Resolution 2723-01 1 RESOLUTION NO. 2723-01
ikw 2
A RESOLUTION OF THE BOARD OF DIRECTORS
3 OF SOUTH TAHOE PUBLIC UTILITY DISTRICT
APPROVING THE PENSION PLAN DOCUMENT
4
5 BE IT RESOLVED, by the Board of Directors of the South Tahoe Public Utility District,
6 County of El Dorado, State of California, as follows:
7 WHEREAS,the South Tahoe Public Utility District Pension Plan, hereinafter referred
8 to as the Plan, has been established for the benefit of the South Tahoe Public Utility District
9 employees; and
10 WHEREAS,the Board of Directors desires the Plan to be in conformance with Section
11 401(a) of the Internal Revenue Code of 1986.
12 NOW, THEREFORE BE IT RESOLVED, by the Board of Directors of South Tahoe
13 Public Utility District, a public agency in the County of El Dorado, State of California, as
14 follows:
" 15 Effective July 1, 2001, the Board of Directors adopted the attached Plan Document
16 to comply with the most current Internal Revenue Codes and Regulations; and
17 To revise Plan eligibility and vesting as directed by the Board of Directors on May 16,
18 2001; and
19 The attached Plan Document restates and supersedes all previous Plan Documents
20 since the Plan's inception on July 1, 1968 as amended.
21 The Board of Directors authorizes the Plan Trustees to prepare a Summary Plan
22 Description in a form consistent with the new Plan Document.
23 The Board of Directors also authorizes the Plan Trustees to submit the Document to
24 the Internal Revenue Service for the purpose of receiving a determination letter.
25 For the purposes of the limitations on contributions and benefits under the Plan,
26 prescribed by Section 415 of the Internal Revenue Code of 1986 as amended,the"limitation
27 year" shall be the Plan year.
28 The Board of Directors further authorizes the Board President and Plan Trustees to
Resolution 2723-01
Page 2
1 to execute the Plan Document.
2 The Plan Trustees of the District shall act as soon as possible to notify the employees
3 of the District of the adoption of the revised Plan Document by delivery to each employee a
4 copy of the summary plan description.
5 WE,THE UNDERSIGNED,do hereby certify that the above and foregoing Resolution
6 was duly and regularly adopted and passed by the Board of Directors of South Tahoe Public
7 Utility District at a regular meeting held on the 16th day of August, 2001, by the following
8 vote:
9 AYES: Directors Schafer . Jones , Wallace , Strohm, Mosbacher
10 NOES: None
11 ABSENT: None
12 41, • „ h
0gRA-
13 DUANE WALLACE, BOARD PRESIDENT
14 SOUTH TAHOE PUBLIC UTILITY DISTRICT
15
ATTEST:
16
17
KATHY SH , CLERK OF THE BOARD
18 SOUTH TA PUBLIC UTILITY DISTRICT
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throf 28
ktsw
SOUTH TAHOE PUBLIC UTILITY DISTRICT PENSION PLAN
AS AMENDED AND RESTATED JULY 1, 2001
TABLE OF CONTENTS
iibe
ARTICLE I DEFINITIONS 7
ARTICLE II TOP HEAVY AND ADMINISTRATION
2.1 TOP HEAVY PLAN REQUIREMENTS 18
2.2 DETERMINATION OF TOP HEAVY STATUS 18
2.3 POWERS AND RESPONSIBILITIES OF THE 21
EMPLOYER
2.4 DESIGNATION OF 22
ADMINISTRATIVE AUTHORITY
2.5 ALLOCATION AND DELEGATION OF 22
RESPONSIBILITIES
2.6 POWERS AND DUTIES OF THE ADMINISTRATOR 22
2.7 RECORDS AND REPORTS 24
2.8 APPOINTMENT OF ADVISERS 24
2.9 INFORMATION FROM EMPLOYER 24
2.10 PAYMENT OF EXPENSES 24
2.11 MAJORITY ACTIONS 25
2.12 CLAIMS PROCEDURE 25
2.13 CLAIMS REVIEW PROCEDURE 25
2
ARTICLE III ELIGIBILITY 26
r 3.1 CONDITIONS OF ELIGIBILITY 26
3.2 APPLICATION FOR PARTICIPATION 26
3.3 EFFECTIVE DATE OF PARTICIPATION 26
3.4 DETERMINATION OF ELIGIBILITY 26
3.5 OMISSION OF ELIGIBLE EMPLOYEE 26
3.6 INCLUSION OF INELIGIBLE EMPLOYEE 27
3.7 ELECTION NOT TO PARTICIPATE 27
ARTICLE IV CONTRIBUTION AND ALLOCATION 27
4.1 FORMULA FOR DETERMINING 27
iw EMPLOYER'S CONTRIBUTION
4.2 TIME OF PAYMENT OF 28
EMPLOYER'S CONTRIBUTION
4.3 ACCOUNTING AND ALLOCATIONS 28
4.4 MAXIMUM ANNUAL ADDITIONS 31
4.5 ADJUSTMENTS FOR EXCESSIVE ANNUAL 34
ADDITIONS
4.6 TRANSFERS FROM QUALIFIED PLANS 35
4.7 MANDATORY CONTRIBUTIONS 36
4.8 DIRECTED INVESTMENT ACCOUNT 37
3
4.9 ACTUAL CONTRIBUTION 38
PERCENTAGE TESTS
4.10 ADJUSTMENT TO ACTUAL CONTRIBUTION 40
PERCENTAGE TESTS
ARTICLE V VALUATIONS 41
5.1 VALUATION OF THE TRUST FUND 41
5.2 METHOD OF VALUATION 42
ARTICLE VI DETERMINATION AND DISTRIBUTION 42
OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT 42
6.2 DETERMINATION OF BENEFITS UPON DEATH 42
6.3 DETERMINATION OF BENEFITS 43
IN EVENT OF DISABILITY
6.4 DETERMINATION OF BENEFITS UPON TERMINATION 44
6.5 DISTRIBUTION OF BENEFITS 46
6.6 DISTRIBUTION OF BENEFITS UPON DEATH 50
6.7 TIME OF SEGREGATION OR DISTRIBUTION 51
6.8 DISTRIBUTION FOR MINOR BENEFICIARY 51
6.9 LOCATION OF PARTICIPANT 51
OR BENEFICIARY UNKNOWN
4
6.10 QUALIFIED DOMESTIC RELATIONS ORDER 51
DISTRIBUTION
ARTICLE VII TRUSTEE 52
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE 52
7.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE 52
7.3 OTHER POWERS OF THE TRUSTEE 52
7.4 LOANS TO PARTICIPANTS 55
7.5 DUTIES OF THE TRUSTEE REGARDING PAYMENTS 56
7.6 TRUSTEE'S COMPENSATION AND EXPENSES 56
AND TAXES
7.7 ANNUAL REPORT OF THE TRUSTEE 57
7.8 AUDIT 57
7.9 RESIGNATION, REMOVAL 58
AND SUCCESSION OF TRUSTEE
7.10 TRANSFER OF INTEREST 58
7.11 DIRECT ROLLOVER 59
ARTICLE VIII AMENDMENT, TERMINATION AND MERGERS 59
8.1 AMENDMENT 59
8.2 TERMINATION 60
8.3 MERGER OR CONSOLIDATION 60
5
ARTICLE IX MISCELLANEOUS 61
ith'` 9.1 PARTICIPANT'S RIGHTS 61
9.2 ALIENATION 61
9.3 CONSTRUCTION OF PLAN 61
9.4 GENDER AND NUMBER 61
9.5 LEGAL ACTION 62
9.6 PROHIBITION AGAINST DIVERSION OF FUNDS 62
9.7 BONDING 62
9.8 EMPLOYEE'S AND TRUSTEE'S PROTECTIVE CLAUSE 62
9.9 INSURER'S PROTECTIVE CLAUSE 63
tiity 9.10 RECEIPT AND RELEASE FOR PAYMENTS 63
9.11 ACTION BY THE EMPLOYER 63
9.12 NAMED FIDUCIARIES AND 63
ALLOCATION OF RESPONSIBILITY
9.13 APPROVAL BY INTERNAL REVENUE SERVICE 64
9.14 UNIFORMITY 64
9.15 WAIVER OF FUNDING 64
6
SOUTH TAHOE PUBLIC UTILITY DISTRICT
r, PENSION PLAN AS AMENDED AND RESTATED
EFFECTIVE JULY 1, 2001
THIS AGREEMENT, hereby made and entered into this 21st day of APRIL, 1994 ,by
and between South Tahoe Public Utility District (herein referred to as the "Employer")
and General Manager, Chief Financial Officer and Human Resource Director (herein
referred to as the "Trustee").
WITNESETH:
WHEREAS, the Employer heretofore established a money Purchase Pension Plan and
Trust effective July 1, 1968, (hereinafter called the "Effective Date") known as South
Tahoe Public Utility District Pension Plan (herein referred to as the "Plan") in recognition
of the contribution made to its successful operation by its employees and for the
exclusive benefit of its eligible employees; and
WHEREAS, under the terms of the Plan, the Employer has the ability to amend the
Plan, provided the Trustee joins in such amendment if the provisions of the Plan
affecting the Trustee are amended;
kir NOW, THEREFORE, effective July 1, 2001 except as otherwise provided, the Employer
and the Trustee in accordance with the provisions of the Plan pertaining to amendments
thereof, hereby amend the Plan in its entirety and restate the Plan to provide as follows:
ARTICLE I
DEFINITIONS
1.1 "Administrator" means the person or entity designated by the Employer pursuant
to Section 2.4 to administer the Plan on behalf of the Employer.
1.2 "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.
1.3 "Anniversary Date" means June 30.
1.4 "Beneficiary" means the person to whom the share of a deceased Participant's
total account is payable, subject to the restrictions of Sections 6.2 and 6.6.
1.5 "Code" means the Internal Revenue Code of 1986, as amended or replaced from
time to time.
7
1.6 "Compensation" with respect to any Participant means such Participant's wages
kor for the Plan Year within the meaning of Code Section 3401(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 3401(a)(2)).
For purposes of this Section, the determination of Compensation shall be made by:
(a) excluding overtime.
(b) excluding commissions.
(c) excluding bonuses, premium pay, double time, taxable allowance, meal
allowance, cash payments in lieu of vacation time, sick time, compensatory time and
holiday time.
(d) including amounts which are contributed by the Employer pursuant to a
salary reduction agreement and which are not includible in the gross income of the
Participant under Code Sections 125, 402(e)(3), 402(h), 403 (b) or 457.
Notwithstanding the above, the amount of compensation used in determining the
Employer contribution under Section 4.1 of this Plan for any Participant during a Plan
kite Year shall be as follows: For the period from January 1 through June 30 of each Plan
Year, the rate of pay in effect as of January 1 shall be used. Any changes in the rate of
pay effective after January 1 but before July 1 shall not be reflected until the next July 1.
For the period from July 1 through December 31 of each Plan Year, the rate of pay in
effect as of July 1 shall be used. Any changes in the rate of pay effective after July 1 but
before January 1 shall not be reflected until the next January 1.
For a Participant's initial year of participation, Compensation shall be recognized as of
such Employee's effective date of participation pursuant to Section 3.3.
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),
except that the dollar increase in effect on January 1 of any calendar year shall be
effective for the Plan Year beginning with or within such calendar year and the first
adjustment to the $200,000 limitation shall be effective on January 1, 1990. For any
short Plan Year the Compensation limit shall be an amount equal to the Compensation
limit for the calendar year in which the Plan Year begins multiplied by the ratio obtained
by dividing the number of full months in the short Plan Year by twelve (12) in addition to
other applicable limitations set forth in the Plan, and notwithstanding any other provision
of the Plan to the contrary, for Plan Years beginning on or after January 1, 1994, the
annual Compensation of each Employee taken into account under the Plan shall not
exceed the OBRA '93 annual compensation limit. The OBRA '93 annual compensation
kr 88
limit is $150,000, as adjusted by the Commissioner for increases in the cost of living in
ilow accordance with Code Section 401(a)(17)(B). The cost of living adjustment in effect for
a calendar year applies to any period, not exceeding 12 months, over which
Compensation is determined (determination period) beginning in such calendar year. If
a determination period consists of fewer than 12 months, the OBRA '93 annual
compensation limit will be multiplied by a fraction, the numerator of which is the number
of months in the determination period, and the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in this Plan to the
limitation under Code Section 401(a)(17) shall mean the OBRA '93 annual
compensation limit set forth in this provision.
If Compensation for any prior determination period is taken into account in determining
an Employee's benefits accruing in the current Plan Year, the For this purpose, for
determination periods beginning before the first day of the first Plan Year beginning on
or after January 1, 1994, the OBRA '93 annual compensation limit is $150,000.
If, in connection with the adoption of this amendment and restatement, the definition of
Compensation has been modified, then, for Plan Years prior to the Plan Year which
includes the adoption date of this amendment and restatement, Compensation means
compensation determined pursuant to the Plan then in effect.
1.7 "Contract" or"Policy" means any life insurance policy, retirement income or
filw annuity policy, or annuity contract (group or individual) issued pursuant to the terms of
the Plan.
1.8 "Early Retirement Date" means the first day of the month (prior to the Normal
Retirement Date) coinciding with or following the date on which a Participant or Former
Participant attains age 55 and has completed at least 7 Years of Service with the
Employer (Early Retirement Age). A Participant shall become fully Vested upon
satisfying this requirement if still employed at his Early Retirement Age.
1.9 "Eligible Employee" means any Employee except for the following Employees
who shall not be eligible to participate in this plan: Part-time employees, full-time
temporary employees or members of the Board of Directors.
1.10 "Employee" means any person who is employed by the Employer or Affiliated
Employer, but excludes any person who is an independent contractor. Employee shall
include Leased Employees within the meaning of Code Sections 414(n)(2) and
414(o)(2) unless such Leased Employees are covered by a plan described in Code
Section 414(n)(5) and such Leased Employees do not constitute more than 20% of the
recipient's non-highly compensated work force.
1.11 "Employee Contribution" means the amount a Participant is required to contribute
to the Plan pursuant to Section 4.7 in order to share in Employer contributions.
9
1.12 "Employee Contribution Account" means the account established by the
kw Administrator for each Participant with respect to his total interest in the Plan resulting
from the Participant's mandatory contributions made pursuant to Section 4.7 of the Plan.
1.13 "Employer" means South Tahoe Public Utility District and any successor which
shall maintain this Plan. The Employer is a Government Corporation with principal
offices in the State of California.
1.14 "Excess Aggregate Contributions" means, with respect to any Plan Year, the
excess of the aggregate amount of the Employee mandatory contributions made
pursuant to Section 4.7, Employer matching contributions made pursuant to Section 4.1
and any qualified non-elective contributions or elective deferrals taken into account
pursuant to Section 4.9(c) on behalf of Highly Compensated Participants for such Plan
Year, over the maximum amount of such contributions permitted under the limitations of
Section 4.9(a).
1.15 "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 its representative body, and
4160 the Administrator.
1.16 "Fiscal Year" means the Employer's accounting year of 12 months commencing
on July 1st of each year and ending the following June 30th.
1.17 "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 a Terminated Participant's
Account, 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. Restoration of such amounts shall occur pursuant to Section 6.4(g)(2). In
addition, the term Forfeiture shall also include amounts deemed to be Forfeitures
pursuant to any other provision of this Plan.
1.18 "Former Participant" means a person who has been a Participant, but who has
krir 10
ceased to be a Participant for any reason.
1.19 "415 Compensation" with respect to any Participant means such Participant's
wages for the Plan Year within the meaning of Code Section 3401(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 3401 (a) (2)) .
If, in connection with the adoption of this amendment and restatement, the definition of
"415 Compensation" has been modified, then, for Plan Years prior to the Plan Year
which includes the adoption date of this amendment and restatement, "415
Compensation" means compensation determined pursuant to the Plan then in effect.
1.20 "414 (s) Compensation"with respect to any Participant means such Participant's
"415 Compensation" paid during a Plan Year. The amount of"414(s) Compensation"
with respect to any Participant shall include "414 (s) Compensation" for the entire twelve
(12) month period ending on the last day of such Plan Year, except that "414(s)
Compensation" shall only be recognized for that portion of the Plan Year during which
an Employee was a Participant in the Plan.
For purposes of this Section, the determination of"414 (s) Compensation" shall be
made by including amounts which are contributed by the Employer pursuant to a salary
r reduction agreement and which are not includible in the gross income of the Participant
under Code Sections 125, 402(e)(3), 402(h), 403 (b) or 457, and Employee
contributions described in Code Section 414(h)(2) that are treated as Employer
contributions.
"414 (s) 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), except that the dollar increase in effect on January 1 of any calendar year shall
be effective for the Plan Year beginning with or within such calendar year and the first
adjustment to the $200,000 limitation shall be effective on January 1, 1990. For any
short Plan Year the "414 (s) Compensation" limit shall be an amount equal to the
"414(s) Compensation" limit for the calendar year in which the Plan Year begins
multiplied by the ratio obtained by dividing the number of full months in the short Plan
Year by twelve (12).
In addition to other applicable limitations set forth in the Plan, and notwithstanding any
other provision of the Plan to the contrary, for Plan Years beginning on or after January
1, 1994, the annual Compensation of each Employee taken into account under the Plan
shall not exceed the OBRA '93 annual compensation limit. The OBRA '93 annual
compensation limit is $150,000, as adjusted by the Commissioner for increases in the
cost of living in accordance with Code Section 401(a)(17)(B). The cost of living
adjustment in effect for a calendar year applies to any period, not exceeding 12 months,
11
over which Compensation is determined (determination period) beginning in such
calendar year. If a determination period consists of fewer than 12 months, the OBRA '93
annual compensation limit will be multiplied by a fraction, the numerator of which is the
number of months in the determination period, and the_denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in this Plan to the
limitation under Code Section 401(a)(17) shall mean the OBRA '93 annual
compensation limit set forth in this provision.
If Compensation for any prior determination period is taken into account in determining
an Employee's benefits accruing in the current Plan Year, the Compensation for that
prior determination period is subject to the OBRA '93 annual compensation limit in effect
for that prior determination period. For this purpose, for determination periods beginning
before the first day of the first Plan Year beginning on or after January 1, 1994, the
OBRA '93 annual compensation limit is $150,000.
If, in connection with the adoption of this amendment and restatement, the definition of
"414 (s) Compensation" has been modified, then, for Plan Years prior to the Plan Year
which includes the adoption date of this amendment and restatement, "414(s)
Compensation" means compensation determined pursuant to the Plan then in effect.
1.21 "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 received "415 Compensation" during the "look-back year"
from the Employer in excess of $75,000.
(b) 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.
(c) 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. For the
purpose of determining the number of officers, Employees described in Section 1.49(a),
(b), (c) and (d) shall be excluded, but such Employees shall still be considered for the
purpose of identifying the particular Employees who are officers. 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.
12
(d) Employees who are in the group consisting of the 100 Employees paid the
460 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.
For purposes of this Section, the determination of"415 Compensation" shall be made
by including amounts which are contributed by the Employer pursuant to a salary
reduction agreement and which are not includible in the gross income of the Participant
under Code Sections 125, 402 (e) (3), 402 (h), 403 (b) or 457, and Employee
contributions described in Code Section 414(h) (2) that are treated as Employer
contributions. 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) (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,
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
410, 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. Highly
Compensated Former Employees shall be treated as Highly Compensated Employees
without regard to whether they performed services during the "determination year."
1.22 "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 from 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 a 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. For purposes
of this Section, "determination year," and "415 Compensation" shall be determined in
accordance with Section 1.23. 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.
1.23 "Highly Compensated Participant" means any Highly Compensated Employee
13
who is eligible to participate in the Plan.
thiw 1.24 "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 of whether the employment relationship has terminated) for
reasons other than performance of duties (such as vacation, holidays, 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. These hours will be credited to the
Employee for the computation period or periods to which the award or agreement
pertains rather than the computation period in which the award, agreement or payment
is made. 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,
rr° 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 of 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).
In addition, Hours of Service will be credited for employment with other Affiliated
Employers. The provisions of Department of Labor regulations 2530.200b-2(b) and (c)
are incorporated herein by reference.
1.25 "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
14
investment adviser under the Investment Advisers Act of 1940, a bank, or an insurance
company.
1.26 "Key Employee" means an Employee as defined in Code Section 416(i) and the _
Regulations thereunder. 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,
who is an officer defined within the meaning of the Regulations under Code Section
416) having annual "415 Compensation" greater than 50 percent of the amount in effect
under Code Section 415(b)(1)(A) for any such Plan Year.
For purposes of this Section, the determination of"415 Compensation" shall be made
by including amounts which are contributed by the Employer pursuant to a salary
reduction agreement and which are not includible in the gross income of the Participant
under Code Sections 125, 402(e)(3), 402(h), 403(b) or 457, and Employee contributions
described in Code Section 414(h)(2) that are treated as Employer contributions.
1.27 "Late Retirement Date" means the first day of the month coinciding with or next
following a Participant's actual Retirement Date after having reached his Normal
Retirement Date.
1.28 "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
kw organization") has performed services for 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:
(a) if such employee is covered by a money purchase pension plan providing:
(1) a non-integrated employer contribution rate of at least 10% of
compensation, as defined in Code Section 415(c)(3), but including amounts which are
contributed by the Employer pursuant to a salary reduction agreement and which are
not includible in the gross income of the Participant under Code Sections 125,
402(e)(3), 402(h), 403 (b) or 457, and Employee contributions described in Code
Section 414(h)(2) that are treated as Employer contributions.
(2) immediate participation; and
(3) full and immediate vesting; and
15
(b) if Leased Employees do not constitute more than 20% of the recipient's
non-highly compensated work force.
_ 1.29 "Non-Highly Compensated Participant" means any Participant who isnot a Highly
Compensated Employee.
1.30 "Non-Key Employee" means any Employee or former Employee (and his
Beneficiaries) who is not a Key Employee.
1.31 "Normal Retirement Age" means the Participant's 65th birthday. A Participant
shall become fully Vested in his Participant's Account upon attaining his Normal
Retirement Age.
1.32 "Normal Retirement Date" means the first day of the month coinciding with or
next following the Participant's Normal Retirement Age.
1.33 "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." Years of Service and 1-Year
Breaks in Service shall be measured on the same computation period.
kise "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 reason 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.
1.34 "Participant" means any Eligible Employee who participates in the Plan as
provided in Sections 3.2 and 3.3, and has not for any reason become ineligible to
participate further in the Plan.
16
1.35 "Participant's 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 contributions.
1.36 "Plan" means this instrument, including all amendments thereto.
1.37 "Plan Year" means the Plan's accounting year of twelve (12) months
commencing on July 1st of each year and ending the following June 30th.
1.38 "Pre-Retirement Survivor Annuity" is an immediate annuity for the life of the
Participant's spouse the payments under which must be equal to the amount of benefit
which can be purchased with the accounts of a Participant used to provide the death
benefit under the Plan.
1.39 "Regulation" means the Income Tax Regulations as promulgated by the
Secretary of the Treasury or his delegate, and as amended from time to time.
1.40 "Retired Participant" means a person who has been a Participant, but who has
become entitled to retirement benefits under the Plan.
1.41 "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) .
41610 1.42 "Super Top Heavy Plan" means a plan described in Section 2.2 (b) .
1.43 "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.
1.44 "Top Heavy Plan" means a plan described in Section 2.2 (a) .
1.45 "Top Heavy Plan Year" means a Plan Year commencing after December 31,
1983 during which the Plan is a Top Heavy Plan.
1.46 "Total and Permanent Disability" means a physical or mental condition of a
Participant resulting from bodily injury, disease, or mental disorder which renders him
incapable of continuing his usual and customary employment with the Employer. The
disability of a Participant shall be determined by a licensed physician chosen by the
Administrator. The determination shall be applied uniformly to all Participants.
1.47 "Trustee" means the person or entity named as trustee herein or in any separate
trust forming a part of this Plan, and any successors.
1.48 "Trust Fund" means the assets of the Plan and Trust as the same shall exist from
17
time to time.
kow 1.49 "Vested" means the nonforfeitable portion of any account maintained on behalf of
a Participant.
1.50 "Year of Service" means the computation period of twelve (12) consecutive
months, herein set forth, during which an Employee has at least 1000 Hours of Service.
For purposes of eligibility for participation, the computation periods shall be measured
from the date on which the Employee first performs an Hour of Service and
anniversaries thereof. The participation computation periods beginning after a 1-Year
Break in Service shall be measured from the date on which an Employee again
performs an Hour of Service and anniversaries thereof.
For vesting purposes, the computation period shall be the Plan Year, including periods
prior to the Effective Date of the Plan.
For all other purposes, the computation period shall be the Plan Year.
Notwithstanding the foregoing, for any short Plan Year, the determination of whether an
Employee has completed a Year of Service shall be made in accordance with
Department of Labor regulation 2530.203-2(c).
iikw Years of Service with any Affiliated Employer shall be recognized.
ARTICLE II
TOP HEAVY 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 of the Plan.
2.2 DETERMINATION OF TOP HEAVY STATUS
(a) This Plan shall be a Top Heavy Plan for any Plan Year commencing 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
kirr 18
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, for
Plan Years beginning after December 31, 1984, 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 commencing
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) the Participant's Account balance as of the most recent valuation
occurring within a twelve (12) month period ending on the Determination Date.
(2) contributions that would be allocated as of a date not later than the
r; Determination Date, even though those amounts are not yet made or required to be
made.
(3) 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. 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 purposes of this
paragraph.
(4) 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.
(5) 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
19
to a plan maintained by another employer), per Section 7.10 and 7.11, it shall always
kipv consider such rollovers or plan-to-plan transfers as a distribution for the purposes of this
Section. Plan rollovers or plan-to-plan transfers, it shall not consider such rollovers or
plan-to-plan transfers per Section 4.6 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.
(6) 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.
(7) For the purposes of determining whether two employers are to be treated
as the same employer in (5) and (6) 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.
ihoo (1) Required Aggregation Group: In determining a Required Aggregation
Group hereunder, each plan of the Employer 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 plan of the Employer which enables any 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 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 Permissive 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.
20
(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.
(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.
2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER
(a) The Employer shall be empowered to appoint and remove the Trustee and
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 and the
Code.
(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
21
investment of the Trust Funds. Such "funding policy and method" shall be consistent
with the objectives of this Plan.
(c) 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.
(d) The Employer shall establish a procedure by which mandatory Employee
Contributions are to be made to the Trustee pursuant to the Plan. Such procedure may
be by payroll deduction or such other method as determined by the Employer.
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
22
ktior 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 to 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 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
ottile 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;
(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 Plan;
(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;
•
tlise 23
klow (I) to prepare and implement a procedure for notifying prospective Eligible
Employees of their requirement to make mandatory Employee Contributions to the Plan
as a condition of eligibility;
(j) 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 as required by the Regulations thereunder;
(k) 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.
24
%is, 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 claims 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
titie request the Administrator to give further consideration to his claim by filing with the
Administrator (on a form which may be obtained from the Administrator) a 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 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
25
kw references to the pertinent Plan provisions on which the decision is based.
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY
Any Eligible Employee who has completed one (1) Year of Service shall be eligible to
participate hereunder as of the date he has satisfied such requirements. However, any
Employee who was a Participant in the Plan prior to the effective date of this
amendment and restatement shall continue to participate in the Plan. The Employer
shall give each prospective Eligible Employee written notice of his eligibility to
participate in the Plan.
3.2 APPLICATION FOR PARTICIPATION
To be a Participant, each Eligible Employee must agree to make mandatory Employee
Contributions pursuant to Section 4.7 (a). Such Employee Contribution shall be made in
accordance with written procedures established by the Employer and Administrator. The
Employer shall give each prospective Eligible Employee written notice of his required
contribution in sufficient time to enable such prospective Eligible Employee to make his
Employee Contribution in accordance with the procedures established.
%irr' 3.3 EFFECTIVE DATE OF PARTICIPATION
An Eligible Employee shall become a Participant effective as of the earlier of the first
day of the Plan Year or the first day of the seventh month of such Plan Year coinciding
with or next following the date such Employee met the eligibility requirements of Section
3.1, provided said Employee was still employed as of such date (or if not employed on
such date, as of the date of rehire if a 1-Year Break in Service has not occurred).
3.4 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. Such determination shall be subject to review per Section 2.13.
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 with respect to the omitted Employee in the amount which the
26
totio said Employer would have contributed with respect to him had he not been omitted.
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.
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION
(a) 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 6% of his annual Compensation.
(b) Should the Employer, for any reason, fail to make a contribution for any
year or should the Employer fail to make a contribution as provided for herein, then
such deficiency shall be made up in subsequent years pursuant to Section 9.16.
(c) Notwithstanding the foregoing, the Employer's contribution for any Plan
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.
(d) The Employer shall not contribute on behalf of any Participant who is not
entitled to share in the allocation of the Employer's contribution as provided in Section
4.3 (d) unless otherwise required pursuant to Section 4.3(g).
27
4.2 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION
The Employer shall pay to the Trustee its contribution to the Plan for each Plan Year no
later than thirty days following the close of the each month.
4.3 ACCOUNTING AND ALLOCATIONS
(a) The Administrator shall establish and maintain an account in the name of
each Participant to which the Administrator shall credit no later than each Anniversary
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 contribution 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 to
each Participant's Account in accordance with Section 4.1.
(c) 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). The remaining Forfeitures, if any, shall be used to reduce the contribution of
the Employer hereunder for the Plan Year in which such Forfeitures occur.
kw (d) Participants shall be eligible to share in the allocation of contributions for a
Plan Year regardless of hours of service completed during the Plan Year.
(e) As of each Anniversary Date or other valuation date, before the current
valuation period allocation of Employer contributions and after allocation of 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. Participants' transfers from other qualified
plans deposited in the general Trust Fund shall share in any earnings and losses (net
appreciation or net depreciation) of the Trust Fund in the same manner provided above.
Each segregated account maintained on behalf of a Participant shall be credited or
charged with its separate earnings and losses.
(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
allocated to the Participant's Account of each Employee shall be equal to at least three
percent (3%) of such Employee's "415 Compensation" (reduced by contributions and
forfeitures, if any, allocated to each Employee in any defined contribution plan included
with this plan in a Required Aggregation Group). However, if(1) the sum of the
Employer's contributions allocated to the Participant's Account of each Key Employee
28
for such Top Heavy Plan Year is less than three percent (3%) of each Key Employee's
"415 Compensation" and (2) 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 allocated to the Participant's
Account of each Employee shall be equal to the largest percentage allocated to the
Participant's Account of any Key Employee.
(g) For any Top Heavy Plan Year, the minimum allocations set forth above
shall be allocated to the Participant's Account of all Employees who are Participants and
who are employed by the Employer on the last day of the Plan Year, including
Employees who have (1) failed to complete a Year of Service, and (2) declined to make
mandatory contributions (if required) to the Plan.
(h) For the purposes of this Section, "415 Compensation" shall be limited to
$200,000. Such amount shall be adjusted at the same time and in the same manner as
permitted under Code Section 415(d), except that the dollar increase in effect on
January 1 of any calendar year shall be effective for the Plan Year beginning with or
within such calendar year and the first adjustment to the $200,000 limitation shall be
effective on January 1, 1990. For any short Plan Year the "415 Compensation" limit
shall be an amount equal to the "415 Compensation" limit for the calendar year in which
the Plan Year begins multiplied by the ratio obtained by dividing the number of full
months in the short Plan Year by twelve (12). However, for Plan Years beginning prior
r to January 1, 1989, the $200,000 limitation shall be effective on January 1, 1990. for
any short Plan Year the "415 Compensation" limit for the calendar year in which the
Plan Year begins multiplied by the ratio obtained by dividing in the number of full
months in the short Plan Year by twelve (12). 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.
In addition to other applicable limitations set forth in the Plan, and notwithstanding any
other provision of the Plan to the contrary, for Plan Years beginning on or after January
1, 1994, the annual Compensation of each Employee taken into account under the Plan
shall not exceed the OBRA '93 annual compensation limit. The OBRA '93 annual
compensation limit is $150,000, as adjusted by the Commissioner for increases in the
cost of living in accordance with Code Section 401(a)(17)(B). The cost of living
adjustment in effect for a calendar year applies to any period, not exceeding 12 months,
over which Compensation is determined (determination period) beginning in such
calendar year. If a determination period consists of fewer than 12 months, the OBRA '93
annual compensation limit will be multiplied by a fraction, the numerator of which is the
number of months in the determination period, and the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in this Plan to the
limitation under Code Section 401(a)(17) shall mean the OBRA '93 annual
compensation limit set forth in this provision.
29
4YIf Compensation for any prior determination period is taken into account in determining
60, an Employee's benefits accruing in the current Plan Year, the Compensation for that
prior determination period is subject to the OBRA '93 annual compensation limit in effect
for that prior determination period. For this purpose, for determination periods beginning
before the first day of the first Plan Year beginning on or after January 1, 1994, the
OBRA '93 annual compensation limit is $150,000.
(I) 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 status in the Plan attributable to post-break
service.
(j) Notwithstanding anything to the contrary, for Plan Years beginning after
December 31, 1989, if this is a 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 would not be 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
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
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 terminating employment.
(3) 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
30
have received had they been included in the allocations. 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) Notwithstanding the foregoing, the maximum "annual additions" credited to
a Participant's accounts for any "limitation year" shall equal the lesser of: (1) $30,000
(or, if greater, one-fourth of the dollar limitation in effect under Code Section
415(b)(1)(A)) or (2) twenty-five percent (25%) of the Participant's "415 Compensation"
for such "limitation year." For any short "limitation year," the dollar limitation in (1) above
shall be reduced by a fraction, the numerator of which is the number of full months in
the short "limitation year" and the denominator of which is twelve (12).
(b) For purposes of applying the limitations of Code Section 415, "annual
additions" means the sum credited to a Participant's accounts for any "limitation year" of
(1) Employer contributions, (2) Employee contributions for"limitation years" beginning
after December 31, 1986, (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 plan (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(1)(1).
(c) 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(b)(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)
(d) For purposes of applying the limitations of Code Section 415, the
"limitation year" shall be the Plan Year.
kare 31
(e) The dollar limitation under Code Section 415(b)(1)(A) stated in paragraph
�r (a)(1) above shall be adjusted annually as provided in Code Section 415(d) pursuant to
the Regulations. The adjusted_limitation is effective as of January 1st of each calendar
year and is applicable to "limitation years" ending with or within that calendar year.
(f) For the purpose of this Section, all qualified defined benefit plans (whether
terminated or not) ever maintained by the Employer shall be treated as one defined
benefit plan, and all qualified defined contribution plans (whether terminated or not) ever
maintained by the Employer shall be treated as one defined contribution plan.
(g) For the purpose of this Section, if the Employer is a member of a
controlled group of corporations, trades or businesses under common control (as
defined by Code Section 1563(a) or Code Section 414(b) and (c) as modified by Code
Section 415(h)), is a member of an affiliated service group (as defined by Code Section
414(m)), or is a member of a group of entities required to be aggregated pursuant to
Regulations under Code Section 414(o), all Employees of such Employers shall be
considered to be employed by a single Employer.
(h) For the purpose of this Section, if this Plan is a Code Section 413(c) plan,
all Employers of a Participant who maintain this Plan will be considered to be a single
Employer.
(i)(1) If a Participant participates in more than one defined contribution plan
maintained by the Employer which have different Anniversary Dates, the maximum
"annual additions" under this Plan shall equal the maximum "annual additions"for the
"limitation year" minus any "annual additions" previously credited to such Participant's
accounts during the "limitation year."
(2) If a Participant participates in both a defined contribution plan subject to
Code Section 412 and a defined contribution plan not subject to Code Section 412
maintained by the Employer which have the same Anniversary Date, "annual additions"
will be credited to the Participant's accounts under the defined contribution plan subject
to Code Section 412 prior to crediting "annual additions" to the Participant's accounts
under the defined contribution plan not subject to Code Section 412.
(3) If a Participant participates in more than one defined contribution plan
subject to Code Section 412 maintained by the Employer which has the same
Anniversary Date, the maximum "annual additions" under this Plan shall equal the
product of(A) the maximum "annual additions" for the "limitation year" minus any
"annual additions" previously credited under subparagraphs (1) or (2) above, multiplied
by (B) a fraction (I) the numerator of which is the "annual additions" which would be
credited to such Participant's accounts under this Plan without regard to the limitations
of Code Section 415 and (ii) the denominator of which is such "annual additions" for all
plans described in this subparagraph.
32
(j) If an Employee is (or has been) a Participant in one or more defined
benefit plans and one or more defined contribution plans maintained by the Employer,
the sum of the defined benefit plan fraction and the defined contribution plan fraction for _
any "limitation year" may not exceed 1.0.
(k) The defined benefit plan fraction for any "limitation year" is 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 the
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 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.
(1) The defined contribution plan fraction for any "limitation year" is 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 years" (including the annual additions
attributable to the Participant's nondeductible Employee contributions to all defined
benefit plans, whether or not terminated, maintained by the Employer, and the annual
additions attributable to all welfare benefit funds, as defined in Code Section 419(e),
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 dollar limitation determined under Code Sections 415 (b) and (d) in effect under
Code Section 415(c)(1)(A) or 35 percent of the Participant's Compensation for such
year.
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 6, 1986, the numerator of
this fraction will be adjusted if the sum of this fraction and the defined benefit fraction
would otherwise exceed 1.0 under the terms of this Plan. Under the adjustment, an
33
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. The annual addition for any "limitation year"
beginning before January 1, 1987 shall not be recomputed to treat all Employee
contributions as annual additions.
(m) Notwithstanding the foregoing, for any "limitation year" in which the Plan is
a Top Heavy Plan, 100 percent shall be substituted for 125 percent in Sections 4.4(k)
and 4.4(1) unless the extra minimum allocation is being provided pursuant to Section
4.3. However, for any "limitation year" in which the Plan is a Super Top Heavy Plan, 100
percent shall be substituted for 125 percent in any event.
(n) Notwithstanding anything contained in this 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 a reasonable error in estimating a Participant's
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 "annual additions" to be exceeded for any Participant, the
Administrator shall (1) distribute any elective deferrals (within the meaning of Code
Section 402(g)(3)) or return any voluntary Employee contributions credited for the
"limitation year"to the extent that the return would reduce the "excess amount" in the
Participant's accounts (2) hold any "excess amount" remaining after the return of any
elective deferrals or voluntary Employee contributions in a "Section 415 suspense
account" (3) allocate and reallocate the "Section 415 suspense account" in the next
"limitation year" (and succeeding "limitation years" if necessary) to all Participants in the
Plan before any Employer or Employee contributions which would constitute "annual
additions" are made to the Plan for such "limitation year" (4) reduce Employer
contributions to the Plan for such "limitation year" by the amount of the "Section 415
suspense account" allocated and reallocated during such "limitation year."
(b) For purposes of this Article, "excess amount" for any Participant for a
"limitation year" shall mean the excess, if any, of(1) the "annual additions" which would
be credited to his account under the terms of the Plan without regard to the limitations of
tiorri 34
tilov Code Section 415 over (2) the maximum "annual additions" determined pursuant to
Section 4.4.
(c) For purposes of this Section, "Section 415 suspense account" shall mean
an unallocated account equal to the sum of"excess amounts" for all Participants in the
Plan during the "limitation year." The "Section 415 suspense account" shall not share in
any earnings or losses of the Trust Fund.
(d) The Plan may not distribute "excess amounts," other than voluntary
Employee contributions, to Participants or Former Participants.
4.6 TRANSFERS FROM QUALIFIED PLANS
(a) With the consent of the Administrator, amounts may be transferred from
other qualified plans by Participants, 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 Trust 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 or in part, except as provided in paragraphs (c) and (d) of this
Section.
(c) Except as permitted by Regulations (including Regulation 1.411(d)-4),
amounts attributable to elective contributions (as defined in Regulation 1.401(k)-
1(g)(3)), 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). However, the foregoing shall not
otherwise permit any distributions from this Plan by reason of a Participant's hardship.
(d) 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 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 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
417 and 411(a)(11) 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 Participant consent may be made.
(e) The Administrator may direct that employee transfers made after a
35
460, valuation date 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 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) All amounts allocated to a Participant's Rollover Account may be treated
as a Directed Investment Account pursuant to Section 4.8.
(g) 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) distributions from another qualified plan which are eligible rollover
distributions and which are either transferred by the Employee to this Plan within sixty
(60) days following his receipt thereof or are transferred pursuant to a direct rollover; (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
460, 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.
(h) 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.
(I) 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 MANDATORY CONTRIBUTIONS
(a) As a condition for sharing in Employer contributions, each Participant shall
agree to contribute 4% of his Compensation to the Trustee. Such contribution shall be
credited to his Employee Contribution Account and shall share in Trust Fund earnings
and losses. The Employee Contribution will be contributed by the Employer on the
Participant's behalf as described in Code Section 414(h)(2).
rr 36
(b) The Employee Contribution Account shall be fully Vested at all times.
(c) Withdrawals from the Employee Contribution Account are not permitted
prior to termination of employment.
(d) In the event a Participant has received a hardship distribution pursuant to
Regulation 1.401(k)-1(d)(2)(iv)(B) from any other plan maintained by the Employer, then
such Participant shall be barred from making any Employee Contributions to the Trust
Fund for a period of twelve (12) months after receipt of the distribution.
(e) A Participant may discontinue his Employee Contributions by notifying the
Employer of his election at least 10 days prior to the end of an applicable pay period in
accordance with procedures established by the Employer.
(f) Any Participant who has elected to discontinue his Employee
Contributions may resume making Employee Contributions at any time pursuant to the
procedures established by the Employer.
(g) The Employer shall transfer Employee Contributions 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 days from the date on which
such amounts would otherwise have been payable to the Participant in cash.
(h) At Normal Retirement, or such other date when the Participant or his
Beneficiary shall be entitled to receive benefits, the fair market value of the Employee
Contribution Account shall be used to provide additional benefits to the Participant or his
Beneficiary. Any distributions of amounts held in an Employee Contribution Account
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 417 and 411(a)(11) and the Regulations thereunder.
4.8 DIRECTED INVESTMENT ACCOUNT
(a) The Administrator, in his sole discretion, may determine that all
Participants be permitted to direct the Trustee as to the investment of all or a portion of
the interest in any one or more of their individual account balances. If such authorization
is given, Participants may, subject to a procedure established by the Administrator and
applied in a uniform nondiscriminatory manner, direct the Trustee in writing to invest any
portion of their account in specific assets, specific funds or other investments permitted
under the Plan and the directed investment procedure. That portion of the account of
any Participant so directing will thereupon be considered a Directed Investment
Account, which shall not share in Trust Fund earnings.
(b) A separate Directed Investment Account shall be established for each
37
ittof Participant who has directed an investment. Transfers between the Participant's regular
account and his 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.
4.9 ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) The "Actual Contribution Percentage" for Plan Years beginning after
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 any cash or deferred arrangement
maintained by the Employer or an Affiliated Employer 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 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 4.10, "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 Employee mandatory contributions made pursuant to Section
4.7 and Employer matching contributions made pursuant to Section 4.1 on behalf of
each such Participant for such Plan Year; to
(2) the Participant's "414(s) Compensation" for such PlanYear.
(c) For purposes of determining the "Actual Contribution Percentage" and the
amount of Excess Aggregate Contributions pursuant to Section 4.10(d), only Employer
matching contributions (excluding Employer matching contributions forfeited pursuant to
Section 4.10(a)) contributed to the Plan prior to the end of the succeeding Plan Year
38
kow shall be considered. In addition, the Administrator may elect to take into account, with
respect to Employees eligible to have Employee mandatory contributions made
pursuant to Section 4.7 and Employer matching contributions made pursuant to Section
4.1 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 1.401(m)-1(b)(5) 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.
(e) For purposes of this Section and Code Sections 401(a)(4), 410(b) 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(b) (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(b) and 401(m). In such a case, the aggregated
plans must satisfy this Section and Code Sections 401(a)(4), 410 (b) and 401(m) as
kie though such aggregated plans were a single plan. Plans may be aggregated under this
paragraph (e) for Plan Years beginning after December 31, 1988, only if they have the
same plan year.
(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(e)(7) or 409 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, 1988, 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 Sections 4.9 (a) and 4.10, a Highly Compensated
Participant and Non-Highly Compensated Participant shall include any Employee
eligible to have Employee mandatory contributions pursuant to Section 4.7 (whether or
not a mandatory contribution election was made or suspended pursuant to Section 4.7)
and Employer matching contributions pursuant to Section 4.1 allocated to his account
for the Plan Year.
39
4.10 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 4.9(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 Vested portion
of Excess Aggregate Contributions (and Income allocable to such contributions) and, 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 4.9(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 4.9(a) is satisfied. The distribution and/or forfeiture of Excess
Aggregate Contributions shall be made simultaneously from mandatory Employee
contributions and related Employer matching contributions.
If the correction of Excess Aggregate Contributions attributable to Employer matching
contributions is not in proportion to the Vested and non-Vested portion of such
contributions, then the Vested portion of the Participant's Account attributable to
Employer matching contributions after the correction shall be subject to Section 6.5(i).
(b) Any distribution and/or forfeiture of less than the entire amount of Excess
Aggregate Contributions (and Income) shall be treated as a pro rata distribution and/or
forfeiture of 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.
(c) Excess Aggregate Contributions attributable to matching 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 each Highly Compensated Participant, the amount of Excess
Aggregate Contributions is equal to the Employee mandatory contributions made
pursuant to Section 4.7, Employer matching contributions made pursuant to Section 4.1
and any qualified non-elective contributions or elective deferrals taken into account
pursuant to Section 4.9(c) 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 "414(s) Compensation." The actual contribution
ratio must be rounded to the nearest one-hundredth of one percent for Plan Years
40
kow beginning after December 31, 1988. In no case shall the amount of Excess Aggregate
Contribution with respect to any Highly Compensated Participant exceed the amount of
Employee mandatory contributions made pursuant to Section 4.7, Employer matching
contributions made pursuant to Section 4.1 and any qualified non-elective contributions
or elective deferrals taken into account pursuant to Section 4.9(c) on behalf of such
Highly Compensated Participant for such Plan Year.
(e) The determination of the amount of Excess Aggregate Contributions with
respect to any Plan Year shall be made after first determining the Excess Contributions
(as defined in Regulation 1.401(k)-1(g)(7)(i)), if any, to be treated as voluntary
Employee contributions due to recharacterization for the plan year of any qualified cash
or deferred arrangement (as defined in Code Section 401(k)) maintained by the
Employer that ends with or within the Plan Year.
(f) If during a Plan Year the projected aggregate amount of Employee
mandatory contributions and Employer matching contributions to be allocated to all
Highly Compensated Participants under this Plan would, by virtue of the tests set forth
in Section 4.9(a), cause the Plan to fail such tests, then the Administrator may
automatically reduce proportionately or in the order provided in Section 4.10 (a) each
affected Highly Compensated Participant's projected share of such contributions by an
amount necessary to satisfy one of the tests set forth in Section 4.9(a).
Niro (g) Notwithstanding the above, within twelve (12) months after the end of the
Plan Year, the Employer may make a qualified non-elective contribution (as defined in
Code Section 401(m)(4)(C)) on behalf of Non-Highly Compensated Participants in an
amount sufficient to satisfy one of the tests set forth in Section 4.9(a). Such contribution
shall be allocated to the Participant's 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 with respect to
such contributions.
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.
kir 41
440 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
kise purposes hereof on his Normal Retirement Date or Early Retirement Date. 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
Trustee shall distribute all amounts credited to such Participant's 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 Account shall
become fully Vested. The Administrator shall direct the Trustee, in accordance with the
provisions of Sections 6.6 and 6.7, to distribute the value of the deceased Participant's
accounts to the Participant's Beneficiary.
(b) Upon the death of a Former Participant, the Administrator shall direct the
Trustee, in accordance with the provisions of Sections 6.6 and 6.7, to distribute any
remaining vested amounts credited to the accounts of a deceased Former Participant to
such Former Participant's Beneficiary.
(c) The Administrator may require such proper proof of death and such
42
kw 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 death benefit shall be the Participant's spouse, who shall receive such
benefit in the form of a Pre-Retirement Survivor Annuity pursuant to Section 6.6.
Except, however, the Participant may designate a Beneficiary other than his spouse 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. 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) Any security interest held by the Plan by reason of an outstanding loan to
the Participant or Former Participant shall be taken into account in determining the
amount of the Pre-Retirement Survivor Annuity.
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
Account shall become fully Vested. In the event of a Participant's Total and Permanent
Disability, the Trustee, in accordance with the provisions of Sections 6.5 and 6.7, shall
distribute to such Participant all amounts credited to such Participant's Account as
though he had retired.
krof 43
6.4 DETERMINATION OF BENEFITS UPON TERMINATION
41.110
(a) On or before the Anniversary Date coinciding with or subsequent to the
termination of a Participant's employment for any reason other than death, Total and -
Permanent Disability or retirement, the Administrator may direct the Trustee to
segregate the amount of the Vested portion of such Terminated Participant's Account
and invest the aggregate amount thereof in a separate, federally insured savings
account, certificate of deposit, common or collective trust fund of a bank or a deferred
annuity. In the event the Vested portion of a Participant's 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.
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 the Trustee to cause the entire Vested portion
of the Terminated Participant's Account to be payable to such Terminated Participant.
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 417 and 411(a)(11) and the Regulations
thereunder.
If the value of a Terminated Participant's Vested benefit 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 Trustee to cause the
entire Vested benefit to be paid to such Participant in a single lump sum.
For purposes of this Section 6.4, if the value of a Terminated Participant's Vested
benefit is zero, the Terminated Participant shall be deemed to have received a
distribution of such Vested benefit.
(b) The Vested portion of any Participant's Account shall be a percentage of
the total amount credited to his Participant's Account determined on the basis of the
Participant's number of Years of Service according to the following schedule:
Vesting Schedule
Years of Service Percentage
1 20%
2 40%
3 60%
4 80%
5 100%
(c) Notwithstanding the vesting provided for in paragraph (b) above, for any
Top Heavy Plan Year, the Vested portion of the Participant's Account of any Participant
44
who has an Hour of Service after the Plan becomes top heavy shall be a percentage of
'tappv the total amount credited to his Participant's Account determined on the basis of the
Participant's number of Years of Service according to the following schedule:
Vesting Schedule
Years of Service Percentage
Less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 100%
If in any subsequent Plan Year, the Plan ceases to be a Top Heavy Plan, the
Administrator shall revert to the vesting schedule in effect before this Plan became a
Top Heavy Plan. Any such reversion shall be treated as a Plan amendment pursuant to
the terms of the Plan.
(d) Notwithstanding the vesting schedule above, the Vested percentage of a
Participant's Account shall not be less than the Vested percentage attained as of the
later of the effective date or adoption date of this amendment and restatement.
(e) Notwithstanding the vesting schedule above, 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.
Oirsv
(f) 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
Plan. For this purpose, the Plan shall be treated as having been amended if the Plan
provides for an automatic change in vesting due to a change in top heavy status. In the
event that the Plan is amended to change or modify any vesting schedule, a Participant
with at least three (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. If a Participant fails to make such election, 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.
45
(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, or
was deemed to have 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 five (5) consecutive 1-Year Breaks in Service commencing after the distribution, or in
the event of a deemed distribution, upon the reemployment of such Former Participant.
In the event the Former Participant does repay the full amount distributed to him, or in
the event of a deemed distribution, 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 coinciding with or preceding his termination.
The source for such reinstatement shall first be any Forfeitures occurring during the
year. If such source is insufficient, then the Employer shall contribute an amount which
is sufficient to restore any such forfeited Accounts.
(3) If any Former Participant is reemployed after a1-Year Break in Service
has occurred, Years of Service shall include Years of Service prior to his 1-YearBreak in
Service subject to the following rules:
(I) If a Former Participant has a 1-Year Break in Service, his pre-break and
post-break service shall be used for computing Years of Service for eligibility and for
vesting purposes only after he has been employed for one (1) Year of Service following
the date of his reemployment with the Employer;
(ii) Any Former Participant who under the Plan does not have a nonforfeitable
kw right to any interest in the Plan resulting from Employer contributions shall lose credits
otherwise allowable under (I) above 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 Years of
Service;
(iii) After five (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;
(iv) If a Former Participant who has not had his Years of Service before a 1-
Year Break in Service disregarded pursuant to (ii) above completes one (1)Year of
Service for eligibility purposes following his reemployment with the Employer, he shall
participate in the Plan retroactively from his date of reemployment;
(v) If a Former Participant who has not had his Years of Service before a 1-
Year Break in Service disregarded pursuant to (ii) above 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.
6.5 DISTRIBUTION OF BENEFITS
46
(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 50% 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 (75%) 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, 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 entitle 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
47
date" a written explanation of:
kkov
(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 an 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 Trustee to distribute to a Participant or his
Beneficiary any amount to which he is entitled under the Plan in one or more of the
following methods:
(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
thaw (A) segregate the aggregate amount thereof in a separate, federally insured
savings account, certificate of deposit in a bank or savings and loan association, money
market certificate or other liquid short-term security or (B) purchase a nontransferable
annuity contract for a term certain (with no life contingencies) providing for such
payment. 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 Participant (or the lives of the Participant and his designated Beneficiary) or the life
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, $3,500 at the time of any prior distribution.
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 $3,500 and has never exceeded $3,500 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 writing to such distribution. Any written consent required under this paragraph must
48
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) Anydistribution to a Participant who has a benefit which exceeds, or has
ever exceeded, 3,500 at the time of any prior distribution 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(e).
(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 if 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(a)(9) and the
Regulations thereunder (including Regulation 1.401(a)(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 '/ or (ii) the calendar year in which the Participant retires. 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 the life expectancy of the Participant (or the life expectancies of the Participant and
his designated Beneficiary) in accordance with Regulations. Notwithstanding the
foregoing, clause (ii) above shall not apply to any Participant unless the Participant had
attained age 70 '/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 % or any subsequent Plan Year.
(2) Distributions to a Participant and his Beneficiaries shall only be made in
49
accordance with the incidental death benefit requirements of Code Section 401(a)(9)(G)
„r and the Regulations thereunder.
Additionally, for calendar years beginning before 1989, 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. 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) 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 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.
(h) 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 the Plan.
(I) If a distribution is made at a time when a Participant is not fully Vested in
thw his Participant's Account (employment has not terminated) and the Participant may
increase the Vested percentage in such account:
(1) a separate account shall be established for the Participant's interest in the
Plan as of the time of the distribution; and
(2) at any relevant time, the Participant's Vested portion of the separate
account shall be equal to an amount ("X") determined by the formula:
X equals P(AB plus ®x D)) -®x D)
For purposes of applying the formula: P is the Vested percentage at the relevant time,
AB is the account balance at the relevant time, D is the amount of distribution, and R is
the ratio of the account balance at the relevant time to the account balance after
distribution.
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 his
death benefit paid to his surviving spouse in the form of a Pre-Retirement Survivor
Annuity. The Participants 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
50
Participant would have attained the later of Normal Retirement Age or age 62.
krw
6.7 TIME OF SEGREGATION OR DISTRIBUTION
Except as limited by Sections 6.5 and 6.6, whenever the Trustee is to make a
distribution or to commence a series of payments 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. 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.
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.
khrir 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.
6.10 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION
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 separated from service and 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).
51
ARTICLE VII
kitty TRUSTEE
-7.1 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 Trustee 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;
(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
7.6; and
(d) If there shall be more than one Trustee, they shall act by a majority of their
number, but may authorize one or more of them to sign papers on their behalf.
7.2 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
kie 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 times in making investments of the Trust Fund consider, among other factors, the
short and long-term 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 so that at all times the Plan may qualify as a qualified Money
Purchase Pension Plan and Trust.
(b) The Trustee may employ a bank or trust company pursuant to the terms of
its usual and customary bank agency agreement, under which the duties of such bank
or trust company shall be of a custodial, clerical and record-keeping nature.
7.3 OTHER POWERS OF THE TRUSTEE
The Trustee, in addition to all powers and authorities under common law, statutory
authority and other provisions of the 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.
52
(b) To sell, exchange, convey, transfer, grant options to purchase, or
Siti,r 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 rights or other options, and to make any
payments incidental thereto; to oppose, or to consent to, or otherwise participate in,
corporate reorganizations or other changes affecting corporate securities, 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;
(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 part 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 part, 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 the Trustee may deem advisable
any securities or other property received or acquired as Trustee hereunder, whether or
not such securities or 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, and such agent or counsel may or may not be agent or
counsel for the Employer;
(k) To apply for and procure from responsible insurance companies, to be
53
selected by the Administrator, as an investment of the Trust Fund such annuity, or other
rr 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;
(1) 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 Bills and other forms of United States government
obligations;
(n) To invest in shares of investment companies registered under the
Investment Company Act of 1940;
(o) To sell, purchase and acquire put or call options if the options are traded
on and purchased through a national securities exchange registered under the
Securities Exchange Act of 1934, as amended, or, if the options are not traded on a
national securities exchange, are guaranteed by a member firm of the New York Stock
Exchange;
(p) To deposit monies in federally insured savings accounts or certificates of
deposit in banks or savings and loan associations;
(q) To pool all or any of the Trust Fund, from time to time, with assets
kie belonging to any other qualified employee pension benefit trust created by the Employer
or an affiliated company of the 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 trusts, 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;
(r) 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.
(s) Directed Investment Account. The powers granted to the Trustee shall be
exercised in the sole fiduciary discretion of the Trustee. However, if Participants are so
empowered by the Administrator, each Participant may direct the Trustee to separate
and keep separate all or a portion of his account; and further each Participant is
authorized and empowered, in his sole and absolute discretion, to give directions to the
Trustee pursuant to the procedure established by the Administrator and in such form as
the Trustee may require concerning the investment of the Participant's Directed
Investment Account. The Trustee shall comply as promptly as practicable with
directions given by the Participant hereunder. 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. The Trustee
shall not be responsible or liable for any loss or expense which may result from the
Trustee's refusal or failure to comply with any directions from the Participant. Any costs
54
and expenses related to compliance with the Participant's directions shall be borne by
the Participant's Directed Investment Account.
7.4 LOANS TO PARTICIPANTS
(a) The Trustee may, in the Trustee's discretion, make loans to Participants
and 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 and Beneficiaries; (3) loans shall bear a
reasonable rate of interest; (4) loans shall be adequately secured; and (5) shall provide
for repayment over a reasonable period of time.
(b) 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) $50,000 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
kw the Participant 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.
(c) 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, to 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, loans 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 or 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 are
made less frequently than quarterly and which do not necessarily result in level
amortization.
55
(d) Any loan made pursuant to this Section after August 18, 1985 where the
Vested interest of the Participant is usedto secure such loan shall require the written
consent of the Participant's spouse in a manner consistent with Section 6.5(a). Such
written consent must be obtained within the 90-day period prior to the date the loan is
made.
(e) Any loans granted or renewed on or after the last day of the first Plan Year
beginning after December 31, 1988 shall be made pursuant to a Participant loan
program. Such loan program shall be established in writing and must include, but need
not be limited to, the following:
(1) the identity of the person or positions
(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;
(5) the procedure under the program for determining a reasonable rate of
interest;
rr (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 part of the
Plan. Furthermore, such Participant loan program may be modified or amended in
writing from time to time without the necessity of amending this Section.
7.5 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.
7.6 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES
The Trustee shall be paid such reasonable compensation as shall from time to time be
agreed upon in writing by the Employer and the Trustee. An individual serving as
Trustee who already receives full-time pay from the Employer shall not receive
compensation from the Plan. 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
56
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.
7.7 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 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
kiiv 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 parties; provided, however, that nothing herein
contained shall deprive the Trustee of its right to have its accounts judicially settled if
the Trustee so desires.
7.8 AUDIT
(a) If an audit of the Plan's records shall be required by 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 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. All auditing and accounting fees shall be an expense of and may, at the
election of the Administrator, be paid from the Trust Fund.
(b) If some or all of the information necessary to enable the Administrator to
comply with regulations of the Secretary of Labor is maintained by a bank, insurance
57
company, or similar institution, regulated and supervised and subject to periodic
1/40 examination by a state or federal agency, it shall transmit and certify the accuracy of
that information to the Administrator within one hundred twenty (120) days after the end
of the Plan Year or by such other date as may be prescribed under regulations of the
Secretary of Labor.
7.9 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) The Employer may remove the Trustee by mailing by registered or
certified mail, addressed to such Trustee at his last known address, at least thirty (30)
days before its effective date, a written notice of his removal.
(c) Upon the death, resignation, incapacity, or removal of any Trustee, a
successor may be appointed by the Employer; and such successor, upon accepting
such appointment in writing and delivering same to the Employer, shall, without further
act, become vested with all the estate, rights, powers, discretions, and duties of his
predecessor with like respect as if he were originally named as a Trustee herein. Until
such a successor is appointed, the remaining Trustee or Trustees shall have full
authority to act under the terms of the Plan.
(d) The Employer may designate one or more successors prior to the death,
resignation, incapacity, or removal of a Trustee. In the event a successor is so
designated by the Employer and accepts such designation, the successor shall, without
kile further act, become vested with all the estate, rights, powers, discretions, and duties of
his predecessor with the like effect as if he were originally named as Trustee herein
immediately upon the death, resignation, incapacity, or removal of his predecessor.
(e) Whenever any Trustee hereunder ceases to serve as such, he 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 part of the annual statement of account for the Plan Year required
under Section 7.6 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 set forth in Section 7.6 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 7.6 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 7.6 and this subparagraph.
7.10 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
58
maintained by such Participant's new employer and represented by said employer in
(kw 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.
7.11 DIRECT ROLLOVER
(a) This Section applies to distributions made on or after January 1, 1993.
Notwithstanding any provision of the Plan to the contrary that would otherwise limit a
distributee's election under this Section, a distributee may elect, at the time and in the
manner prescribed by the Plan Administrator, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by the distributee in a
direct rollover.
(b) For purposes of this Section the following definitions shall apply:
(1) An eligible rollover distribution is any distribution of all or any portion of the
balance to the credit of the distributee, except that an eligible rollover distribution does
not include: any distribution that is one of a series of substantially equal periodic
payments (not less frequently than annually) made for the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies) of the distributee and the
distributee's designated beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under Code Section 401(a)(9);
and the portion of any distribution that is not includible in gross income (determined
without regard to the exclusion for net unrealized appreciation with respect to employer
securities).
(2) An eligible retirement plan is an individual retirement account described in
Code Section 408(a), an individual retirement annuity described in Code Section 408(b),
an annuity plan described in Code Section 403(a), or a qualified trust described in Code
Section 401(a), that accepts the distributee's eligible rollover distribution. However, in
the case of an eligible rollover distribution to the surviving spouse, an eligible retirement
plan is an individual retirement account or individual retirement annuity.
(3) A distributee includes an Employee or former Employee. In addition, the
Employee's or former Employee's surviving spouse and the Employee's or former
Employee's spouse or former spouse who is the alternate payee under a qualified
domestic relations order, as defined in Code Section 414(p), are distributees with regard
to the interest of the spouse or former spouse.
(4) A direct rollover is a payment by the plan to the eligible retirement plan
specified by the distributee.
ARTICLE VIII
AMENDMENT, TERMINATION AND MERGERS
8.1 AMENDMENT
(a) The Employer shall have the right at any time to amend the Plan, subject
to the limitations of this Section. Any such amendment shall be adopted by formal action
of the Employer's board of directors and executed by an officer authorized to act on
kkiv 59
behalf of the Employer. However, any amendment which affects the rights, duties or
responsibilities of the Trustee and Administrator may only be made with the Trustee's
and Administrator's 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 Trust provisions contained herein are a part of the Plan
and the amendment affects the duties of the Trustee hereunder.
(b) No amendment to the Plan shall be 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.
(c) Except as permitted by Regulations, no Plan amendment or transaction
having the effect of a Plan amendment (such as a merger, plan transfer or similar
transaction) shall be effective to the extent it eliminates or reduces any "Section
411(d)(6) protected benefit" or adds or modifies conditions relating to "Section 411(d)(6)
protected benefits" the result of which is a further restriction on 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(d)(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
kire (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'Accounts
shall become 100% Vested as provided in Section 6.4 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 of the Trust Fund 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 or through the purchase of irrevocable
nontransferable deferred commitments from an insurer. Except as permitted by
Regulations, the termination of the Plan shall not result in the reduction of"Section
411(d)(6) protected benefits" in accordance with Section 8.1(c).
8.3 MERGER OR CONSOLIDATION
This Plan and Trust may be merged or consolidated with, or its assets and/or liabilities
maybe transferred to any other plan and trust 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 transfer, merger or consolidation
does not otherwise result in the elimination or reduction of any "Section
60
411(d)(6)protected benefits" in accordance with Section 8.1(c).
lbw
ARTICLE IX
MISCELLANEOUS
9.1 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.
9.2 ALIENATION
(a) Subject to the exceptions provided below, no benefit which shall be
payable out of the Trust Fund 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 torts 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 by the Trustee, except to
jihe such extent as may be required by law.
(b) 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.
9.3 CONSTRUCTION OF PLAN
This Plan and Trust shall be construed and enforced according to the laws of the State
of California, other than its laws respecting choice of law.
9.4 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.
61
9.5 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.
9.6 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 an excessive contribution under a
mistake of fact, the Employer may demand repayment of such excessive 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 excess contributions may not be returned to the Employer but any
losses attributable thereto must reduce the amount so returned.
9.7 BONDING
Every Fiduciary, except a bank or an insurance company 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, 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.
9.8 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 person which
may delay payment or render a Contract null and void or unenforceable in whole or in
part.
62
9.9 INSURER'S PROTECTIVE CLAUSE
Any 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.
9.10 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 the Plan, shall, to the extent thereof, be in full satisfaction of all claims
hereunder against the Trustee and the Employer, either of whom may require such
Participant, legal representative, Beneficiary, guardian or committee, as a condition
precedent to such payment, to execute a receipt and release thereof in such form as
shall be determined by the Trustee or Employer.
9.11 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.
9.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY
The "named Fiduciaries" of this Plan are (1) the Employer, (2) the Administrator and (3)
the Trustee. 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 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 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. 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, 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
63
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.
9.13 APPROVAL BY INTERNAL-REVENUE SERVICE
(a) Notwithstanding anything herein to the contrary, contributions to this Plan
are conditioned upon the initial qualification of the Plan under Code Section 401. If the
Plan receives an adverse determination with respect to its initial qualification, then the
Plan will distribute such contributions to the Participants within one year after such
determination, provided the application for the determination is made by the time
prescribed by law.
9.14 UNIFORMITY
All provisions of this Plan shall be interpreted and applied in a uniform,
nondiscriminatory manner. In the event of any conflict between the terms of this Plan
and any Contract purchased hereunder, the Plan provisions shall control.
9.15 WAIVER OF FUNDING
(a) In the event that the minimum funding requirement for a particular Plan
Year has been waived in whole or in part, then, an Adjusted Account Balance shall be
established for each Participant which shall reflect the Account balance the Participant
would have had, had the waived amount been contributed. The Adjusted Account
Balance shall remain in effect until such time as the value of the Participant's Account
equals the value of the Participant's Adjusted Account Balance:
(1) The excess of the value of each Participant's Adjusted Account Balance
over the value of the Participant's Account balance will be credited with earnings equal
to 150 percent of the Federal mid-term rate (as in effect under Code Section 1274 for
the first month of such Plan Year). 76(2)The waiver payment to be made by the
Employer in the year after the waiver is granted shall at least equal the amount
necessary to amortize over 5 years, at the appropriate interest rate, the excess of the
sum of the Adjusted Account Balances over the total value of the Trust Fund
attributable to Employer contributions. In the next year, the excess for such subsequent
year, if any, is amortized over 4 years. In each succeeding year the amortization period
is reduced by one year.
The Employer may, however, make such larger payments at any time as the Employer
shall deem appropriate.
(3) An unallocated Waiver Suspense Account shall be created, to which shall
be made all payments designed to reduce the waived deficiency. If at the time of a
distribution, the nonforfeitable portion of a Participant's Adjusted Account Balance
exceeds that Participant's actual Account balance, that Participant will receive the
larger amount to the extent that there are then funds in the unallocated Waiver
Suspense Account to cover the excess. If at any time, a Participant may not be able to
receive a total distribution of the entire nonforfeitable portion of his Adjusted Account
Balance, such Participant would receive subsequent distributions derived from future
waiver payments.
Nie 64
(b) When the total value of the Trust Fund equals the sum of the Adjusted
r Account Balances, the Waiver Suspense Account shall be allocated to the affected
Participants so that each Participant's actual Account balance equals that Participant's
Adjusted Account Balance.
ADOPTED BY SOUTH TAHOE PUBLIC UTILITY
BY:
Employer
a7V11\( :. V1r '0-N/42 c. NR
Trustee
Tru tee
kirse
Trus ee
DATE:
4-tr5 /42,
65