Exhibit 10.7
 
 
DYNEX CAPITAL, INC.
 
401(K) OVERFLOW PLAN
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 

Nonqualified Retirement Plan 7.5A
Effective: July 1, 1997

 
 

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TABLE OF CONTENTS
 
 
INTRODUCTION
 
1
     
ARTICLE I FORMAT AND DEFINITIONS
 
2
     
SECTION 1.01  --FORMAT.
 
2
SECTION 1.02  --DEFINITIONS.
 
2
     
ARTICLE II PARTICIPATION
 
7
     
SECTION 2.01  --ACTIVE PARTICIPANT.
 
7
SECTION 2.02  --INACTIVE PARTICIPANT.
 
7
SECTION 2.03  --CESSATION OF PARTICIPATION.
 
7
     
ARTICLE III CONTRIBUTIONS
 
8
     
SECTION 3.01  --SALARY SAVINGS CONTRIBUTIONS.
 
8
SECTION 3.02  --EMPLOYER CONTRIBUTIONS.
 
8
SECTION 3.03  --NONFORFEITABILITY OF CONTRIBUTIONS.
 
9
SECTION 3.04  --ALLOCATION.
 
9
     
ARTICLE IV INVESTMENT OF CONTRIBUTIONS
 
10
     
SECTION 4.01  --INVESTMENT OF CONTRIBUTIONS.
 
10
SECTION 4.01A-- AGREEMENT OF AGENCY.
 
10
     
ARTICLE V BENEFITS
 
12
     
SECTION 5.01  --RETIREMENT BENEFITS.
 
12
SECTION 5.02  --DEATH BENEFITS.
 
12
SECTION 5.03  --TERMINATION BENEFITS.
 
12
SECTION 5.04  --WHEN BENEFITS START.
 
12
SECTION 5.05  --WITHDRAWAL PRIVILEGES.
 
13
     
ARTICLE VI DISTRIBUTION OF BENEFITS
 
14
     
SECTION 6.01  --AUTOMATIC FORMS OF DISTRIBUTION.
 
14
SECTION 6.02  --OPTIONAL FORMS OF DISTRIBUTION.
 
14
SECTION 6.03  --ELECTION PROCEDURES.
 
15
SECTION 6.04  --NOTICE REQUIREMENTS.
 
17
     
ARTICLE VII TERMINATION OF PLAN
 
20
     
ARTICLE VIII ADMINISTRATION OF PLAN
 
21
     
SECTION 8.01  --ADMINISTRATION.
 
21

 
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SECTION 8.02  --RECORDS.
 
21
SECTION 8.03  --INFORMATION AVAILABLE.
 
21
SECTION 8.04  --CLAIM AND APPEAL PROCEDURES.
 
22
SECTION 8.05  --DELEGATION OF AUTHORITY.
 
22
     
ARTICLE IX GENERAL PROVISIONS
 
23
     
SECTION 9.01  --AMENDMENTS.
 
23
SECTION 9.02  --MERGERS.
 
23
SECTION 9.03  --PROVISIONS RELATING TO THE INSURER AND OTHER PARTIES.
 
24
SECTION 9.04  --EMPLOYMENT STATUS.
 
24
SECTION 9.05  --RIGHTS TO PLAN ASSETS.
 
24
SECTION 9.06  --BENEFICIARY.
 
24
SECTION 9.07  --NONALIENATION OF BENEFITS.
 
25
SECTION 9.08  --CONSTRUCTION.
 
25
SECTION 9.09  --LEGAL ACTIONS.
 
25
SECTION 9.10  --SMALL AMOUNTS.
 
26
SECTION 9.11  --WORD USAGE.
 
26
     
PLAN EXECUTION
   

 
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INTRODUCTION
 
The Employer is establishing a nonqualified, defined contribution employees’
retirement plan which has been designed as, and is intended to be, a funded plan
for purposes of the Employee Retirement Income Security Act of 1974, as amended,
and a nonqualified plan under the Internal Revenue Code of 1986, including any
later amendments to the Code.  The Employer agrees to operate the plan according
to the terms, provisions and conditions set forth in this document.
 
The purpose of the Plan is to provide a vehicle to overcome the limitations
regarding the contributions which can be made by or on the behalf of some highly
compensated employees to the Qualified Plan.  This Plan, working in combination
with the Qualified Plan, will permit Participants and the Employer to contribute
the full amount of Salary Savings Contributions and Employer contributions
desired without regard to the limitations of the Qualified Plan.
 

 
 

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ARTICLE I
 

 
FORMAT AND DEFINITIONS
 
SECTION 1.01  --              FORMAT.
 
Words and phrases defined in the DEFINITIONS SECTION of Article I shall have
that defined meaning when used in this Plan, unless the context clearly
indicates otherwise.
 
These words and phrases have an initial capital letter to aid in identifying
them as defined terms.
 
SECTION 1.02  --              DEFINITIONS.
 
ACCOUNT means, for a Participant, his share of the Investment Fund.  Separate
accounting records are kept for those parts of his Account that result from:
 
 
(a)
Salary Savings Contributions.

 
 
(b)
Matching Contributions.

 
 
(c)
Excess Contributions.

 
A Participant’s Account shall be reduced by any distribution of his Account.  A
Participant’s Account will participate in the earnings credited, expenses
charged and any appreciation or depreciation of the Investment Fund.  His
Account is subject to any minimum guarantees applicable under the Group Contract
or other investment arrangement.
 
ACTIVE PARTICIPANT means an Eligible Employee who is actively participating in
the Plan according to the provisions in the ACTIVE PARTICIPANT SECTION of
Article II.
 
ANNUITY STARTING DATE means, for a Participant, the first day of the first
period for which an amount is payable as an annuity or any other form.
 
BENEFICIARY means the person or persons named by a Participant to receive any
benefits under this Plan upon the Participant’s death.  See the BENEFICIARY
SECTION of Article IX.
 
CLAIMANT means any person who has made a claim for benefits under this
Plan.  See the CLAIM AND APPEAL PROCEDURES SECTION of Article VIII.
 
CODE means the Internal Revenue Code of 1986, as amended.
 
COMPENSATION means the total earnings paid or made available to an Employee by
the Employer during any specified period.  Compensation shall exclude Employer
Contributions made under this Plan.
 

 
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“Earnings” in this definition means an Employee’s W-2 earnings.
 
Compensation shall also include employer contributions made pursuant to a salary
reduction agreement which are not includible in the gross income of the Employee
under Code Sections 125, 402(a)(8), 402(h), 403(b) or 457.
 
CONTINGENT ANNUITANT means an individual named by the Participant to receive a
lifetime benefit after the Participant’s death in accordance with a survivorship
life annuity.
 
CONTRIBUTIONS means
 
Salary Savings Contributions
Matching Contributions
Excess Contributions
 
as set out in Article III, unless the context clearly indicates otherwise.
 
ELIGIBLE EMPLOYEE means any Employee of the Employer as determined from Plan
Year to Plan Year by the Employer, and for whom contributions to the Qualified
Plan are limited by more than $500 due to the restrictions imposed by the
Qualified Plan to meet qualification requirements of the Internal Revenue Code.
 
EMPLOYEE means an individual who is employed by the Employer.
 
EMPLOYER means Dynex Capital, Inc. or any adopting employer of the Dynex Capital
401(k) Plan.  The Employer will act as Agent for its Employees participating in
this Plan.  See the AGREEMENT OF AGENCY SECTION of Article IV.  This will also
include any successor corporation or firm of the Employer which shall, by
written agreement, assume the obligations of this Plan or any predecessor
corporation or firm of the Employer (absorbed by the Employer, or of which the
Employer was once a part) which became a predecessor because of a change of
name, merger, purchase of stock or purchase of assets and which maintained this
Plan.
 
EMPLOYER CONTRIBUTIONS means
 
Matching Contributions
Excess Contributions
 
as set out in Article III, unless the context clearly indicates otherwise.
 
ENTRY DATE means the date an Employee first enters the Plan as an Active
Participant.  See the ACTIVE PARTICIPANT SECTION of Article II.
 
ERISA means the Employee Retirement Income Security Act of 1974, as amended.
 
EXCESS CONTRIBUTIONS means excess contributions made by the Employer to fund
this Plan.  See the EMPLOYER CONTRIBUTIONS SECTION of Article III.
 

 
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FISCAL YEAR means the Employer’s taxable year.  The last day of the Fiscal Year
is December 31.
 
GROUP CONTRACT means the group annuity contract or contracts into which the
Employer enters with the Insurer for the investment of Contributions and the
payment of benefits under this Plan.  The term Group Contract as it is used in
this Plan is deemed to include the plural unless the context clearly indicates
otherwise.
 
INACTIVE PARTICIPANT means a former Active Participant who has an Account.  See
the INACTIVE PARTICIPANT SECTION of Article II.
 
INSURER means Principal Mutual Life Insurance Company and any other insurance
company or companies named by the Employer.
 
INVESTMENT FUND means the total assets held for the purpose of providing
benefits for Participants.  These funds result from Contributions made under the
Plan.
 
INVESTMENT MANAGER means any fiduciary (other than a trustee or Named Fiduciary)
 
 
(a)
who has the power to manage, acquire, or dispose of any assets of the Plan; and

 
 
(b)
who (1) is registered as an investment adviser under the Investment Advisers Act
of 1940, or (2) is a bank, as defined in the Investment Advisers Act of 1940, or
(3) is an insurance company qualified to perform services described in
subparagraph (a) above under the laws of more than one state; and

 
 
(c)
who has acknowledged in writing being a fiduciary with respect to the Plan.

 
LATE RETIREMENT DATE means the first day of any month which is after a
Participant’s Normal Retirement Date and on which retirement benefits begin.  If
a Participant continues to work for the Employer after his Normal Retirement
Date, his Late Retirement Date shall be the earliest first day of the month on
or after he ceases to be an Employee.  A later Retirement Date may apply if the
Participant so elects.  See the WHEN BENEFITS START SECTION of Article V.
 
MATCHING CONTRIBUTIONS means matching contributions made by the Employer to fund
this Plan.  See the EMPLOYER CONTRIBUTIONS SECTION of Article III.
 
MONTHLY DATE means each Yearly Date and the same day of each following month
during the Plan Year beginning on such Yearly Date.
 
NAMED FIDUCIARY means the person or persons who have authority to control and
manage the operation and administration of the Plan.
 
The Named Fiduciary is the Employer.
 
NORMAL FORM means a single life annuity with installment refund.
 

 
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NORMAL RETIREMENT AGE means the older of age 60 or his age on the date five
years after the first day of the Plan Year in which his Entry Date occurred.
 
NORMAL RETIREMENT DATE means the first day of the month on or after the date the
Participant reaches his Normal Retirement Age.  Unless otherwise provided in
this Plan, a Participant’s retirement benefits shall begin on a Participant’s
Normal Retirement Date if he has ceased to be an Employee on such date and has
an Account.  Even if the Participant is an Employee on his Normal Retirement
Date, he may choose to have his retirement benefit begin on such date.  See the
WHEN BENEFITS START SECTION of Article V.
 
PARENTAL ABSENCE means an Employee’s absence from work which begins on or after
the first Yearly Date after December 31, 1984,
 
 
(a)
by reason of pregnancy of the Employee,

 
 
(b)
by reason of birth of a child of the Employee,

 
 
(c)
by reason of the placement of a child with the Employee in connection with
adoption of such child by such Employee, or

 
 
(d)
for purposes of caring for such child for a period beginning immediately
following such birth or placement.

 
PARTICIPANT means either an Active Participant or an Inactive Participant.
 
PERIOD OF SERVICE means a period of time beginning on an Employee’s Employment
Commencement Date or Reemployment Commencement Date (whichever applies) and
ending on his Severance from Service Date.
 
PLAN means the nonqualified retirement plan of the Employer set forth in this
document, including any later amendments to it.
 
PLAN ADMINISTRATOR means the person or persons who administer the Plan.
 
The Plan Administrator is the Employer.
 
PLAN YEAR means a period beginning on a Yearly Date and ending on the day before
the next Yearly Date.
 
QUALIFIED JOINT AND SURVIVOR FORM means, for a Participant who has a spouse, a
survivorship life annuity with installment refund, where the survivorship
percentage is 50% and the Contingent Annuitant is the Participant’s spouse.  A
former spouse will be treated as the spouse to the extent provided under a
qualified domestic relations order as described in ERISA Act Section 206(d).  If
a Participant does not have a spouse, the Qualified Joint and Survivor Form
means the Normal Form.
 

 
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The amount of benefit payable under the Qualified Joint and Survivor Form shall
be the amount of benefit which may be provided by the Participant’s Account.
 
QUALIFIED PLAN means Dynex Capital, Inc. 401(k) Plan.
 
QUALIFIED PRERETIREMENT SURVIVOR ANNUITY means a single life annuity with
installment refund payable to the surviving spouse of a Participant who dies
before his Annuity Starting Date.  A former spouse will be treated as the
surviving spouse to the extent provided under a qualified domestic relations
order as described in ERISA Act Section 206(d).
 
REEMPLOYMENT COMMENCEMENT DATE means the date an Employee first performs an
Hour-of-Service following a Period of Severance.
 
REENTRY DATE means the date a former Active Participant reenters the Plan.  See
the ACTIVE PARTICIPANT SECTION of Article II.
 
RETIREMENT DATE means the date a retirement benefit will begin and is a
Participant’s Normal or Late Retirement Date, as the case may be.
 
SALARY SAVINGS CONTRIBUTIONS means salary deferral contributions made by the
Employer to fund this Plan.  See the SALARY SAVINGS CONTRIBUTIONS SECTION of
Article III.
 
SEVERANCE FROM SERVICE DATE means the earlier of
 
 
(a)
the date on which an Employee quits, retires, dies or is discharged, or

 
 
(b)
the first anniversary of the date an Employee begins a one-year absence from
service (with or without pay).  This absence may be the result of any
combination of vacation, holiday, sickness, disability, leave of absence or
layoff.

 
Solely to determine whether a one-year Period of Severance has occurred for
eligibility or vesting purposes for an Employee who is absent from service
beyond the first anniversary of the first day of a Parental Absence, Severance
from Service Date is the second anniversary of the first day of the Parental
Absence.  The period between the first and second anniversaries of the first day
of the Parental Absence is not a Period of Service and is not a Period of
Severance.
 
YEARLY DATE means July 1, 1997, and each following January 1.
 

 
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ARTICLE II
 

 
PARTICIPATION
 
SECTION 2.01  --              ACTIVE PARTICIPANT.
 
 
(a)
An Employee shall first become an Active Participant (begin active participation
in the Plan) on the earliest Monthly Date on which he is an Eligible Employee.

 
The date is his Entry Date.
 
If a person has been an Eligible Employee who has met all the eligibility
requirements stated above,
 
 
(b)
An Inactive Participant shall again become an Active Participant (resume active
participation in the Plan) on the date he again performs an Hour of Service as
an Eligible Employee.  This date is his Reentry Date.

 
Upon again becoming an Active Participant, he shall cease to be an Inactive
Participant.
 
 
(c)
A former Participant shall again become an Active Participant (resume active
participation in the Plan) on the date he again performs an Hour of Service as
an Eligible Employee.  This date is his Reentry Date.

 
There shall be no duplication of benefits for a Participant under this Plan
because of more than one period as an Active Participant.
 
SECTION 2.02  --              INACTIVE PARTICIPANT.
 
An Active Participant shall become an Inactive Participant on the earlier of the
following:
 
 
(a)
The date on which he ceases to be an Eligible Employee (on his Retirement Date
if the date he ceases to be an Eligible Employee occurs within one month of his
Retirement Date).

 
 
(b)
The effective date of complete termination of the Plan.

 
SECTION 2.03  --              CESSATION OF PARTICIPATION.
 
A Participant shall cease to be a Participant on the date he is no longer an
Eligible Employee and the value of his Account is zero.
 

 
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ARTICLE III
 

 
CONTRIBUTIONS
 
SECTION 3.01  --              SALARY SAVINGS CONTRIBUTIONS
 
Salary Savings Contributions shall be equal to any percentage of the
Participant’s Compensation for the pay period as elected by the Participant, and
are as described below.
 
 
(a)
Contributions of amounts refunded or not accepted by the Qualified Plan due to
requirements under Code Sections 401(a)(17), 401(k), 401(m) and
415.  Participants may elect to contribute amounts refunded or not accepted by
the Qualified Plan due to the requirements of Code Sections 401(a)(17), 401(k),
401(m) and 415 to the Plan by designation on an election form provided by the
Employer.

 
 
(b)
Contributions in excess of the Qualified Plan specified maximum deferral
percentage.  Participants who have current elections on file to contribute the
maximum percentage of compensation permitted under the Qualified Plan (12% in
1997) may elect to make Salary Savings Contributions to the Plan by designation
on an election form provided by the Employer.

 
Elections to start or change Salary Savings Contributions may be effective on a
Participant’s Entry Date (Reentry Date, if applicable) or any following
date.  The Participant may start, make any change or terminate an election by
completing a new election form provided by the Employer.
 
SECTION 3.02  --              EMPLOYER CONTRIBUTIONS
 
Employer Contributions for each Plan Year are as described below:
 
 
(a)
Matching Contributions.  For Participants who are 100% vested under the
Qualified Plan, the amount of each Matching Contribution made by the Employer
for a Participant shall be equal to the amount the Employer would have made
under the Qualified Plan in the absence of limitations imposed by Code Sections
401(a)(17), 401(k), 401(m) and 415, if the Participant had made all
contributions contributed to this Plan to the Qualified Plan, reduced by the
Employer’s matching contributions to the Qualified Plan.

 
For Participants who are less than 100% vested under the Qualified Plan, the
Matching Contribution to the Plan is determined as described in the above
paragraph, but only to the extent these contributions would be vested according
to the vesting provisions of the Qualified Plan.  Amounts not initially
contributed to the Plan will be contributed by the Employer to the Plan in
subsequent years as the Participant’s vesting status under the Qualified Plan
increases.
 
 
(b)
Excess Contributions.  For Participants who are 100% vested under the Qualified
Plan, the amount of each Excess Contribution made by the Employer

 

 
8

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for the Participant shall be equal to the amount the Employer would have
contributed to the Qualified Plan if the limits of Section 415 and 401(a)(17) of
the Code were not operative, reduced by the Employer’s Discretionary
Contributions (as defined in the Qualified Plan) to the Qualified Plan.
 
For Participants who are less than 100% vested under the Qualified Plan, the
amount of each Excess Contribution made by the Employer for the Participant is
as described in the above paragraph, but only to the extent these contributions
would be vested according to the vesting provisions of the Qualified
Plan.  Amounts not initially contributed to the Plan will be contributed by the
Employer to the Plan in subsequent years as the Participant’s vesting status
under the Qualified Plan increases.
 
SECTION 3.03  --              NONFORFEITABILITY OF CONTRIBUTIONS.
 
All Contributions are fully vested and nonforfeitable when made.
 
SECTION 3.04  --              ALLOCATION.
 
The following Contributions for each Plan Year shall be allocated to each
Participant for whom such Contributions were made under the SALARY SAVINGS
CONTRIBUTIONS and EMPLOYER CONTRIBUTIONS SECTIONS of Article III.
 
Salary Savings Contributions
Matching Contributions
Excess Contributions
 
These Contributions shall be allocated when made and credited to the
Participant’s Account.
 
 
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ARTICLE IV
 
 
 
INVESTMENT OF CONTRIBUTIONS
 
SECTION 4.01  --              INVESTMENT OF CONTRIBUTIONS.
 
All Contributions are forwarded by the Employer to the appropriate funding
arrangement for deposit in the Investment Fund.
 
Investment of Contributions is governed by the provisions of the Plan, the Group
Contract and any other funding arrangement in which the Investment Fund is or
may be invested.  To the extent permitted by the Plan, Group Contract or other
funding arrangement, the Participant shall direct the Contributions to any of
the accounts available under the Plan or Group Contract and may request the
transfer of assets resulting from those Contributions between such accounts.  A
Participant may not direct the Employer to invest the Participant’s Account in
collectibles.  To the extent that a Participant does not direct the investment
of his Account, such Account shall be invested ratably in the accounts available
under the Investment Fund or Group Contract in the same manner as the undirected
Accounts of all other Participants.  The Accounts of all Inactive Participants
may be segregated and invested separately from the Accounts of all other
Participants.
 
The Investment Fund shall be valued at current fair market value as of the last
day of the last calendar month ending in the Plan Year and, at the discretion of
the Employer, may be valued more frequently.  The valuation shall take into
consideration investment earnings credited, expenses charged, payments made and
changes in the value of the assets held in the Investment Fund.  The Account of
a Participant shall be credited with its share of the gains and losses of the
Investment Fund.  That part of a Participant’s Account invested in a funding
arrangement which establishes an account or accounts for such Participant
thereunder shall be credited with the gain or loss from such account or
accounts.  That part of a Participant’s Account which is invested in other
funding arrangements shall be credited with a proportionate share of the gain or
loss of such investments.  The share shall be determined by multiplying the gain
or loss of the investment by the ratio of the part of the Participant’s Account
invested in such funding arrangement to the total of the Investment Fund
invested in such funding arrangement.
 
At least annually, the Named Fiduciary shall review all pertinent Employee
information and Plan data in order to establish the funding policy of the Plan
and to determine appropriate methods of carrying out the Plan’s objectives.  The
Named Fiduciary shall inform any Investment Manager of the Plan’s short-term and
long-term financial needs so the investment policy can be coordinated with the
Plan’s financial requirements.
 
SECTION 4.01A--             AGREEMENT OF AGENCY.
 
The Employer agrees that it will act as Agent of its employees who are
Participants under this Plan for purposes of entering into a Group Contract and
collecting salary deferral amounts, if any, and any Employer deposits to the
Plan, and transmitting said amounts to the Insurer for deposit under the Group
Contract.
 

 
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As Agent, the Employer has the right to:
 
 
(i)
agree to any amendments to such contract, as long as any such amendment does not
adversely affect the amounts accumulated for a Participant or beneficiary before
the effective date of said amendment;

 
 
(ii)
terminate the Group Contract; and

 
 
(iii)
direct benefit payments and exercise any other rights, duties and privileges of
the Contractholder.

 
The Insurer may rely on information given by the Agent and on Contractholder
decisions made by the Agent.  Nothing in this agency agreement, however, gives
the Agent the right to direct payments from the Group Contract to other than
Participants or their beneficiaries without the express consent of the
Participant.  In no event will the Agent convert assets held under the Group
Contract to its own use.
 
The Employer and its successors or assignees shall remain Agent until it
notifies each Participant hereunder that it will no longer serve as Agent.  The
Employer’s agency agreement will not terminate until the Group Contract has been
terminated by the Employer and distribution of the Participant accounts has
occurred.
 

 
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ARTICLE V
 

 
BENEFITS
 
SECTION 5.01  --              RETIREMENT BENEFITS.
 
On a Participant’s Retirement Date, his Account shall be distributed to him
according to the distribution of benefits provisions of Article VI and the
provisions of the SMALL AMOUNTS SECTION of Article IX.
 
SECTION 5.02  --              DEATH BENEFITS.
 
If a Participant dies before his Annuity Starting Date, his Account shall be
distributed according to the distribution of benefits provisions of Article VI
and the provisions of the SMALL AMOUNTS SECTION of Article IX.
 
SECTION 5.03  --              TERMINATION BENEFITS.
 
A Participant may receive a distribution of his Account at any time after he
ceases to be an Employee, provided he has not again become an Employee.  If such
amount is not payable under the provisions of the SMALL AMOUNTS SECTION of
Article IX, it will be distributed only if the Participant so elects.  The
Participant’s election shall be subject to the requirements in the ELECTION
PROCEDURES SECTION of Article VI for a qualified election of a retirement
benefit.
 
If a Participant does not receive an earlier distribution according to the
provisions of this section or the SMALL AMOUNTS SECTION of Article IX, upon his
Retirement Date or death, his Account shall be applied according to the
provisions of the RETIREMENT BENEFITS SECTION or the DEATH BENEFITS SECTION of
Article V.
 
SECTION 5.04  --              WHEN BENEFITS START.
 
Benefits under the Plan begin when a Participant retires, dies or ceases to be
an Employee, whichever applies, as provided in the preceding sections of this
article.  The start of benefits is subject to the qualified election procedures
of Article VI.
 
Unless otherwise elected, benefits shall begin before the sixtieth day following
the close of the Plan Year in which the latest date below occurs:
 
 
(a)
The date the Participant attains age 65 (Normal Retirement Age, if earlier).

 
 
(b)
The tenth anniversary of the Participant’s Entry Date.

 
 
(c)
The date the Participant ceases to be an Employee.

 
Notwithstanding the foregoing, the failure of a Participant and spouse to
consent to a distribution while a benefit is immediately distributable, within
the meaning of the ELECTION
 

 
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PROCEDURES SECTION of Article VI, shall be deemed to be an election to defer
commencement of payment of any benefit sufficient to satisfy this section.
 
The Participant may elect to have his benefits begin after the latest date for
beginning benefits described above, subject to the provisions of this
section.  The Participant shall make the election in writing and deliver the
signed statement of election to the Plan Administrator before Normal Retirement
Date or the date he ceases to be an Employee, if later.  The election must
describe the form of distribution and the date the benefits will begin.
 
SECTION 5.05  --              WITHDRAWAL PRIVILEGES.
 
Before he ceases to be an Employee, a Participant may withdraw all or part of
his Account, as permitted under the funding arrangement for this Plan, and in
accordance with the procedures and limitations set up by the Plan Administrator.
 
A request for withdrawal shall be in writing on a form furnished for that
purpose and delivered to the Plan Administrator before the withdrawal is to
occur.  The Participant’s request shall be subject to the requirements in the
ELECTION PROCEDURES SECTION of Article VI for a qualified election of a
retirement benefit payable in a form other than a Qualified Joint and Survivor
Form.
 

 
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ARTICLE VI
 

 
DISTRIBUTION OF BENEFITS
 
SECTION 6.01  --              AUTOMATIC FORMS OF DISTRIBUTION.
 
Unless a qualified election of an optional form of benefit has been made within
the election period (see the ELECTION PROCEDURES SECTION of Article VI),. the
automatic form of benefit payable to or on behalf of a Participant is determined
as follows:
 
 
(a)
The automatic form of retirement benefit for a Participant who does not die
before his Annuity Starting Date shall be the Qualified Joint and Survivor Form.

 
 
(b)
The automatic form of death benefit for a Participant who dies before his
Annuity Starting Date shall be:

 
 
(1)
A Qualified Preretirement Survivor Annuity for a Participant who has a spouse to
whom he has been continuously married throughout the one-year period ending on
the date of his death.  The spouse may elect to start receiving the death
benefit on any first day of the month on or after the Participant dies.  If the
spouse dies before benefits start, the Participant’s Account, determined as of
the date of the spouse’s death, shall be paid to the spouse’s Beneficiary.

 
 
(2)
A single-sum payment to the Participant’s Beneficiary for a Participant who does
not have a spouse who is entitled to a Qualified Preretirement Survivor Annuity.

 
Before a death benefit will be paid on account of the death of a Participant who
does not have a spouse who is entitled to a Qualified Preretirement Survivor
Annuity, it must be established to the satisfaction of a plan representative
that the Participant does not have such a spouse.
 
SECTION 6.02  --              OPTIONAL FORMS OF DISTRIBUTION.
 
 
(a)
The optional forms of retirement benefit shall be the following: a straight life
annuity; single life annuities with certain periods of five, ten or fifteen
years; a single life annuity with installment refund; survivorship life
annuities with installment refund and survivorship percentages of 50, 66 2/3 or
100; fixed period annuities for any period of whole months which is not less
than 60 nor more than 360; and a series of installments chosen by the
Participant.  The minimum payment will be based on a period equal to the joint
and last survivor expectancy of the Participant and the Participant’s spouse, if
any, where the joint and last survivor expectancy is recalculated.  The balance
of the Participant’s Account, if any, will be payable on the Participant’s death
to his Beneficiary in a single sum.  The Participant may also elect to receive
his Account in a single-sum payment.

 

 
14

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Election of an optional form is subject to the qualified election provisions of
Article VI.
 
 
(b)
The optional forms of death benefit are a single-sum payment and any annuity
that is an optional form of retirement benefit.  However, a series of
installments shall not be available if the Beneficiary is not the spouse of the
deceased Participant.

 
SECTION 6.03  --              ELECTION PROCEDURES.
 
The Participant, Beneficiary, or spouse shall make any election under this
section in writing.  The Plan Administrator may require such individual to
complete and sign any necessary documents as to the provisions to be made.  Any
election permitted under (a) and (b) below shall be subject to the election
provisions of (c) below.
 
 
(a)
Retirement Benefits.  A Participant may elect his Beneficiary or Contingent
Annuitant and may elect to have retirement benefits distributed under any of the
optional forms of retirement benefit described in the OPTIONAL FORMS OF
DISTRIBUTION SECTION of Article VI.

 
 
(b)
Death Benefits.  A Participant may elect his Beneficiary and may elect to have
death benefits distributed under any of the optional forms of death benefit
described in the OPTIONAL FORMS OF DISTRIBUTION SECTION of Article VI.

 
If the Participant has not elected an optional form of distribution for the
death benefit payable to his Beneficiary, the Beneficiary may, for his own
benefit, elect the form of distribution, in like manner as a Participant.
 
The Participant may waive the Qualified Preretirernent Survivor Annuity by
naming someone other than his spouse as Beneficiary.
 
In lieu of the Qualified Preretirement Survivor Annuity described in the
AUTOMATIC FORMS OF DISTRIBUTION SECTION of Article VI, the spouse may, for his
own benefit, waive the Qualified Preretirement Survivor Annuity by electing to
have the benefit distributed under any of the optional forms of death benefit
described in the OPTIONAL FORMS OF DISTRIBUTION SECTION of Article VI.
 
 
(c)
Qualified Election.  The Participant, Beneficiary or spouse may make an election
at any time during the election period.  The Participant, Beneficiary, or spouse
may revoke the election made (or make a new election) at any time and any number
of times during the election period.  An election is effective only if it meets
the consent requirements below.

 
The election period as to retirement benefits is the 90-day period ending on the
Annuity Starting Date.  An election to waive the Qualified Joint and Survivor
Form may not be made before the date he is provided with the notice of the
ability
 
15

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to waive the Qualified Joint and Survivor Form.  If the Participant elects the
series of installments, he may elect on any later date to have the balance of
his Account paid under any of the optional forms of retirement benefit available
under the Plan.  His election period for this election is the 90-day period
ending on the Annuity Starting Date for the optional form of retirement benefit
elected.
 
A Participant may make an election as to death benefits at any time before he
dies.  The spouse’s election period begins on the date the Participant dies and
ends on the date benefits begin.  The Beneficiary’s election period begins on
the date the Participant dies and ends on the date benefits begin.  An election
to waive the Qualified Preretirement Survivor Annuity may not be made by the
Participant before the date he is provided with the notice of the ability to
waive the Qualified Preretirement Survivor Annuity.  A Participant’s election to
waive the Qualified Preretirement Survivor Annuity which is made before the
first day of the Plan Year in which he reaches age 35 shall become invalid on
such date.  An election made by a Participant after he ceases to be an Employee
will not become invalid on the first day of the Plan Year in which he reaches
age 35 with respect to death benefits from that part of his Account resulting
from Contributions made before he ceased to be an Employee.
 
If the Participant’s Account has at any time exceeded $5,000, any benefit which
is (1) immediately distributable or (2) payable in a form other than a Qualified
Joint and Survivor Form or a Qualified Preretirement Survivor Annuity requires
the consent of the Participant and the Participant’s spouse (or where either the
Participant or the spouse has died, the survivor).  The consent of the
Participant or spouse to a benefit which is immediately distributable must not
be made before the date the Participant or spouse is provided with the notice of
the ability to defer the distribution.  Such consent shall be made in
writing.  The consent shall not be made more than 90 days before the Annuity
Starting Date.  Spousal consent is not required for a benefit which is
immediately distributable in a Qualified Joint and Survivor Form.  Furthermore,
if spousal consent is not required because the Participant is electing an
optional form of retirement benefit that is not a life annuity pursuant to (d)
below, only the Participant need consent to the distribution of a benefit
payable in a form that is not a life annuity and which is immediately
distributable.
 
A benefit is immediately distributable if any part of the benefit could be
distributed to the Participant (or surviving spouse) before the Participant
attains (or would have attained if not deceased) the older of Normal Retirement
Age or age 62.  If the Qualified Joint and Survivor Form is waived, the spouse
has the right to limit consent only to a specific Beneficiary or a specific form
of benefit.  The spouse can relinquish one or both rights.  Such consent shall
be made in writing.  The consent shall not be made more than 90 days before the
Annuity Starting Date.  If the Qualified Preretirement Survivor Annuity is
waived, the spouse has the right to limit consent only to a specific
Beneficiary.  Such consent shall be in writing.  The spouse’s consent shall be
witnessed by a plan representative or notary public.  The spouse’s consent must
acknowledge the
 

 
16

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effect of the election, including that the spouse had the right to limit consent
only to a specific Beneficiary or a specific form of benefit, if applicable, and
that the relinquishment of one or both such rights was voluntary.  Unless the
consent of the spouse expressly permits designations by the Participant without
a requirement of further consent by the spouse, the spouse’s consent must be
limited to the form of benefit, if applicable, and the Beneficiary (including
any Contingent Annuitant), class of Beneficiaries, or contingent Beneficiary
named in the election.  Spousal consent is not required, however, if the
Participant establishes to the satisfaction of the plan representative that the
consent of the spouse cannot be obtained because there is no spouse or the
spouse cannot be located.  A spouse’s consent under this paragraph shall not be
valid with respect to any other spouse.  A Participant may revoke a prior
election without the consent of the spouse.  Any new election will require a new
spousal consent, unless the consent of the spouse expressly permits such
election by the Participant without further consent by the spouse.  A spouse’s
consent may be revoked at any time within the Participant’s election period.
 
 
(d)
Special Rule for Profit Sharing Plan.  As provided in the preceding provisions
of the Plan, if a Participant has a spouse to whom he has been continuously
married throughout the one-year period ending on the date of his death, the
Participant’s Account shall be paid to such spouse.  However, if there is no
such spouse or if the surviving spouse has already consented in a manner
conforming to the election requirements in (c) above, the Account shall be
payable to the Participant’s Beneficiary in the event of the Participant’s
death.

 
The Participant may waive the spousal death benefit described above at any time
provided that no such waiver shall be effective unless it satisfies the
conditions of (c) above (other than the notification requirement referred to
therein) that would apply to the Participant’s waiver of the Qualified
Preretirement Survivor Annuity.
 
Because this is a profit sharing plan which pays death benefits as described
above, this subsection (d) applies if the following condition is met: with
respect to the Participant, this Plan is not a direct or indirect transferee
after December 31, 1984, of a defined benefit plan, money purchase plan
(including a target plan), stock bonus plan or profit sharing plan which is
subject to the survivor annuity requirements of ERISA Act Section 205.  If the
above condition is met, spousal consent is not required for electing a benefit
payable in a form that is not a life annuity.  If the above condition is not
met, the consent requirements of this article shall be operative.
 
SECTION 6.04  --              NOTICE REQUIREMENTS.
 
 
(a)
Optional forms of retirement benefit.  The Plan Administrator shall furnish to
the Participant and the Participant’s spouse a written explanation of the
optional forms of retirement benefit in the OPTIONAL FORMS OF DISTRIBUTION
SECTION of Article VI, including the material features and relative values of
these options, in a manner that would satisfy the notice requirements of ERISA

 
17

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Act Section 205 and the right of the Participant and the Participant’s spouse to
defer distribution until the benefit is no longer immediately
distributable.  The Plan Administrator shall furnish the written explanation by
a method reasonably calculated to reach the attention of the Participant and the
Participant’s spouse no less than 30 days and no more than 90 days before the
Annuity Starting Date.
 
 
(b)
Qualified Joint and Survivor Form.  The Plan Administrator shall furnish to the
Participant a written explanation of the following:  the terms and conditions of
the Qualified Joint and Survivor Form; the Participant’s right to make, and the
effect of, an election to waive the Qualified Joint and Survivor Form; the
rights of the Participant’s spouse; and the right to revoke an election and the
effect of such a revocation.  The Plan Administrator shall furnish the written
explanation by a method reasonably calculated to reach the attention of the
Participant no less than 30 days and no more than 90 days before the Annuity
Starting Date.

 
After the written explanation is given, a Participant or spouse may make written
request for additional information.  The written explanation must be personally
delivered or mailed (first class mail, postage prepaid) to the Participant or
spouse within 30 days from the date of the written request.  The Plan
Administrator does not need to comply with more than one such request by
Participant or spouse.
 
The Plan Administrator’s explanation shall be written in nontechnical language
and will explain the terms and conditions of the Qualified Joint and Survivor
Form and the financial effect upon the Participant’s benefit (in terms of
dollars per benefit payment) of electing not to have benefits distributed in
accordance with the Qualified Joint and Survivor Form.
 
 
(c)
Qualified Preretirement Survivor Annuity.  As required by the Code and Federal
regulation, the Plan Administrator shall furnish to the Participant a written
explanation of the following: the terms and conditions of the Qualified
Preretirement Survivor Annuity; the Participant’s right to make, and the effect
of, an election to waive the Qualified Preretirement Survivor Annuity; the
rights of the Participant’s spouse; and the right to revoke an election and the
effect of such a revocation.  The Plan Administrator shall furnish the written
explanation by a method reasonably calculated to reach the attention of the
Participant within the applicable period.  The applicable period for a
Participant is whichever of the following periods ends last:

 
 
(1)
the period beginning one year before the date the individual becomes a
Participant and ending one year after such date; or

 
 
(2)
the period beginning one year before the date the Participant’s spouse is first
entitled to a Qualified Preretirement Survivor Annuity and ending one year after
such date.

 
If such notice is given before the period beginning with the first day of the
Plan Year in which the Participant attains age 32 and ending with the close of
the Plan
18

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Year preceding the Plan Year in which the Participant attains age 35, an
additional notice shall be given within such period.  If a Participant ceases to
be an Employee before attaining age 35, an additional notice shall be given
within the period beginning one year before the date he ceases to be an Employee
and ending one year after such date.
 
After the written explanation is given, a Participant or spouse may make written
request for additional information.  The written explanation must be personally
delivered or mailed (first class mail, postage prepaid) to the Participant or
spouse within 30 days from the date of the written request.  The Plan
Administrator does not need to comply with more than one such request by a
Participant or spouse.
 
The Plan Administrator’s explanation shall be written in nontechnical language
and will explain the terms and conditions of the Qualified Preretirement
Survivor Annuity and the financial effect upon the spouse’s benefit (in terms of
dollars per benefit payment) of electing not to have benefits distributed in
accordance with the Qualified Preretirernent Survivor Annuity.
 

 
19

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ARTICLE VII
 

 
TERMINATION OF PLAN
 
The Employer expects to continue the Plan indefinitely but reserves the right to
terminate the Plan in whole or in part at any time upon giving written notice to
all parties concerned.  Complete discontinuance of Contributions under the Plan
constitutes complete termination of Plan.
 
The Participant’s Account shall continue to participate in the earnings
credited, expenses charged and any appreciation or depreciation of the
Investment Fund until the Account is distributed.  A distribution under this
article will be a retirement benefit and shall be distributed to the Participant
according to the provisions of Article VI.
 
Upon complete termination of Plan, no more Employees shall become Participants
and no more Contributions shall be made.
 
The assets of this Plan shall not be paid to the Employer at any time.
 

 
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ARTICLE VIII
 

 
ADMINISTRATION OF PLAN
 
SECTION 8.01  --              ADMINISTRATION.
 
Subject to the provisions of this article, the Plan Administrator has complete
control of the administration of the Plan.  The Plan Administrator has all the
powers necessary for it to properly carry out its administrative duties.  Not in
limitation, but in amplification of the foregoing, the Plan Administrator has
the power to construe the Plan and to determine all questions that may arise
under the Plan, including all questions relating to the eligibility of Employees
to participate in the Plan and the amount of benefit to which any Participant,
Beneficiary, spouse or Contingent Annuitant may become entitled.  The Plan
Administrator’s decisions upon all matters within the scope of its authority
shall be final.
 
Unless otherwise set out in the Plan, Group Contract or other funding
arrangement, the Plan Administrator may delegate recordkeeping and other duties
which are necessary for the administration of the Plan to any person or firm
which agrees to accept such duties.  The Plan Administrator shall be entitled to
rely upon all tables, valuations, certificates and reports furnished by the
consultant or actuary appointed by the Plan Administrator and upon all opinions
given by any counsel selected or approved by the Plan Administrator.
 
The Plan Administrator shall receive all claims for benefits by Participants,
former Participants, Beneficiaries, spouses and Contingent Annuitants.  The Plan
Administrator shall determine all facts necessary to establish the right of any
Claimant to benefits and the amount of those benefits under the provisions of
the Plan.  The Plan Administrator may establish rules and procedures to be
followed by Claimants in filing claims for benefits, in furnishing and verifying
proofs necessary to determine age, and in any other matters required to
administer the Plan.
 
SECTION 8.02  --              RECORDS.
 
All acts and determinations of the Plan Administrator shall be duly
recorded.  All these records, together with other documents necessary for the
administration of the Plan, shall be preserved in the Plan Administrator’s
custody.
 
Writing (handwriting, typing, printing), photostating, photographing,
microfilming, magnetic impulse, mechanical or electrical recording or other
forms of data compilation shall be acceptable means of keeping records.
 
SECTION 8.03  --              INFORMATION AVAILABLE.
 
Any Participant in the Plan or any Beneficiary may examine copies of the Plan
description, latest annual report, any bargaining agreement, this Plan, the
Group Contract or any other instrument under which the Plan was established or
is operated.  The Plan Administrator shall maintain all of the items listed in
this section in its office, or in such other place or places as it may designate
in order to comply with governmental regulations.  These items may be examined
during reasonable business hours.  Upon the written request of a Participant or
Beneficiary receiving benefits under the Plan, the Plan Administrator will
furnish him with a
 

 
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copy of any of these items.  The Plan Administrator may make a reasonable charge
to the requesting person for the copy.
 
SECTION 8.04  --              CLAIM AND APPEAL PROCEDURES.
 
A Claimant must submit any required forms and pertinent information when making
a claim for benefits under the Plan.
 
If a claim for benefits under the Plan is denied, the Plan Administrator shall
provide adequate written notice to the Claimant whose claim for benefits under
the Plan has been denied.  The notice must be furnished within 90 days of the
date that the claim is received by the Plan Administrator.  The Claimant shall
be notified in writing within this initial 90-day period if special
circumstances require an extension of time needed to process the claim and the
date by which the Plan Administrator’s decision is expected to be rendered.  The
written notice shall be furnished no later than 180 days after the date the
claim was received by the Plan Administrator.
 
The Plan Administrator’s notice to the Claimant than specify the reason for the
denial; specify references to pertinent Plan provisions on which denial is
based; describe any additional material and information needed for the Claimant
to perfect his claim for benefits; explain why the material and information is
needed; inform the Claimant that any appeal he wishes to make must be in writing
to the Plan Administrator within 60 days after receipt of the Plan
Administrator’s notice of denial of benefits and that failure to make the
written appeal within such 60-day period shall render the Plan Administrator’s
determination of such denial final, binding and conclusive.
 
If the Claimant appeals to the Plan Administrator, the Claimant, or his
authorized representative, may submit in writing whatever issues and comments
the Claimant, or his representative, feels are pertinent.  The Claimant, or his
authorized representative may review pertinent Plan documents.  The Plan
Administrator shall reexamine all facts related to the appeal and make a final
determination as to whether the denial of benefits is justified under the
circumstances.  The Plan Administrator shall advise the Claimant of its decision
within 60 days of his written request for review, unless special circumstances
(such as a hearing) would make rendering a decision within the 60-day limit
unfeasible.  The Claimant must be notified within the 60-day limit if an
extension is necessary.  The Plan Administrator shall render a decision on a
claim for benefits no later than 120 days after the request for review s
received.
 
SECTION 8.05  --              DELEGATION OF AUTHORITY.
 
All or any part of the administrative duties and responsibilities under this
article may be delegated by the Plan Administrator to a retirement
committee.  The duties and responsibilities of the retirement committee shall be
set out in a separate written agreement.
 

 
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ARTICLE IX
 

 
GENERAL PROVISIONS
 
SECTION 9.01  --              AMENDMENTS.
 
The Employer may amend this Plan at any time, to comply with the requirements of
any law or regulation issued by any governmental agency to which the Employer is
subject.  Amendments may be made in the form of written resolutions or by a
separate written document and, except in the case of an amendment adopted
pursuant to the next sentence hereof, shall be adopted pursuant to action by the
Board of Directors of the Employer (including pursuant to any standing
authorization for any officer, director or committee to adopt amendments) in
accordance with its applicable procedures, including, where applicable, by
majority vote or consent in writing.  In addition, and as an alternative, to
amendment of the Plan by action of the Board of Directors of the Employer, the
Chief Executive Officer and the Chief Financial Officer of Dynex Capital, Inc.,
acting jointly or individually, shall be and are hereby authorized to adopt on
behalf of the Board of Directors of the Employer and to execute any technical
amendments to the Plan which in the opinion of counsel for Dynex Capital, Inc.
are required by law and are deemed advisable by such officers and to also adopt
and execute any other discretionary amendments to the Plan which are deemed
advisable by such officers so long as any such amendments do not, in the view of
such officers, materially increase costs of the Plan to the Employer.  An
amendment may not diminish or adversely affect any accrued interest or benefit
of Participants or their Beneficiaries or eliminate an optional form of
distribution with respect to benefits attributable to service before the
amendment nor allow reversion or diversion of Plan assets to the Employer at any
time, except as may be necessary to comply with the requirements of any law or
regulation issued by any governmental agency to which the Employer is
subject.  No amendment to this Plan shall be effective to the extent that it has
the effect of decreasing a Participant’s accrued benefit.  For purposes of this
paragraph, a Plan amendment which has the effect of decreasing a Participant’s
Account or eliminating an optional form of benefit, with respect to benefits
attributable to service before the amendment shall be treated as reducing an
accrued benefit.  Furthermore, if the vesting schedule of the Plan is amended,
in the case of an Employee who is a Participant as of the later of the date such
amendment is adopted or the date it becomes effective, the nonforfeitable
percentage (determined as of such date) of such Employee’s employer-derived
accrued benefit will not be less than his percentage computed under the Plan
without regard to such amendment.
 
SECTION 9.02  --              MERGERS.
 
The Plan may not be merged or consolidated with, nor have its assets or
liabilities transferred to, any other retirement plan, unless each Participant
in the plan would (if the plan then terminated) receive a benefit immediately
after the merger, consolidation or transfer which is equal to or greater than
the benefit the Participant would have been entitled to receive immediately
before the merger, consolidation or transfer (if this Plan had then terminated).
 

 
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SECTION 9.03  --              PROVISIONS RELATING TO THE INSURER AND OTHER
PARTIES.
 
The obligations of an Insurer shall be governed solely by the provisions of the
Group Contract.  The Insurer shall not be required to perform any act not
provided in or contrary to the provisions of the Group Contract.  See the
CONSTRUCTION SECTION of this article.
 
Any issuer or distributor of investment contracts or securities is governed
solely by the terms of its policies, written investment contract, prospectuses,
security instruments, and any other written agreements entered into with the
Employer or Participant.
 
Such Insurer, issuer or distributor is not a party to the Plan, nor bound in any
way by the Plan provisions.  Such parties shall not be required to look to the
terms of this Plan, nor to determine whether the Employer, the Plan
Administrator, or the Named Fiduciary have the authority to act in any
particular manner or to make any contract or agreement.
 
Until notice of any amendment or termination of this Plan has been received by
the Insurer at its home office or an issuer or distributor at their principal
address, they are and shall be fully protected in assuming that the Plan has not
been amended or terminated and in dealing with any party acting as Agent
according to the latest information which they have received at their home
office or principal address.
 
SECTION 9.04  --              EMPLOYMENT STATUS.
 
Nothing contained in this Plan gives an Employee the right to be retained in the
Employer’s employ or to interfere with the Employer’s right to discharge any
Employee.
 
SECTION 9.05  --              RIGHTS TO PLAN ASSETS.
 
No Employee shall have any right to or interest in any assets of the Plan upon
termination of his employment or otherwise except as specifically provided under
this Plan, and then only to the extent of the benefits payable to such Employee
in accordance with Plan provisions.
 
Any final payment or distribution to a Participant or his legal representative
or to any Beneficiaries, spouse or Contingent Annuitant of such Participant
under the Plan provisions shall be in full satisfaction of all claims against
the Plan, the Named Fiduciary, the Plan Administrator, the Insurer, and the
Employer arising under or by virtue of the Plan.
 
SECTION 9.06  --              BENEFICIARY
 
Each Participant may name a Beneficiary to receive any death benefit (other than
any income payable to a Contingent Annuitant) that may arise out of his
participation in the Plan.  The Participant may change his Beneficiary from time
to time.  Unless a qualified election has been made, for purposes of
distributing any death benefits before Retirement Date, the Beneficiary of a
Participant who has a spouse who is entitled to a Qualified Preretirement
Survivor Annuity shall be the Participant’s spouse.  The Participant’s
Beneficiary designation and any change of Beneficiary shall be subject to the
provisions of the ELECTION
 

 
24

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PROCEDURES SECTION of Article VI.  It is the responsibility of the Participant
to give written notice to the Insurer of the name of the Beneficiary on a form
furnished for that purpose.
 
With the Employer’s consent, the Plan Administrator may maintain records of
Beneficiary designations for Participants before their Retirement Dates.  In
that event, the written designations made by Participants shall be filed with
the Plan Administrator.  If a Participant dies before his Retirement Date, the
Plan Administrator shall certify to the Insurer the Beneficiary designation on
its records for the Participant.
 
If, at the death of a Participant, there is no Beneficiary named or surviving,
any death benefit under the Group Contract shall be paid under the applicable
provisions of the Group Contract.
 
SECTION 9.07  --              NONALIENATION OF BENEFITS.
 
Benefits payable under the Plan are not subject to the claims of any creditor of
any Participant, Beneficiary, spouse or Contingent Annuitant.  A Participant,
Beneficiary, spouse or Contingent Annuitant does not have any rights to
alienate, anticipate, commute, pledge, encumber or assign any of such
benefits.  The preceding sentences shall also apply to the creation, assignment,
or recognition of a right to any benefit payable with respect to a Participant
according to a domestic relations order, unless such order is determined by the
Plan Administrator to be a qualified domestic relations order, as defined in
ERISA Act Section 206(d), or any domestic relations order entered before January
1, 1985.
 
SECTION 9.08  --              CONSTRUCTION.
 
The validity of the Plan or any of its provisions is determined under and
construed according to Federal law and, to the extent permissible, according to
the laws of the state in which the Employer has its principal office.  In case
any provision of this Plan is held illegal or invalid for any reason, such
determination shall not affect the remaining provisions of this Plan, and the
Plan shall be construed and enforced as if the illegal or invalid provision had
never been included.
 
In the event of any conflict between the provisions of the Plan and the terms of
any contract or policy issued hereunder, the provisions of the Plan control the
operation and administration of the Plan.
 
SECTION 9.09  --              LEGAL ACTIONS.
 
The Plan, the Plan Administrator, and the Named Fiduciary are the necessary
parties to any action or proceeding involving the assets held with respect to
the Plan or administration of the Plan.  No person employed by the Employer, no
Participant, former Participant or their Beneficiaries or any other person
having or claiming to have an interest in the Plan is entitled to any notice of
process.  A final judgment entered in any such action or proceeding shall be
binding and conclusive on all persons having or claiming to have an interest in
the Plan.
 

 
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SECTION 9.10  --     SMALL AMOUNTS.
 
If the Account of a Participant has never exceeded $5,000, the entire Account
shall be payable in a single sum as of the earliest of his Retirement Date, the
date he dies, or the date he ceases to be an Employee for any other
reason.  This is a small amounts payment.  If a small amount is payable as of
the date the Participant dies, the small amounts payment shall be made to the
Participant’s Beneficiary (spouse if the death benefit is payable to the
spouse).  If a small amount is payable while the Participant is living, the
small amounts payment shall be made to the Participant.  The small amounts
payment is in full settlement of all benefits otherwise payable.  The service
credited to a Participant who is reemployed by the Employer is not diminished as
a result of receiving a small amounts payment.
 
No other small amounts payments shall be made.
 
SECTION 9.11  --              WORD USAGE.
 
The masculine gender, where used in this Plan, shall include the feminine gender
and the singular words as used in this Plan may include the plural, unless the
context indicates otherwise.
 

 

 

 

 

 
 
 

 
26