to be transferred meet the requirements of
this Section.
(h) Notwithstanding anything herein to the contrary, a transfer
directly to this Plan from another qualified plan (or a transaction having
the effect of such a transfer) shall only be permitted if it will not
result in the elimination or reduction of any "Section 411(d)(6) protected
benefit" as described in Section 8.1.
4.7 VOLUNTARY CONTRIBUTIONS
(a) If this is an amendment to a Plan that had previously allowed
voluntary Employee contributions, then, except as provided in 4.7(b) below,
this Plan will not accept voluntary Employee contributions for Plan Years
beginning after the Plan Year in which this Plan is adopted by the
Employer.
(b) For 401(k) Plans, if elected in the Adoption Agreement, each
Participant may, at the discretion of the Administrator in a
nondiscriminatory manner, elect to voluntarily contribute a portion of his
compensation earned while a Participant under this Plan. Such contributions
shall be paid to the Trustee within a reasonable period of time but in no
event later than 90 days after the receipt of the contribution.
(c) The balance in each Participant's Voluntary Contribution Account
shall be fully Vested at all times and shall not be subject to Forfeiture
for any reason.
(d) A Participant may elect to withdraw his voluntary contributions
from his Voluntary Contribution Account and the actual earnings thereon in
a manner which is consistent with and satisfies the provisions of Section
6.5, including, but not limited to, all notice and consent requirements of
Code Section 411(a)(11) and 417 and the Regulations thereunder. If the
Administrator maintains sub-accounts with respect to voluntary
contributions (and earnings thereon) which were made on or before a
specified date, a Participant shall be permitted to designate which
sub-account shall be the source for his withdrawal. No Forfeitures shall
occur solely as a result of an Employee's withdrawal Employee
contributions.
In the event such a withdrawal is made, or in the event a Participant
has received a hardship distribution pursuant to Regulation
1.401(k)-1(d)(2)(iii)(B) from any plan maintained by the Employer, then
such Participant shall be barred from making any voluntary contributions
for a period of twelve (12) months after receipt of the withdrawal or
distribution.
(e) At Normal Retirement Date, or such other date when the Participant
or his Beneficiary shall be entitled to receive benefits, the fair market
value of the Voluntary Contribution Account shall be used to provide
additional benefits to the Participant or his Beneficiary.
(f) The Administrator may direct that voluntary contributions made
after a valuation date be segregated into a separate account until such
time as the allocations pursuant to this Plan have been made, at which time
they may remain segregated or be invested as part of the general Trust
Fund, to be determined by the Administrator.
4.8 DIRECTED INVESTMENT ACCOUNT
(a) If elected in the Adoption Agreement, all Participants shall
direct the Trustee as to the investment of all of their individual account
balances. Participants shall direct the Trustee in writing (or such other
medium as is acceptable to the Trustee) to invest their account in specific
assets as permitted by the Administrator provided such investments are in
accordance with the Department of Labor regulations and are permitted by
the Plan. That portion of the account of any Participant so directing will
thereupon be considered a Directed Investment Account.
(b) A separate Directed Investment Account shall be established for
each Participant who has directed an investment. Transfers between the
Participant's regular account and their Directed Investment Account shall
be charged and credited as the case may be to each account. The Directed
Investment Account shall not share in Trust Fund Earnings, but it shall be
charged or credited as appropriate with the net earnings, gains, losses,
and expenses as well as any appreciation or depreciation in market value
during each Plan Year attributable to such account.
(c) The Administrator shall establish a procedure, to be applied in a
uniform and nondiscriminatory manner, setting forth the permissible
investment options under this Section, how often changes between
investments may be made, and any other limitations that the Administrator
shall impose on a Participant's right to direct investments.
4.9 QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS
(a) If this is an amendment to a Plan that previously permitted
deductible voluntary contributions, then each Participant who made a
"Qualified Voluntary Employee Contribution" within the meaning of Code
Section 219(c)(2) as it existed prior to the enactment of the Tax Reform
Act of 1986, shall have his contribution held in a separate Qualified
Voluntary Employee Contribution Account which shall be fully Vested at all
times. Such contributions, however, shall not be permitted if they are
attributable to taxable years beginning after December 31, 1986.
(b) A Participant may, upon written request delivered to the
Administrator, make withdrawals from his Qualified Voluntary Employee
Contribution Account. Any distribution shall be made in a manner which is
consistent with and satisfies the provisions of Section 6.5, including, but
not limited to, all notice and consent requirements of Code Sections
411(a)(11) and 417 and the Regulations thereunder.
(c) At Normal Retirement Date, or such other date when the Participant
or his Beneficiary shall be entitled to receive benefits, the fair market
value of the Qualified Voluntary Employee Contribution Account shall be
used to provide additional benefits to the Participant or his Beneficiary.
(d) Unless the Administrator directs Qualified Voluntary Employee
Contributions made pursuant to this Section be segregated into a separate
account for each Participant, they shall be invested as part of the general
Trust Fund and share in earnings and losses.
4.10 ACTUAL CONTRIBUTION PERCENTAGE TESTS
In the event this Plan previously provided for voluntary or mandatory
Employee contributions, then, with respect to Plan Years beginning after
December 31, 1986, such contributions must satisfy the provisions of Code
Section 401(m) and the Regulations thereunder.
4.11 INTEGRATION IN MORE THAN ONE PLAN
If the Employer and/or and Affiliated Employer maintain qualified
retirement plans integrated with Social Security such that any Participant in
this Plan is covered under more than one of such plans, then such plans will be
considered to be one plan and will be considered to be integrated if the extent
of the integration of all such plans does not exceed 100%. For purposes of the
preceding sentence, the extent of integration of a plan is the ratio, expressed
as a percentage, which the actual benefits, benefit rate, offset rate, or
employer contribution rate, whatever is applicable under the Plan bears to the
limitation applicable to such Plan. If the Employer maintains two or more
standardized paired plans, only one plan may be integrated with Social Security.
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND
The Administrator shall direct the Trustee, as of each Anniversary Date,
and at such other date or dates deemed necessary by the Administrator, herein
called "valuation date," to determine the net worth of the assets comprising the
Trust Fund as it exists on the "valuation date." In determining such net worth,
the Trustee shall value the assets comprising the Trust Fund at their fair
market value as of the "valuation date" and shall deduct all expenses for which
the Trustee has not yet obtained reimbursement from the Employer or the Trust
Fund.
5.2 METHOD OF VALUATION
In determining the fair market value of securities held in the Trust
Fund which are listed on a registered stock exchange, the Administrator shall
direct the Trustee to value the same at the prices they were last traded on such
exchange preceding the close of business on the "valuation date." If such
securities were not traded on the "valuation date," or if the exchange on which
they are traded was not open for business on the "valuation date," then the
securities shall be valued at the prices at which they were last traded prior to
the "valuation date." Any unlisted security held in the Trust Fund shall be
valued at its bid price next preceding the close of business on the "valuation
date," which bid price shall be obtained from a registered broker or an
investment banker. In determining the fair market value of assets other than
securities for which trading or bid prices can be obtained, the Trustee may
appraise such assets itself, or in its discretion, employ one or more appraisers
for that purpose and rely on the values established by such appraiser or
appraisers.
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT
Every Participant may terminate his employment with the Employer and
retire for the purposes hereof on or after his Normal Retirement Date or Early
Retirement Date. Upon such Normal Retirement Date or Early Retirement Date, all
amounts credited to such Participant's Combined Account shall become
distributable. However, a Participant may postpone the termination of his
employment with the Employer to a later date, in which event the participation
of such Participant in the Plan, including the right to receive allocations
pursuant to Section 4.3, shall continue until his Late Retirement Date. Upon a
Participant's Retirement Date, or as soon thereafter as is practicable, the
Administrator shall direct the distribution of all amounts credited to such
Participant's Combined Account in accordance with Section 6.5.
6.2 DETERMINATION OF BENEFITS UPON DEATH
(a) Upon the death of a Participant before his Retirement Date or
other termination of his employment, all amounts credited to such
Participant's Combined Account shall become fully Vested. The Administrator
shall direct, in accordance with the provisions of Sections 6.6. and 6.7,
the distribution of the deceased Participant's accounts to the
Participant's Beneficiary.
(b) Upon the death of a Former Participant, the Administrator shall
direct, in accordance with the provisions of Sections 6.6 and 6.7, the
distribution of any remaining amounts credited to the accounts of such
deceased Former Participant to such Former Participant's Beneficiary.
(c) The Administrator may require such proper proof of death and such
evidence of the right of any person to receive payment of the value of the
account of a deceased Participant or Former Participant as the
Administrator may deem desirable. The Administrator's determination of
death and of the right of any person to receive payment shall be
conclusive.
(d) Unless otherwise elected in the manner prescribed in Section 6.6,
the Beneficiary of the Pre-Retirement Survivor Annuity shall be the
Participant's spouse. Except, however, the Participant may designate a
Beneficiary other than his spouse for the Pre-Retirement Survivor Annuity
if:
(1) the Participant and his spouse have validly waived the
Pre-Retirement Survivor Annuity in the manner prescribed in Section
6.6, and the spouse has waived his or her right to be the
Participant's Beneficiary, or
(2) the Participant is legally separated or has been abandoned (within
the meaning of local law) and the Participant has a court order to
such effect (and there is no "qualified domestic relations order" as
defined in Code Section 414(p) which provides otherwise), or
(3) the Participant has no spouse, or
(4) the spouse cannot be located.
In such event, the designation of a Beneficiary shall be made on a
form satisfactory to the Administrator. A Participant may at any time
revoke his designation of a Beneficiary or change his Beneficiary by filing
written notice of such revocation or change with the Administrator.
However, the Participant's spouse must again consent in writing to any
change in Beneficiary unless the original consent acknowledged that the
spouse had the right to limit consent only to a specific Beneficiary and
that the spouse voluntarily elected to relinquish such right. The
Participant may, at anytime, designate a Beneficiary for death benefits
payable under the Plan that are in excess of the Pre-Retirement Survivor
Annuity. In the event no valid designation of Beneficiary exists at the
time of the Participant's death, the death benefit shall be payable to his
estate.
(e) If the Plan provides an insured death benefit and a Participant
dies before any insurance coverage to which he is entitled under the Plan
is effected, his death benefit from such insurance coverage shall be
limited to the standard rated premium which was or should have been used
for such purpose.
(f) In the event of any conflict between the terms of this Plan and
the terms of any Contract issued hereunder, the Plan provisions shall
control.
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY
In the event of a Participant's Total and Permanent Disability prior
to his Retirement Date or other termination of his employment, all amounts
credited to such Participant's Combined Account shall become fully vested. In
the event of a Participant's Total and Permanent Disability, the Administrator,
in accordance with the provisions of Sections 6.5 and 6.7, shall direct the
distribution to such Participant of all amounts credited to such Participant's
Combined Account as though he had retired.
6.4 DETERMINATION OF BENEFITS UPON TERMINATION
(a) On or before the Anniversary Date, or other valuation date,
coinciding with or subsequent to the termination of a Participant's
employment for any reason other than retirement, death, or Total and
Permanent Disability, the Administrator may direct that the amount on the
Vested portion of such Terminated Participant's Combined Account be
segregated and invested separately. In the event the Vested portion of a
Participant's Combined Account is not segregated, the amount shall remain
in a separate account for the Terminated Participant and share in
allocations pursuant to Section 4.3 until such time as a distribution is
made to the Terminated Participant. The amount of the portion of the
Participant's Combined Account which is not Vested may be credited to a
separate account (which will always share in gains and losses of the Trust
Fund) and at such time as the amount becomes a Forfeiture shall be treated
in accordance with the provisions of the Plan regarding Forfeitures.
Regardless of whether distributions in kind are permitted, in the
event that the amount of the Vested portion of the Terminated Participant's
Combined Account equals or exceeds the fair market value of any Insurance
Contracts, the Trustee, when so directed by the Administrator and agreed to
by the Terminated Participant, shall assign, transfer, and set over to such
Terminated Participant all Contracts on his life in such form or with such
endorsement, so that the settlement options and forms of payments are
consistent with the provisions of Section 6.5. In the event that the
Terminated Participant's Vested portion does not at least equal the fair
market value of the Contracts, if any, the Terminated Participant may pay
over to the Trustee the sum needed to make the distribution equal to the
value of the Contracts being assigned or transferred, or the Trustee,
pursuant to the Participant's election, may borrow the cash value of the
Contracts from the Insurer so that the value of the Contracts is equal to
the Vested portion of the Terminated Participant's Combined Account and
then assign the Contracts to the Terminated Participant.
Distribution of the funds due to a Terminated Participant shall be
made on the occurrence of an event which would result in the distribution
had the Terminated Participant remained in the employ of the Employer (upon
the Participant's death, Total and Permanent Disability, Early or Normal
Retirement). However, at the election of the Participant the Administrator
shall direct that the entire Vested portion of the Terminated Participant's
Combined Account to be payable to such Terminated Participant provided the
conditions, if any, set forth in the Adoption Agreement have been
satisfied. Any distribution under this paragraph shall be made in a manner
which is consistent with and satisfies the provisions of Section 6.5,
including but not limited to, all notice and consent requirements of Code
Sections 411(a)(11) and 417 and the Regulations thereunder.
Notwithstanding the above, if value of a Terminated Participant's
Vested benefit derived from Employer and Employee contributions does not
exceed, and at the time of any prior distribution, has never exceeded
$3,500, the Administrator shall direct the entire Vested benefit be paid to
such Participant in a single lump-sum without regard to the consent of the
Participant or the Participant's spouse. A Participant's Vested benefit
shall not include Qualified Voluntary Employee Contributions within the
meaning of Code Section 72(o)(5)(B) for Plan Years beginning prior to
January 1, 1989.
(b) The Vested portion of any Participant's Account shall be a
percentage of such Participant's Account determined on the basis of the
Participants number of Years of Service according to the vesting schedule
specified in the Adoption Agreement.
(c) For any Top Heavy Plan Year, one of the minimum top heavy vesting
schedules as elected by the Employer in the Adoption Agreement will
automatically apply to the Plan. The minimum top heavy vesting schedule
applies to all benefits within the meaning of Code Section 411(a)(7) except
those attributable to Employee contributions, including benefits accrued
before the effective date of Code Section 416 and benefits accrued before
the Plan became top heavy. Further, no decrease in a Participant's Vested
percentage may occur in the event the Plan's status as top heavy changes
for any Plan Year. However, this Section does not apply to the account
balances of any Employee who does not have an Hour of Service after the
Plan has initially become top heavy and the Vested percentage of such
Employee's Participant's Account shall be determined without regard to this
Section 6.4 (c).
If in any subsequent Plan Year, the Plan ceases to be a Top Heavy
Plan, the Administrator shall continue to use the vesting schedule in
effect while the Plan was a Top Heavy Plan for each Employee who had an
hour of Service during the Plan Year when the Plan was Top Heavy.
(d) Notwithstanding the vesting schedule above, upon the complete
discontinuance of the Employer's contributions to the Plan or upon any full
or partial termination of the Plan, all amounts credited to the account of
any affected Participant shall become 100% Vested and shall not thereafter
be subject to Forfeiture.
(e) If this is an amended or restated Plan, then notwithstanding the
vesting schedule specified in the Adoption Agreement, the Vested percentage
of a Participant's Account shall not be less that the Vested percentage
attained as of the later of the effective date or adoption date of this
amendment and restatement. The computation of a Participant's
nonforfeitable percentage of his interest in the Plan shall not be reduced
as the result of any direct or indirect amendment to this Article, or due
to changes in the Plan's status as a Top Heavy Plan.
(f) If the Plan's vesting schedule is amended, or if the Plan is
amended in any way that directly or indirectly affects the computation of
the Participant's nonforfeitable percentage or if the Plan is deemed
amended by an automatic change to a top heavy vesting schedule, then each
Participant with at least 3 Years of Service as of the expiration date of
the election period may elect to have his nonforfeitable percentage
computed under the Plan without regard to such amendment or change.
Notwithstanding the foregoing, for Plan Years beginning before January 1,
1989, or with respect to Employees who fail to complete at least one (1)
Hour of Service in a Plan Year beginning after December 31, 1988, five (5)
shall be substituted for three (3) in the preceding sentence. If a
Participant fails to make such elections, then such Participant shall be
subject to the new vesting schedule. The Participant's election period
shall commence on the adoption date of the amendment and shall end 60 days
after the latest of:
(1) the adoption date of the amendment,
(2) the effective date of the amendment, or
(3) the date the Participant receives written notice of the amendment
from the Employer or Administrator.
(g) (1) If any Former Participant shall be reemployed by the Employer
before a 1-Year Break in Service occurs, he shall continue to participate
in the Plan in the same manner as if such termination had not occurred.
(2) If any Former participant shall be reemployed by the Employer
before five (5) consecutive 1-Year Breaks in Service, and such Former
Participant had received a distribution of his entire Vested interest
prior to his reemployment, his forfeited account shall be reinstated
only if he repays the full amount distributed to him before the
earlier of five (5) years after the first date on which the
Participant is subsequently reemployed by the Employer or the close of
the first period of 5 consecutive 1-Year Breaks in Service commencing
after the distribution. If a distribution occurs for any reason other
than a separation from service, the time for repayment may not end
earlier than five (5) years after the date of separation. In the event
the Former participant does not repay the full amount distributed to
him, the undistributed portion of the Participant's Account must be
restored in full, unadjusted by any gains or losses occurring
subsequent to the Anniversary Date or other valuation date preceding
his termination. If an employee receives a distribution pursuant to
this section and the employee resumes employment covered under this
plan, the employee's employer-derived account balance will be restored
to the amount on the date of distribution if the employee repays to
the plan the full amount of the distribution attributable to employer
contributions before the earlier of 5 years after the first date on
which the participant is subsequently re-employed by the employer, or
the date of the participant incurs 5 consecutive 1-year breaks in
service following the date of distribution. If a non-Vested Former
Participant was deemed to have received a distribution and such Former
Participant is reemployed by the Employer before five (5) consecutive
1-Year Breaks in Service, then such Participant will be deemed to have
repaid the deemed distribution as of the date of reemployment.
(3) If any former Participant is reemployed after 1-Year Break in
Service has occurred, Years of Service shall include Years of Service
prior to his after 1-Year Break in Service subject to the following
rules:
(i) any Former Participant who under the Plan does not have a
nonforfeitable right to any interest in the Plan resulting from
Employer contributions shall lose credits if his consecutive
1-Year Breaks in Service equal or exceed the greater of (A) five
(5) or (B) the aggregate number of his pre-break Year of Service;
(ii) After (5) consecutive 1-Year Breaks in Service, a Former
Participant's Vested Account balance attributable to pre-break
service shall not be increased as a result of post-break service;
(iii) A Former Participant who is reemployed and who has not had
his Years of Service before a 1-Year Break in Service disregarded
pursuant to (i) above, shall participate in the Plan as of his
date of reemployment;
(iv) If a Former Participant completes a Year of Service (a
1-Year Break in Service previously occurred, but employment had
not terminated), he shall participate in the Plan retroactively
from the first day of the Plan Year during which he completes one
(1) Year of Service.
(h) In determining Years of Service for purposes of vesting under the
Plan, Years of Service shall be excluded a s specified in the Adoption
Agreement.
6.5 DISTRIBUTION OF BENEFITS.
(a) (1) Unless otherwise elected as provided below, a Participant who
is married on the "annuity starting date" and who does not die before the
"annuity starting date" shall receive the value of all of his benefits in
the form of a Joint and Survivor Annuity. The Joint and Survivor Annuity is
an annuity that commences immediately and shall be equal in value to a
single life annuity. Such joint and survivor benefits following the
Participant's death shall continue to the spouse during the spouse's
lifetime at a rate equal to 50% of the rate at which such benefits were
payable to the Participant. This Joint and Survivor Annuity shall be
considered the designated qualified Joint and Survivor Annuity and
automatic form of payment for the purposes of this Plan. However, the
Participant may elect to receive a smaller annuity benefit with
continuation of payments to the spouse at a rate of seventy-five percent
(759) or one hundred percent (100%) of the rate payable to a Participant
during his lifetime which alternative Joint and Survivor Annuity shall be
equal in value to the automatic Joint and 50% Survivor Annuity. An
unmarried Participant shall receive the value of his benefit in the form of
a life annuity. Such unmarried Participant, however, may elect in writing
to waive the life annuity. The election must comply with the provisions of
this Section as if it were an election to waive the Joint and Survivor
Annuity by a married Participant, but without the spousal consent
requirement. The Participant may elect to have any annuity provided for in
this Section distributed upon the attainment of the -earliest retirement
age" under the Plan. The "earliest retirement age" is the earliest date on
which, under the Plan, the Participant could elect to receive retirement
benefits.
(2) Any election to waive the Joint and Survivor Annuity must be
made by the Participant in writing during the election period and
be consented to by the Participant's spouse. If the spouse is
legally incompetent to give consent, the spouse's legal guardian,
even if such guardian is the Participant, may give consent. Such
election shall designate a Beneficiary (or a form of benefits)
that may not be changed without spousal consent (unless the
consent of the spouse expressly permits designations by the
Participant without the requirement of further consent by the
spouse). Such spouse's consent shall be irrevocable and must
acknowledge the effect of such election and be, witnessed by a
Plan representative or a notary public. Such consent shall not be
required if it is established to the satisfaction of the
Administrator that the required consent cannot be obtained
because there is no spouse, the spouse cannot be located, or
other circumstances that may be prescribed by Regulations. The
election made by the Participant and consented to by his spouse
may be revoked by the Participant in writing without the consent
of the spouse at any time during the election period. The number
of revocations shall not be limited. Any new election must comply
with the requirements of this paragraph. A former spouse's waiver
shall not be binding on a new spouse.
(3) The election period to waive the Joint and Survivor Annuity
shall be the 90 day period ending on the "annuity starting date."
(4) For purposes of this Section and Section 6.6, the "annuity
starting date" means the first day of the first period for which
an amount is paid as an annuity, or, in the case of a benefit not
payable in the form of an annuity, the first day on which all
events have occurred which entitles the Participant to such
benefit.
(5) With regard to the election, the Administrator shall provide
to the Participant no less than 30 days and no more than 90 days
before the "annuity starting date" a written explanation of
(i) the terms and conditions of the Joint and Survivor
Annuity, and
(ii) the Participant's right to make and the effect of an
election to waive the Joint and Survivor Annuity, and
(iii) the right of the Participant's spouse to consent to
any election to waive the Joint and Survivor Annuity, and
(iv) the right of the Participant to revoke such election,
and the effect of such revocation.
(b) In the event a married Participant duly elects pursuant to
paragraph (a)(2) above not to receive his benefit in the form of a Joint
and Survivor Annuity, or if such Participant is not married, in the form of
a life annuity, the Administrator, pursuant to the election of the
Participant, shall direct the distribution to a Participant or his
Beneficiary any amount to which he is entitled under the Plan in one or
more of the following method which are permitted pursuant to the Adoption
Agreement.
(1) One lump-sum payment in cash or in property,
(2) Payments over a, period certain in monthly, quarterly, semiannual,
or annual cash installments. In order to provide such installment
payments, the Administrator may direct that the Participant's interest
in the Plan be segregated and invested separately, and that the funds
in the segregated account be used for the payment of the installments,
The period over which such payment is to be made shall not extend
beyond the Participant's life expectancy (or the life expectancy of
the Participant and his designated Beneficiary),
(3) Purchase of or providing an annuity. However, such annuity may not
be in any form that will provide for payments over a period extending
beyond either the life of the Participate (or the lives of the
Participant and his designated Beneficiary) or the lire expectancy of
the Participant (or the life expectancy of the Participant and his
designated Beneficiary).
(c) The present value of a Participant's Joint and Survivor Annuity
derived from Employer and Employee contributions may not be paid without
his written consent if the value exceeds, or has ever exceeded at the time
of any prior distribution, $3,500. Further, the spouse of a Participant
must consent in writing to any immediate distribution. If the value of the
Participant's benefit derived from Employer and Employee contributions does
not exceed 53,500 and has never exceeded 53,500 at the time of any prior
distribution, the Administrator may immediately distribute such benefit
without such Participant's consent, No distribution may be made under the
preceding sentence after the "annuity starting date" unless the Participant
and his spouse consent in wilting to such distribution. Any written consent
required under this paragraph must be obtained not more than 90 days before
commencement of the distribution and shall be made in a manner consistent
with Section 6.5(a)(2).
(d) Any distribution to a Participant who has a benefit which exceeds,
or has ever exceeded :at the time of any prior distribution, $3,500 shall
require such Participant's consent if such distribution commences prior to
the later of his Normal Retirement Age or age 62. With regard to this
required consent:
(1) No consent shall be valid unless the Participant has received a
general description of the material features and an explanation of the
relative values of the optional forms of benefit available under the
Plan that would satisfy the notice requirements of Code Section 417-
(2) The Participant must be informed of his right to defer receipt of
the distribution. If a Participant fails to consent, it shall be
deemed an election to defer the commencement of payment of any
benefit. However, any election to defer the receipt of benefits shall
not apply with respect to distributions which are required under
Section 6.5(c).
(3) Notice of the rights specified under this paragraph shall be
provided no less than 30 days and no more than 90 days before the
"annuity starting date."
(4) Written consent of the Participant to the distribution must not be
made before the Participant receives the notice and must not be made
more than 90 days before the "annuity starting date."
(5) No consent shall be valid it a significant detriment is imposed
under the Plan on any Participant who does not consent to the
distribution.
(e) Notwithstanding any provision in the plan to the contrary, the
distribution of a Participant's benefits, made on or after January 1, 1985,
whether under the Plan or through the purchase of an annuity Contract,
shall be made in accordance with the following requirements and shall
otherwise comply with Code Section 401(x)(9) and the Regulations thereunder
(including Regulation Section 1.401(x)(9)-2), the provisions of which are
incorporated herein by reference:
(1) A Participant's benefits shall be distributed to him not later
than April 1st of the calendar year following the later of (i) the
calendar year in which the Participant attains age 70 1/2 or (ii) the
calendar year in which the Participant retires, provided, however,
that this clause (ii) shall not apply in the case of a Participant who
is a "five (5) percent owner" at any time during the five (5) Plan
Year period ending in the calendar year in which he attains age 70 1/2
or, in the case of a Participant who becomes a five (5) percent owner'
during any subsequent Plan Year, clause (ii) shall no longer apply and
the required beginning dale Shall be the April 1st of the calendar
year following the calendar year in which such subsequent Plan Year
ends. Alternatively, distributions to a Participant must begin no
later than the applicable April 1st as determined under the preceding
sentence and must be made over the life of the Participant (or the
lives of the Participant and the Participant's designated Beneficiary)
or, if benefits are paid in the form of a Joint and Survivor Annuity,
the life expectancy of the Participant (or the life expectancies of
the Participant and his designated Beneficiary) in accordance with
Regulations. For Plan Years beginning after December 31, 1988, clause
(ii) above shall not apply to any Participant unless the Participant
had attained age 70 1/2 before January 1, 1988 and was not a "five (5)
percent owner" at any time during the Plan Year ending with or within
the calendar year in which the Participant attained age 66 1/2 or any
subsequent Plan Year.
(2) Distributions to a Participant and his Beneficiaries shall only be
made in accordance with the incidental death benefit requirements of
Code Section 401(a)(9)(G) and the Regulations thereunder.
Additionally, for calendar years beginning before 1999, distributions
may also be made under an alternative method which provides that the
then present value of the payments to be made over the period of the
Participant's life expectancy exceeds fifty percent (50%) of the then
present value of the total payments to be made to the Participant and
his Beneficiaries.
(f) For purposes of this Section, the life expectancy of a Participant
and a Participant's spouse (other than in the case of a life annuity) shall
be redetermined annually in accordance with Regulations if permitted
pursuant to the Adoption Agreement. If the Participant or the Participant's
spouse may elect whether recalculations will be made, then the election,
once made, shall, be irrevocable. If no election is made by the time
distributions must commence, then the life expectancy of the Participant
and the Participant's spouse shall not be subject to recalculation. Life
expectancy and joint and last survivor expectancy shall be computed using
the return multiples in Tables V and VI of Regulation 1.72-9.
(g) All annuity Contracts under this Plan shall be non-transferable
when distributed. Furthermore, the terms of any annuity Contract purchased
and distributed to a Participant or spouse shall comply with all of the
requirements of this Plan.
(h) Subject to the spouse's right of consent afforded under the Plan,
the restrictions imposed by this Section shall not apply if a Participant
has, prior to January 1, 1994, made a written designation to have his
retirement benefit paid in an alternative method acceptable under Code
Section 401(a) as in effect prior to the enactment of the Tax Equity and
Fiscal Responsibility Act of 1982.
(i) If a distribution is made at a time when a Participant who has not
terminated employment is not fully Vested in his Participant's Account and
the Participant may increase the Vested percentage in such account, the
Vested portion of such Account at any time after such distribution shall be
an amount X where:
X = P (AB+D) - D
and where P is the nonforfeitable percentage at such later time, AB is
the account balance at such later time, and D is the amount of the
distribution.
(j) Notwithstanding any other provision of the Plan to the contrary,
if a benefit is entitled to protection under Code Section 411(4)(6), such
benefit shall be provided hereunder, but only with respect to benefits
accrued to the Effective Date.
6.6 DISTRIBUTION OF BENEFITS UPON DEATH.
(a) Unless otherwise elected as provided below, a Vested Participant
who dies before the annuity starting date and who has a surviving spouse
shall have the Pre-Retirement Survivor Annuity paid to his surviving
spouse. The Participant's spouse may direct that payment of the
Pre-Retirement Survivor Annuity commence within a reasonable period after
the Participant's death. If the spouse does not so direct. Payment of such
benefit will commence at the time the Participant would have attained the
later of his Normal Retirement Age or ago 62. However, the spouse may elect
a later commencement date, Any distribution to the Participant's spouse
shall be subject to the rules specified in Section 6.6(h).
(b) Any election to waive the Pre-Retirement Survivor Annuity before
the Participant's death must be made by the Participant in writing during
the election period and shall require the spouse's irrevocable consent in
the same manner provided for in Section 6.5(a)(2). Further, the spouse's
consent must acknowledge the specific nonspouse Beneficiary.
Notwithstanding the foregoing, the nonspouse Beneficiary need not be
acknowledged, provided the consent of the spouse acknowledges that the
spouse has the right to limit consent only to a specific Beneficiary and
that the spouse voluntarily elects to relinquish such right.
(c) The election period to waive the Pre-Retirement Survivor Annuity
shall begin on the first day of the Plan Year in which the Participant
attains age 35 and end on the date of the Participant's death. An earlier
waiver (with spousal consent) may be made provided a written explanation of
the Pre-Retirement Survivor Annuity is given to the Participant and such
waiver becomes invalid at the beginning of the Plan Year in which the
Participant turns age 35. In the event a Vested Participant separates from
service prior to the beginning of the election period, the election period
shall begin on the date of such separation from service,
(d) With regard to the election, the Administrator shall provide each
Participant within the applicable period, with respect to such Participant
(and consistent with Regulations), a written explanation of the
Pre-Retirement Survivor Annuity containing comparable information to that
required pursuant to Section 6.5(a)(4). For the purposes of this paragraph,
the term "applicable period" means, with respect to a Participant,
whichever of the following periods ends last:
(1) 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:
(2) A reasonable period after the individual becomes a Participant.
For this purpose, in the case of an individual who becomes a
Participant after age 32, the explanation must be provided by the end
of the three-year period beginning with the first day of the first
Plan Year for which the individual is a Participant;
(3) A reasonable period ending after the Plan no longer fully
subsidizes the cost of the Pre-Retirement Survivor Annuity with
respect to the Participant:
(4) A reasonable period ending after Code Section 401(a)(1 l) applies
to the Participant: or
(5) A reasonable period after separation from service in the case of a
Participant who separates before attaining age 35. For this purpose,
the Administrator must provide the explanation beginning one year
before the separation from service and ending one year after
separation.
(e) The Pre-Retirement Survivor Annuity provided for in this Section
shall apply only to Participants who are credited with an Hour of Service
on or after August 23, 1984. Former Participants who are not credited with
an Hour of Service on or after August 23, 1984 shall be provided with
rights to the Pre-Retirement Survivor Annuity in accordance with Section
303(e)(2) of the Retirement Equity Act of 1984.
(f) If the value of the Pre-Retirement Survivor Annuity derived from
Employer and Employee contributions does not exceed $3,500 and has never
exceeded 3,500 at the time of any prior distribution, the Administrator
shall direct the immediate distribution of such amount to the Participant's
spouse. No distribution may be made under the preceding sentence after the
annuity starting date unless the spouse consents in writing. If the value
exceeds, or has ever exceeded at the time of any prior distribution,
$3,500, an immediate distribution of the entire amount may be made to the
surviving spouse, provided such surviving spouse consents in writing to
such distribution. Any written consent required under this paragraph must
be obtained not more than 90 days before commencement of the distribution
and shall be made in a manner consistent with Section 6.5(a)(2).
(g) (1) In the event there is an election to waive the Pre-Retirement
Survivor Annuity, and for death benefits in excess of the Pre-Retirement
Survivor Annuity, such death benefits shall be paid to the Participant's
Beneficiary by either of the following methods, as elected by the
Participant (or if no election has been made prior to the Participant's
death by his Beneficiary) subject to the rules specified in Section 6_6(h)
and the selections made in the Adoption Agreement;
(i) One lump-sum payment in cash or in property,
(ii) Payment in monthly, quarterly, semi-annual, or annual cash
installments over a period to be determined by the Participant or
his Beneficiary. After periodic installments commence, the
Beneficiary shall have the right to reduce the period over which
such periodic installments shall be made, and the cash amount of
such periodic installments shall be adjusted accordingly.
(iii) If death benefits in excess of the Pre-Retirement Survivor
Annuity are to be paid to the surviving spouse, such benefits may
be paid pursuant to (i) or (ii) above, or used to purchase an
annuity so as to increase the payments made pursuant to the
Pre-Retirement Survivor Annuity;
(2) In the event the death benefit payable pursuant to Section 6.2 is
payable in installments, then, upon the death of the Participant, the
Administrator may direct that the death benefit be segregated and
invested separately, and that the funds accumulated in the segregated
account be used for the payment of the installments.
(h) Notwithstanding any provision in the Plan to the contrary,
distributions upon the death of a Participant made on or after January 1,
1985, shall be made in accordance with the following requirements and shall
otherwise comply with Code Section 401(a)(9) and the Regulations
thereunder.
(1) If it is determined, pursuant to Regulations, that the
distribution Or a Participant's interest has begun and the Participant
dies before his entire interest has been distributed to him, the
remaining portion of such interest shall be distributed at least as
rapidly as under the method of distribution selected pursuant to
Section 6.5 as of his date of death.
(2) If a Participant dies before he has begun to receive any
distributions of his interest in the Plan or before distributions arc
deemed to have begun pursuant to Regulations, then his death benefit
shall be distributed to his Beneficiaries in accordance with the
following rules subject to the selections made in the Adoption
Agreement and Subsections 64(h)(3) and 6.6(9) below;
(i) The entire death benefit shall be distributed to the
Participant's Beneficiaries by December 31st of the calendar year
in which the fifth anniversary of the Participant's death occurs;
(ii) The 5-scar distribution requirement of (i) above shall not
apply to any portion of the deceased Participant's interest which
is payable to or for the benefit of a designated Beneficiary. In
such event, such portion shall be distributed over the life of
such designated Beneficiary (or over a period not extending
beyond the life expectancy of such designated Beneficiary)
provided such distribution begins not later than December 31st of
the calendar year immediately following the calendar year in
which the Participant died;
(iii) However, in the event the Participant's spouse (determined
as of the date of the Participant's death) is his designated
Beneficiary, the provisions of (ii) above shall apply except that
the requirement that distributions commence within one year of
the Participant's death shall not apply. In lieu thereof,
distributions must commence on or before the later or, (1)
December 31st of the calendar year immediately following the
calendar year to which the Participant died; or (2) December 31st
of the calendar year in which the Participant would have attained
age 70 1/2, If the surviving spouse dies before distributions to
such spouse begin, then the 5-year distribution requirement of
this Section shall apply as if the spouse was the Participant.
(3) Notwithstanding subparagraph (2) above, or any selections made in
the Adoption Agreement, if a Participant's death benefits arc to be
paid in the form of a Pre-Retirement Survivor Annuity, then
distributions to the Participant's surviving spouse must commence on
or before the later of: (1) December 31st of the calendar year
immediately following the calendar year in which the Participant died;
or (2) December 31st of the calendar year in which the Participant
would have attained age 70 1/2.
(i) For purposes of Section 6.6(h)(2), the election by a designated
Beneficiary to be excepted from the 5-year distribution requirement (if
permitted in the Adoption Agreement) must be made no later than December
31st of the calendar year following the calendar year of the Participant's
death. Except, however, with respect to a designated Beneficiary who is the
Participant's surviving spouse, the election must be made by the earlier
of: (1) December 31st of the calendar year immediately following the
calendar year in which the Participant died or, if later, the calendar year
in which the Participant would have attained age 70 112; or (2) December
31st of the calendar year which contains the fifth anniversary of the date
of the Participant's death. An election by a designated Beneficiary must be
in writing and shall be irrevocable as of the last day of the election
period stated herein. In the absence of an election by the Participant or a
designated Beneficiary, the 5-year distribution requirement shall apply.
(j) For purposes of this Section, the life expectancy of a Participant
and a Participant's spouse (other than in the cast; of a life annuity)
shall or shall not be redetermined annually as provided in the Adoption
Agreement and in accordance with Regulations. If the Participant or the
Participant's spouse may elect, pursuant to the Adoption Agreement, to have
life expectancies recalculated, then the election, once made shall be
irrevocable. If no election is made by the time distributions must
commence, then the life expectancy of the Participant and the Participant's
spouse shall not be subject to recalculation. Life expectancy and joint and
last survivor expectancy shall be computed using the return multiples in
Tables V and VI of Regulation Section 1.72-9.
(k) In the event that less than 100% of a Participant's interest in
the Plan is distributed to such Participant's spouse, the portion of the
distribution attributable to the Participant's Voluntary Contribution
Account shall be in the same proportion that the Participant's Voluntary
Contribution Account bears to the Participant's total interest in the Plan.
(l) Subject to the spouse's right of consent afforded under the Plan,
the restrictions imposed by this Section shall not apply if a Participant
has, prior to January 1, 1984, made a written designation to have his death
benefits paid in an alternative method acceptable under Code Section 401(a)
as in effect prior to the enactment of the Tax Equity and Fiscal
Responsibility Act of 1982.
6.7 TIME OF SEGREGATION OR DISTRIBUTION.
Except as limited by Sections 6.5 and 6.6, whenever a distribution is
to be made, or a series of payments are to commence, on or as of an Anniversary
Date, the distribution or series of payments may be made or begun on such date
or as soon thereafter as is practicable, but in no event later than 180 days
after the Anniversary Date, However, unless a Former Participant elects in
writing to defer the receipt of benefits (such election may not result in a
death benefit that is more than incidental), the payment of benefits shall begin
not later than the 60th day after the close of the Plan Year in which the latest
of the following events occurs: (a) the date on which the Participant attains
the earlier of age 65 or the Normal Retirement Age specified herein; (b) the
10th anniversary of the year in which the Participant commenced participation in
the Plan; or (c) the date the Participant terminates his service with the
Employer.
Notwithstanding the foregoing, the failure of a Participant and, if
applicable, the Participant's spouse, to consent to a distribution pursuant to
Section 6.5(d), shall be deemed to be an election to defer the commencement of
payment of any benefit sufficient to satisfy this Section.
6.8 DISTRIBUTION FOR MINOR BENEFICIARY.
In the event a distribution is to be made to a minor, then the
Administrator may direct that such distribution be paid to the legal guardian,
or if none, to a parent of such Beneficiary or a responsible adult with whom the
Beneficiary maintains his residence, or to the custodian for such Beneficiary
under the Uniform Gift to Minors Act or Gift to Minors Act, if such is permitted
by the laws of the state in which said Beneficiary resides. Such a payment to
the legal guardian, custodian or parent of a minor Beneficiary shall fully
discharge the Trustee. Employer, and Plan from further liability on account
thereof.
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN.
In the event that all, or any portion, of the distribution payable to
a Participant or his Beneficiary hereunder shall, at the later of the
Participant's attainment of age 62 or his Normal Retirement Age, remain unpaid
solely by reason of the inability of the Administrator, after sending a
registered letter, return receipt requested, to the last known address, and
after further diligent effort, to ascertain the whereabouts of such Participant
or his Beneficiary, the amount so distributable shall be treated, as a
Forfeiture pursuant to the Plan_ In the event a Participant or Beneficiary is
located subsequent to his benefit being reallocated, such benefit shall be
restored, first from Forfeitures, if any, and then from an additional Employer
contribution if necessary.
6.10 PRE-RETIREMENT DISTRIBUTION.
For Profit Sharing Plans and 401(k) Profit Sharing Plans, if elected
in the Adoption Agreement, at such time as a Participant shall have attained the
age specified in the Adoption Agreement, the Administrator, at the election of
the Participant, shall direct the distribution or up to the entire Vested amount
then credited to the accounts maintained on behalf of the Participant. In the
event that the Administrator makes such a distribution, the Participant shall
continue to be eligible to participate in the Plan on the same basis as any
other Employee. Any distribution made pursuant to this Section shall be made in
a manner consistent with Section 6.5, including, but not limited to, all notice
and consent requirements of Code Sections 411(a)(11) and 417 and the Regulations
thereunder.
6.11 ADVANCE DISTRIBUTION FOR HARDSHIP.
(A) For Profit Sharing Plans, if elected in the Adoption Agreement,
the Administrator, at the election of the Participant, shall direct the
distribution to any Participant in any one Plan Year up to The lesser of
10096 of his Vested Participant's Combined Account valued as of the last
Anniversary Date or other valuation data or the amount necessary to satisfy
the immediate and heavy financial need of the Participant. Any distribution
made pursuant to this Section shall be deemed to be made as of the first
day of the Plan Year or, if later, the valuation date immediately preceding
the date of distribution, and the account from which the distribution is
made shall be reduced accordingly. Withdrawal under this Section shall be
authorized only if the distribution is on account of
(1) Medical expenses described in Code Section 213(d) incurred by the
Participant, his spouse, or any of his dependents (as defined in Code
Section 152) or expenses necessary for these persons to obtain medical
care;
(2) The purchase (excluding mortgage payments) of a principal
residence for the Participant;
(3) Funeral expenses for a member of the Participant's family;
(4) Payment of tuition and related educational fees for the next 12
months of post-secondary education for the Participant, his spouse,
children, or dependents; or
(5) The need to prevent the eviction of the Participant from his
principal residence or foreclosure on the mortgage of the
Participant's principal residence.
(b) Any distribution made pursuant to this Section shall be made in a
manner which is consistent with and satisfies the provisions of Section
6.5, including, but not limited to_ all notice and consent requirements of
Code Sections 411(a)(11) and 417 and the Regulations thereunder.
6.12 LIMITATIONS ON BENEFITS AND DISTRIBUTIONS.
All rights and benefits, including elections, provided to a
Participant in this Plan shall be subject to the rights afforded to any
"alternate payee" under a "qualified domestic relations order." Furthermore, a
distribution to an "alternate payee" shall be permitted if such distribution is
authorized by a "qualified domestic relations order," even if the affected
Participant has not reached the "earliest retirement age" under the Plan. For
the purposes of this Section, "alternate payee," "qualified domestic relations
order" and "earliest retirement age" shall have the meaning set forth under Code
Section 414(p).
6.13 SPECIAL RULE FOR NON-ANNUITY PLANS.
If elected in the Adoption Agreement, the following shall apply to a
Participant in a Profit Sharing Plan or 401(k) Profit Sharing Plan and to any
distribution, made on or after the first day of the first plan year beginning
after December 31, 1988, from or under a separate account attributable solely to
accumulated deductible employee contributions, as defined in Code Section
72(o)(5)(B), and maintained on behalf of a participant in a money purchase
pension plan, (including a target benefit plan):
(a) The Participant shall be prohibited from electing benefits in the
form of a life annuity;
(b) Upon the death of the Participant, the participant's entire Vested
account balances will be paid to his or her surviving spouse, or, if there
is no surviving spouse or the surviving spouse has already consented to
waive his or her benefit_ in accordance with Section 6.6, to his designated
Beneficiary;
(c) Except to the extent otherwise provided in this Section and
Section 6.5(h), the other provisions of Sections 6.2, 6.5 and 6.6 regarding
spousal consent and the forms of distributions shall be inoperative with
respect to this plan.
(d) If a distribution is one to which Sections 401(a)(11) and 417 of
the Internal Revenue Code do not apply, such distribution may commence less
than 30 days after the notice required under Section 1.411(a)-11(c) of the
Income Tax Regulations is given, provided that:
(1) the Plan Administrator clearly informs the Participant that
the Participant has a right to a period of at least 30 days after
the notice to consider the decision of whether or not to elect a
distribution (and, if applicable, a particular distribution
option), and
(2) the participant, after receiving the notice, affirmatively
elects a distribution.
This Section shall not apply to any Participant if it is determined that
this Plan is a direct or indirect transferee of a defined benefit plan or
money purchase plan, or a target benefit plan, stock bonus or profit
sharing plan which would otherwise provide for a life annuity form of
payment to the Participant.
ARTICLE VII
TRUSTEE
7.1 TRUSTEE.
Notwithstanding any other provision of the Plan to the contrary, if
State Sweet Bank or any successor bank or financial institution thereto ("State
Street") is appointed to serve as Trustee, State Street shall serve as a
directed Trustee and the Employer shall enter into a separate trust agreement
with State Sweet that shall supersede the provisions of the Plan that concern
the rights, duties, obligations or status of the Trustee, or require
notification of the Trustee, to the extent such provisions are inconsistent with
the terms of the separate trust agreement.
7.2 BASIC RESPONSIBILITIES OF THE TRUSTEE.
The Trustee shall have the following categories of responsibilities:
(a) Consistent with the "funding policy and method" determined by the
Employer to invest, manage, and control the Plan assets subject, however,
to the direction of an, Investment Manager if the Employer should appoint
such manager as to all or a portion of the assets of the Plan;
(B) At the direction of the Administrator, to pay benefits required
under the Plan, to be paid to Participants, or, in the event of their
death, to their Beneficiaries; and
(C) To maintain records of receipts and disbursements and furnish to
the Employer and/or Administrator for each Plan Year a written annual
report per Section 7.8.
7.3 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE.
(a) The Trustee shall invest and reinvest the Trust Fund to keep the
Trust Fund invested without distinction between principal and income and in
such securities or property, real or personal, wherever situated; as the
Trustee shall deem advisable, including, but not limited to, stocks, common
or preferred, bonds and other evidences of indebtedness or ownership, and
real estate or any interest therein. The Trustee shall at all brines in
making investments of the Trust Fund consider, among other factors, the
short and long-terns financial needs of the Plan on the basis of
information furnished by the Employer. In making such investments, the
Trustee shall not be restricted to securities or other property of the
character expressly authorized by the applicable law for trust investments:
however, the Trustee shall give due regard to any limitations imposed by
the Code or the Act so that at all times this Plan may qualify as a
qualified Plan and Trust.
(b) Notwithstanding Section 7.3(a), the Employer, in writing to the
Trustee, may delegate investment responsibility to the Administrator. If
the Administrator has been delegated such authority, the Trustee shall
invest trust assets in accordance with the Administrator's direction,
unless the Trustee determines, in the-exercise of its responsibility under
ERISA as a co-fiduciary of the Plan, that such investments are not
permitted under the terms of the Plan, Trust, or the Act. The Trustee shall
not be liable or responsible for losses or unfavorable results arising from
the Trustee's compliance with directions received from the Administrator.
(c) The Trustee may from time to time transfer to a common,
collective, or pooled trust fund maintained by any corporate Trustee
hereunder pursuant to Revenue Ruling 81-100, all or such part of the Trust
Fund as the Trustee may deem advisable, and such part or all of the Trust
Fund so transferred shall be subject to all the terms and provisions of the
common, collective, or pooled trust fund which contemplate the commingling
for investment purposes of such trust assets with trust assets of other
trusts. The Trustee may withdraw from such common, collective, or pooled
trust fund all or such part of the Trust Fund as the Trustee may deem
advisable.
(d) The Trustee, at the direction of the Administrator and pursuant to
instructions from the individual designated in the Adoption Agreement for
such purpose and subject to the conditions set forth in the Adoption
Agreement, shall ratably apply for, own, and pay all premiums on Contracts
on the lives of the Participants. Any initial or additional Contract
purchased on behalf of a Participant shall have a face amount of not less
than $1,000, the amount set forth in the Adoption Agreement, or the
limitation of the Insurer, whichever is greater. If a life insurance
Contract is to be purchased for a Participant, the aggregate premium for
ordinary life insurance for each Participant must be less than 50% of the
aggregate contributions and Forfeitures allocated to a Participant's
Combined Account. For purposes of this limitation, ordinary life insurance
Contracts are Contracts with both non-decreasing death benefits and
non-increasing premiums. If term insurance or universal life insurance is
purchased with such contributions, the aggregate premium must be 25% or
less of the aggregate contributions and Forfeitures allocated to a
Participant's Combined Account. If both term insurance and ordinary life
insurance are purchased with such contributions, the amount expended for
term insurance plus one-half of the premium for ordinary life insurance may
not in the aggregate exceed 25% of the aggregate Employer contributions and
Forfeitures allocated to a Participant's Combined Account. The Trustee must
distribute the Contracts to the Participant or convert the entire value of
the Contracts at or before retirement into cash or provide for a periodic
income so that no portion of such value may be used to continue life
insurance protection beyond retirement. Notwithstanding the above, the
limitations imposed herein with respect to the purchase of life insurance
shall not apply, in the case of a Profit Sharing Plan, to the portion of a
Participant's Account that has accumulated for at least two (2) Plan Years.
Notwithstanding anything hereinabove to the contrary, amounts credited
to a Participant's Qualified Voluntary Employee Contribution Account
pursuant to Section 4.9, shall not be applied to the purchase of He
insurance contracts.
(e) The Trustee will be the owner of any life insurance Contract
purchased under due terms of this Plan. The Contract must provide that the
proceeds will be payable to the Trustee; however, the Trustee shall be
required to pay over all proceeds of the Contract to the Participant's
designated Beneficiary in accordance with the distribution provisions of
Article VI. A Participant's spouse will be the designated Beneficiary
pursuant to Section 6.2, unless a qualified election has been made in
accordance with Sections 6.5 and 6.6 of the Plan, if applicable. Under no
circumstances shall the Trust retain any part of the proceeds. However, the
Trustee shall not pay the proceeds in a method that would violate the
requirements of the Retirement Equity Act, as stared in Article V1 of the
Plan, or Code Section 401(a)(9) and the Regulations thereunder.
7.4 OTHER POWERS OF THE TRUSTEE.
The Trustee, in addition to all powers and authorities under common
law, statutory authority, including the Act, and other provisions of this Plan,
shall have the following powers and authorities to be exercised in the Trustee's
sole discretion:
(a) To purchase, or subscribe for, any securities or other property
and to retain the same;
(b) To sell, exchange, convey, transfer, grant options to purchase, or
otherwise dispose of any securities or other property held by the Trustee,
by private contract or at public auction. No person dealing with the
Trustee shall be bound to see to the application of the purchase money or
to inquire into the validity, expediency, or propriety of any such sale or
other disposition, with or without advertisement;
(c) To vote upon any stocks, bonds, or other securities; to give
general or special proxies or powers of attorney with or without power of
substitution; to exercise any conversion privileges, subscription tights or
other options, and to make any payments incidental thereto; to oppose, or
to consent to, or otherwise participate in, corporate reorganizations or
other changes affecting corporate securities, and to delegate discretionary
powers, and to pay any assessments or charges in connection therewith; and
generally to exercise any of the powers of an owner with respect to stocks,
bonds, securities, or other property. However, the Trustee shall not vote
proxies relating to securities for which it has not been assigned full
investment management responsibilities. In those cases where another party
has such investment authority or discretion, be it the Administrator or an
outside investment Manager, the Trustee will deliver all proxies to said
party who will then have full responsibility for voting those proxies;
(d) To cause any securities or other property to be registered in the
Trustee's own name or in the name of one or more of the Trustee's nominees,
and to hold any investments in bearer form, but the books and records of
the Trustee shall at all times show that all such investments are pan of
the Trust Fund;
(e) To borrow or raise money for the purposes of the Plan in such
amount, and upon such terms and conditions, as the Trustee shall deem
advisable; and for any sum so borrowed, to issue a promissory note as
Trustee, and to secure the repayment thereof by pledging all, or any pan,
of the Trust Fund; and no person lending money to the Trustee shall be
bound to see to the application of the money lent or to inquire into the
validity, expediency, or propriety of any borrowing.
(f) To keep such portion of the Trust Fund in cash or cash balances as
the Trustee may, from time to time, deem to be in the best interests of the
Plan, without liability for interest thereon;
(g) To accept and retain for such time as it may deem advisable any
securities or other property received or acquired by it as Trustee
hereunder, whether or not such securities of other property would normally
be purchased as investments hereunder,
(h) To make, execute, acknowledge, and deliver any and all documents
of transfer and conveyance and any and all other instruments that may be
necessary or appropriate to carry out the powers herein granted;
(i) To settle, compromise, or submit to arbitration any claims, debts,
or damages due or owing to or from the Plan, to commence or defend suits or
legal or administrative proceedings, and to represent the Plan in all suits
and legal and administrative proceedings;
(j) To employ suitable agents and counsel and to pay their reasonable
expenses and compensation from the Trust Fund, and such agent or counsel
may or may not be agent or counsel for the Employer,
(k) To apply for and procure from the Insurer as an investment of the
Trust Fund such annuity, or other Contracts (on the life of any
Participant) as the Administrator shall deem proper, to exercise, at any
time or from time to time, whatever rights and privileges may be granted
under such annuity, or other Contracts; to collect, receive, and settle for
the proceeds of all such annuity, or other Contracts as and when entitled
to do so under the provisions thereof;
(l) To invest funds of the Trust in time deposits or savings accounts
bearing a reasonable rate of interest in the Trustee's bank;
(m) To invest in Treasury Hills and other forms of United States
government obligations;
(n) To sell, purchase and acquire put or call options if the options
arc traded on and purchased through a national securities exchange
registered under the Securities Exchange Act of 1934, as amended, or, if
the options arc not traded an a national securities exchange, are
guaranteed by a member firm of the New York Stock Exchange;
(o) To deposit monies in federally insured savings accounts or
certificates of deposit in banks or savings and loan associations;
(p) To pool all or any of the Trust Fund, from time to time, with
assets belonging to any other qualified employee pension benefit trust
created by the Employer or any Affiliated Employer, and to commingle such
assets and make joint or common investments and carry joint accounts on
behalf of this Plan and such other trust or frosts, allocating undivided
shares or interests in such investments or accounts or any pooled assets of
the two or more trusts in accordance with their respective interests;
(q) To do all such acts and exercise all such rights and privileges,
although not specifically mentioned herein, as the Trustee may deem
necessary to carry out the purposes of the Plan.
(r) Directed Investment Account. The powers granted to the Trustee
shall be exercised in the sole fiduciary discretion of the Trustee.
However, if elected in the Adoption Agreement, each Participant shall
direct the Trustee to separate and keep separate all or a portion of his
interest in the Plan; and further each Participant is authorized and
empowered, in his sole and absolute discretion, to give directions to the
Trustee in such form as the Trustee may require concerning the investment
of the Participant's Directed Investment Account, which directions must be
followed by the Trustee subject, however, to restrictions on payment of
life insurance premiums. Neither the Trustee nor any other persons
including the Administrator or otherwise shall be under any duty to
question any such direction of the Participant or to review any securities
or other property, real or personal, or to make any suggestions to the
Participant in connection therewith, and the Trustee shall comply as
promptly as practicable with directions given by the Participant hereunder.
Any such direction may be of a continuing nature or otherwise and may be
revoked by the Participant at any time in such form as the Trustee may
require. The Trustee may refuse to comply with any direction from the
Participant in the event the Trustee, in its sole and absolute discretion,
deems such directions improper by virtue of applicable law, and in such
event, the Trustee shall not be responsible or liable for any loss or
expense which may result. Any costs and expenses related to compliance with
the Participant's directions shall be borne by the Participant's Directed
Investment Account,
7.5 LOANS TO PARTICIPANTS.
(a) If specified in the Adoption Agreement, the Trustee (or, if loans
are treated as Directed Investment pursuant to the Adoption Agreement, the
Administrator) May, in the Trustee's (or, if applicable, the
Administrator's) sole discretion, make loans to Participants or
Beneficiaries under the following circumstances: (1) loans shall be made
available to all Participants and .Beneficiaries on a reasonably equivalent
basis; (2) loans shall not be made available to Highly Compensated
Employees in an amount greater than the amount made available to other
Participants; (3) loans shall bear a reasonable rate of interest; (4) loans
shall be adequately secured: and (5) shall provide for periodic repayment
over a reasonable period of time,
(b) Loans shall not be made to any Shareholder-Employee or
Owner-Employee unless an exemption for such loan is obtained pursuant to
Act Section 408 and further provided that such loon would not be subject to
tax pursuant to Code Section 4975.
(c) Loans made pursuant to this Section (when added to the outstanding
balance of all other loans made by the Plan to the Participant) shall be
limited to the lesser of:
(1) 550,000 reduced by the excess (if any) of the highest outstanding
balance of loans from the Plan to the Participant during the one year
period ending on the day before the date on which such loan is made,
over the outstanding balance of loans from the Plan to the Participant
on the date on which such loan was made, or
(2) one-half (1/2) of the present value of the non-forfeitable accrued
benefit of the Employee under the Plan.
For purposes of this limit, all plans of the Employer shall be
considered one plan. Additionally, with respect to any loan made prior to
January 1, 1987, the $50,000 limit specified in (1) above shall be
unreduced.
(d) No Participant loan shall take into account the present value of
such Participant's Qualified Voluntary Employee Contribution Account.
(e) Loans shall provide for level amortization with payments to be
made not less frequently than quarterly over a period not to exceed five
(5) years. However, loans used to acquire any dwelling unit which, within a
reasonable time, is to be used (determined at the time the loan is made) as
a principal residence of the Participant shall provide for periodic
repayment over a reasonable period of time that may exceed five (5) years.
Notwithstanding the foregoing, leans made prior to January 1, 1987 which
are used to acquire, construct, reconstruct or substantially rehabilitate
any dwelling unit which, within a reasonable period of time is to be used
(determined at the time the loan is made) as a principal residence of the
Participant or a member of his family (within the meaning of Code Section
267(c)(4)) may provide for periodic repayment over a reasonable period of
time that may exceed five (5) years. Additionally, loans made prior to
January 1, 1987, may provide for periodic payments which am made less
frequently than quarterly and which do not necessarily result in level
amortization.
(f) An assignment or pledge of any portion of a Participant's interest
in the Plan and a loan, pledge, or assignment with respect to any insurance
Contract purchased under the Plan, shall be .treated as a loan under this
Section.
(g) Any loan made pursuant to this Section after August 18, 1985 where
the Vested interest of the Participant is used to secure such loan shall
require the written consent of the Participant's spouse in a manner
consistent with Section 6.5(a) provided the spousal consent requirements of
such Section apply to the Plan. Such written consent must be obtained
within the 90-day period prior to the date the loan is made. Any security
interest held by the Plan by reason of an outstanding loan to the
Participant shall be taken into account in determining the amount of the
death benefit or Pre-Retirement Survivor Annuity, However, no spousal
consent shall be required under this paragraph if the total accrued benefit
subject to the security is not in excess of $3,500.
(h) With regard to any loans granted or renewed on or after the last
day of the first Plan Year beginning after December 31, 198B, a Participant
loan program shall be established which must include, but need not be
limited to, the following:
(1) the identity of the person or positions authorized to administer
the Participant loan program;
(2) a procedure for applying for loans;
(3) the basis on which loans will be approved or denied;
(4) limitations, if any, on the types and amounts of loans offered,
including what constitutes a hardship or financial need if selected in
the Adoption Agreement;
(5) the procedure under the program for determining a reasonable rate
of interest;
(6) the types of collateral which may secure a Participant loan; and
(7) the events constituting default and the steps that will be taken
to preserve plan assets.
Such Participant loan program shall be contained in a separate written
document which, when properly executed, is hereby incorporated by reference
and made a pan of this plan. Furthermore, such Participant loan program may
be modified or amended in writing from time to time without the necessity
of amending this Section of the Plan.
7.6 DUTIES OF THE TRUSTEE REGARDING PAYMENTS.
At the direction of the Administrator, the Trustee shall, from time to
time, in accordance with the terms of the Plan, make payments out of the Trust
Fund. The Trustee shall not be responsible in any way for the application of
such payments.
7.7 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES.
The Trustee shall be paid such reasonable compensation as set forth in
the Trustee's fee schedule (if the Trustee has such a schedule) or as agreed
upon in writing by the Employer and the Trustee. In addition, the Trustee shall
be reimbursed for any reasonable expenses, including reasonable counsel fees
incurred by it as Trustee. Such compensation and expenses shall be paid from the
Trust Fund unless paid or advanced by the Employer. All taxes of any kind and
all kinds whatsoever that may be levied or assessed under existing or future
laws upon, or in respect of, the Trust Fund or the income thereof, shall be paid
from the Trust Fund.
7.8 ANNUAL REPORT OF THE TRUSTEE.
Within a reasonable period of time after the later of the Anniversary
Date or receipt of the Employer's contribution for each Plan ,Year, the Trustee,
or its agent, shall furnish to the Employer and Administrator a written
statement of account with respect to the Plan Year for which such contribution
was made setting forth:
(a) the net income, or loss, of the Trust Fund;
(b) the gains, or losses realized by the Trust Fund upon sales or
other disposition of the assets;
(c) the increase, or decrease, in the value of the Trust Fund;
(d) all payments and distributions made from the Trust Fund; and
(e) such further information as the Trustee and/or Administrator deems
appropriate. The Employer, forthwith upon its receipt of each such
statement of account, shall acknowledge receipt thereof in writing and
advise the Trustee and/or Administrator of its approval or disapproval
thereof. Failure by the Employer to disapprove any such statement of
account within thirty (30) days after its receipt thereof shall be deemed
an approval thereof. The approval by the Employer of any statement of
account shall be binding as to all matters embraced therein as between the
Employer and the Trustee to the same extent as if the account of the
Trustee had been settled by judgment or decree in an action for a judicial
settlement of its account in a court of competent jurisdiction in which the
Trustee, the Employer and all persons having or claiming an interest in the
Plan were panics: provided, however, that nothing herein contained shall
deprive the Trustee of its right to have its accounts judicially settled if
the Trustee so desires.
7.9 AUDIT.
(a) If an audit of the Plan's records shall be required by the Act and
the regulations thereunder for any Plan Year, the Administrator shall
direct the Trustee to engage on behalf of all Participants an independent
qualified public accountant for that purpose. Such accountant shall, after
an audit of the books and records of the Plan in accordance with generally
accepted auditing standards, within a reasonable period after the close of
the Plan Year, furnish to the Administrator and the Trustee a report of his
audit setting forth his opinion as to whether any statements, schedules or
lists, that are required by Act Section 103 or the Secretary of Labor to be
filed with the Plan's annual report are presented fairly in conformity with
generally accepted accounting principles applied consistently.
(b) All auditing and accounting fees shall be an expense of and may,
at the election of the Administrator, be paid from the Trust Fund.
(c) If some or all of the information necessary to enable the
Administrator to comply with Act Section 103 is maintained by a bank,
insurance company, or similar institution, regulated and supervised and
subject to periodic examination by a state or federal agency, it shall
transmit and certify the accuracy of that information to the Administrator
as provided in Act Section 103(b) within one hundred twenty (120) days
after the end of the Plan Year or such other date as may be prescribed
under regulations of the Secretary of Labor.
7.10 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE.
(a) The Trustee may resign at any time by delivering to the Employer,
at least thirty (30) days before its effective date, a written notice of his
resignation.
(b) Whenever the Trustee hereunder ceases to serve as such, it shall
furnish to the Employer and Administrator a written statement of account with
respect to the portion of the Plan Year during which he served as Trustee. This
statement shall be either (i) included as pan of the annual statement of account
for the Plan Year required under Section 7.8 or (ii) set forth in a special
statement. Any such special statement of account should be rendered to the
Employer no later than the due date of the annual statement of account for the
Plan Year. The procedures sot forth in Section 7.8 for the approval by the
Employer of annual statements of account shall apply to any special statement of
account rendered hereunder and approval by the Employer of any such special
statement in the manner provided in Section 7.8 shall have the same effect upon
the statement as the Employer's approval of an annual statement of account. No
successor to the Trustee shall have any duty or responsibility to investigate
the acts or transactions of any predecessor who has rendered all statements of
account required by Section 7.8 and this subparagraph.
7.11 Transfer Of Interest.
Notwithstanding any other provision contained in this Plan, the
Trustee at the direction of the Administrator shall transfer the Vested
interest, if any, of such Participant in his account to another trust forming
part of a pension, profit sharing, or stock bonus plan maintained by such
Participant's new employer and represented by said employer in writing as
meeting the "requirements of Code Section 401(a), provided that the trust to
which such transfers are made permits the transfer to be made.
(a) Notwithstanding any provision of the plan to the contrary, with
respect to distributions made after December 31, 1992, a Participant shall
be permitted to elect to have any "eligible rollover distribution"
transferred directly to an "eligible retirement plan" specified by the
Participant. The Plan provisions otherwise applicable to distributions
continue to apply to the direct transfer option. The Participant shall, in
the time and manner prescribed by the Administrator, specify the amount to
be directly transferred and the "eligible retirement plan" to receive the
transfer, Any portion of a distribution which is not transferred shall be
distributed to the Participant.
(b) For purposes of this Section, the term "eligible rollover
distribution" means any distribution other than a distribution of
substantially equal periodic payments over the life or life expectancy of
the Participant (or joint life or joint life expectancies of the
Participant and the designated beneficiary) or a distribution over a period
certain of ten years or more. Amounts required to be distributed under Code
Section 401(x)(9) are not eligible rollover distributions. The direct
transfer option described in subsection (a) applies only to eligible
rollover distributions which would otherwise be includable in gross income
if not transferred.
(c) For purposes of this Section, the term "eligible retirement plan"
means an individual retirement account as described in Code Section 408(a),
an individual retirement annuity as described in Code Section 408(6), an
annuity plan as described in Coda Section 403(a), Dr a defined contribution
plan as described in Code Section 401(a) which is exempt from tax under
Code Section 501(a) and which accepts rollover distributions.
(d) The election described in subsection (a) also applies to the
surviving spouse after the Participant's death; however, distributions to
the surviving spouse may only be transferred to an individual retirement
account or individual retirement annuity. For purposes of subsection (a), a
spouse or former spouse who is the alternate payee under a qualified
domestic relations order as defined in Code Section 414(p) will be treated
as the participant.
7.12 TRUSTEE INDEMNIFICATION.
The Employer agrees to indemnify and save harmless the Trustee against
any and all claims, losses, damages, expenses and liabilities the Trustee may
incur in the exercise and performance of the Trustee's powers and duties
hereunder, unless the same are determined to be due to gross negligence or
willful misconduct.
7.13 EMPLOYER SECURITIES AND REAL PROPERTY.
The Trustee shall be empowered to acquire and hold "qualifying
Employer securities" and "qualifying Employer real property," as those terms arc
defined in the Act. However, no more than 100%, in the case of a Profit Sharing
Plan or 401(k) Plan or 10%, in the case of a Money Purchase Plan of the fair
market value of all the assets in the Trust Fund may be invested in "qualifying
Employer securities" and "qualifying Employer real property."
7.14 POWERS AND DUTIES OF THE CUSTODIAN.
The Custodian herein named shall have no duties other than those of an
administrative or custodial nature, and shall keep records of its activities, to
be furnished from time to time to the Trustee and/or Administrator. The
Custodian shall have possession of the assets of the Trust Fund and shall invest
them and distribute them only in accordance with directions received from the
Trustee and/or Administrator. The Custodian shall have no responsibility with
respect to any assets of the Trust Fund not delivered to the Custodian. The
Custodian shall be entitled to be paid fees in accordance with its published fee
schedule and reimbursement for its expenses, to be paid from the assets of the
Trust.
ARTICLE VIII
AMENDMENT, TERMINATION, AND MERGERS
8.1 AMENDMENT.
(a) The Employer shall have the right at any time to amend this Plan
subject to the limitations of this Section. However, any amendment which
affects the rights, duties or responsibilities of the Trustee and
Administrator may only be made with the Trustee's and Administrators
written consent. Any such amendment shall become effective as provided
therein upon its execution- The Trustee shall not be required to execute
any such amendment unless the amendment affects the duties of the Trustee
hereunder.
(b) The Employer may (1) change the choice of options in the Adoption
Agreement, (2) add overriding language in the Adoption Agreement when such
language is necessary to satisfy Code Sections 415 or 416 because of the
required aggregation of multiple plans, and (3) add certain model
amendments published by the Internal Revenue Service which specifically
provide that their adoption will not cause the Plan to be treated as an
individually designed plan. An Employer that amends ft Plan for any other
reason, including a waiver of the minimum funding requirement under Code
Section 412(d), will no longer participate in this Prototype Plan and will
be considered to have an individually designed plan.
(c) The Employer expressly delegates authority to the sponsoring
organization of this Plan, the right to amend this Plan by submitting a
copy of the amendment to each Employer who has adopted this Plan after
first having received a ruling or favorable determination from the Internal
Revenue Service that the Plan as amended qualifies under Code Section
401(a) and the Act. For purposes of this Section, the mass submitter shall
be recognized as the agent of the sponsoring organization. If the
sponsoring organization does not adopt the amendments made by the mass
submitter, it will no longer be identical to or a minor modifier of the
mass submitter plan.
(d) No amendment to the Plan shall bra effective if it authorizes or
permits any part of the Trust Fund (other than such part as is required to
pay taxes and administration expenses) to be used for or diverted to any
purpose other than for the exclusive benefit of the Participants or their
Beneficiaries or estates; or causes any reduction in the amount credited to
the account of any Participant; or causes or permits any portion of the
Trust Fund to revert to or become property of the Employer.
(e) Except as permitted by Regulations (including Regulation
1.411(4)-4), no Plan amendment or transaction having the effect of a Plan
amendment (such as a merger, plan transfer or similar transaction) shall be
effective if it eliminates or reduces any "Section 411(4)(6) protected
benefit" or adds or modifies conditions relating to "Section 411(4)(6)
protected benefits" the result of which is a further restriction an such
benefit unless such protected benefits are preserved with respect to
benefits accrued as of the later of the adoption date or effective date of
the amendment. "Section 411(4)(6) protected benefits" are benefits
described in Code Section 411(d)(6)(A), early retirement benefits and
retirement-type subsidies, and optional forms of benefit.
8.2 TERMINATION.
(a) The Employer shall have the right at any time to terminate the
Plan by delivering to the Trustee and Administrator written notice of such
termination. Upon any full or partial termination all amounts credited to
the affected Participants' Combined Accounts shall become 100% Vested and
shall not thereafter be subject to forfeiture, and all unallocated amounts
shall be allocated to the accounts of all Participants in accordance with
the provisions hereof.
(b) Upon the full termination of the Plan, the Employer shall direct
the distribution of the assets to Participants in a manner which is
consistent with and satisfies the provisions of Section 6.5. Distributions
to a Participant shall be made in cash (or in property if permitted in the
Adoption Agreement) or through the purchase of irrevocable nontransferable
deferred commitments from the Insurer. Except as permitted by Regulations,
the Lamination of the Plan shall not result in the reduction of "Section
411(d)(6) protected benefits" as described in Section 8.1.
8.3 MERGER OR CONSOLIDATION.
This Plan may be merged or consolidated with, or its assets and/or
liabilities may be transferred to any other plan only if the benefits which
would be received by a Participant of this Plan, in the event of a termination
of the plan immediately after such transfer, merger or consolidation, are at
least equal to the benefits the Participant would have received if the Plan had
terminated immediately before the transfer, merger or consolidation and such
merger or consolidation does not otherwise result in the elimination or
reduction of any "Section 411(4)(6) protected benefits" as described in Section
8.1(e).
ARTICLE IX
MISCELLANEOUS
9.1 EMPLOYER ADOPTIONS.
(a) Any organization may become the Employer hereunder by executing
the Adoption Agreement in form satisfactory to the Trustee, and it shall
provide such additional information as the Trustee may require. The consent
of the Trustee to act as such shall be signified by its execution of the
Adoption Agreement, provided that if the Trustee is The Chase Manhattan
Bank, or any successor bank of financial institution thereto, such consent
shall be signified by the separate trust agreement.
(b) Except as otherwise provided in this Plan, the affiliation of the
Employer and the participation of its Participants shall be separate and
apart from that of any other employer and its participants hereunder.
9.2 PARTICIPANT'S RIGHTS.
This Plan shall not be deemed to constitute a contract between the
Employer and any Participant or to be a consideration or an inducement for the
employment of any Participant or Employee. Nothing contained in this Plan shall
be deemed to give any Participant or Employee the right to be retained in the
service of the Employer or to interfere with the right of the Employer to
discharge any Participant or Employee at any time regardless of the effect which
such discharge shall have upon him as a Participant of this Plan.
9.3 ALIENATION.
(a) Subject to the exceptions provided below, no benefit which shall
be payable to any person (including a Participant or his Beneficiary) 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 tons of any
such person, nor shall it be subject to attachment or legal process for or
against such person, and the same shall not be recognized except to such
extent as may be required by law.
(b) This provision shall not apply to the extent a Participant or
Beneficiary is indebted to the Plan, for any reason, under any provision of
this Plan. At the time a distribution is to be made to or for a
Participant's or Beneficiary's benefit, such proportion of the amount to be
distributed as shall equal such indebtedness shall be paid to the Plan, to
apply against or discharge, such indebtedness. Prior to making a payment,
however, the Participant or Beneficiary must be given written notice by the
Administrator that such indebtedness is to be so paid in whole or pan from
his Participant's Combined Account. If the Participant or Beneficiary does
not agree that the indebtedness is a valid claim against his Vested
Participant's Combined Account, he shall be entitled to a review of the
validity of the claim in accordance with procedures provided in Sections
2.12 and 2.13.
(c) This provision shall not apply to a "qualified domestic relations
order" defined in Code Section 414(p), and those other domestic relations
orders permitted to be so treated by the Administrator under the provisions
of the Retirement Equity Act of 1984. The Administrator shall establish a
written procedure to determine the qualified status of domestic relations
orders and to administer distributions under such qualified orders.
Further, to the extent provided under a "qualified domestic relations
order," a former spouse of a Participant shall be treated as the spouse or
surviving spouse for all purposes under the Plan.
9.4 CONSTRUCTION OF PLAN.
This Plan and Trust shall be construed and enforced according to the
Act and the laws of the State or Commonwealth in which the Employer's principal
office is located, other than its laws respecting choice of law, to the extent
not pre-empted by the Act.
9.5 GENDER AND NUMBER.
Wherever any words are used herein in the masculine, feminine or
neuter gender, they shall be construed as though they were also used in another
gender in all cases where they would so apply, and whenever any Words are used
herein in the singular or plural form, they shall be construed as though they
were also used in the other form in all cases where they would so apply.
9.6 LEGAL ACTION.
In the event any claim, suit, or proceeding is brought regarding the
Trust and/or Plan established hereunder to which the Trustee or the
Administrator may be a party, and such claim, suit, or proceeding is resolved in
favor of the Trustee or Administrator, they shall be entitled to be reimbursed
from the Trust Fund for any and all costs, attorney's fees, and other expenses
pertaining thereto incurred by them for which they shall have become liable.
9.7 PROHIBITION AGAINST DIVERSION OF FUNDS.
(a) Except as provided below and otherwise specifically permitted by
law, it shall be impossible by operation of the Plan or of the Trust, by
termination of either, by power of revocation or amendment, by the
happening of any contingency, by collateral arrangement or by any other
means, for any part of the corpus or income of any Trust Fund maintained
pursuant to the Plan or any funds contributed thereto to be used for, or
diverted to, purposes other than the exclusive benefit of Participants,
Retired participants, or their Beneficiaries.
(b) In the event the Employer shall make a contribution under a
mistake of fact pursuant to Section 403(c)(2)(A) of the Act, the Employer
may demand repayment of such contribution at any time within one (1) year
following the time of payment and the Trustees shall return such amount to
the Employer within the one (1) year period. Earnings of the Plan
attributable to the contributions may not be returned to the Employer but
any losses attributable thereto must reduce the amount so returned.
9.8 BONDING.
Every Fiduciary, except a bank or an insurance company, unless exempted by
the Act and regulations thereunder, shall be bonded in an amount not less than
10% of the amount of the funds such Fiduciary handles; provided, however, that
the minimum bond shall be $1,000 and the maximum bond, $500,000. The amount of
funds handled shall be determined at the beginning of each Plan Year by the
amount of funds handled by such person, group, or class to be covered and their
predecessors, if any, during the preceding Plan Year, or if there is no
preceding Plan Year, then by the amount of the funds to be handled during the
then current year. The bond shall provide protection to the Plan against any
loss by reason of acts of fraud or dishonesty by the Fiduciary alone or in
connivance with others. The surety shall be a corporate surety company (as such
term is used in Act Section 412(a)(2)), and the bond shall be in a form approved
by the Secretary of Labor. Notwithstanding anything in the Plan to the contrary,
the cost of such bonds shall be an expense of and may, at the election of the
Administrator, be paid from the Trust Fund or by the Employer.
9.9 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE.
Neither the Employer nor the Trustee, nor their successors, shall be
responsible for the validity of any Contract issued hereunder or for the failure
on the part of the Insurer to make payments provided by any such Contract, or
for the action of any parson which may delay payment or render a Contract null
and void or unenforceable in whole or in part.
9.10 INSURER'S PROTECTIVE CLAUSE.
The Insurer who shall issue Contracts hereunder shall not have any
responsibility for the validity of this Plan or for the tax or legal aspects of
this Plan. The Insurer shall be protected and held harmless in acting in
accordance with any written direction of the Trustee, and shall have no duty to
see to the application of any funds paid to the Trustee, nor be required to
question any actions directed by the Trustee. Regardless of any provision of
this Plan, the Insurer shall not be required to take or permit any action or
allow any benefit or privilege contrary to the terms of any Contract which it
issues hereunder, or the rules of the Insurer.
9.11 RECEIPT AND RELEASE FOR PAYMENTS.
Any payment to any Participant, his legal representative, Beneficiary, or
to any guardian or committee appointed for such Participant or Beneficiary in
accordance with the provisions of this Plan, shall, to the extent thereof, be in
full satisfaction of all claims hereunder against the Trustee and the Employer.
9.12 ACTION BY THE EMPLOYER.
Whenever the Employer under the terms of the Plan is permitted or required
to do or perform any act or matter or thing, it shall be done and performed by a
person duly authorized by its legally constituted authority.
9.13 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY.
The "named fiduciaries" of this Plan are (1) the Employer, (2) the
Administrator, (3) the Trustee, and (4) any Investment Manager appointed
hereunder. The named Fiduciaries shall have only those specific powers, duties,
responsibilities, and obligations as are specifically given them under the Plan.
In general, the Employer shall have the sole responsibility for making the
contributions provided for under Section 4.1; and if Section 7.4(r) applies, the
responsibility to select the investment funds available for investment by
Participants and shall have the sole authority to appoint and remove the Trustee
and the Administrator, to formulate the Plan's "funding policy and method"; and
to amend the elective provisions of the Adoption Agreement or terminate, in
whole or in part, the Plan. The Administrator shall have the sole responsibility
for the administration of the Plan, which responsibility is specifically
described in the Plan. Except as provided above or in Section 7.1, the Trustee
shall have the sole responsibility of management of the assets held under the
Trust, except those assets, the management of which has been assigned to an
Investment Manager or Administrator, who shall be solely responsible for the
management of the assets assigned to it, all as specifically provided in the
Plan. Each named Fiduciary warrants that any directions given, information
furnished, or action taken by it shall be in accordance with the provisions of
the Plan, authorizing or providing for such direction, information or action.
Furthermore, each named Fiduciary may rely upon any such direction, information
or action of another named Fiduciary as being proper under the Plan, and is not
required under the Plan to inquire into the propriety of any such direction,
information or action. It is intended under the Plan that each named Fiduciary
shall be responsible for the proper exercise of its own powers, duties,
responsibilities and obligations under the Plan. No named Fiduciary shall
guarantee the Trust Fund in any manner against investment loss or depreciation
in asset value. Any person or group may serve in more than one Fiduciary
capacity.
9.14 HEADINGS.
The headings and subheadings of this Plan have been inserted for
convenience of reference and are to be ignored in any construction of the
provisions hereof.
9.15 APPROVAL BY INTERNAL REVENUE SERVICE.
(a) Notwithstanding anything herein to the contrary, if, pursuant to a
timely application filed by or in behalf of the Plan, the Commissioner of
Internal Revenue Service or his delegate should determine that the Plan
does not initially qualify as a tax-exempt plan under Code Sections 401 and
501, and such determination is not contested, or if contested, is finally
upheld, then if the Plan is a new plan, it shall be void ab initio and all
amounts contributed to the Plan, by the Employer, less expenses paid, shall
be returned within one year and the Plan shall terminate, and the Trustee
shall be discharged from all further obligations. If the disqualification
relates to in amended plan, then the Plan shall operate as if it had not
been amended and restated,
(b) Except as specifically stated in the Plan, any contribution by the
Employer to the Trust Fund is conditioned upon the deductibility of the
contribution by the Employer under the Code and, to the extent any such
deduction is disallowed, the Employer may within one (1) year following a
find determination of the disallowance, whether by agreement with the
Internal Revenue Service or by final decision of a court of competent
jurisdiction, demand repayment of such disallowed contribution and the
Trustee shall return such contribution within one (1) year following the
disallowance. Earnings of the Plan attributable to the excess contribution
may not be returned to the Employer, but any losses attributable thereto
must reduce the amount so returned.
9.16 UNIFORMITY.
All provisions of this Plan shall be interpreted and applied in a uniform,
nondiscriminatory manner.
9.17 PAYMENT OF BENEFITS.
Benefits under this Plan shall be paid, subject to Section 6.10 and Section
6.11 only upon death, Total and Permanent Disability, normal or early
retirement, termination of employment, or upon Plan Termination.
ARTICLE X
PARTICIPATING EMPLOYERS
10.1 ELECTION TO BECOME A PARTICIPATING EMPLOYER.
Notwithstanding anything herein to the contrary, with the consent of
the Employer and Trustee, any Affiliated Employer may adopt this Plan and all of
the provisions hereof, and participate herein and be known as a Participating
Employer, by a properly executed document evidencing said intent and will of
such Participating Employer.
10.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS.
(a) Each Participating Employer shall be required to select the same
Adoption Agreement provisions as those selected by the Employer other than
the Plan Year, the Fiscal Year, and such other items that must, by
necessity, vary among employers.
(b) The Trustee may, but shall not be required to, commingle, hold and
invest as one Trust Fund all contributions made by Participating Employers,
as well as all increments thereof.
(c) The transfer of any Participant from or to an Employer
participating in this Plan, whether he be an Employee of the Employer or a
Participating Employer, shall not affect such Participant's rights under
the Plan, and all amounts credited to such Participant's Combined Account
as well as his accumulated service time with the transferor or predecessor,
and his length of participation in the Plan, shall continue to his credit.
(d) Any expenses of the Plan which are to be paid by the Employer or
borne by the Trust Fond shall be paid by each Participating Employer in the
same proportion that the total amount standing to the credit of all
Participants employed by such Employer bears to the total standing to the
credit of all Participants.
10.3 DESIGNATION OF AGENT.
Each Participating Employer shall be deemed to be a pan of this Plan;
provided, however, that with respect to all or its relations with the Trustee
and Administrator for the purpose of this Plan, each Participating Employer
shall be deemed to have designated irrevocably the Employer as its agent.
Unless the context of the Plan clearly indicates the contrary, the word
"Employer" shall be deemed to include each Participating Employer as related to
its adoption of the Plan.
10.4 EMPLOYEE TRANSFERS.
It is anticipated that an Employee may be transferred between
Participating Employers, and in the dent of any such transfer, the Employee
involved shall carry with him his accumulated service and eligibility. No such
transfer shall effect a termination of employment hereunder, and the
Participating Employer to which the Employee is transferred shall thereupon
become obligated hereunder with respect to such Employer: in the same manner as
was the Participating Employer from whom the Employee was transferred.
10.5 PARTICIPATING EMPLOYER'S CONTRIBUTION AND FORFEITURES.
Any contribution or Forfeiture subject to allocation during each Plan
Year shall be allocated among all Participants of all Participating Employers in
accordance with the provisions of this Plan. On the basis of the information
furnished by the Administrator, the Trustee shall keep separate books and
records concerning the affairs of each Participating Employer hereunder and as
to the accounts and credits of the Employees of each Participating Employer. The
Trustee may, but need not, register Contracts so as to evidence that a
particular Participating Employer is the interested Employer hereunder, but in
the event of an Employee transfer from one participating Employer to another,
the employing Employer Shall immediately notify the Trustee thereof.
10.6 AMENDMENT.
Amendment of this Plan by the Employer at any time when there shall be
a Participating Employer hereunder shall only be by the written action of each
and every Participating Employer and with the consent of the Trustee where such
consent is necessary in accordance with the terms of this Plan,
10.7 DISCONTINUANCE OF PARTICIPATION.
Except in the case of a Standardized Plan, any Participating Employer
shall be permitted to discontinue or revoke its participation in the Plan at any
time. At the time of any such discontinuance or revocation, satisfactory
evidence thereof and of any applicable conditions imposed shall be delivered to
the Trustee. The Trustee shall thereafter transfer, deliver and assign Contracts
and other Trust Fund assets allocable to the Participants of such Participating
Employer to such new Trustee as shall have been designated by such Participating
Employer, in the event that it has established a separate pension plan for its
Employees provided, however, that no such transfer shall be made if the result
is the elimination or reduction of any "Section 411(d)(6) protected benefits" in
accordance with Section 8.1(e). If no successor is designated, the Trustee shall
rosin such assets for the Employees of said Participating Employer pursuant to
the provisions of Article VII hereof. In no such event shall any part of the
corpus or income of the Trust Fund as it relates to such Participating Employer
be used for or diverted for purposes other than for the exclusive boners of the
Employees of such Participating Employer.
10.8 ADMINISTRATOR'S AUTHORITY.
The Administrator shall have authority to snake any and alt necessary
rules or regulations, binding upon all Participating Employers and all
Participants, to effectuate the purpose of this Article.
10.9 PARTICIPATING EMPLOYER CONTRIBUTION FOR AFFILIATE.
If any Participating Employer is prevented in whole or in part from
making a contribution which it would otherwise have made under the Plan by
reason of having no current or accumulated earnings or profits, or because such
carvings or profits are less than the contribution which it would otherwise have
made, then, pursuant to Code Section 404(a)(3)(B), so much of the contribution
which such Participating Employer was so prevented from malting may be made, for
the benefit of the participating employees of such Participating Employer, by
other Participating Employers who arc members of the same affiliated group
within the meaning of Code Section 1504 to the extent of their current or
accumulated earnings or profits, except that such contribution by each such
other Participating Employer shall be limited to the proportion of its total
current and accumulated earnings or profits remaining after adjustment for its
contribution to the Plan made without regard to this paragraph which the total
prevented contribution bears to the total current and accumulated earnings or
profits of all the Participating Employers remaining after adjustment for all
contributions made to the Plan without regard to this paragraph.
A Participating Employer on behalf of whose cmploycc5 a contribution
is made under this paragraph shall not be required to reimburse the contributing
Participating Employers.
ARTICLE XI
CASH OR DEFERRED PROVISIONS
Notwithstanding any provisions in the Plan to the contrary, the
provisions of this Article shall apply with respect to any 401(k) Profit Sharing
Plan. Notwithstanding anything in this Article to the contrary, effective as of
the Plan Year in which this amendment becomes effective, the Actual Deferral
Percentage Test and the Actual Contribution Percentage Test shall be applied
(and adjusted) by applying the Family Member aggregation rules of Code Section
414(q)(6).
11.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION.
For cash Plan Year, the Employer shall contribute to the Plan:
(a) The amount of the total salary reduction elections of all
Participants made pursuant to Section 11.2(a), which amount shall be deemed
an Employees Elective Contribution, plus
(b) If specified in E3 of the Adoption Agreement, a matching
contribution equal to the percentage specified in the Adoption Agreement of
the Deferred Compensation of each Participant eligible to share in the
allocations of the matching contribution, which amount shall be deemed an
Employers Non-Elective or Elective Contribution as selected in the Adoption
Agreement, plus
(c) If specified in E4 of the Adoption Agreement, a discretionary
amount, if any, which shall be deemed an Employer's Non-Elective
Contribution, plus
(d) If specified in E5 of the Adoption Agreement, a Qualified
Non-Elective Contribution.
(e) Notwithstanding the foregoing, however, the Employer's
contributions for any Fiscal Year shall not exceed the maximum amount
allowable nit a deduction to the Employer under the provisions of Code
Section 404_ All contributions by the Employer shall be made in cash or in
such property as is acceptable to the Trustee,
(f) Except, however, to the extent necessary to provide the top heavy
minimum allocations, the Employer shall make a contribution even if it
exceeds currant or accumulated Net Profit or the amount which is deductible
under Code Section 404,
(g) Employer Elective Contributions accumulated through payroll
deductions shall be paid to the Trustee as of the earliest date on which
such contributions can reasonably be segregated from the Employer's general
assets, but in any event within ninety (90) days from the date on which
such amounts would otherwise have been payable to the Participant in cash.
The provisions of Department of Labor regulations 2510.3-102 are
incorporated herein by reference. Furthermore, any additional Employer
contributions which are allocable, to the Participant's Elective Account
for a Plan Year shall be paid to the Plan no later than the twelve-month
period immediately following the close of such Plan Year.
11.2 PARTICIPANT'S SALARY REDUCTION ELECTION.
(a) If selected in the Adoption Agreement, each Participant may elect
to defer his Compensation which would have been received in the Plan Year,
but for the deferral election, subject to the limitations of this Section
and the Adoption Agreement. A deferral election (or modification of an
earlier election) may not be made with respect to Compensation which is
currently available on or before the date the participant executed such
election, or if later, the latest of the date the Employer adopts this cash
or deferred arrangement, or the date such arrangement first became
effective. Any elections made pursuant to this Suction shall become
effective as soon as is administratively feasible.
Additionally, if elected in the Adoption Agreement, each Participant
may elect to defer and have allocated for a Plan Year all or a portion of
any cash bonus attributable to services performed by the Participant for
the Employer during such Plan Year and which would have been received by
the Participant on or before two and one-half months following the end of
the Plan Year but for the deferral. A deferral election may not be made
with respect to cash bonuses which are currently available on or before the
date the Participant executed such election. Notwithstanding the foregoing,
cash bonuses attributable to services performed by the Participant during a
Plan Year but which are to be paid to the Participant later than two and
one half months after the close of such Plan Year will be subjected to
whatever deferral election is in effect at the time such cash bonus would
have otherwise been received,
The amount by which Compensation and/or cash bonuses are reduced shall
be that Participant's Deferred Compensation and be treated as an Employer
Elective Contribution and allocated to that Participant's Elective Account.
Once made, a Participant's election to reduce Compensation shall remain in
effect un07 modified or terminated. Modifications may be made as specified
in the Adoption Agreement, and terminations may be made at any time. Any
modification or termination of an election will become effective as soon as
is administratively feasible.
(b) The balance in each Participant's Elective Account shall be fully
Vested at all times and shall not be subject to Forfeiture for any reason.
(C) Amounts held in the Participant's Elective Account and Qualified
Non-Elective Account may be distributable as permitted under the Plan, but
in no event prior to the earlier of;
(1) a Participant's termination of employment, Total and Permanent
Disability, or death;
(2) a Participant's attainment of ago 59 1/2;
(3) the proven financial hardship of a Participant, subject to the
limitations of Section 11.8;
(4) the termination of the Plan without the existence at the time of
Plan termination of another defined contribution plan (other than an
employee stock ownership plan as defined in Code Section 4975(e)(7))
or the establishment of a successor defined contribution plan (other
than an employee stock ownership plan as defined in Code Section
4975(e)(7)) by the Employer or an Affiliated Employer within the
period ending twelve months after distribution of all assets from the
Plan maintained by the Employer;
(5) the date of the sale by the Employer to an entity that is not an
Affiliated Employer of substantially all of the assets (within the
meaning of Code Section 409(d)(2)) with respect to a Participant who
continues employment with the corporation acquiring such assets; or
(6) the date of the sale by the Employer or an Affiliated Employer of
its interest in a subsidiary (within the meaning of Code Section
409(d)(3)) to an entity that is not an Affiliated Employer with
respect to a Participant who continues employment with such
subsidiary.
(d) In any Plan Year beginning after December 31, 1986, a
Participant's Deferred Compensation made under this Plan and all other
plans, contracts or arrangements of the Employer maintaining this Plan
shall not exceed the limitation imposed by Code Section 402(8), as in
effect for the calendar year in which such Plan Year began. If such dollar
limitation is exceeded solely from elective deferrals made under this Plan
or any other Plan maintained by the Employer, a Participant will be deemed
to have notified the Administrator of such excess amount which shall be
distributed in a manner consistent with Section l1.2(l). This dollar
limitation shall be adjusted annually pursuant to the method provided in
Code Section 415(d) in accordance with Regulations.
(e) In the event a Participant has received a hardship distribution
pursuant to Regulation 1.401(k)-1(d)(2)(iii)(B) from any other plan
maintained by the Employer or from his Participant's Elective Account
pursuant to Section 11.8, then such Participant shall not be permitted to
elect to have Deferred Compensation contributed to the Plan on his behalf
for a period of twelve (12) months following the receipt of the
distribution. Furthermore, the dollar limitation under Code Section 402(8)
shall be reduced, with respect to the Participant's taxable year following
the taxable year in which the hardship distribution was made, by the amount
of such Participant's Deferred Compensation, if any, made pursuant to this
Plan (and any other plan maintained by the Employer) for the taxable year
of the hardship distribution.
(f) If a Participant's Deferred Compensation under this Plan together
with any elective deferrals (as defined in Regulation 1.402(g)-1(b)) under
another qualified cash or deferred arrangement (as defined in Code Section
401(k)), a simplified employee pension (as defined in Code Section 408(k)),
a salary reduction arrangement (within the meaning of Code Section
3121(a)(5)(D)), a deferred compensation plan under Code Section 457, or a
trust described in Code Section 501(c)(18) cumulatively exceed the
limitation imposed by Code Section 402(8) (as adjusted annually in
accordance with the method provided in Code Section 415(d) pursuant to
Regulations) for such Participant's taxable year, the Participant may, not
later than March 1st following the close of his taxable year, notify the
Administrator in writing of such excess and request that his Deferred
Compensation under this Plan be reduced by an amount specified by the
Participant. In such event, the Administrator shall direct the Trustee to
distribute such excess amount (and any Income allocable to such excess
amount) to the Participant not later than the first April 15th following
the close of the Participant's taxable year. Distributions in accordance
with this paragraph may be made for any taxable year of the Participant
which begins after December 31, 1986. Any distribution of less than the
entire amount of Excess Deferred Compensation and Income shall be treated
as a pro rata distribution of Excess Deferred Compensation and Income. The
amount distributed shall not exceed the Participant's Deferred Compensation
under the Plan for the taxable year. Any distribution on or before the last
day of the Participant's taxable year must satisfy each of the following
conditions,
(1) the Participant shall designate the distribution as Excess
Deferred Compensation;
(2) the distribution must be made after the date on which the Plan
received the Excess Deferred Compensation; and
(3) the Plan must designate the distribution as a distribution of
Excess Deferred Compensation.
Any distribution under this Section shall be made first from unmatched
Deferred Compensation and, thereafter, simultaneously from Deferred
Compensation which is matched and matching contributions which relate to
such Deferred Compensation. However, any such matching contributions which
arc not Vested shall be forfeited in lieu of being distributed.
For the purpose of this Section, "Income" means the amount of income
or loss allocable to a Participant's Excess Deferred Compensation and shall
be equal to the sum of the allocable gain or loss for the taxable year of
the Participant and the allocable gain or loss for the period between the
end of the taxable year of the Participant and the date of distribution
("gap period"). The income or loss allocable to each such period is
calculated separately and is determined by multiplying the income or loss
allocable to the Participant's Deferred Compensation for the respective
period by a fraction. The numerator of the fraction is the Participant's
Excess Deferred Compensation for the taxable year of the Participant. The
denominator is the balance, as of the last day of the respective period, of
the Participant's Elective Account that is attributable to the
Participant's Deferred Compensation reduced by the gain allocable to such
total amount for the respective period and increased by the loss allocable
to such total amount for the respective period.
In lieu of the "fractional method" described above, a "safe harbor
method" may be used to calculate the allocable income or loss for the 'gap
period." Under such "safe harbor method," allocable income or loss for the
`gap period- shall be deemed to equal ten percent (10%) of the income or
loss allocable to a Participant's Excess Deferred Compensation for the
taxable year of the Participant multiplied by the number of calendar months
in the "gap period." For purposes of determining the number of calendar
months in the "gap period," a distribution occurring on or before the
fifteenth day of the month shall be treated as having been made on the last
day of the preceding month and a distribution occurring after such
fifteenth day shall be treated as having been made on the first day of the
next subsequent month.
Income or loss allocable to any distribution of Excess Deferred
Compensation on or before the last day of the taxable year of the
Participant shall be calculated from the first day of the taxable year of
the Participant to the date on which the distribution is made pursuant to
either the "fractional method" or the "safe harbor method."
Notwithstanding the above, for any distribution under this Section
which is made after August 15, 1991, such distribution shall not include
any income for the "gap period". Further provided, for any distribution
under this Section which is made after August 15, 1991, the amount of
Income may be computed using a reasonable method that is consistent with
Section 4.3(c), provided such method is used consistently for all
Participants and for all such distributions for the Plan Year.
Notwithstanding the above, for the 1987 calendar year. Income during
the "gap period" shall not be taken into account.
(g) Notwithstanding the above, a Participant's Excess Deferred
Compensation shall be reduced, but not below zero, by any distribution
and/or recharacterization of Excess Contributions pursuant to Section
11.5(a) for the Plan Year beginning with or within the taxable year of the
Participant.
(h) At Normal Retirement Date, or such other date when the Participant
shall be entitled to receive benefits, the fair market value of the
Participant's Elective Account shall be used to provide benefits to the
Participant or his Beneficiary.
(i) Employer Elective Contributions made pursuant to this Section may
be segregated into a separate account for each Participant in a federally
insured savings account, certificate of deposit in a bank or savings and
loan association, money market certificate, or other short-term debt
security acceptable to the Trustee until such time as the allocations
pursuant to Section 11.3 have been made.
(j) The Employer and the Administrator shall adopt a procedure
necessary to implement the salary reduction elections provided for herein.
11.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS.
(a) The Administrator shall establish and maintain an account in the
name of each Participant to which the Administrator shall credit as of each
Anniversary Date, or other valuation date, all amounts allocated to each
such Participant as set forth herein.
(b) The Employer shall provide the Administrator with all information
required by the Administrator to make a proper allocation of the Employer's
contributions for each Plan Year. Within a reasonable period of time after
the date of receipt by the Administrator of such information, the
Administrator shall allocate such contribution as follows:
(1) With respect to the Employer's Elective Contribution made pursuant
to Section 11.1(a), to each Participant's Elective Account in an
amount equal to each such Participant's Deferred Compensation for the
year.
(2) With respect to the Employer's Matching Contribution made pursuant
to Section 11.1(b), to each Participant's Account, or Participant's
Elective Account as selected in E3 of the Adoption Agreement, in
accordance with Section 11.1(b).
Except, however, a Participant who is not credited with a Year of
Service during any Plan Year shall or shall not share in the
Employer's Matching Contribution for that year as provided in E3 of
the Adoption Agreement. However, for Plan Years beginning after 1989,
if this is a standardized Plan, a Participant shall share in the
Employer's Matching Contribution regardless of Hours of Service.
(3) With respect to the Employer's Non-Elective Contribution made
pursuant to Section 11.1(c), to each Participant's Account in
accordance with the provisions of Sections 4.3(b)(2) or 4.3(h)(3),
whichever is applicable, 4.3(k) and 4.3(1).
(4) With respect to the Employer's Qualified Non-Elective Contribution
made pursuant to Section 11.1(d), to each Participant's Qualified
Non-Elective Contribution Account in the same proportion that each
such Participant's Compensation for the year bears to the total
Compensation of all Participants for such year. However, for any Plan
Year beginning prior to January 1, 1990, and if elected in the
non-standardized Adoption Agreement for any Plan Year beginning on or
after January l, 1990, a Participant who is not credited with a Year
of Service during any Plan Year shall not share in the Employer's
Qualified Non-Elective Contribution for that year, unless required
pursuant to Section 4.3(h). In addition, the provisions of Sections
4.3(k) and 4.3(l) shall apply with respect to the allocation of the
Employer's Qualified Non-Elective contribution.
(c) Notwithstanding anything in the Plan to the contrary, for Plan
Years beginning alter December 31, 1988, in determining whether a Non-Key
Employee has received the required minimum allocation pursuant to Section
4.3(1) such Non-Key Employee's Deferred Compensation and matching
contributions used to satisfy the "Actual Deferral Percentage" test
pursuant to Section 11.4(a) or the "Actual Contribution Percentage" test of
Section 11.6(a) shall not be taken into account.
(d) Notwithstanding anything herein to the contrary, participants who
terminated employment during the Plan Year shall share in the salary
reduction contributions made by the Employer for the year of termination
without regard to the Hours of Service credited.
(e) Notwithstanding anything herein to the contrary (other than
Sections 11.3(d) and 11.3(g)), any Participant who terminated employment
during the Plan Year for reasons other than death, Total and Permanent
Disability, or retirement shall or shall not share in the allocations of
the Employer's Matching Contribution made pursuant to Section 11.1(b), the
Employer's Non-Elective Contributions made pursuant to Section 11.1(c), the
Employer's Qualified Non-Elective Contribution made pursuant to Section
11.1(d), and Forfeitures as provided in the Adoption Agreement.
Notwithstanding the foregoing, for Plan Years beginning after 1989, if this
is a standardized Plan, any such terminated Participant shall share in such
allocations provided the terminated Participant completed more than 500
Hours of Service.
(f) Notwithstanding anything herein to the contrary, Participants
terminating for reasons of death, Total and Permanent Disability, or
retirement shall share in the allocation of the Employer's Matching
Contribution made pursuant to Section 11.1(b), the employer's Non-Elective
Contributions made pursuant to Section 11.1(e), the Employer's Qualified
Non-Elective Contribution made pursuant to Section 11.1(d), and Forfeitures
as provided in this Section regardless of whether they completed a Year of
Service during the Plan Year.
(g) Notwithstanding any election in the Adoption Agreement to the
contrary, if this is a non-standardized Plan that would otherwise fail to
meet the requirements of Code Sections 401(a)(26), 410(b)(1), or
430(b)(2)(A)(i) and the Regulations thereunder because Employer matching
Contributions made pursuant to Section 11.1(b), Employer Non-Elective
Contributions made pursuant to Section 11.1(c) or Employer Qualified
Non-Elective Contributions made pursuant to Section11.1(d) have not been
allocated to a sufficient number or percentage of Participants for a Plan
Year, then the Following rules shall apply:
(1) The group of Participants eligible to share in the respective
contributions for the Plan Year shall be expanded to include the
minimum number of Participants who would not otherwise be eligible as
are necessary to satisfy the applicable test specified above. The
specific participants who shall become eligible under the terms of
this paragraph shall be those who are actively employed on the last
day of the Plan Year and, when compared to similarly situated
Participants, have completed the greatest number of Hours of Service
in the Plan Year.
(2) If after application of paragraph (1) above, the applicable test
is still not satisfied, then this group of Participants eligible to
share for the Plan Year shall be further expanded to include the
minimum number of Participants who are not actively employed on the
last day of the Plan Year as are necessary to satisfy the applicable
test. The specific Participants who shall become eligible to sharp:
shall be those Participants, when compared to similarly situated
Participants, who have completed the greatest number of Hours or
Service in the Plan Year before terminating employment.
11.4 Actual Deferral Percentage Tests.
(a) Maximum Annual Allocation: For each Plan Year beginning after
December 31, 1986, the annual allocation derived from Employer Elective
Contributions and Qualified Non-Elective Contributions to a Participant's
Elective Account and Qualified Non-Elective Account shall satisfy one of
the following tests:
(1) The "Actual Deferral Percentage" for the Highly Compensated
Participant group shall not be more than the "Actual Deferral
Percentage" of the Non-Highly Compensated Participant group multiplied
by 1.25, or
(2) The excess of the "Actual Deferral Percentage" for the Highly
Compensated Participant group over the "Actual Deferral Percentage"
for the Non-Highly Compensated Participant group shall not be more
than two percentage points. Additionally, the "Actual Deferral
Percentage" for the Highly Compensated Participant group shall not
exceed the "Actual Deferral Percentage" for the Non-Highly Compensated
Participant group multiplied by 2. The provisions of Code Section
401(k)(3) and Regulation 1.401(k)-I(b) are incorporated herein by
reference.
However, for Plan Years beginning after December 31, 1988, to prevent
the multiple use of the alternative method described in (2) above and
Code Section 401(m)(9)(A), any Highly Compensated Participant eligible
to make elective deferrals pursuant to Section 11.2 and to make
Employee contributions or to receive matching contributions under this
Plan or under any other plan maintained by the Employer or an
Affiliated Employer shall have his actual contribution ratio reduced
pursuant to Regulation 1.401(m)-2, the provisions of which are
incorporated herein by reference,
(b) For the purposes of this Section "Actual Deferral Percentage'
means, with respect to the Highly Compensated Participant group and
Non-Highly Compensated Participant group for a Plan Year, the average of
the ratios, calculated separately for each Participant in such group, of
the amount of Employer Elective Contributions and Qualified Non-Elective
Contributions allocated to each Participants Elective Account and Qualified
Non-Elective Account for such Plan Year, to such Participant's -414(s)
Compensation" for such Plan Year. The actual deferral ratio for each
Participant and the "Actual Deferral Percentage" for each group, for Plan
Years beginning after December 31, 1988, shall be calculated to the nearest
one-hundredth of one percent of the Participant's "414(3) Compensation."
Employer Elective Contributions allocated to each Non-Highly Compensated
Participant's Elective Account shall be reduced by Excess Deferred
Compensation to the extent such excess amounts are made under this Plan or
any other plan maintained by the Employer.
(c) For the purpose of determining the actual deferral ratio of a
Highly Compensated Participant who is subject to the Family Member
aggregation rules of Code Section 414(q)(6) because such Participant is
either a "five percent owner" of the Employer or one of the ten (10) Highly
Compensated Employees paid the greatest "415 Compensation" during the year,
the following shall apply:
(1) The combined actual deferral ratio for the family group (which
shall be treated as one Highly Compensated Participant) shall be the
greater of: (i) the ratio determined by aggregating Employer Elective
Contributions and "414(s) Compensation" of all eligible Family Members
who are Highly Compensated Participants without regard to family
aggregation, and (ii) the ratio determined by aggregating Employer
Elective' Contributions and "414(s) Compensation" of all eligible
Family Members (including Highly Compensated Participants). However,
in applying the $200,000 limit to "414(s) Compensation" for Plan Years
beginning after December 31, 1988, Family Members shall include only
the affected Employee's spouse and any lineal descendants who have not
attained age 19 before the close of the Plan Year.
(2) The Employer Elective Contributions and "414(3) Compensation" of
all Family Members shall be disregarded for purposes of determining
the "Actual Deferral Percentage" of the Non-Highly Compensated
Participant group except to the extent taken into account in paragraph
(1) above.
(3) If a Participant is required to be aggregated as a member of more
than one family group in a plan, all Participants who am members of
those family groups that include the Participant are aggregated as one
family group in accordance with paragraphs (1) and (2) above.
(d) For the purposes of this Section and Code Sections 401(a)(4),
410(b) and 401(k), if two or more plans which include cash or deferred
arrangements are considered one plan for the purposes of Code Section
401(a)(4) or 410(b) (other than Code Section 401(b)(2)(A)(ii) as in effect
for Plan Years beginning after December 31, 1988), the cash or deferred
arrangements included in such plans shall be treated as one arrangement. In
addition, two or more cash or deferred arrangements may be considered as a
single arrangement for purposes of determining whether or not such
arrangements satisfy Code Sections 401(a)(4), 410(b) and 401(k). In such a
case, the cash or deferred arrangements included in such plans and the
plans including such arrangements shall be treated as one arrangement and
as one plan for purposes of this Section and Code Sections 401(a)(4),
410(b) and 401(k). For plan years beginning after December 31, 1989, plans
may be aggregated under this paragraph (e) only if they have the same plan
year.
Notwithstanding the above, for Plan Years beginning after December 31,
1988, an employee stock ownership plan described in Code Section 4975(e)(7)
may not be combined with this Plan for purposes of determining whether the
employee stock ownership plan or this Plan satisfies this Section and Code
Sections 401(a)(4), 410(b) and 401(k).
(e) For the purposes of this Section, if a Highly Compensated
Participant is a Participant under two (2) or more cash or deferred
arrangements (other than a cash or deferred arrangement which is part of an
employee stock ownership plan as defined in Code Section 4975(c)(7) for
Plan Years beginning after December 31, 1988) of the Employer or an
Affiliated Employer, all such cash or deferred arrangements shall be
treated as one cash or deferred arrangement for the purpose of determining
the actual deferral ratio with respect to such Highly Compensated
Participant. However, for Plan Years beginning after December 31, 1988, if
the cash or deferred arrangements have different Plan Years, this paragraph
shall be applied by treating all cash or deferred arrangements ending with
or within the same calendar year as a single arrangement.
11.5 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS.
In the event that the initial allocations of the Employer's Elective
Contributions and Qualified Non-Elective Contributions do not satisfy one of the
tests set forth in Section 11.4, for Plan Years beginning after December 31,
1986, the Administrator shall adjust Excess Contributions pursuant to the
options set forth below:
(a) On or before the fifteenth day of the third month following the
end of each Plan Year, the Highly Compensated Participant having the
highest actual deferral ratio shall have his portion of Excess
Contributions distributed to him and/or at his election recharacterized as
a voluntary Employee contribution pursuant to Section 4.7 until one of the
tests set forth in Section 11.4 is satisfied, or until his actual deferral
ratio equals the actual deferral ratio of the Highly Compensated
Participant having the second highest actual deferral ratio. This process
shall continue until one of the tests set forth in Section 11.4 is
satisfied. For each Highly Compensated Participant, the amount of Excess
Contributions is equal to the Elective Contributions and Qualified
Non-Elective Contributions made on behalf of such Highly Compensated
Participant (determined prior to the application of this paragraph) minus
the amount determined by multiplying the Highly Compensated Participant's
actual deferral ratio (determined after application of this paragraph) by
his "414(s) Compensation." However, in determining the amount of Excess
Contributions to be distributed and/or recharacterized with respect to an
affected Highly Compensated Participant as determined herein, such amount
shall be reduced by any Excess Deferred Compensation previously distributed
to such affected Highly Compensated Participant for his taxable year ending
with or within such Plan Year. Any distribution and/or recharacterization
of Excess Contributions shall be made in accordance with the following:
(1) With respect to the distribution of Excess Contributions pursuant
to (a) above, such distribution:
(i) may be postponed but not later than the close or the Plan
Year following the Plan Year to which they are allocable;
(ii) shall be made first from unmatched Deferred Compensation
and, thereafter, simultaneously from Deferred Compensation which
is matched and matching contributions which relate to such
Deferred Compensation. However, any such matching contributions
which are not Vested shall be forfeited in lieu of being
distributed;
(iii) shall be made from Qualified Non-Elective Contributions
only to the extent that Excess Contributions exceed the balance
in the Participant's Elective Account attributable to Deferred
Compensation and Employer matching contributions.
(iv) shall be adjusted for income; and
(v) shall be designated by the Employer as a distribution of
Excess Contributions (and Income).
(2) With respect to the recharacterization of Excess Contributions
pursuant to (a) above, such recharactcrized amounts:
(i) shall be deemed to have occurred on the date on which the
last of those Highly Compensated Participants with Excess
Contributions to be recharacterized is notified of the
recharacterization and the tax consequences of such
recharacterization;
(ii) for Plan Years ending on or before August 8, 1988, may be
postponed but not later than October 24, 1988;
(iii) shall not exceed the amount of Deferred Compensation on
behalf of any Highly Compensated Participant for any Plan Year;
(iv) shall be treated as voluntary Employee contributions for
purposes of Code Section 401(a)(4) and Regulation 1.401(k)-1(b).
However, for purposes of Sections 2.2 and 4.3(1), recharacterized
Excess Contributions continue to be treated as Employer
contributions that are Deferred Compensation. For Plan Years
beginning after December 31, 1988. Excess Contributions
recharacterized as voluntary Employee contributions shall
continue to be nonforfeitable and subject to the same
distribution rules provided for in Section 111(c);
(v) which relate to Plan Years ending on or before October 24,
1998, may be treated as either Employer contributions or
voluntary Employee contributions and therefore shall not be
subject to the restrictions of Section 11.2(c);
(vi) are not permitted if the amount recharacterized plus
voluntary Employee contributions actually made by such Highly
Compensated Participant. exceed the maximum amount of voluntary
Employee contributions (determined prior to application of
Section 11.6) that such Highly Compensated Participant is
permitted to make under the Plan in the absence of
recharacterization:
(vii) shall be adjusted for Income.
(3) Any distribution and/or recharacterization of less than the entire
amount of Excess Contributions shall be treated as a pro rata
distribution and/or recharacterization of Excess Contributions and
Income.
(4) The determination and correction of Excess Contributions of a
Highly Compensated Participant whose actual deferral ratio is
determined under the family aggregation rules shall be accomplished as
follows:
(ii) If the actual deferral ratio for the Highly Compensated
Participant is determined in accordance with Section
11.4(c)(1)(ii), then the actual deferral ratio shall be reduced
as required herein and the Excess Contributions for the family
unit shall be allocated among the Family Members in proportion to
the Elective Contributions of each Family Member that were
combined to determine the group actual deferral ratio.
(ii) If the actual deferral ratio for the Highly Compensated
Participant is determined under Section 11.4(c)(1)(i), then the
actual deferral ratio shall first be reduced as required herein,
but not below the actual deferral ratio of the group of Family
Members who are not Highly Compensated Participants without
regard to family aggregation. The Excess Contributions resulting
from this initial reduction shall be allocated (in proportion to
Elective Contributions) among the Highly Compensated Participants
whose Elective Contributions were combined to determine the
actual deferral ratio. If further reduction is still required,
then Excess Contributions resulting from this further reduction
shall be determined by taking into account the contributions of
all Family Members and shall be allocated among them in
proportion to their respective Elective Contributions.
(b) Within twelve (12) months after the end of the Plan Year, the
Employer shall make a special Qualified Non-Elective Contribution on behalf
of Non-Highly Compensated Participants in an amount sufficient to satisfy
one of the tests set forth in Section 11.4(a). Such contribution shall be
allocated to the Participant's Qualified Non-Elective Account of each
Non-Highly Compensated Participant in the same proportion that each
Non-Highly Compensated Participant's Compensation for the year bears to the
total Compensation of all Non-Highly Compensated Participants.
(c) For purposes of this Section, "Income" means the income or loss
allocable to Excess Contributions which shall equal the sum of the
allocable gain or loss for the Plan Year and, the allocable gain or loss
for the period between the end of the Plan Year and the date of
distribution ("gap period"). The income or loss allocable to Excess
Contributions for the Plan Year and the "gap period" is calculated
separately and is determined by multiplying the income or loss for the Plan
Year or the "gap period" by a fraction. The numerator of the fraction is
the Excess Contributions for the Plan Year. The denominator of the fraction
is the total of the Participant's Elective Account attributable to Elective
Contributions and the Participant's Qualified Non-Elective Account as of
the end of the Plan Year or the "gap period," reduced by the gain allocable
to such total amount for the Plan Year or the "gap period" and increased by
the loss allocable to such total amount for the Plan Year or the "gap
period."
In lieu of the "fractional method" described above, a "safe harbor
method" may be used to calculate the allocable Income for the "gap period."
Under such "safe harbor method," allocable Income for the "gap period"
shall be deemed to equal ten percent (10%) of the Income allocable to
Excess Contributions for the Plan Year of the Participant multiplied by the
number of calendar months in the "gap period." For purposes of determining
the number of calendar months in the "gap period," a distribution occurring
on or before the fifteenth day of the month shall be treated as having been
made on the last day of the preceding month and a distribution occurring
after such fifteenth day shall be treated as having been made on the first
day of the next subsequent month.
Notwithstanding the above, for Plan Years which began in 1987, income
during the "gap period' shall not be taken into account.
Notwithstanding the above, for any distribution under this Section
which is made after August 15, 1991, such distribution shall not include
any Income for the "gap period." Further provided, for any distribution
under this Section which is made after August 15, 1991, the amount of
Income may be computed using a reasonable method that is consistent with
Section 4.3(c), provided such method is used consistently for all
Participants and for all such distributions for the Plan Year.
(d) Any amounts not distributed or recharacterized within 2 1/2 months
after the end of the Plan Year shall be subject to the 10% Employer excise
tax imposed by Code Section 4979.
11.6 ACTUAL CONTRIBUTION PERCENTAGE TESTS.
(a) The "Actual Contribution Percentage," for Plan Years beginning
after the later of the Effective Date of this Plan or December 31, 1986,
for the Highly Compensated Participant group shall not exceed the greater
of:
(1) 125 percent of such percentage for the Non-Highly Compensated
Participant group: or
(2) the lesser of 200 percent of such percentage for the Non-Highly
Compensated Participant group, or such percentage for the Non-Highly
Compensated Participant group plus 2 percentage points. However, for
Plan Years beginning after December 31, 1988, to prevent the multiple
use of the alternative method described in this paragraph and Code
Section 401(m)(9)(A), any Highly Compensated Participant eligible to
make elective deferrals pursuant to Section 11.2 or any other cash or
deferred arrangement maintained by the Employer or an Affiliated
Employer and to make Employee contributions or to receive matching
contributions under any plan maintained by the Employer or an
Affiliated Employer shall have his actual contribution ratio reduced
pursuant to Regulation 1.401 (m)-2, The provisions of Code Section
401(m) and Regulations 1.401(m)-1(b) and 1.401(m)-2 are incorporated
herein by reference.
(b) For the purposes of this Section and Section 11.7, "Actual
Contribution Percentage" for a Plan Year means, with respect to the Highly
Compensated Participant group and Non-Highly Compensated Participant group,
the average of the ratios (calculated separately for each Participant in
each group) of:
(1) the sum of Employer matching contributions made pursuant to
Section 11.1(b) (to the extent such matching contributions arc not
used to satisfy the tests set forth in Section 11.4), voluntary
Employee contributions made pursuant to Section 4.7 and Excess
Contributions recharacterized as voluntary Employee contributions
pursuant to Section 11.5 on behalf of each such Participant for such
Plan Year, to
(2) the Participant's "414(s) Compensation" for such Plan Year.
(c) For purposes of determining the "Actual Contribution Percentage"
and the amount of Excess Aggregate Contributions pursuant to Section
113(d), only Employer matching contributions (excluding matching
contributions forfeited or distributed pursuant to Section 11.2(f),
11.5(a), or 11.7(a)) contributed to the Plan prior to the end of the
succeeding Plan Year shall be considered. In addition, the Administrator
may elect to take into account, with respect to Employees eligible to have
Employer matching contributions made pursuant to Section 11.1(b) or
voluntary Employee contributions made pursuant to Section 4.7 allocated to
their accounts, elective deferrals (as defined in Regulation 1.402(g)-1(b))
and qualified non-elective contributions (as defined in Code Section
401(m)(4)(C)) contributed to any plan maintained by the Employer. Such
elective deferrals and qualified non-elective contributions shall be
treated as Employer matching contributions subject to Regulation
1A01(m)-1(b)(2) which is incorporated herein by reference. However, for
Plan Years beginning after December 31, 1988, the Plan Year must be the
same as the plan year of the plan to which the elective deferrals and the
qualified non-elective contributions are made.
(d) For the purpose of determining the actual contribution ratio of a
Highly Compensated Employee who is subject to the Family Member aggregation
rules of Code Section 414(q)(6) because such Employee is either a "rive
percent owner" of the Employer or one of the ten (10) Highly Compensated
Employees paid the greatest "415 Compensation" during the year, the
following shall apply:
(1) The combined actual contribution ratio for the family group (which
shall be treated as one Highly Compensated Participant) Shall be the
greater of: (i) the ratio determined by aggregating Employer matching
contributions made pursuant to Section 11.1(b) (to the extent such
matching contributions are not used to satisfy the tests set forth in
Section 11.4), voluntary Employee contributions made pursuant to
Section 4.7, Excess Contributions recharacterized as voluntary
Employee contributions pursuant to Section 11.5 and
"414(s)Compensation" of all eligible Family Members who arc Highly
Compensated Participants without regard to family aggregation; and
(ii) the ratio determined by aggregating Employer matching
contributions made pursuant to Section 11.1(6) (to the extent such
matching contributions arc not used to satisfy the tests set forth in
Section 11.4), voluntary Employee contributions made pursuant to
Section 4.7, Excess Contributions recharacterized as voluntary
Employee contributions pursuant to Section 11.5 end "414(s)
Compensation" of all eligible Family Members (including Highly
Compensated Participants). However, in applying the 5200,000 limit to
"414(s) Compensation" for Plan Years beginning after December 31,
1988. Family Members shall include only the affected Employee's spouse
and any lineal descendants who have not attained age 19 before the
close of the Plan Year.
(2) The Employer matching contributions made pursuant to Section
11.1(6) (to the extent such matching contributions are not used to
satisfy the tests set forth in Section 11.4), voluntary Employee
contributions made pursuant to Section 4.7. Excess Contributions
recharacterized as voluntary Employee contributions pursuant to
Section 11.5 and "414(s) Compensation" of all Family Members shall be
disregarded for purposes of determining the "Actual Contribution
Percentage" of the Non-Highly Compensated Participant group except to
the extent taken into account in paragraph (1) above.
(3) If a Participant is required to be aggregated as a member of more
than one family group in a plan, all Participants who are members of
those family groups that include the Participant arc aggregated as one
family group in accordance with paragraphs (1) and (2) above.
(e) For purposes of this Section and Code Sections 401(a)(4), 410(6)
and 401(m), if two or more plans of the Employer to which matching
contributions. Employee contributions, or both, are made are treated as one
plan for purposes of Code Sections 401(a)(4) or 410(6) (other than the
average benefits test under Code Section 410(b)(2)(A)(ii) as in effect for
Plan Years beginning after December 31, 1988), such plans shall be treated
as one plan. In addition, two or more plans of the Employer to which
matching contributions, Employee contributions, or both, are made may be
considered as a single plan for purposes of determining whether or not such
plans satisfy Code Sections 401(a)(4), 410(6) and 401(m). In such a case,
the aggregated plans must satisfy this Section and Code Sections 401(a)(4),
410(6) and 401(m) as though such aggregated plans were a single plan. For
plan years beginning after December 31, 1989, plans may be aggregated under
this paragraph only if they have the same plan year.
Notwithstanding the above-, for Plan Years beginning after December
31, 1988, an employee stock ownership plan described in Code Section
4975(e)(7) may not be aggregated with this Plan for purposes of determining
whether the employee stock ownership plan or this Plan satisfies this
Section and Code Sections 401(a)(4), 410(6) and 401(m).
(f) If a Highly Compensated Participant is a Participant under two or
more plans (other than an employee stock ownership plan as defined in Code
Section 4975(c)(7) for Plan Years beginning after December 31, 1988) which
are maintained by the Employer or an Affiliated Employer to which matching
contributions. Employee contributions, or both, are made, all such
contributions on behalf of such Highly Compensated Participant shall be
aggregated for purposes of determining such Highly Compensated
Participant's actual contribution ratio. However, for Plan Years beginning
after December 31, 1989, if the plans have different plan years, this
paragraph shall be applied by treating all plans ending with or within the
same calendar year as a single plan.
(g) For purposes of Section 11.6(a) and 11.7, a Highly Compensated
Participant and a .Non-Highly Compensated Participant shall include any
Employee eligible to have matching contributions made pursuant to Section
11.1(b) (whether or not a deferred election was made or suspended pursuant
to Section 11.2(e)) allocated to his account for the Plan Year or to make
salary deferrals pursuant to Section 11.2 (if the Employer uses salary
deferrals to satisfy the provisions of this Section) or voluntary Employee
contributions pursuant to Section 4.7 (whether or not voluntary Employee
contributions are made) allocated to his account for the Plan Year.
(h) For purposes of this Section, "Matching Contribution" shall mean
an Employer contribution made to the Plan, or to a contract described in
Code Section 403(b), on behalf of a Participant on account of an Employee
contribution made by such Participant, or on account of a participant's
deferred compensation, under a plan maintained by the Employer.
11.7 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS.
(a) In the event that for Plan Years beginning after December 31,
1986, the "Actual Contribution Percentage" for the Highly Compensated
Participant group exceeds the "Actual Contribution Percentage" for the
Non-Highly Compensated Participant group pursuant to Section 1.6(a), the
Administrator (on or before the fifteenth day of the third month following
the end of the Plan Year, but in no event later than the close of the
following Plan Year) shall direct the Trustee to distribute to the Highly
Compensated Participant having the highest actual contribution ratio, his
portion of Excess Aggregate Contributions (and Income allocable to such
contributions) or, if forfeitable, forfeit such non-Vested Excess Aggregate
Contributions attributable to Employer matching contributions (and Income
allocable to such Forfeitures) until either one of the tests set forth in
Section 11.6(a) is satisfied, or until his actual contribution ratio equals
the actual contribution ratio of the Highly Compensated Participant having
the second highest actual contribution ratio. This process shall continue
until one of the tests set forth in Section 11.6(a) is satisfied. The
distribution and/or Forfeiture of Excess Aggregate Contributions shall be
made in the following order.
(1) Employer matching contributions distributed and/or forfeited
pursuant to Section 11.5(a)(1);
(2) Voluntary Employee contributions including Excess Contributions
recharacterized as voluntary Employee contributions pursuant to
Section 11.5(a)(2);
(3) Remaining Employer matching contributions.
(b) Any distribution or Forfeiture of less than the entire amount of
Excess Aggregate Contributions (and Income) shall be treated as a pro rata
distribution or Excess Aggregate Contributions and Income. Distribution of
Excess Aggregate Contributions shall be designated by the Employer as a
distribution of Excess Aggregate Contributions (and Income). Forfeitures of
Excess Aggregate Contributions shall be treated in accordance with Section
4.3. However, no such Forfeiture may be allocated to a Highly Compensated
Participant whose contributions are reduced pursuant to this Section.
(c) Excess Aggregate Contributions attributable to amounts other than
voluntary Employee contributions, including forfeited matching
contributions, shall be treated as Employer contributions for purposes of
Code Sections 404 and 415 even if distributed from the Plan.
(d) For the purposes of this Section and Section 11.6, "Excess
Aggregate Contributions" means, with respect to any Plan Year, the excess
of:
(1) the aggregate amount of Employer matching contributions made
pursuant to Section 1.1(b) (to the extent such contributions are taken
into account pursuant to Section 11.6(a)), voluntary Employee
contributions made pursuant to Section 4.7. Excess Contributions
recharacterized as voluntary Employee contributions pursuant to
Section 11.5 and any Qualified Non-Elective Contributions or elective
deferrals taken into account pursuant to Section 11.6(c) actually made
on behalf of the Highly Compensated Participant group for such Plan
Year, over
(2) the maximum amount of such contributions permitted under the
limitations of Section 11.6(a).
(e) For each Highly Compensated Participant, the amount of Excess
Aggregate Contributions is equal to the total Employer matching
contributions made pursuant to Section 111(b) (to the extent taken into
account pursuant to Section 11.6(a)), voluntary Employee contributions made
pursuant to Section 4.7. Excess Contributions recharacterized as voluntary
Employee contributions pursuant to Section 41.5 and any Qualified
Non-Elective Contributions or elective deferrals taken into account
pursuant to Section 11.6(e) on behalf of the Highly Compensated Participant
(determined prior to the application of this paragraph) minus the amount
determined by multiplying the Highly Compensated Participant's actual
contribution ratio (determined after application of this paragraph) by his
"4l4(s) Compensation." The actual contribution ratio must be rounded to the
nearest one-hundredth of one percent For Plan Years beginning after
December 31, 1999. In no case shall the amount of Excess Aggregate
Contribution with respect to any Highly Compensated Participant exceed the
amount of Employer matching contributions made pursuant to Section 11.1(b)
(to the extent taken into account pursuant to Section 11.6(a)), voluntary
Employee contributions made pursuant to Section 43, Excess Contributions
recharacterized as voluntary Employee contributions pursuant to Section
11.5 and any Qualified Non-Elective Contributions or elective deferrals
taken into account pursuant to Section 11.6(c) on behalf of such Highly
Compensated Participant for such Plan Year.
(f) The determination of the amount of Excess Aggregate Contributions
with respect to any Plan Year shall be made after first determining the
Excess Contributions, if any, to be treated as voluntary Employee
contributions due to recharacterization for the plan year of any other
qualified cash or deferred arrangement (as defined in Code Section 401(k))
maintained by the Employer that ends with or within the Plan Year or which
are treated as voluntary Employee contributions due to recharacterization
pursuant to Section 11.5.
(g) The determination and correction of Excess Aggregate Contributions
of a Highly Compensated Participant whose actual contribution ratio is
determined under the family aggregation rules shall be accomplished as
follows:
(1) If the actual contribution ratio for the Highly Compensated
Participant is determined in accordance with Section 11.6(d)(1), then
the actual contribution ratio shall be reduced and the Excess
Aggregate Contributions for the family unit shall be allocated among
the Family Members in proportion to the sum of Employer matching
contributions made pursuant to Section 11.1(b) (to the extent taken
into account pursuant to Section 11.6(a)), voluntary Employee
contributions made pursuant to Section 4.7, Excess Contributions
recharacterized as voluntary Employee contributions pursuant to
Section 11.5 and any Qualified Non-Elective Contributions or elective
deferrals taken into account pursuant to Section 11.6(c) of each
Family Member that were combined to determine the group actual
contribution ratio.
(2) If the actual contribution ratio for the Highly Compensated
Participant is determined under Section 11.6(d)(2), then the actual
contribution ratio shall first be reduced, as required herein, but not
below the actual contribution ratio of the group of Family Members who
arc not Highly Compensated Participants without regard to family
aggregation. The Excess Aggregate Contributions resulting from this
initial reduction shall be allocated among the Highly Compensated
Participants whose Employer matching contributions made pursuant to
Section 11.1(b) (to the extent taken into account pursuant to Section
11.6(a)), voluntary Employee contributions made pursuant to Section
4.7. Excess Contributions recharacterized as voluntary Employee
contributions pursuant to Section 11.5 and any Qualified Non-Elective
Contributions or elective deferrals taken into account pursuant to
Section 11.6(c) were combined to determine the actual contribution
ratio. If further reduction is still required, then Excess Aggregate
Contributions resulting from this further reduction shall be
determined by taking into account the contributions of all Family
Members and shall be allocated among them in proportion to their
respective Employer matching contributions made pursuant to Section
11.1(b) (to the extent taken into account pursuant to Section
11.6(a)), voluntary Employee contributions made pursuant to Section
4.7. Excess Contributions recharacterized as voluntary Employee
contributions pursuant to Section 11.5 and any Qualified Non-Elective
Contributions or elective deferrals taken into account pursuant to
Section 11.6(c).
(h) Notwithstanding the above, within twelve (12) months after the end
of the Plan Year, the Employer may make a special Qualified Non-Elective
Contribution on behalf of Non-Highly Compensated Participants in an amount
sufficient to satisfy one of the tents set forth in Section 11.6. Such
contribution shall be allocated to the Participant's Qualified Non-Elective
Account of each Non-Highly Compensated Participant in the same proportion
that each Non-Highly Compensated Participant's Compensation for the year
bears to the total Compensation of all Non-Highly Compensated Participants.
A separate accounting shall be maintained for the purpose of excluding such
contributions from the "Actual Deferral Percentage" tests pursuant to
Section 11.4.
(i) For purposes of this Section, "Income" means the income or loss
allocable to Excess Aggregate Contributions which shall equal the sum of
the allocable gain or loss for the Plan Year and the allocable gain or loss
for the period between the end of the Plan Year and the date of
distribution ("gap period"). The income or loss allocable to Excess
Aggregate Contributions for the Plan Year and the "gap period" is
calculated separately and is determined by multiplying the income or loss
for the Plan Year or the "gap period" by a fraction. The numerator of the
fraction is the Excess Aggregate Contributions for the Plan Year, The
denominator of the fraction is the total Participant's Account and
Voluntary Contribution Account attributable to Employer matching
contributions subject to Section 11.6, voluntary Employee contributions
made pursuant to Section 4.7, and any Qualified Non-Elective Contributions
and elective deferrals taken into account pursuant to Section 11.6(c) as of
the end of the Plan Year or the "gap period." reduced by the gain allocable
to such total amount for the Plan Year or the "gap period" and increased by
the loss allocable to such total amount for the Plan Year or the "gap
period."
In lieu of the "fractional method" described above, a "safe harbor
method" may be used to calculate the allocable Income for the "gap period."
Under such "safe harbor method," allocable Income for the "gap period"
shall be deemed to equal ten percent (10%) of the Income allocable to
Excess Aggregate Contributions for the Plan Year of the Participant
multiplied by the number of calendar months in the "gap period." For
purposes of determining the number of calendar months in the "gap period,"
a distribution occurring on or before the fifteenth day of the month shall
be treated as having been made on the last day of the preceding month and a
distribution occurring after such fifteenth day shall be treated as having
been made on the first day of the next subsequent month,
The Income allocable to Excess Aggregate Contributions resulting from
recharacterization of Elective Contributions shall be determined and
distributed as if such recharacterized Elective Contributions had been
distributed as Excess Contributions.
Notwithstanding the above, for any distribution under this Section
which is made after August 15, 1991, such distribution shall not include
any Income for the "gap period." Further provided, for any distribution
under this Section which is made after August 15, 1991, the amount of
Income may be computed using a reasonable method that is consistent with
Section 4.3(c), provided such method is used consistently for all
Participants and for all such distributions for the Plan Year.
Notwithstanding the above, for Plan Years which began in 1987, Income
during the "gap period" shall not be taken into account.
Notwithstanding the above, for any distribution under this Section
which is made after August 15, 1991, such distribution shall not include
any Income for the "gap period". Further provided for any distribution
under this Section which is made after August 15, 1991, the amount of
Income may be computed using a reasonable method that is consistent with
Section 43(c), provided such method is used consistently for all
Participants and for all such distributions for the Plan Year.
11.8 ADVANCE DISTRIBUTION FOR HARDSHIP.
(a) The Administrator, at the election of the Participant, shall
direct the Trustee to distribute to any Participant in any one Plan Year up
to the lesser of (1) 100% of his Vested accounts as specified in the
Adoption Agreement valued as of the last Anniversary Date or other
valuation date or (2) the amount necessary to satisfy the immediate and
heavy financial need of the Participant. Any distribution made pursuant to
this Section shall be deemed to be made as of the first day of the Plan
Year or, if later, the valuation date immediately preceding the date of
distribution, and the account from which the distribution is made shall be
reduced accordingly. Withdrawal under this Section shall be authorized only
if the distribution is on account of one of the following or any other
items permitted by the Internal Revenue Service:
(1) Medical expenses described in Code Section 213(d) incurred by the
Participant, his spouse, or any of his dependents (as defined in Code
Section 152) or expenses necessary for these persons to obtain medical
care:
(2) The purchase (excluding mortgage payments) of a principal
residence for the Participant;
(3) Payment or tuition and related educational fees for the next 12
months of post-secondary education for the Participant, his spouse,
children, or dependents; or
(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.
(b) No distribution shall be made pursuant to this Section unless the
Administrator, based upon the Participant's representation and such other
facts as am known to the Administrator, determines that all of the
following conditions arc satisfied:
(1) The distribution is not in excess of the amount of the immediate
and heavy financial need of the Participant (including any amounts
necessary to pay any federal, state, or local taxes or penalties
reasonably anticipated to result from the distribution);
(2) The Participant has obtained all distributions, other than
hardship distributions, and all nontaxable loans currently available
under all plans maintained by the Employer,
(3) The Plan, and all other plans maintained by the Employer, provide
that the Participant's elective deferrals and voluntary Employee
contributions will be suspended for at least twelve (12) months after
receipt of the hardship distribution, and
(4) The Plan, and all other plans maintained by the Employer, provide
that the Participant may not make elective deferrals for the
Participant's taxable year immediately following the taxable year of
the hardship distribution in excess of the applicable limit under Code
Section 402(g) for such next taxable year less the amount of such
Participant's elective deferrals for the taxable year of the hardship
distribution.
(c) Notwithstanding the above, distributions from the Participant's
Elective Account and Qualified Non-Elective Account pursuant to this
Section shall be limited solely to the Participant's Deferred Compensation
and any income attributable thereto credited to the Participant's Elective
Account as of December 31, 1988.
(d) Any distribution made pursuant to this Section shall be made in a
manner which is consistent with and satisfies the provisions of Section
6.5, including, but not limited to, all notice and consent requirements of
Code Sections 411(a)(11) and 417 and the Regulations thereunder.
ADOPTION AGREEMENT FOR
AUTOMATIC DATA PROCESSING
NON-STANDARDIZED 401(K) PROFIT SHARING
PLAN AND TRUST
The undersigned Employer adopts the Automatic Data Processing
Non-Standardized 401(k) Profit Sharing Plan and Trust for those Employees who
shall qualify as Participants hereunder, to be known as the
A1 Exelixis, Inc. 401(k) Plan
-----------------------------
(Enter Plan Name)
It shall be effective as of the date specified below. The Employer hereby
selects the following Plan specifications:
CAUTION: The failure to properly fill out this Adoption Agreement may result
in disqualification of the Plan.
EMPLOYER INFORMATION
B1 Name of Employer Exelixis, Inc.
---------------
B2 Address 170 Harbor Way P. O. Box 0511
----------------------------------
San Francisco, CA 94083-0511
----------------- ----- ----------
City State Zip
Telephone 650-837-7000
-------------
B3 Employer Identification Number 04-3257395
----------
B4 Date Business Commenced November 15, 1994
-------------------
B5 TYPE OF ENTITY
a. ( ) S Corporation
b. ( ) Professional Service Corporation
c. (X) Corporation
d. ( ) Sole Proprietorship
e. ( ) Partnership
f. ( ) Other
AND, is the Employer a member of
g. a controlled group? (X) Yes ( ) No
h. an affiliated service group? ( ) Yes (X) No
B6 NAME(S) OF TRUSTEE(S)
a. State Street Bank
--------------------
b.
--------------------
c.
--------------------
d.
--------------------
e.
--------------------
B7 TRUSTEES' ADDRESS
a. ( ) Use Employer Address
b. (X) 200 Newport Avenue, Q3N
---------------------------
Street
North Quincy , Massachusetts 02171
-------------- -------------- -------
City State Zip
B8 LOCATION OF EMPLOYER'S PRINCIPAL OFFICE:
a. (X) State b. ( ) Commonwealth of c. California and this Plan
----------
and Trust shall be governed under the same.
B9 EMPLOYER FISCAL YEAR means the 12 consecutive month period:
Commencing on a. January 1 (e.g., January 1st) and
---------------
month day
ending on b. December 31 .
-------------
month day
PLAN INFORMATION
C1 EFFECTIVE DATE
This Adoption Agreement of the Automatic Data Processing
Non-Standardized 401(k)
Profit Sharing Plan and Trust shall:
a. ( ) establish a new Plan and Trust effective as of (hereinafter
called the "Effective Date").
b. (X) constitute an amendment and restatement in its entirety of a
previously established qualified Plan and Trust of the Employer which
was effective February 1, 1998 (hereinafter called the "Effective
------------------
Date"). Except as specifically provided in the Plan, the effective
date of this amendment and restatement is October 1, 2001(For TRA '86
---------------
amendments, enter the first day of the first Plan Year beginning in
1989).
C2 PLAN YEAR means the 12 consecutive month period:
Commencing on a. January 1 (e.g., January 1st) and
-----------
ending on b. December 31 .
-------------
IS THERE A SHORT PLAN YEAR?
c. (X) No
d. ( ) Yes, beginning
-----------
and ending
---------------
C3 ANNIVERSARY DATE of Plan (Annual Valuation Date)
a. December 31
-------------
month day
C4 PLAN NUMBER assigned by the Employer (select one)
a. (X) 001 b. ( ) 002 c. ( ) 003 d. ( ) Other
---------
C5 NAME OF PLAN ADMINISTRATOR (Document provides for the Employer to appoint
an Administrator. If none is named, the Employer will become the
Administrator.)
a. (X) Employer (Use Employer Address)
b. ( ) Name
Address ( ) Use Employer Address
------------------------------------------------------------
--------------------, ---------------- ---------------
City State Zip
Telephone
---------------------------------------------------
Administrator's I.D. Number
-------------------------------
C6 PLAN'S AGENT FOR SERVICE OF LEGAL PROCESS
a. (X) Employer (Use Employer Address)
b. ( ) Name
-------------------------------------------------------
Address
----------------------------------------------------
----------------------------------------------------
ELIGIBILITY, VESTING AND RETIREMENT AGE
D1 ELIGIBLE EMPLOYEES (Plan Section 1.15) shall mean:
a. ( ) all Employees who have satisfied the eligibility requirements.
b. (X) all Employees who have satisfied the eligibility requirements
except those checked below:
1. ( ) Employees paid by commissions only.
2. ( ) Employees hourly paid.
3. ( ) Employees paid by salary.
4. ( ) Employees whose employment is governed by a collective
bargaining agreement between the Employer and "employee
representatives" under which retirement benefits were the subject
of good faith bargaining. For this purpose, the term "employee
representatives" does not include any organization more than half
of whose members are employees who are owners, officers, or
executives of the Employer.
5. ( ) Highly Compensated Employees.
6. ( ) Employees who are non-resident aliens who received no
earned income (within the meaning of Code Section 911(d)(2)) from
the Employer which constitutes income from sources within the
United States (within the meaning of Code Section 861(a)(3)).
7. (X) Other Leased employee, temps or interns
--------------------------------------------
NOTE: For purposes of this section, the term Employee shall include
all Employees of this Employer and any leased employees deemed to be
Employees under Code Section 414(n) or 414(o).
D2 EMPLOYEES OF AFFILIATED EMPLOYERS (Plan Section 1.16)
Employees of Affiliated Employers:
a. (X) will not or N/A
b. ( ) will
be treated as Employees of the Employer adopting the Plan.
NOTE: If D2b is elected, each Affiliated Employer should execute this
Adoption Agreement as a Participating Employer.
D3 HOURS OF SERVICE (Plan Section 1.31) will be determined on the basis of
the method selected below. Only one method may be selected. The method
selected will be applied to all Employees covered under the Plan.
a. ( ) On the basis of actual hours for which an Employee is paid or
entitled to payment.
b. ( ) On the basis of days worked. An Employee will be credited with
ten (10) Hours of Service if under the Plan such Employee would be
credited with at least one (1) Hour of Service during the day.
c. ( ) On the basis of weeks worked. An Employee will be credited
forty-five (45) Hours of Service if under the Plan such Employee would
be credited with at least one (1) Hour of Service during the week.
d. ( ) On the basis of semi-monthly payroll periods. An Employee will
be credited ninety-five (95) Hours of Service if under the Plan such
Employee would be credited with at least one (1) Hour of Service
during the semi-monthly payroll period.
e. (X) On the basis of months worked. An Employee will be credited one
hundred ninety (190) Hours of Service if under the Plan such Employee
would be credited with at least one (1) Hour of Service during the
month.
D4 CONDITIONS OF ELIGIBILITY (Plan Section 3.1)
(Check either a OR b and c, and if applicable, d)
Any Eligible Employee will be eligible to participate in the Plan if
such Eligible Employee has satisfied the service and age requirements,
if any, specified below:
a. ( ) NO AGE OR SERVICE REQUIRED.
b. (X) SERVICE REQUIREMENT. (may not exceed 1 year)
1. ( ) None
2. ( ) 1/2 Year of Service
3. ( ) 1 Year of Service
4. (X) Other immediate
-----------
NOTE: If the Year(s) of Service selected is or includes a fractional
year, an Employee will not be required to complete any specified
number of Hours of Service to receive credit for such fractional
year. If expressed in Months of Service, an Employee will not be
required to complete any specified number of Hours of Service in
a particular month.
c. (X) AGE REQUIREMENT (may not exceed 21)
1. ( ) N/A - No Age Requirement.
2. ( ) 20 1/2
3. (X) 21
4. ( ) Other
d. ( ) FOR NEW PLANS ONLY - Regardless of any of the above age or
service requirements, any Eligible Employee who was employed on the
Effective Date of the Plan shall be eligible to participate hereunder
and shall enter the Plan as of such date.
D5 EFFECTIVE DATE OF PARTICIPATION (Plan Section 3.2)
An Eligible Employee shall become a Participant as of:
a. ( ) the first day of the Plan Year in which he met the
requirements.
b. ( ) the first day of the Plan Year in which he met the
requirements, if he met the requirements in the first 6 months of the
Plan Year, or as of the first day of the next succeeding Plan Year if
he met the requirements in the last 6 months of the Plan Year.
c. ( ) the earlier of the first day of the seventh month or the first
day of the Plan Year coinciding with or next following the date on
which he met the requirements.
d. ( ) the first day of the Plan Year next following the date on which
he met the requirements. (Eligibility must be 1/2 Year of Service or
less or 1 1/2 Years of Service or less if 100% immediate vesting is
selected and age 20 1/2 or less.)
e. ( ) the first day of the month coinciding with or next following
the date on which he met the requirements.
f. (X) Other: Quarterly, provided that an Employee who has satisfied
---------
the maximum age and service requirements that are
permissible in Section D4 above and who is otherwise entitled to
participate, shall commence participation no later than the earlier of
(a) 6 months after such requirements are satisfied, or (b) the first
day of the first Plan Year after such requirements are satisfied,
unless the Employee separates from service before such participation
date.
D6 VESTING OF PARTICIPANT'S INTEREST (Plan Section 6.4(b))
The vesting schedule, based on number of Years of Service, shall be as
follows:
a. ( ) 100% upon entering Plan. (Required if eligibility requirement
is greater than one (1) Year of Service.)
b. ( ) 0-2 years 0% c. ( ) 0-4 years 0%
3 years 100% 5 years 100%
d. ( ) 0-1 year 0% e. ( ) 1 year 25%
2 years 20% 2 years 50%
3 years 40% 3 years 75%
4 years 60% 4 years 100%
5 years 80%
6 years 100%
f. ( ) 1 year 20% g. ( ) 0-2 years 0%
2 years 40% 3 years 20%
3 years 60% 4 years 40%
4 years 80% 5 years 60%
5 years 100% 6 years 80%
7 years 100%
h. ( ) Other - Must be at least as liberal as either c. or g. above.
Years of Service Percentage
1 33 1/3%
2 66 2/3%
3 100%
D7 FOR AMENDED PLANS (Plan Section 6.4(f)) If the vesting schedule has been
amended to a less favorable schedule, enter the pre-amended schedule below:
a. (X) Vesting schedule has not been amended or amended schedule is more
favorable in all years.
b. ( ) Years of Service Percentage
------------------ ----------
------------------ ----------
------------------ ----------
------------------ ----------
------------------ ----------
------------------ ----------
D8 TOP HEAVY VESTING (Plan Section 6.4(c)) If this Plan becomes a Top Heavy
Plan, the following vesting schedule, based on number of Years of Service,
for such Plan Year and each succeeding Plan Year, whether or not the Plan
is a Top Heavy Plan, shall apply and shall be treated as a Plan amendment
pursuant to this Plan. Once effective, this schedule shall also apply to
any contributions made prior to the effective date of Code Section 416
and/or before the Plan became a Top Heavy Plan.
a. (X) N/A (D6a, b, d, e or f was selected)
b. ( ) 0-1 year 0% c. ( ) 0-2 years 0%
2 years 20% 3 years 100%
3 years 40%
4 years 60%
5 years 80%
6 years 100%
NOTE: This section does not apply to the Account balances of any
Participant who does not have an Hour of Service after the Plan has
initially become top heavy. Such Participant's Account balance
attributable to Employer contributions and Forfeitures will be
determined without regard to this section.
D9 VESTING (Plan Section 6.4(h)) In determining Years of Service for vesting
purposes, Years of Service attributable to the following shall be EXCLUDED:
a. ( ) Service prior to the Effective Date of the Plan b. (X) N/A.
or a predecessor plan.
c. ( ) Service prior to the time an Employee attained d. (X) N/A.
age 18.
D10 PLAN SHALL RECOGNIZE SERVICE WITH PREDECESSOR EMPLOYER
a. (X) No.
b. ( ) Yes: Years of Service with ___ shall be recognized for the purpose
of this Plan.
NOTE: If the predecessor Employer maintained this qualified Plan, then
Years of Service with such predecessor Employer shall be recognized
pursuant to Section 1.74 and b. must be marked.
D11 NORMAL RETIREMENT AGE ("NRA") (Plan Section 1.42) means:
a. (X) the date a Participant attains his 65th birthday. (not to
exceed 65th)
b. ( ) the later of the date a Participant attains his ___ birthday
(not to exceed 65th) or the c. __ (not to exceed 5th)
anniversary of the first -- day of the Plan Year in which
participation in the Plan commenced.
D12 NORMAL RETIREMENT DATE (Plan Section 1.43) shall commence:
a. (X) as of the Participant's "NRA."
OR (must select b. or c. AND 1. or 2.)
b. ( ) as of the first day of the month
c. ( ) as of the Anniversary Date
1. ( ) coinciding with or next following the Participant's "NRA."
2. ( ) nearest the Participant's "NRA."
D13 EARLY RETIREMENT DATE (Plan Section 1.12) means the:
a. (X) No Early Retirement provision provided.
b. ( ) date on which a Participant
c. ( ) first day of the month coinciding with or next following the
date on which a Participant
d. ( ) Anniversary Date coinciding with or next following the date on
which a Participant
AND, if b., c. or d. was selected
1. ( ) attains his ___ birthday and has
2. ( ) completed at least ___ Years of Service.
CONTRIBUTIONS, ALLOCATIONS AND DISTRIBUTIONS
E1 a. COMPENSATION (Plan Section 1.9) with respect to any Participant means:
1. (X) Wages, tips and other Compensation on Form W-2.
2. ( ) Section 3401(a) wages (wages for withholding purposes).
3. ( ) 415 safe-harbor compensation.
AND COMPENSATION
1. (X) shall
2. ( ) shall not
exclude (even if includible in gross income) reimbursements or other
expense allowances, fringe benefits (cash or noncash), moving
expenses, deferred compensation, and welfare benefits.
b. COMPENSATION shall be
1. (X) actually paid (must be selected if Plan is integrated)
2. ( ) accrued
c. HOWEVER, FOR NON-INTEGRATED PLANS, Compensation shall exclude (select
all that apply):
1. (X) N/A. No exclusions
2. ( ) overtime
3. ( ) bonuses
4. ( ) commissions
5. ( ) other ___
d. FOR PURPOSES OF THIS SECTION E1, Compensation shall be based on:
1. (X)the Plan Year.
2. ( )the Fiscal Year coinciding with or ending within the Plan Year.
3. ( )the Calendar Year coinciding with or ending within the Plan
Year.
NOTE: The Limitation Year shall be the same as the year on which
Compensation is based.
e. HOWEVER, for an Employee's first year of participation, Compensation
shall be recognized as of:
1. ( ) the first day of the Plan Year.
2. (X) the date the Participant entered the Plan.
f. IN ADDITION, COMPENSATION and "414(s) Compensation"
1( ). shall 2. (X) not include compensation which is not currently
includible in the Participant's gross income by reason of the
application of Code Sections 125, 402(a)(8), 402(h)(1)(B) or 403(b).
E2 SALARY REDUCTION ARRANGEMENT - ELECTIVE CONTRIBUTION (Plan Section 11.2)
Each Employee may elect to have his Compensation reduced by:
a. ( ) ___%
b. (X) up to 20%
---
c. ( ) from% to%
d. ( ) up to the maximum percentage allowable not to exceed the limits of
Code Sections 401(k), 404 and 415.
AND
e. (X) A Participant may elect to commence salary reductions as of each
business day (ENTER AT LEAST ONE DATE OR PERIOD). A Participant may
modify the amount of salary reductions as of each business day (ENTER
AT LEAST ONE DATE OR PERIOD).
AND
Shall cash bonuses paid within 2 1/2 months after the end of the Plan
Year be subject to the salary reduction election?
f. (X) Yes
g. ( ) No
E3 FORMULA FOR DETERMINING EMPLOYER'S MATCHING CONTRIBUTION (Plan Section
11.1(b))
a. ( ) N/A. There shall be no matching contributions.
b. (X) The Employer shall make matching contributions equal to 50_% (e.g.
50%) of the Participant's salary reductions. Up to 4%
c. ( ) The Employer may make matching contributions equal to a
discretionary percentage, to be determined by the Employer, of the
Participant's salary reductions.
d. ( ) The Employer shall make matching contributions equal to the sum of
____% of the portion of the Participant's salary reduction which does
not exceed ____% of the Participant's Compensation plus ____% of the
portion of the Participant's salary reduction which exceeds ____ % of
the Participant's Compensation, but does not exceed ____% of the
Participant's Compensation.
e. ( ) The Employer shall make matching contributions equal to the
percentage determined under the following schedule:
Participant's Total
Years of Service Matching Percentage
------------------- -------------------
FOR PLANS WITH MATCHING CONTRIBUTIONS
f. (X) Matching contributions g. ( ) shall h. (X) shall not be used in
satisfying the deferral percentage tests. (If used, full vesting and
restrictions on withdrawals will apply and the match will be deemed to be
an Elective Contribution).
i. ( ) Shall a Year of Service be required in order to share in the matching
contribution?
With respect to Plan Years beginning after 1989
1. ( ) Yes (Could cause Plan to violate minimum participation and
coverage requirements under Code Sections 401(a)(26) and 410)
2. (X) No
With respect to Plan Years beginning before 1990
1. (X) N/A, new Plan, or same as years beginning after 1989
2. ( ) Yes
3. ( ) No
j. (X) In determining matching contributions, only salary reductions up to
4%of a Participant's Compensation will be matched. k. ( ) N/A
----
l. ( ) The matching contribution made on behalf of a Participant for any Plan
Year shall not exceed $ ____. m. ( X ) N/A
------
n. (X) Matching contributions shall be made on behalf of
1. (X) all Participants.
2. ( ) only Non-Highly Compensated Employees.
o. ( X ) Notwithstanding anything in the Plan to the contrary, all matching
contributions which relate to distributions of Excess Deferred
Compensation, Excess Contributions, and Excess Aggregate Contributions
shall be Forfeited. (Select this option only if it is applicable.)
E4 WILL A DISCRETIONARY EMPLOYER CONTRIBUTION BE PROVIDED (OTHER THAN A
DISCRETIONARY MATCHING OR QUALIFIED NON-ELECTIVE CONTRIBUTION) (Plan
Section 11.1(c))?
a. ( ) No.
b. ( ) Yes, the Employer may make a discretionary contribution out of its
current or accumulated Net Profit.
c. (X) Yes, the Employer may make a discretionary contribution which is
not limited to its current or accumulated Net Profit.
IF YES (b. or c. is selected above), the Employer's discretionary
contribution shall be allocated as follows:
d. (X) FOR A NON-INTEGRATED PLAN
The Employer discretionary contribution for the Plan Year shall be
allocated in the same ratio as each Participant's Compensation bears to the
total of such Compensation of all Participants.
e. ( ) FOR AN INTEGRATED PLAN
The Employer discretionary contribution for the Plan Year shall be
allocated in accordance with Plan Section 4.3(b)(2) based on a
Participant's Compensation in excess of:
f. ( ) The Taxable Wage Base.
g. ( ) The greater of $10,000 or 20% of the Taxable Wage Base.
h. ( ) ____% of the Taxable Wage Base. (See Note below)
i. ( ) $___. (see Note below)
NOTE: The integration percentage of 5.7% shall be reduced to:
1. 4.3% if h. or i. above is more than 20% and less than or
equal to 80% of the Taxable Wage Base.
2. 5.4% if h. or i. above is less than 100% and more than 80%
of the Taxable Wage Base.
E5 QUALIFIED NON-ELECTIVE CONTRIBUTIONS (Plan Section 11.1(d))
a. ( ) N/A. There shall be no Qualified Non-Elective Contributions except
as provided in Sections 11.5(b) and 11.7(h)
b. ( ) The Employer shall make a Qualified Non-Elective Contribution
equal to ___% of the total Compensation of all Participants eligible
to share in the allocations.
c. (X) The Employer may make a Qualified Non-Elective Contribution in an
amount to be determined by the Employer.
E6 FORFEITURES (Plan Section 4.3(e))
a. Forfeitures of contributions other than matching contributions shall
be
1. (X) added to the Employer's contribution under the Plan.
2. ( ) allocated to all Participants eligible to share in the
allocations in the same proportion that each Participant's
Compensation for the year bears to the Compensation of all
Participants for such year.
b. Forfeitures of matching contributions shall be
1. ( ) N/A. No matching contributions or match is fully vested.
2. (X) used to reduce the Employer's matching contribution.
3. ( ) allocated to all Participants eligible to share in the
allocations in proportion to each such Participant's Compensation
for the year.
4. ( ) allocated to all Non-Highly Compensated Employee's eligible
to share in the allocations in proportion to each such
Participant's Compensation for the year.
E7 ALLOCATIONS TO ACTIVE PARTICIPANTS (Plan Section 4.3) With respect to Plan
Years beginning after 1989, a Participant
a. ( ) shall (Plan may become discriminatory)
b. (X ) shall not
be required to complete a Year of Service in order to share in any
Non-Elective Contributions (other than matching contributions) or Qualified
Non-Elective Contributions. For Plan Years beginning before 1990, the Plan
provides that a Participant must complete a Year of Service to share in the
allocations.
E8 ALLOCATIONS TO TERMINATED PARTICIPANTS (Plan Section 4.3(k)) Any
Participant who terminated employment during the Plan Year (i.e. not
actively employed on the last day of the Plan Year) for reasons other than
death, Total and Permanent Disability or retirement:
a. With respect to Employer Non-Elective Contributions (other than
matching), Qualified Non-Elective Contributions, and Forfeitures:
1. For Plan Years beginning after 1989,
i. ( ) N/A, Plan does not provide for such contributions.
ii. ( ) shall share in the allocations provided such Participant
completed more than 500 Hours of Service.
iii. ( ) shall share in such allocations provided such
Participant completed a Year of Service.
iv. (X) shall not share in such allocations, regardless of Hours
of Service.
2. For Plan Years beginning before 1990,
i. (X) N/A, new Plan, or same as for Plan Years beginning after
1989.
ii. ( ) shall share in such allocations provided such
Participant completed a Year of Service.
iii. ( ) shall not share in such allocations, regardless of Hours
of Service.
NOTE: If a.1.iii or iv is selected, the Plan could violate minimum
participation and coverage requirements under Code Sections 401(a)(26)
and 410.
b. With respect to the allocation of Employer Matching Contributions,
a Participant:
1. For Plan Years beginning after 1989,
i. ( ) N/A, Plan does not provide for matching contributions.
ii. ( ) shall share in the allocations, regardless of Hours of
Service.
iii. ( ) shall share in the allocations provided such Participant
completed more than 500 Hours of Service.
iv. ( ) shall share in such allocations provided such
Participant completed a Year of Service.
v. (X) shall not share in such allocations, regardless of Hours
of Service.
2. For Plan Years beginning before 1990,
i. (X) N/A, new Plan, or same as years beginning after 1989.
ii. ( ) shall share in the allocations, regardless of Hours of
Service.
iii. ( ) shall share in such allocations provided such
Participant completed a Year of Service.
iv. ( ) shall not share in such allocations, regardless of Hours
of Service.
NOTE: If b.1.iv or v is selected, the Plan could violate minimum
participation and coverage requirements under Code Section 401(a)(26)
and 410.
E9 LIMITATIONS ON ALLOCATIONS (Plan Section 4.4)
a. If any Participant is or was covered under another qualified defined
contribution plan maintained by the Employer, other than a Master or
Prototype Plan, or if the Employer maintains a welfare benefit fund,
as defined in Code Section 419(e), or an individual medical account,
as defined in Code Section 415(l)(2), under which amounts are treated
as Annual Additions with respect to any Participant in this Plan:
1. (X) N/A.
2. ( ) The provisions of Section 4.4(b) of the Plan will apply as if
the other plan were a Master or Prototype Plan.
3. ( ) Provide the method under which the Plans will limit total
Annual Additions to the Maximum Permissible Amount, and will
properly reduce any Excess Amounts, in a manner that precludes
Employer discretion.
b. If any Participant is or ever has been a Participant in a defined
benefit plan maintained by the Employer:
1. (X) N/A.
2. ( ) In any Limitation Year, the Annual Additions credited to the
Participant under this Plan may not cause the sum of the Defined
Benefit Plan Fraction and the Defined Contribution Fraction to
exceed 1.0. If the Employer's contribution that would otherwise
be made on the Participant's behalf during the limitation year
would cause the 1.0 limitation to be exceeded, the rate of
contribution under this Plan will be reduced so that the sum of
the fractions equals 1.0. If the 1.0 limitation is exceeded
because of an Excess Amount, such Excess Amount will be reduced
in accordance with Section 4.4(a)(4) of the Plan.
3. ( ) Provide the method under which the Plans involved will
satisfy the 1.0 limitation in a manner that precludes Employer
discretion.
E10 DISTRIBUTIONS UPON DEATH (Plan Section 6.6(h)) Distributions upon the death
of a Participant prior to receiving any benefits shall
a. (X) be made pursuant to the election of the Participant or
beneficiary.
b. ( ) begin within 1 year of death for a designated beneficiary and be
payable over the life (or over a period not exceeding the life
expectancy) of such beneficiary, except that if the beneficiary is the
Participant's spouse, begin within the time the Participant would have
attained age 70 1/2.
c. ( ) be made within 5 years of death for all beneficiaries.
d. ( ) other ___
E11 LIFE EXPECTANCIES (Plan Section 6.5(f)) for minimum distributions required
pursuant to Code Section 401(a)(9) shall
a. ( ) be recalculated at the Participant's election.
b. (X) be recalculated.
c. ( ) not be recalculated.
E12 CONDITIONS FOR DISTRIBUTIONS UPON TERMINATION Distributions upon
termination of employment pursuant to Section 6.4(a) of the Plan shall not
be made unless the following conditions have been satisfied:
a. (X) N/A. Immediate distributions may be made at Participant's
election.
b. ( ) The Participant has incurred ____ 1-Year Break(s) in Service.
c. ( ) The Participant has reached his or her Early or Normal Retirement
Age.
d. ( ) Distributions may be made at the Participant's election on or
after the Anniversary Date following termination of employment.
e. ( ) Other ___
E13 FORM OF DISTRIBUTIONS (Plan Sections 6.5 and 6.6) Distributions under the
Plan may be made
a. 1. ( ) in lump sums.
2. (X) in lump sums or installments.
b. AND, pursuant to Plan Section 6.13,
1. (X) no annuities are allowed (avoids Joint and Survivor rules).
2. ( ) annuities are allowed (Plan Section 6.13 shall not apply).
NOTE: b.1. above may not be elected if this is an amendment to a plan which
permitted annuities as a form of distribution or if this Plan has
accepted a plan to plan transfer of assets from a plan which permitted
annuities as a form of distribution.
c. AND, may be made in
1. (X) cash only (except for insurance or annuity contracts).
2. ( ) cash or property.
TOP HEAVY REQUIREMENTS
F1 TOP HEAVY DUPLICATIONS (Plan Section 4.3(i)): When a Non-Key Employee is a
Participant in this Plan and a Defined Benefit Plan maintained by the
Employer, indicate which method shall be utilized to avoid duplication of
top heavy minimum benefits.
a. (X) The Employer does not maintain a Defined Plan.
b. ( ) A minimum, non-integrated contribution of 5% of each Non-Key
Employee's total Compensation shall be provided in this Plan, as
specified in Section 4.3(i). (The Defined Benefit and Defined
Contribution Fractions will be computed using 100% if this choice is
selected.)
c. ( ) A minimum, non-integrated contribution of 7 1/2% of each Non-Key
Employee's total Compensation shall be provided in this Plan, as
specified in Section 4.3(i). (If this choice is selected, the Defined
Benefit and Defined Contribution Fractions will be computed using 125%
for all Plan Years in which the Plan is Top Heavy, but not Super Top
Heavy.)
d. ( ) Specify the method under which the Plans will provide top heavy
minimum benefits for Non-Key Employees that will preclude Employer
discretion and avoid inadvertent omissions, including any adjustments
required under Code Section 415(e).
F2 PRESENT VALUE OF ACCRUED BENEFIT (Plan Section 2.2) for Top Heavy purposes
where the Employer maintains a Defined Benefit Plan in addition to this
Plan, shall be based on
a. (X) N/A. The Employer does not maintain a defined benefit plan.
b. ( ) Interest Rate: ____
Mortality Table: ____
F3 TOP HEAVY DUPLICATIONS: Employer maintaining two (2) or more Defined
Contribution Plans.
a. (X) N/A.
b. ( ) A minimum, non-integrated contribution of 3% of each Non-Key
Employee's total Compensation shall be provided in the Money Purchase
Plan (or other plan subject to Code Section 412), where the Employer
maintains two (2) or more non-paired Defined Contribution Plans.
c. ( ) Specify the method under which the Plans will provide top heavy
minimum benefits for Non-Key Employees that will preclude Employer
discretion and avoid inadvertent omissions, including any adjustments
required under Code Section 415(e).
MISCELLANEOUS
G1 LOANS TO PARTICIPANTS (Plan Section 7.5)
a. (X) Yes, loans may be made up to $50,000 or 1/2 Vested interest.
b. ( ) No, loans may not be made.
If YES, (check all that apply)
c. (X) loans shall be treated as a Directed Investment.
d. ( ) loans shall only be made for hardship or financial necessity.
e. (X) the minimum loan shall be $500.
NOTE: Department of Labor Regulations require the adoption of a SEPARATE
written loan program setting forth the requirements outlined in Plan
Section 7.5.
G2 DIRECTED INVESTMENT ACCOUNTS (Plan Section 4.8) are permitted for the
interest in any one or more accounts.
a. (X) Yes, regardless of the Participant's Vested interest in the Plan.
b. ( ) Yes, but only with respect to the Participant's Vested interest in
the Plan.
c. ( ) Yes, but only with respect to those accounts which are 100%
Vested.
d. ( ) No directed investments are permitted.
G3 TRANSFERS FROM QUALIFIED PLANS (Plan Section 4.6)
a. (X) Yes, transfers from qualified plans (and rollovers) will be
allowed.
b. ( ) No, transfers from qualified plans (and rollovers) will not be
allowed.
AND, transfers shall be permitted
c. (X) from any Employee, even if not a Participant.
d. ( ) from Participants only.
G4 EMPLOYEES' VOLUNTARY CONTRIBUTIONS (Plan Section 4.7)
a. ( ) Yes, Voluntary Contributions are allowed subject to the limits of
Section 4.10
b. (X) No, Voluntary Contributions will not be allowed.
NOTE: TRA '86 subjects voluntary contributions to strict discrimination
rules.
G5 HARDSHIP DISTRIBUTIONS (Plan Sections 6.11 and 11.8)
a. (X) Yes, from any accounts.
b. ( ) Yes, from Participant's Elective Account only.
c. ( ) Yes, but limited to the Participant's Account only.
d. ( ) No.
NOTE: Distributions from a Participant's Elective Account are limited to
the portion of such account attributable to such Participant's
Deferred Compensation and earnings attributable thereto up to December
31, 1988. Also hardship distributions are not permitted from a
Participant's Qualified Non-Elective Account.
G6 PRE-RETIREMENT DISTRIBUTION (Plan Section 6.10)
a. (X) If a Participant has reached the age of 59 1/2, distributions may
be made, at the Participant's election, from any accounts without
requiring the Participant to terminate employment.
b. ( ) No pre-retirement distribution may be made.
NOTE:Distributions from a Participant's Elective Account and Qualified
Non-Elective Account are not permitted prior to age 59 1/2.
The adopting Employer may not rely on an opinion letter issued by the National
Office of the Internal Revenue Service as evidence that the plan is qualified
under Code Section 401. In order to obtain reliance with respect to plan
qualification, the Employer must apply to the appropriate Key District Office
for a determination letter.
This Adoption Agreement may be used only in conjunction with basic Plan document
01. This Adoption Agreement and the basic Plan document shall together be known
as Automatic Data Processing Non-Standardized 401(k) Profit Sharing Plan and
Trust 01-001.
The adoption of this Plan, its qualification by the IRS, and the related tax
consequences are the responsibility of the Employer and its independent tax and
legal advisors.
Automatic Data Processing will notify the Employer of any amendments made to the
Plan or of the discontinuance or abandonment of the Plan. Furthermore, in order
to be eligible to receive such notification, we agree to notify Automatic Data
Processing of any change in address.
IN WITNESS WHEREOF, the Employer and Trustee hereby cause this Plan to be
executed on August 21, 2001.
-----------------
EMPLOYER:
Exelixis, Inc.
By:______________________
_________________________ ___________________________
TRUSTEE TRUSTEE
_________________________ ___________________________
TRUSTEE TRUSTEE
_________________________
TRUSTEE
PARTICIPATING EMPLOYER:
________________________
(enter name)
By:_____________________
With regard to any questions regarding the provisions of the Plan, adoption of
the Plan, or the effect of an opinion letter from the IRS, call or write (this
information must be completed by the sponsor of this Plan or its designated
representative):
Name _________________________________________________________________
Address _________________________________________________________________
_________________________________________________________________
Telephone ( ) __________________________________________________________