Exhibit 10.1


 


Your
plan is an important legal document. 
This sample plan has been prepared based on our understanding of the
desired provisions.  It may not fit your
situation.  You should consult with your
lawyer on the plan’s legal and tax implications.  Neither Principal Life Insurance Company nor
its agents can be responsible for the legal or tax aspects of the plan nor its
appropriateness for your situation.  If
you wish to change the provisions of this sample plan, you may ask us to
prepare new sample wording for you and your lawyer to review.


 

















 


NATURE’S SUNSHINE PRODUCTS, INC.


TAX DEFERRED RETIREMENT PLAN


 


401(k) Plan CL2006


 


Restated
March 1, 2008


 


2

















 


TABLE OF CONTENTS


 


	
   

  	
  Page

  
	
   

  	
   

  
	
  INTRODUCTION

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
   

  	
  FORMAT AND DEFINITIONS

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  Section  1.01

  	
  —

  	
  Format

  	
  2

  
	
  Section  1.02

  	
  —

  	
  Definitions

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  	
  PARTICIPATION

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  Section  2.01

  	
  —

  	
  Active Participant

  	
  16

  
	
  Section  2.02

  	
  —

  	
  Inactive Participant

  	
  16

  
	
  Section  2.03

  	
  —

  	
  Cessation of Participation

  	
  16

  
	
  Section  2.04

  	
  —

  	
  Adopting Employers - Single Plan

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  	
  CONTRIBUTIONS

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  Section  3.01

  	
  —

  	
  Employer Contributions

  	
  18

  
	
  Section  3.01A

  	
  —

  	
  Rollover Contributions

  	
  20

  
	
  Section  3.02

  	
  —

  	
  Forfeitures

  	
  21

  
	
  Section  3.03

  	
  —

  	
  Allocation

  	
  22

  
	
  Section  3.04

  	
  —

  	
  Contribution Limitation

  	
  23

  
	
  Section  3.05

  	
  —

  	
  Excess Amounts

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  	
  INVESTMENT OF CONTRIBUTIONS

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  Section  4.01

  	
  —

  	
  Investment and Timing of Contributions

  	
  37

  
	
  Section  4.01A

  	
  —

  	
  Investment in Qualifying Employer Securities

  	
  38

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  	
  BENEFITS

  	
  40

  
	
   

  	
   

  	
   

  	
   

  
	
  Section  5.01

  	
  —

  	
  Retirement Benefits

  	
  40

  
	
  Section  5.02

  	
  —

  	
  Death Benefits

  	
  40

  
	
  Section  5.03

  	
  —

  	
  Vested Benefits

  	
  40

  
	
  Section  5.04

  	
  —

  	
  When Benefits Start

  	
  40

  
	
  Section  5.05

  	
  —

  	
  Withdrawal Benefits

  	
  41

  
	
  Section  5.06

  	
  —

  	
  Distributions Under Qualified Domestic Relations Orders

  	
  42

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
   

  	
  DISTRIBUTION OF BENEFITS

  	
  44

  
	
   

  	
   

  	
   

  	
   

  
	
  Section  6.01

  	
  —

  	
  Automatic Forms of Distribution

  	
  44

  
	
  Section  6.02

  	
  —

  	
  Optional Forms of Distribution

  	
  44

  
	
  Section  6.03

  	
  —

  	
  Election Procedures

  	
  45

  
	
  Section  6.04

  	
  —

  	
  Notice Requirements

  	
  46

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  	
  REQUIRED MINIMUM DISTRIBUTIONS

  	
  47

  
	
   

  	
   

  	
   

  	
   

  
	
  Section  7.01

  	
  —

  	
  Application

  	
  47

  
	
  Section  7.02

  	
  —

  	
  Definitions

  	
  47

  



 


i

















 


	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  Section  7.03

  	
  —

  	
  Required Minimum Distributions

  	
  48

  
	
  Section  7.04

  	
  —

  	
  Transition Rules

  	
  51

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  	
  TERMINATION OF THE PLAN

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
   

  	
  ADMINISTRATION OF THE PLAN

  	
  53

  
	
   

  	
   

  	
   

  	
   

  
	
  Section  9.01

  	
  —

  	
  Administration

  	
  53

  
	
  Section  9.02

  	
  —

  	
  Expenses

  	
  53

  
	
  Section  9.03

  	
  —

  	
  Records

  	
  53

  
	
  Section  9.04

  	
  —

  	
  Information Available

  	
  53

  
	
  Section  9.05

  	
  —

  	
  Claim Procedures

  	
  54

  
	
  Section  9.06

  	
  —

  	
  Delegation of Authority

  	
  55

  
	
  Section  9.07

  	
  —

  	
  Exercise of Discretionary Authority

  	
  55

  
	
  Section  9.08

  	
  —

  	
  Transaction Processing

  	
  55

  
	
  Section  9.09

  	
  —

  	
  Voting and Tender of Qualifying Employer Securities

  	
  56

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
   

  	
  GENERAL PROVISIONS

  	
  57

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 10.01

  	
  —

  	
  Amendments

  	
  57

  
	
  Section 10.02

  	
  —

  	
  Direct Rollovers

  	
  58

  
	
  Section 10.03

  	
  —

  	
  Mergers and Direct
  Transfers

  	
  58

  
	
  Section 10.04

  	
  —

  	
  Provisions Relating to the
  Insurer and Other Parties

  	
  59

  
	
  Section 10.05

  	
  —

  	
  Employment Status

  	
  60

  
	
  Section 10.06

  	
  —

  	
  Rights to Plan Assets

  	
  60

  
	
  Section 10.07

  	
  —

  	
  Beneficiary

  	
  60

  
	
  Section 10.08

  	
  —

  	
  Nonalienation of Benefits

  	
  61

  
	
  Section 10.09

  	
  —

  	
  Construction

  	
  61

  
	
  Section 10.10

  	
  —

  	
  Legal Actions

  	
  61

  
	
  Section 10.11

  	
  —

  	
  Small Amounts

  	
  61

  
	
  Section 10.12

  	
  —

  	
  Word Usage

  	
  62

  
	
  Section 10.13

  	
  —

  	
  Change in Service Method

  	
  62

  
	
  Section 10.14

  	
  —

  	
  Military Service

  	
  64

  
	
  Section 10.15

  	
  —

  	
  Indemnification

  	
  64

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
   

  	
  TOP-HEAVY PLAN REQUIREMENTS

  	
  65

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.01

  	
  —

  	
  Application

  	
  65

  
	
  Section 11.02

  	
  —

  	
  Definitions

  	
  65

  
	
  Section 11.03

  	
  —

  	
  Modification of Vesting Requirements

  	
  67

  
	
  Section 11.04

  	
  —

  	
  Modification of Contributions

  	
  68

  
	
   

  	
   

  	
   

  	
   

  
	
  PLAN EXECUTION

  	
   

  	
   

  	
   

  



 


ii

















 


INTRODUCTION


 


The
Primary Employer previously established a tax deferred retirement plan on October 31,
1986.


 


The
Primary Employer is of the opinion that the plan should be changed.  It believes that the best means to accomplish
these changes is to completely restate the plan’s terms, provisions and
conditions.  The restatement, effective March 1,
2008, is set forth in this document and is substituted in lieu of the prior
document with the exception of any good faith compliance amendment and any
model amendment.  Such amendment(s) shall
continue to apply to this restated plan until such provisions are integrated
into the plan or such amendment(s) are superseded by another amendment.


 


The
restated plan continues to be for the exclusive benefit of employees of the
Employer.  All persons covered under the
plan on February 29, 2008, shall continue to be covered under the restated
plan with no loss of benefits.


 


It
is intended that the plan, as restated, shall qualify as a profit sharing plan
under the Internal Revenue Code of 1986, including any later amendments to the
Code.


 


This
plan includes the statutory, regulatory, and guidance changes specified in the
2006 Cumulative List of Changes in Plan Qualification Requirements (2006
Cumulative List) contained in Internal Revenue Service Notice 2007-3 and the
qualification requirements and guidance published before the issuance of such
list.  The provisions of this plan apply
as of the effective date of the restatement unless otherwise specified.


 


1

















 


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 Plan Fund.  Separate accounting records are kept for
those parts of his Account that result from:


 


(a)                          Pre-tax Elective Deferral Contributions


 


(b)                         Roth Elective Deferral Contributions


 


(c)                          Matching Contributions


 


(d)                         Qualified Nonelective Contributions


 


(e)                          Rollover Contributions


 


A
Participant’s Account shall be reduced by any distribution of his Vested
Account and by any Forfeitures.  A
Participant’s Account shall 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 Annuity Contract or other investment
arrangement and to any expenses associated therewith.


 


ACP Test means the nondiscrimination test described in Code Section 401(m)(2) as
provided for in subparagraph (d) of the EXCESS AMOUNTS SECTION of Article III.


 


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.


 


Adopting Employer means an employer which is a Controlled Group member and which is
listed in the ADOPTING EMPLOYERS - SINGLE PLAN SECTION of Article II.


 


ADP Test means the nondiscrimination test described in Code Section 401(k)(3) as
provided for in subparagraph (c) of the EXCESS AMOUNTS SECTION of Article III.


 


Affiliated Service Group means any group of corporations, partnerships
or other organizations of which the Employer is a part and which is affiliated
within the meaning of Code Section 414(m) and the regulations
thereunder.  Such a group includes at
least two organizations one of which is either a service organization (that is,
an organization the principal business of which is performing services), or an
organization the principal business of which is performing management functions
on a regular and continuing basis.  Such
service is of a type historically performed by employees.  In the case of a management organization, the
Affiliated Service Group shall include organizations related, within the
meaning of Code Section 144(a)(3), to either the


 


2

















 


management
organization or the organization for which it performs management
functions.  The term Controlled Group, as
it is used in this Plan, shall include the term Affiliated Service Group.


 


Alternate Payee means any spouse, former spouse, child, or other dependent of a
Participant who is recognized by a qualified domestic relations order as having
a right to receive all, or a portion of, the benefits payable under the Plan
with respect to such Participant.


 


Annual Compensation means, for a Plan Year, the Employee’s Compensation for the
Compensation Year ending with or within the consecutive 12-month period ending
on the last day of the Plan Year.


 


Annual
Compensation shall exclude Compensation for the portion of the Compensation
Year in which an Employee is not an Active Participant.


 


Annuity Contract means the annuity contract or contracts into which the Trustee or the
Primary Employer enters with the Insurer for guaranteed benefits, for the
investment of Contributions in separate accounts, and for the payment of
benefits under this Plan.


 


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 the Plan when the Participant dies.  See the BENEFICIARY SECTION of Article X.


 


Catch-up Contributions means Elective Deferral Contributions made to
the Plan that are in excess of an otherwise applicable Plan limit and that are
made by Participants who are age 50 or older by the end of the taxable
year.  An otherwise applicable Plan limit
is a limit in the Plan that applies to Elective Deferral Contributions without
regard to Catch-up Contributions, such as the limits on the Maximum Annual
Additions, as defined in the CONTRIBUTION LIMITATION SECTION of Article III,
the dollar limitation on Elective Deferral Contributions under Code Section 402(g) (not
counting Catch-up Contributions), and the limit imposed by the ADP Test.


 


Catch-up
Contributions are not subject to the limits on the Maximum Annual Additions, as
defined in the CONTRIBUTION LIMITATION SECTION of Article III, are
not counted in the ADP Test, and are not counted in determining the minimum
allocation under Code Section 416 (but Catch-up Contributions made in
prior years are counted in determining whether the Plan is top-heavy).


 


Claimant means any person who makes a claim for benefits under this Plan.  See the CLAIM PROCEDURES SECTION of Article IX.


 


Code
means the Internal Revenue Code of 1986, as amended.


 


Compensation means, except for purposes of the CONTRIBUTION LIMITATION SECTION of
Article III and Article XI, the total earnings, except as modified in
this definition, from the Employer during any specified period.


 


“Earnings”
in this definition means wages 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
any Self-employed Individual, Compensation means Earned Income.


 


3

















 


Except
as provided herein, Compensation for a specified period is the Compensation
actually paid or made available (or if earlier, includible in gross income)
during such period.


 


For
Plan Years beginning on or after January 1, 2005, Compensation for a Plan
Year shall also include Compensation paid by the later of 2 1/2 months
after an Employee’s Severance from Employment with the Employer maintaining the
Plan or the end of the Plan Year that includes the date of the Employee’s
Severance from Employment with the Employer maintaining the Plan, if the
payment is regular Compensation for services during the Employee’s regular
working hours, or Compensation for services outside the Employee’s regular
working hours (such as overtime or shift differential), commissions, bonuses,
or other similar payments, and, absent a Severance from Employment, the
payments would have been paid to the Employee while the Employee continued in
employment with the Employer.


 


Any
payments not described above shall not be considered Compensation if paid after
Severance from Employment, even if they are paid by the later of 2 1/2 months
after the date of Severance from Employment or the end of the Plan Year that
includes the date of Severance from Employment, except, payments to an
individual who does not currently perform services for the Employer by reason
of qualified military service (within the meaning of Code Section 414(u)(1))
to the extent these payments do not exceed the amounts the individual would
have received if the individual had continued to perform services for the
Employer rather than entering qualified military service.


 


Back
pay, within the meaning of section 1.415(c)-2(g)(8) of the regulations,
shall be treated as Compensation for the Plan Year to which the back pay
relates to the extent the back pay represents wages and compensation that would
otherwise be included in this definition.


 


Compensation
paid or made available during a specified period shall include amounts that
would otherwise be included in Compensation but for an election under Code Section 125(a),
132(f)(4), 402(e)(3), 402(h)(1)(B), 402(k), or 457(b).


 


For
purposes of determining the allocation or amount of


 


Elective
Deferral Contributions


 


Compensation
shall exclude the following:


 


severance
pay


 


For
purposes of the EXCESS AMOUNTS SECTION of Article III, the Employer
may elect to use an alternative nondiscriminatory definition of Compensation in
accordance with the regulations under Code Section 414(s).


 


For
Plan Years beginning on or after January 1, 2002, the annual Compensation
of each Participant taken into account in determining contributions and
allocations for any determination period (the period over which Compensation is
determined) shall not exceed $200,000, as adjusted for cost-of-living increases
in accordance with Code Section 401(a)(17)(B).  The cost-of-living adjustment in effect for a
calendar year applies to any determination period beginning with or within such
calendar year.


 


If
a determination period consists of fewer than 12 months, the annual
compensation limit is an amount equal to the otherwise applicable annual
compensation limit multiplied by a fraction. 
The numerator of the fraction is the number of months in the short
determination period, and the denominator of the fraction is 12.


 


4

















 


If
Compensation for any prior determination period is taken into account in
determining a Participant’s contributions or allocations for the current Plan
Year, the Compensation for such prior determination period is subject to the
applicable annual compensation limit in effect for that determination
period.  For this purpose, in determining
contributions and allocations in Plan Years beginning on or after January 1,
2002, the annual compensation limit in effect for determination periods
beginning before that date is $200,000.


 


Compensation
means, for a Leased Employee, Compensation for the services the Leased Employee
performs for the Employer, determined in the same manner as the Compensation of
Employees who are not Leased Employees, regardless of whether such Compensation
is received directly from the Employer or from the leasing organization.


 


Compensation Year means the consecutive 12-month period ending on the last day of each
Plan Year, including corresponding periods before October 31, 1986.


 


Contributions means Employer Contributions and Rollover Contributions as set out in Article III,
unless the context clearly indicates only specific contributions are meant.


 


Controlled Group means any group of corporations, trades, or businesses of which the
Employer is a part that is under common control.  A Controlled Group includes any group of
corporations, trades, or businesses, whether or not incorporated, which is
either a parent-subsidiary group, a brother-sister group, or a combined group
within the meaning of Code Section 414(b), Code Section 414(c) and
the regulations thereunder and, for purposes of determining contribution
limitations under the CONTRIBUTION LIMITATION SECTION of Article III,
as modified by Code Section 415(h). 
The term Controlled Group, as it is used in this Plan, shall include the
term Affiliated Service Group and any other employer required to be aggregated
with the Employer under Code Section 414(o) and the regulations
thereunder.


 


Direct Rollover means a payment by the Plan to the Eligible Retirement Plan specified
by the Distributee.


 


Distributee means an Employee or former Employee. 
In addition, the Employee’s (or former Employee’s) surviving spouse and
the Employee’s (or former Employee’s) spouse or former spouse who is the
alternate payee under a qualified domestic relations order, as defined in Code Section 414(p),
are Distributees with regard to the interest of the spouse or former spouse.


 


Earned Income means, for a Self-employed Individual, net earnings from self-employment
in the trade or business for which this Plan is established if such
Self-employed Individual’s personal services are a material income producing
factor for that trade or business.  Net
earnings shall be determined without regard to items not included in gross
income and the deductions properly allocable to or chargeable against such
items.  Net earnings shall be reduced for
the employer contributions to the employer’s qualified retirement plan(s) to
the extent deductible under Code Section 404.


 


Net
earnings shall be determined with regard to the deduction allowed to the
employer by Code Section 164(f) for taxable years beginning after December 31,
1989.


 


Elective Deferral Contributions means contributions made by the Employer to
fund this Plan in accordance with elective deferral agreements between Eligible
Employees and the Employer.


 


Elective
deferral agreements shall be made, changed, or terminated according to the
provisions of the EMPLOYER CONTRIBUTIONS SECTION of Article III.


 


Elective
Deferral Contributions shall be 100% vested and subject to the distribution
restrictions of Code Section 401(k) when made.  See the WHEN BENEFITS START SECTION of Article V.


 


5

















 


Elective
Deferral Contributions means Pre-tax Elective Deferral Contributions and Roth
Elective Deferral Contributions, unless the context clearly indicates only one
is meant.


 


Eligible Employee means any Employee of the Employer excluding the following:


 


Bargaining
class.  Represented for collective
bargaining purposes by any collective bargaining agreement between the Employer
and employee representatives, if retirement benefits were the subject of good
faith bargaining and if two percent or less of the Employees who are covered
pursuant to that agreement are professionals as defined in section 1.410(b)-9
of the regulations.  For this purpose,
the term “employee representatives” does not include any organization more than
half of whose members are Employees who are owners, officers, or executives of
the Employer.  However, this exclusion
shall not apply if the collective bargaining agreement specifically provides
for participation under this Plan.


 


Leased
Employee.


 


An
Employee considered by the Employer to be an independent contractor, or the
employee of an independent contractor, who is later determined by the Internal
Revenue Service to be an Employee.


 


Eligible Retirement Plan means an eligible plan under Code Section 457(b) which
is maintained by a state, political subdivision of a state, or any agency or
instrumentality of a state or political subdivision of a state and which agrees
to separately account for amounts transferred into such plan from this Plan, 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), an annuity contract described in
Code Section 403(b), or a qualified plan described in Code Section 401(a),
that accepts the Distributee’s Eligible Rollover Distribution.  The definition of Eligible Retirement Plan
shall also apply in the case of a distribution to a surviving spouse, or to a
spouse or former spouse who is the Alternate Payee under a qualified domestic
relations order, as defined in Code Section 414(p).


 


For
taxable years beginning on or after January 1, 2006, if any portion of an
Eligible Rollover Distribution is attributable to payments or distributions
from a designated Roth account, an Eligible Retirement Plan with respect to
such portion shall include only (i) another designated Roth account of the
individual from whose Account the payments or distributions were made under an
annuity plan described in Code Section 403(a) or a qualified plan
described in Code Section 401(a); (ii) another designated Roth
account of such individual under an annuity plan described in Code Section 403(b);
or (iii) a Roth IRA described in Code Section 408A of such
individual.


 


Eligible Rollover Distribution means 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:  (i) 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; (ii) any distribution to the extent such
distribution is required under Code Section 401(a)(9); (iii) any
hardship distribution; (iv) the portion of any other distribution(s) that
is not includible in gross income (determined without regard to the exclusion
for net unrealized appreciation with respect to employer securities); and (v) any
other distribution(s) that is reasonably expected to total less than $200
during a year.


 


A
portion of a distribution shall not fail to be an Eligible Rollover
Distribution merely because the portion consists of after-tax employee contributions
that are not includible in gross income. 
However, such portion may be transferred only to an individual
retirement account or individual retirement annuity described in Code Section 408(a) or
(b), or to a qualified defined contribution plan described in Code Section 401(a) or
403(a) that


 


6

















 


agrees
to separately account for amounts so transferred, including separately
accounting for the portion of such distribution which is includible in gross
income and the portion of such distribution which is not so includible.


 


A
portion of a distribution shall not fail to be an Eligible Rollover
Distribution merely because the portion consists of the portion of a designated
Roth account that is not includible in a Participant’s gross income.  However, for taxable years beginning on or
after January 1, 2006, such portion may be transferred only to a Roth IRA
described in Code Section 408A or to a designated Roth account under
another plan that agrees to separately account for amounts so transferred,
including separately accounting for the portion of such distribution which is
includible in gross income and the portion of such distribution which is not so
includible.


 


If
the distribution includes any portion of a designated Roth account, in
determining if (v) above applies: (i) any portion of the distribution
from the designated Roth account shall not be treated as an Eligible Rollover
Distribution if it is reasonably expected to total less than $200 during a year
and (ii) the balance of the distribution, if any, shall not be treated as
an Eligible Rollover Distribution if it is reasonably expected to total less
than $200 during a year.  In addition,
for taxable years beginning on or after January 1, 2006, a designated Roth
account and all other accounts under the Plan shall be treated as accounts held
under two separate plans and shall not be combined in determining a mandatory
distribution of an Eligible Rollover Distribution greater than $1,000 in the
DIRECT ROLLOVERS SECTION of Article X.


 


Employee means an individual who is employed by the Employer or any other
employer required to be aggregated with the Employer under Code Sections
414(b), (c), (m), or (o).  A Controlled
Group member is required to be aggregated with the Employer.


 


The
term Employee shall include any Self-employed Individual treated as an employee
of any employer described in the preceding paragraph as provided in Code Section 401(c)(1).  The term Employee shall also include any
Leased Employee deemed to be an employee of any employer described in the
preceding paragraph as provided in Code Section 414(n) or (o).


 


Employer means, except for purposes of the CONTRIBUTION LIMITATION SECTION of
Article III, the Primary Employer. 
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 Employer that maintained this Plan.


 


Employer Contributions means


 


Elective
Deferral Contributions


Matching
Contributions


Qualified
Nonelective Contributions


 


as
set out in Article III and contributions made by the Employer to fund this
Plan in accordance with the provisions of the MODIFICATION OF CONTRIBUTIONS SECTION of
Article XI, unless the context clearly indicates only specific
contributions are meant.


 


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.


 


Fiscal Year means the Primary Employer’s taxable year.  The last day of the Fiscal Year is December 31.


 


7
















 


Forfeiture means the
part, if any, of a Participant’s Account that is forfeited.  See the FORFEITURES SECTION of Article III.


 


Forfeiture Date
means, as to a Participant, the date the Participant incurs five consecutive
Vesting Breaks in Service.


 


Governing Board
means the Chief Executive Officer and Chief Financial Officer of the Primary
Employer.


 


Highly Compensated Employee
means any Employee who:


 


(a)                        was a
5-percent owner at any time during the year or the preceding year, or


 


(b)                       for the
preceding year had compensation from the Employer in excess of $80,000 and, if
the Employer so elects, was in the top-paid group for the preceding year.  The $80,000 amount is adjusted at the same
time and in the same manner as under Code Section 415(d), except that the
base period is the calendar quarter ending September 30, 1996.


 


For this purpose the applicable
year of the plan for which a determination is being made is called a
determination year and the preceding 12-month period is called a look-back
year.  If the Employer makes a calendar
year data election, the look-back year shall be the calendar year beginning
with or within the look-back year.  The
Plan may not use such election to determine whether Employees are Highly Compensated
Employees on account of being a 5-percent owner.


 


In determining who is a Highly Compensated
Employee, the Employer makes a top-paid group election.  The effect of this election is that an
Employee (who is not a 5-percent owner at any time during the determination year
or the look-back year) with compensation in excess of $80,000 (as adjusted) for
the look-back year is a Highly Compensated Employee only if the Employee was in
the top-paid group for the look-back year. 
In determining who is a Highly Compensated Employee, the Employer does
not make a calendar year data election.


 


Calendar year data elections and
top-paid group elections, once made, apply for all subsequent years unless
changed by the Employer.  If the Employer
makes one election, the Employer is not required to make the other.  If both elections are made, the look-back
year in determining the top-paid group must be the calendar year beginning with
or within the look-back year.  These
elections must apply consistently to the determination years of all plans
maintained by the Employer which reference the highly compensated employee
definition in Code Section 414(q), except as provided in Internal Revenue
Service Notice 97-45 (or superseding guidance).


 


The determination of who is a
highly compensated former Employee is based on the rules applicable to
determining Highly Compensated Employee status as in effect for that
determination year, in accordance with section 1.414(q)-1T, A-4 of the
temporary Income Tax Regulations and Internal Revenue Service Notice 97-45.


 


The determination of who is a Highly
Compensated Employee, including the determinations of the number and identity
of Employees in the top-paid group, the compensation that is considered, and
the identity of the 5-percent owners, shall be made in accordance with Code Section 414(q) and
the regulations thereunder.


 


Hour of Service
means the following:


 


(a)                        Each hour
for which an Employee is paid, or entitled to payment, for performing duties
for the Employer during the applicable computation period.


 


8

















 


(b)                       Each hour for which an Employee is paid, or entitled
to payment, by the Employer on account of a period of time in which no duties
are performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or leave of absence.  Notwithstanding the preceding provisions of
this subparagraph (b), no credit will be given to the Employee:


 


(1)                        for more
than 501 Hours of Service under this subparagraph (b) on account of any
single continuous period in which the Employee performs no duties (whether or
not such period occurs in a single computation period); or


 


(2)                        for an
Hour of Service for which the Employee is directly or indirectly paid, or
entitled to payment, on account of a period in which no duties are performed if
such payment is made or due under a plan maintained solely for the purpose of
complying with applicable worker’s or workmen’s compensation, or unemployment
compensation, or disability insurance laws; or


 


(3)                        for an
Hour of Service for a payment which solely reimburses the Employee for medical
or medically related expenses incurred by him.


 


For purposes of this subparagraph (b), 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.


 


(c)                        Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by the Employer.  The same Hours of Service shall not be
credited both under subparagraph (a) or subparagraph (b) above (as
the case may be) and under this subparagraph (c).  Crediting of Hours of Service for back pay
awarded or agreed to with respect to periods described in subparagraph (b) above
will be subject to the limitations set forth in that subparagraph.


 


The crediting of Hours of Service
above shall be applied under the rules of paragraphs (b) and (c) of
the Department of Labor Regulation 2530.200b-2 (including any interpretations
or opinions implementing such rules); which rules, by this reference, are
specifically incorporated in full within this Plan.  The


 


reference to paragraph (b) applies
to the special rule for determining hours of service for reasons other
than the performance of duties such as payments calculated (or not calculated)
on the basis of units of time and the rule against double credit.  The reference to paragraph (c) applies
to the crediting of hours of service to computation periods.


 


Hours of Service shall be credited for
employment with any other employer required to be aggregated with the Employer
under Code Sections 414(b), (c), (m), or (o) and the regulations
thereunder for purposes of eligibility and vesting.  Hours of Service shall also be credited for
any individual who is considered an employee for purposes of this Plan pursuant
to Code Section 414(n) or (o) and the regulations thereunder.


 


Solely for purposes of determining whether a
one-year break in service has occurred for eligibility or vesting purposes,
during a Parental Absence an Employee shall be credited with the Hours of
Service which would otherwise have been credited to the Employee but for such
absence, or in any case in which such hours cannot be determined, eight Hours
of Service per day of such absence.  The
Hours of Service credited under this paragraph shall be credited in the
computation period in which the absence begins if the crediting is necessary to
prevent a break in service in that period; or in all other cases, in the
following computation period.


 


9

















 


Inactive Participant
means a former Active Participant who has an Account.  See the INACTIVE PARTICIPANT SECTION of Article II.


 


Insurer means
Principal Life Insurance Company or the insurance company or companies named by
(i) the Primary Employer or (ii) the Trustee in its discretion or as
directed under the Trust Agreement.


 


Investment Fund
means the total of Plan assets, excluding the guaranteed benefit policy portion
of any Annuity Contract.  All or a
portion of these assets may be held under, or invested pursuant to, the terms
of a Trust Agreement.


 


The Investment Fund shall be valued
at current fair market value as of the Valuation Date.  The valuation shall take into consideration
investment earnings credited, expenses charged, payments made, and changes in
the values of the assets held in the Investment Fund.


 


The Investment Fund shall be allocated at all
times to Participants, except as otherwise expressly provided in the Plan.  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 that establishes one or more accounts or investment
vehicles for such Participant thereunder shall be credited with the gain or
loss from such accounts or investment vehicles. 
The part of a Participant’s Account that 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.


 


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;


 


(b)                       who (i) is
registered as an investment adviser under the Investment Advisers Act of 1940; (ii) is
not registered as an investment adviser under such Act by reason of paragraph (1) of
section 203A(a) of such Act, is registered as an investment adviser under
the laws of the state (referred to in such paragraph (1)) in which it maintains
its principal office and place of business, and, at the time it last filed the
registration form most recently filed by it with such state in order to
maintain its registration under the laws of such state, also filed a copy of
such form with the Secretary of Labor; (iii) is a bank, as defined in that
Act; or (iv) 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 any day that 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 day he has a Severance from
Employment.  An earlier Retirement Date
may apply if the Participant so elects. 
A later Retirement Date may apply if the Participant so elects.  See the WHEN BENEFITS START SECTION of Article V.


 


Leased Employee
means any person (other than an employee of the recipient) who, pursuant to an
agreement between the recipient and any other person (“leasing organization”),
has performed services 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 performed under primary direction or control by the recipient.  Contributions or benefits provided by the
leasing organization to a Leased 


 


10

















 


Employee, which are attributable to service
performed for the recipient employer, shall be treated as provided by the
recipient employer.


 


A Leased Employee shall not be considered an
employee of the recipient if:


 


(a)                        such
employee is covered by a money purchase pension plan providing (i) a
nonintegrated employer contribution rate of at least 10 percent of
compensation, as defined in Code Section 415(c)(3), (ii) immediate
participation, and (iii) full and immediate vesting, and


 


(b)                       Leased
Employees do not constitute more than 20 percent of the recipient’s nonhighly
compensated work force.


 


Matching Contributions
means contributions made by the Employer to fund this Plan that are contingent
on a Participant’s Elective Deferral Contributions.  See the EMPLOYER CONTRIBUTIONS SECTION of
Article III.


 


Named Fiduciary means the person or persons appointed by
the Governing Board who have authority to control and manage the investment of
the assets of the Plan.  To the extent
the authority has not been delegated, the Named Fiduciary shall be the
Governing Board.  A Named Fiduciary has
the authority to appoint an Investment Manager to have investment
responsibility for a portion of the assets of the Plan as identified by the
Named Fiduciary.


 


Nonhighly Compensated Employee means an
Employee of the Employer who is not a Highly Compensated Employee.


 


Nonvested Account means the
excess, if any, of a Participant’s Account over his Vested Account.


 


Normal Retirement Age means the
age at which the Participant’s normal retirement benefit becomes nonforfeitable
if he is an Employee.  A Participant’s
Normal Retirement Age is 59 1/2.


 


Normal Retirement Date means the
date the Participant reaches his Normal Retirement Age.  Unless otherwise provided in this Plan, a
Participant’s retirement benefits shall begin on his Normal Retirement Date if
he has had a Severance from Employment on such date.  However, retirement benefits shall not begin
before the older of age 62 or his Normal Retirement Age, unless the qualified
election procedures of the ELECTION PROCEDURES SECTION of Article VI
are met.  Even if the Participant is an
Employee on his Normal Retirement Date, he may choose to have his retirement
benefit begin on such date.


 


Owner-employee means a Self-employed Individual who, in
the case of a sole proprietorship, owns the entire interest in the
unincorporated trade or business for which this Plan is established.  If this Plan is established for a
partnership, an Owner-employee means a Self-employed Individual who owns more
than 10 percent of either the capital interest or profits interest in such
partnership.


 


Parental Absence means an Employee’s absence from work:


 


(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


 


11

















 


(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 Military Duty means, for
an Employee


 


(a)                        who served
as a member of the armed forces of the United States, and


 


(b)                       who was
reemployed by the Employer at a time when the Employee had a right to
reemployment in accordance with seniority rights as protected under Chapter 43
of Title 38 of the U.S. Code,


 


the
period of time from the date the Employee was first absent from active work for
the Employer because of such military duty to the date the Employee was
reemployed.


 


Plan means the tax deferred 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 Governing Board. 
The Governing Board has authority to delegate to other person or persons
any part or all of the duties of Plan Administrator.


 


Plan Fund means the total of the Investment Fund
and the guaranteed benefit policy portion of any Annuity Contract.  The Investment Fund shall be valued as stated
in its definition.  The guaranteed benefit
policy portion of any Annuity Contract shall be determined in accordance with
the terms of the Annuity Contract and, to the extent that such Annuity Contract
allocates contract values to Participants, allocated to Participants in
accordance with its terms.  The total
value of all amounts held under the Plan Fund shall equal the value of the
aggregate Participants’ Accounts under the Plan.


 


Plan Year means a period beginning on a Yearly
Date and ending on the day before the next Yearly Date.


 


Predecessor Employer means a
firm of which the Employer was once a part (e.g., due to a spinoff or change of
corporate status) or a firm absorbed by the Employer because of a merger or
acquisition (stock or asset, including a division or an operation of such
company).


 


Pre-tax Elective Deferral Contributions means a
Participant’s Elective Deferral Contributions that are not includible in the
Participant’s gross income at the time deferred.


 


Primary Employer means Nature’s Sunshine Products, Inc.


 


Qualified Nonelective Contributions means
contributions made by the Employer to fund this Plan (other than Elective
Deferral Contributions) that are 100% vested when made to the Plan and that are
distributable only in accordance with the distribution provisions (other than for
hardships) applicable to Elective Deferral Contributions. See the EMPLOYER
CONTRIBUTIONS SECTION of Article III and the WHEN BENEFITS START SECTION of
Article V.


 


Qualifying Employer Securities means any
security which is issued by the Employer or any Controlled Group member and
which meets the requirements of Code Section 409(l) and ERISA Section 407(d)(5).  This shall also include any securities that
satisfied the requirements of the definition when these securities were
assigned to the Plan.


 


12

















 


Qualifying Employer Securities Fund means that
part of the assets of the Trust Fund that are designated to be held primarily
or exclusively in Qualifying Employer Securities for the purpose of providing
benefits for Participants.


 


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.


 


Rollover Contributions means the
Rollover Contributions which are made by an Eligible Employee or an Inactive
Participant according to the provisions of the ROLLOVER CONTRIBUTIONS SECTION of
Article III.


 


Roth Elective Deferral Contributions
means a Participant’s Elective Deferral Contributions that are not excludible
from the Participant’s gross income at the time deferred and have been
irrevocably designated as Roth Elective Deferral Contributions by the
Participant in his elective deferral agreement. 
Whether an Elective Deferral Contribution is not excludible from a
Participant’s gross income will be determined in accordance with section
1.401(k)-1(f)(2) of the regulations. 
In the case of a Self-employed Individual, an Elective Deferral
Contribution is not excludible from gross income only if the individual does
not claim a deduction for such amount.


 


Self-employed Individual means, with
respect to any taxable year, an individual who has Earned Income for the
taxable year (or who would have Earned Income but for the fact the trade or
business for which this Plan is established did not have net profits for such
taxable year).


 


Severance from Employment means,
except for purposes of the CONTRIBUTION LIMITATION SECTION of Article III,
an Employee has ceased to be an Employee. 
The Plan Administrator shall determine if a Severance from Employment
has occurred in accordance with section 1.401(k)-1(d)(2) of the
regulations.


 


Totally and Permanently Disabled means that
a Participant meets the definition of disabled under the Employer’s long-term
disability plan.


 


Trust Agreement means an agreement or agreements of
trust between the Primary Employer and Trustee established for the purpose of
holding and distributing the Trust Fund under the provisions of the Plan.  The Trust Agreement may provide for the
investment of all or any portion of the Trust Fund in the Annuity Contract or
any other investment arrangement.


 


Trust Fund means the total funds held under an
applicable Trust Agreement.  The term
Trust Fund when used within a Trust Agreement shall mean only the funds held
under that Trust Agreement.


 


Trustee means the party or parties named in the
applicable Trust Agreement.


 


Valuation Date means the date on which the value of the
assets of the Investment Fund is determined. 
The value of each Account that is maintained under this Plan shall be
determined on the Valuation Date.  In
each Plan Year, the Valuation Date shall be the last day of the Plan Year.  At the discretion of the Plan Administrator,
Trustee, or Insurer (whichever applies) and in a nondiscriminatory manner,
assets of the Investment Fund may be valued more frequently.  These dates shall also be Valuation Dates.


 


Vested Account means the vested part of a Participant’s
Account.  The Participant’s Vested
Account is equal to that part of his Account resulting from Contributions that
were 100% vested when made before his Vesting Percentage is 100% and is equal
to his Account when his Vesting Percentage is 100%.


 


13

















 


Vesting Break in Service means a
Vesting Computation Period in which an Employee is credited with 500 or fewer
Hours of Service.  An Employee incurs a
Vesting Break in Service on the last day of a Vesting Computation Period in
which he has a Vesting Break in Service.


 


Vesting Computation Period means a
consecutive 12-month period ending on the last day of each Plan Year, including
corresponding consecutive 12-month periods before October 31, 1986.


 


Vesting Percentage means the
percentage used to determine the nonforfeitable portion of a Participant’s
Account attributable to Employer Contributions that were not 100% vested when
made.


 


A
Participant’s Vesting Percentage is shown in the following schedule opposite
the number of whole years of his Vesting Service.


 




	
  VESTING SERVICE

  	
   

  	
  VESTING

  	
   

  
	
  (whole years)

  	
   

  	
  PERCENTAGE

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Less than 3

  	
   

  	
  0

  	
   

  
	
  3 or more

  	
   

  	
  100

  	
   

  






 


The
Vesting Percentage for a Participant who is an Employee on or after the date he
reaches Normal Retirement Age shall be 100%. 
The Vesting Percentage for a Participant who is an Employee on the date
he dies shall be 100%.  The Vesting
Percentage for a Participant who is an Employee on the date he becomes disabled
shall be 100% if such disability is subsequently determined to meet the
definition of Totally and Permanently Disabled.


 


If
the schedule used to determine a Participant’s Vesting Percentage is changed,
the new schedule shall not apply to a Participant unless he is credited with an
Hour of Service on or after the date of the change and the Participant’s
nonforfeitable percentage on the day before the date of the change is not
reduced under this Plan.  The amendment
provisions of the AMENDMENTS SECTION of Article X regarding changes
in the computation of the Vesting Percentage shall apply.


 


Vesting Service means one year of service for each
Vesting Computation Period in which an Employee is credited with at least 1,000
Hours of Service.


 


However,
Vesting Service is modified as follows:


 


Period
of Military Duty included:


 


A
Period of Military Duty shall be included as service with the Employer to the
extent it has not already been credited. 
For purposes of crediting Hours of Service during the Period of Military
Duty, an Hour of Service shall be credited (without regard to the 501 Hour of
Service limitation) for each hour an Employee would normally have been
scheduled to work for the Employer during such period.


 


Controlled
Group service included:


 


An
Employee’s service with a member firm of a Controlled Group while both that
firm and the Employer were members of the Controlled Group shall be included as
service with the Employer.


 


Yearly Date means October 31, 1986, and each
following January 1.


 


14

















 


Years of Service means an Employee’s Vesting Service disregarding any modifications that
exclude service.


 


15

















 


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 date on which he is an
Eligible Employee and has met the eligibility requirement set forth below.  This date is his Entry Date.


 


(1)                        He
is age 18 or older.


 


Each Employee who was an Active
Participant on February 29, 2008, shall continue to be an Active
Participant if he is still an Eligible Employee on March 1, 2008, and his
Entry Date shall not change.


 


In the event an Employee who is not an
Eligible Employee becomes an Eligible Employee, such Eligible Employee shall
become an Active Participant immediately if such Eligible Employee has
satisfied the eligibility requirements above and would have otherwise
previously become an Active Participant had he met the definition of Eligible
Employee.  This date is his Entry Date.


 


(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 (stop accruing benefits under the Plan) on the earlier of
the following:


 


(a)                        the date
the Participant ceases to be an Eligible Employee, or


 


(b)                       the
effective date of complete termination of the Plan under Article VIII.


 


An Employee or former Employee who was an
Inactive Participant under the Plan on February 29, 2008, shall continue
to be an Inactive Participant on March 1, 2008.  Eligibility for any benefits payable to the
Participant or on his behalf and the amount of the benefits shall be determined
according to the provisions of the prior document, unless otherwise stated in
this document.


 


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 his Account is zero.


 


16

















 


SECTION 2.04—ADOPTING EMPLOYERS - SINGLE
PLAN.


 


Each of the Controlled Group members listed
below is an Adopting Employer.  Each
Adopting Employer listed below participates with the Employer in this
Plan.  An Adopting Employer’s agreement
to participate in this Plan shall be in writing.


 


The Employer has the right to amend the
Plan.  An Adopting Employer does not have
the right to amend the Plan.


 


If the Adopting Employer did not maintain its
plan before its date of adoption specified below, its date of adoption shall be
the Entry Date for any of its Employees who have met the requirements in the
ACTIVE PARTICIPANT SECTION of this article as of that date.  Service with and Compensation from an Adopting
Employer shall be included as service with and Compensation from the
Employer.  Transfer of employment,
without interruption, between an Adopting Employer and another Adopting
Employer or the Employer shall not be considered an interruption of service.  The Employer’s Fiscal Year defined in the
DEFINITIONS SECTION of Article I shall be the Fiscal Year used in
interpreting this Plan for Adopting Employers.


 


Contributions made by an Adopting Employer
shall be treated as Contributions made by the Employer.  Forfeitures arising from those Contributions
shall be used for the benefit of all Participants.


 


An employer shall not be an Adopting Employer
if it ceases to be a Controlled Group member. 
Such an employer may continue a retirement plan for its Employees in the
form of a separate document.  This Plan
shall be amended to delete a former Adopting Employer from the list below.


 


If (i) an employer ceases to be an
Adopting Employer or the Plan is amended to delete an Adopting Employer and (ii) the
Adopting Employer does not continue a retirement plan for the benefit of its
Employees, partial termination may result and the provisions of Article VIII
shall apply.


 


ADOPTING EMPLOYERS


 


	
  NAME

  	
   

  	
  DATE OF ADOPTION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Nature’s Sunshine Products
  Direct, Inc.

  	
   

  	
  December 31,
  2002

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Synergy Worldwide Inc.

  	
   

  	
  October 31,
  2000

  	
   

  



 


17
















 


ARTICLE III


 


CONTRIBUTIONS


 


SECTION 3.01—EMPLOYER CONTRIBUTIONS.


 


Employer
Contributions shall be made without regard to current or accumulated net
income, earnings, or profits of the Employer. 
Notwithstanding the foregoing, the Plan shall continue to be designed to
qualify as a profit sharing plan for purposes of Code Sections 401(a), 402,
412, and 417.  Such Contributions shall
be equal to the Employer Contributions as described below:


 


(a)                          The amount of each Elective Deferral
Contribution for a Participant shall be equal to a portion of Compensation as
specified in the elective deferral agreement. 
An Employee who is eligible to participate in the Plan for purposes of
Elective Deferral Contributions may file an elective deferral agreement with
the Employer.  The Participant shall
modify or terminate the elective deferral agreement by filing a new elective
deferral agreement.  The elective
deferral agreement may not be made retroactively and shall remain in effect
until modified or terminated.


 


The
elective deferral agreement to start or modify Elective Deferral Contributions
shall be effective as soon as administratively feasible on or after the
Participant’s Entry Date (Reentry Date, if applicable) or any following
date.  The elective deferral agreement must
be entered into on or before the date it is effective.


 


The
elective deferral agreement to stop Elective Deferral Contributions may be
entered into on any date.  Such elective
deferral agreement shall be effective as soon as administratively feasible following
the date on which the elective deferral agreement is entered into.


 


Elective
Deferral Contributions for Highly Compensated Employees cannot be more than 5%
of Compensation.  A Participant who is
eligible to make Catch-up Contributions shall not be limited to the maximum
deferral percentage unless his Elective Deferral Contributions, including
Catch-up Contributions, exceed this limit plus the dollar amount of Catch-up
Contributions permitted.


 


A
Participant who is age 50 or older by the end of the taxable year shall be
eligible to make Catch-up Contributions.


 


A
Participant may elect to designate all or any portion of his future Elective
Deferral Contributions as Roth Elective Deferral Contributions.


 


Elective
Deferral Contributions are 100% vested and nonforfeitable.


 


(b)                         The Employer shall make Matching
Contributions in an amount equal to 100% of Elective Deferral
Contributions.  Elective Deferral
Contributions that are over 5% of Compensation won’t be matched.


 


Matching
Contributions are calculated based on Elective Deferral Contributions and
Compensation for the payroll period. 
Matching Contributions are made for all persons who were Active
Participants at any time during that payroll period.


 


Matching
Contributions are subject to the Vesting Percentage.


 


18

















 


(c)                          Qualified Nonelective Contributions may be
made for each Plan Year in an amount determined by the Employer.


 


Discretionary
Qualified Nonelective Contributions may be made for each Plan Year in an amount
determined by the Employer to be used to reduce Excess Aggregate Contributions
and Excess Contributions, as defined in the EXCESS AMOUNTS SECTION of this
article. If the Plan is treated as separate plans because it is mandatorily
disaggregated under the regulations of Code Section 401(k), a separate
Qualified Nonelective Contribution may be determined for each separate
plan.  Such Contributions are in addition
to the Qualified Nonelective Contributions determined above, if any.


 


Qualified
Nonelective Contributions are 100% vested and are distributable only in
accordance with the distribution provisions (other than for hardships)
applicable to Elective Deferral Contributions.


 


No
Participant shall be permitted to have Elective Deferral Contributions, as
defined in the EXCESS AMOUNTS SECTION of this article, made under this
Plan, or any other plan, contract, or arrangement maintained by the Employer,
during any calendar year, in excess of the dollar limitation contained in Code Section 402(g) in
effect for the Participant’s taxable year beginning in such calendar year.  The dollar limitation in the preceding
sentence shall be increased by the dollar limit on Catch-up Contributions under
Code Section 414(v)(2)(B)(i) for the taxable year for any Participant
who will be age 50 or older by the end of the taxable year.


 


The
dollar limitation contained in Code Section 402(g) is $10,500 for
taxable years beginning in 2000 and 2001, increasing to $11,000 for taxable
years beginning in 2002, and increasing by $1,000 for each year thereafter up
to $15,000 for taxable years beginning in 2006 and later years.  After 2006, the $15,000 limit will be
adjusted by the Secretary of the Treasury for cost-of-living increases under
Code Section 402(g)(4).  Any such adjustments
will be in multiples of $500.


 


Catch-up
Contributions for a Participant for a taxable year may not exceed the dollar
limit on Catch-up Contributions under Code Section 414(v)(2)(B)(i) for
the taxable year.  The dollar limit on
Catch-up Contributions under Code Section 414(v)(2)(B)(i) is $1,000
for taxable years beginning in 2002, increasing by $1,000 for each year
thereafter up to $5,000 for taxable years beginning in 2006 and later
years.  After 2006, the $5,000 limit will
be adjusted by the Secretary of the Treasury for cost-of-living increases under
Code Section 414(v)(2)(C).  Any such
adjustments will be in multiples of $500.


 


An
elective deferral agreement (or change thereto) must be made in such manner and
in accordance with such rules as the Employer may prescribe in a
nondiscriminatory manner (including by means of voice response or other
electronic system under circumstances the Employer permits) and may not be made
retroactively.


 


Employer
Contributions are allocated according to the provisions of the ALLOCATION SECTION of
this article.


 


A
portion of the Plan assets resulting from Employer Contributions (but not more
than the original amount of those Contributions) may be returned if the
Employer Contributions are made because of a mistake of fact or are more than
the amount deductible under Code Section 404 (excluding any amount which
is not deductible because the Plan is disqualified).  The amount involved must be returned to the
Employer within one year after the date the Employer Contributions are made by
mistake of fact or the date the deduction is disallowed, whichever
applies.  Except as provided under this
paragraph and Article VIII, the assets of the Plan shall never be used for
the benefit of the Employer and are held for the exclusive purpose of providing
benefits to Participants and their Beneficiaries and for defraying reasonable
expenses of administering the Plan.


 


19

















 


SECTION 3.01A—ROLLOVER CONTRIBUTIONS.


 


A
Rollover Contribution may be made by an Eligible Employee or Inactive
Participant if the following conditions are met:


 


(a)                          The Contribution is a Participant Rollover
Contribution or a direct rollover of a distribution made after December 31,
2001 from the types of plans specified below. 
A Participant Rollover Contribution or a direct rollover of a
distribution from a designated Roth account applies only to distributions made
in taxable years beginning on or after January 1, 2006.


 


Direct
Rollovers.  The Plan will accept a direct rollover of an
Eligible Rollover Distribution from (i) a qualified plan described in Code
Section 401(a) or 403(a), including after-tax employee contributions
and any portion of a designated Roth account; (ii) an annuity contract
described in Code Section 403(b), including after-tax employee
contributions and any portion of a designated Roth account; and (iii) an
eligible plan under Code Section 457(b) which is maintained by a
state, political subdivision of a state, or any agency or instrumentality of a
state or political subdivision of a state.


 


Participant
Rollover Contributions from Other Plans.  The
Plan will accept a Participant contribution of an Eligible Rollover
Distribution from (i) a qualified plan described in Code Section 401(a) or
403(a), including distributions of a designated Roth account only to the extent
such amount would otherwise be includible in a Participant’s gross income; (ii) an
annuity contract described in Code Section 403(b), including distributions
of a designated Roth account only to the extent such amount would otherwise be
includible in a Participant’s gross income; and (iii) an eligible plan
under Code Section 457(b) which is maintained by a state, political
subdivision of a state, or any agency or instrumentality of a state or
political subdivision of a state.


 


Participant
Rollover Contributions from IRAs.  The Plan will accept a
Participant Rollover Contribution of the portion of a distribution from an
individual retirement account or individual retirement annuity described in
Code Section 408(a) or (b) that is eligible to be rolled over
and would otherwise be includible in the Participant’s gross income.


 


(b)                         The Contribution is of amounts that the Code
permits to be transferred to a plan that meets the requirements of Code Section 401(a).


 


(c)                          The Contribution is made in the form of a
direct rollover under Code Section 401(a)(31) or is a rollover made under
Code Section 402(c) or 408(d)(3)(A) within 60 days after the
Eligible Employee or Inactive Participant receives the distribution.


 


(d)                         The Eligible Employee or Inactive Participant
furnishes evidence satisfactory to the Plan Administrator that the proposed
rollover meets conditions (a), (b), and (c) above.


 


(e)                          In the case of an Inactive Participant, the
Contribution must be of an amount distributed from another plan of the
Employer, or a plan of a Controlled Group member, that satisfies the
requirements of Code Section 401(a).


 


A
Rollover Contribution shall be allowed in cash only and must be made according
to procedures set up by the Plan Administrator.


 


If
the Eligible Employee is not an Active Participant when the Rollover
Contribution is made, he shall be deemed to be an Active Participant only for
the purpose of investment and distribution of the Rollover Contribution.  Employer Contributions shall not be made for
or allocated to the Eligible Employee until the time he meets all of the
requirements to become an Active Participant.


 


20

















 


Rollover
Contributions made by an Eligible Employee or an Inactive Participant shall be
credited to his Account.  The part of the
Participant’s Account resulting from Rollover Contributions is 100% vested and
nonforfeitable at all times.  Separate
accounting records shall be maintained for those parts of his Rollover
Contributions consisting of (i) voluntary contributions which were
deducted from the Participant’s gross income for Federal income tax purposes; (ii) after-tax
employee contributions, including the portion that would not have been
includible in the Participant’s gross income if the contributions were not
rolled over into this Plan; and (iii) any portion of a designated Roth
account, including the portion that would not have been includible in the
Participant’s gross income if the contributions were not rolled over into this
Plan.


 


SECTION 3.02—FORFEITURES.


 


The
Nonvested Account of a Participant shall be forfeited as of the earlier of the
following:


 


(a)                          the date the record keeper is notified that
the Participant died (if prior to such date he has had a Severance from
Employment), or


 


(b)                         the Participant’s Forfeiture Date.


 


All
or a portion of a Participant’s Nonvested Account shall be forfeited before
such earlier date if, after he has a Severance from Employment, he receives, or
is deemed to receive, a distribution of his entire Vested Account or a
distribution of his Vested Account derived from Employer Contributions that
were not 100% vested when made, under the RETIREMENT BENEFITS SECTION of Article V,
the VESTED BENEFITS SECTION of Article V, or the SMALL AMOUNTS SECTION of
Article X.  The forfeiture shall
occur as of the date the Participant receives, or is deemed to receive, the
distribution.  If a Participant receives,
or is deemed to receive, his entire Vested Account, his entire Nonvested
Account shall be forfeited.  If a
Participant receives a distribution of his Vested Account from Employer
Contributions that were not 100% vested when made, but less than his entire
Vested Account, the amount to be forfeited shall be determined by multiplying
his Nonvested Account from such Contributions by a fraction.  The numerator of the fraction is the amount
of the distribution derived from Employer Contributions that were not 100%
vested when made and the denominator of the fraction is his entire Vested
Account derived from such Contributions on the date of the distribution.


 


A
Forfeiture shall also occur as provided in the EXCESS AMOUNTS SECTION of
this article.


 


Forfeitures
shall be determined at least once during each Plan Year.  Forfeitures may first be used to pay
administrative expenses.  Forfeitures of
Matching Contributions that relate to excess amounts as provided in the EXCESS
AMOUNTS SECTION of this article, that have not been used to pay
administrative expenses, shall be applied to reduce the earliest Employer
Contributions made after the Forfeitures are determined.  Any other Forfeitures that have not been used
to pay administrative expenses shall be applied to reduce the earliest Employer
Contributions made after the Forfeitures are determined.  Upon their application to reduce Employer
Contributions, Forfeitures shall be deemed to be Employer Contributions.


 


If
a Participant again becomes an Eligible Employee after receiving a distribution
which caused all or a portion of his Nonvested Account to be forfeited, he
shall have the right to repay to the Plan the entire amount of the distribution
he received (excluding any amount of such distribution resulting from
Contributions that were 100% vested when made). 
The repayment must be made in a single sum (repayment in installments is
not permitted) before the earlier of the date five years after the date he
again becomes an Eligible Employee or the end of the first period of five
consecutive Vesting Breaks in Service which begin after the date of the
distribution.


 


If
the Participant makes the repayment above, the Plan Administrator shall restore
to his Account an amount equal to his Nonvested Account that was forfeited on
the date of distribution, unadjusted for any investment gains or losses.  If no amount is to be repaid because the
Participant was deemed to have received a distribution, or only


 


21

















 


received
a distribution of Contributions which were 100% vested when made, and he again
performs an Hour of Service as an Eligible Employee within the repayment
period, the Plan Administrator shall restore the Participant’s Account as if he
had made a required repayment on the date he performed such Hour of
Service.  Restoration of the Participant’s
Account shall include restoration of all Code Section 411(d)(6) protected
benefits with respect to the restored Account, according to applicable Treasury
regulations.  Provided, however, the Plan
Administrator shall not restore the Nonvested Account if (i) a Forfeiture
Date has occurred after the date of the distribution and on or before the date
of repayment and (ii) that Forfeiture Date would result in a complete
forfeiture of the amount the Plan Administrator would otherwise restore.


 


The
Plan Administrator shall restore the Participant’s Account by the close of the
Plan Year following the Plan Year in which repayment is made.  The permissible sources for restoration of
the Participant’s Account are Forfeitures or special Employer Contributions.  Such special Employer Contributions shall be
made without regard to profits.  The
repaid and restored amounts are not included in the Participant’s Annual
Additions, as defined in the CONTRIBUTION LIMITATION SECTION of this
article.


 


SECTION 3.03—ALLOCATION.


 


A
person meets the allocation requirements of this section if he is an Active
Participant on the last day of the Plan Year.


 


Elective
Deferral Contributions shall be allocated to the Participants for whom such
Contributions are made under the EMPLOYER CONTRIBUTIONS SECTION of this
article.  Such Contributions shall be
allocated when made and credited to the Participant’s Account.


 


Matching
Contributions shall be allocated to the persons for whom such Contributions are
made under the EMPLOYER CONTRIBUTIONS SECTION of this article.  Such Contributions shall be allocated when
made and credited to the person’s Account.


 


The
discretionary Qualified Nonelective Contributions to be used to reduce excess
amounts, as described in the EMPLOYER CONTRIBUTIONS SECTION of this
article, which are in addition to any other Qualified Nonelective Contributions
described in such section shall be allocated as of the last day of the Plan
Year only to Nonhighly Compensated Employees who meet the allocation
requirements of this section.  Such
Contributions (or separate Contributions) shall be allocated first to the
eligible person under the Plan (or separate plan) with the lowest Annual
Compensation for the Plan Year, then to the eligible person under the Plan (or
separate plan) with the next lowest Annual Compensation, and so forth, in each
case subject to the applicable limits of the CONTRIBUTION LIMITATION SECTION of
this article.  This amount shall be
credited to the person’s Account.


 


Qualified
Nonelective Contributions other than the discretionary Qualified Nonelective
Contributions to be used to reduce excess amounts, as described in the EMPLOYER
CONTRIBUTIONS SECTION of this article, shall be allocated as of the last
day of the Plan Year to each person who meets the allocation requirements of
this section.  Such Qualified Nonelective
Contributions shall be allocated only to Nonhighly Compensated Employees.  The amount allocated to such person for the
Plan Year shall be equal to such Qualified Nonelective Contributions multiplied
by the ratio of such person’s Annual Compensation for the Plan Year to the
total Annual Compensation of all such persons. 
This amount shall be credited to the person’s Account.


 


If
Leased Employees are Eligible Employees, in determining the amount of Employer
Contributions allocated to a person who is a Leased Employee, contributions
provided by the leasing organization that are attributable to services such
Leased Employee performs for the Employer shall be treated as provided by the
Employer.  Those contributions shall not
be duplicated under this Plan.


 


22

















 


SECTION 3.04—CONTRIBUTION LIMITATION.


 


Contributions
to the Plan shall be limited in accordance with Code Section 415 and the
regulations thereunder.  The limitations
of this section shall apply to Limitation Years beginning on or after July 1,
2007, except as otherwise provided herein.


 


(a)                          Definitions.  For the purpose of determining
the contribution limitation set forth in this section, the following terms are
defined.


 


Annual Additions means the sum of the following amounts credited to a Participant’s
account for the Limitation Year:


 


(1)         employer contributions;


 


(2)         employee contributions; and


 


(3)         forfeitures.


 


Annual
Additions to a defined contribution plan, as defined in section
1.415(c)-1(a)(2)(i) of the regulations, shall also include the following:


 


(4)                          mandatory employee contributions, as defined
in Code Section 411(c)(2)(C) and section 1.411(c)-1(c)(4) of the
regulations, to a defined benefit plan;


 


(5)                          contributions allocated to any individual
medical benefit account, as defined in Code Section 415(l)(2), which is
part of a pension or annuity plan maintained by the Employer;


 


(6)                          amounts attributable to post-retirement
medical benefits, allocated to the separate account of a key employee, as
defined in Code Section 419A(d)(3), under a welfare benefit fund, as
defined in Code Section 419(e), maintained by the Employer; and


 


(7)                          annual additions under an annuity contract
described in Code Section 403(b).


 


Compensation means wages 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
any Self-employed Individual, Compensation shall mean Earned Income.


 


Except
as provided herein, Compensation for a Limitation Year is the Compensation
actually paid or made available (or if earlier, includible in gross income)
during such Limitation Year.


 


For
Limitation Years beginning on or after January 1, 2005, Compensation for a
Limitation Year shall also include Compensation paid by the later of 2 1/2
months after an employee’s Severance from Employment with the Employer
maintaining the Plan or the end of the Limitation Year that includes the date
of the employee’s Severance from Employment with the Employer maintaining the
Plan, if the payment is regular Compensation for services during the employee’s
regular working hours, or Compensation for services outside the employee’s
regular working hours (such as overtime or shift differential), commissions,
bonuses, or other similar payments, and, absent a Severance from Employment,
the payments would have been paid to the employee while the employee continued
in employment with the Employer.


 


23

















 


Any
payments not described above shall not be considered Compensation if paid after
Severance from Employment, even if they are paid by the later of 2 1/2 months
after the date of Severance from Employment or the end of the Limitation Year
that includes the date of Severance from Employment, except, payments to an
individual who does not currently perform services for the Employer by reason
of qualified military service (within the meaning of Code Section 414(u)(1))
to the extent these payments do not exceed the amounts the individual would
have received if the individual had continued to perform services for the
Employer rather than entering qualified military service.


 


Back
pay, within the meaning of section 1.415(c)-2(g)(8) of the regulations,
shall be treated as Compensation for the Limitation Year to which the back pay
relates to the extent the back pay represents wages and compensation that would
otherwise be included in this definition.


 


Compensation
paid or made available during such Limitation Year shall include amounts that
would otherwise be included in Compensation but for an election under Code Section 125(a),
132(f)(4), 402(e)(3), 402(h)(1)(B), 402(k), or 457(b).


 


Compensation
shall not include amounts paid as Compensation to a nonresident alien, as
defined in Code Section 7701(b)(1)(B), who is not a Participant in the
Plan to the extent the Compensation is excludible from gross income and is not
effectively connected with the conduct of a trade or business within the United
States.


 


Defined Contribution Dollar Limitation means, effective for Limitation Years
beginning after December 31, 2001, $40,000, automatically adjusted under
Code Section 415(d), effective January 1 of each year, as published
in the Internal Revenue Bulletin.  The
new limitation shall apply to Limitation Years ending with or within the
calendar year of the date of the adjustment, but a Participant’s Annual
Additions for a Limitation Year cannot exceed the currently applicable dollar
limitation (as in effect before the January 1 adjustment) prior to January 1.
 However, after a January 1
adjustment is made, Annual Additions for the entire Limitation Year are
permitted to reflect the dollar limitation as adjusted on January 1.


 


Employer means the employer that adopts this Plan, and all members of a
controlled group of corporations (as defined in Code Section 414(b) as
modified by Code Section 415(h)), all commonly controlled trades or
businesses (as defined in Code Section 414(c), as modified, except in the
case of a brother-sister group of trades or businesses under common control, by
Code Section 415(h)), or affiliated service groups (as defined in Code Section 414(m))
of which the adopting employer is a part, and any other entity required to be
aggregated with the employer pursuant to Code Section 414(o).


 


Limitation Year means the consecutive 12-month period ending on the last day of each
Plan Year, including corresponding consecutive 12-month periods before October 31,
1986.  If the Limitation Year is other
than the calendar year, execution of this Plan (or any amendment to this Plan
changing the Limitation Year) constitutes the Employer’s adoption of a written
resolution electing the Limitation Year. 
If the Limitation Year is amended to a different consecutive 12-month
period, the new Limitation Year must begin on a date within the Limitation Year
in which the amendment is made.


 


Maximum Annual Addition means, for Limitation Years beginning on or
after January 1, 2002, except for catch-up contributions described in Code
Section 414(v), the Annual Addition that may be contributed or allocated
to a Participant’s Account under the Plan for any Limitation Year.  This amount shall not exceed the lesser of:


 


(1)         The Defined Contribution Dollar
Limitation, or


 


24

















 


(2)         100 percent of the Participant’s
Compensation for the Limitation Year.


 


A
Participant’s Compensation for a Limitation Year shall not include Compensation
in excess of the limitation under Code Section 401(a)(17) that is in
effect for the calendar year in which the Limitation Year begins.


 


The
compensation limitation referred to in (2) shall not apply to an
individual medical benefit account (as defined in Code Section 415(l); or
a post-retirement medical benefits account for a key employee (as defined in
Code Section 419A(d)(1)).


 


If
a short Limitation Year is created because of an amendment changing the
Limitation Year to a different consecutive 12-month period, the Maximum Annual
Addition will not exceed the Defined Contribution Dollar Limitation multiplied
by the following fraction:


 


Number
of months (including any fractional parts of a month)


in
the short Limitation Year


12


 


If the Plan is terminated as of a date other than the last day of the
Limitation Year, the Plan is treated as if the Plan was amended to change the
Limitation Year and create a short Limitation Year ending on the date the Plan
is terminated.


 


If
a short Limitation Year is created, the limitation under Code Section 401(a)(17)
shall be prorated in the same manner as the Defined Contribution Dollar
Limitation.


 


Predecessor Employer means, with respect to a Participant, a former employer if the
Employer maintains a plan that provides a benefit which the Participant accrued
while performing services for the former employer.  Predecessor Employer also means, with respect
to a Participant, a former entity that antedates the Employer if, under the
facts and circumstances, the Employer constitutes a continuation of all or a
portion of the trade or business of the former entity.


 


Severance from Employment means an employee has ceased to be an
employee of the Employer maintaining the plan. 
An employee does not have a Severance from Employment if, in connection
with a change of employment, the employee’s new employer maintains the plan
with respect to the employee.


 


(b)                         If the Participant does not participate in,
and has never participated in, another qualified plan maintained by the
Employer or a welfare benefit fund, as defined in Code Section 419(e),
maintained by the Employer, or an individual medical benefit account, as
defined in Code Section 415(l)(2), maintained by the Employer, or a
simplified employee pension, as defined in Code Section 408(k), maintained
by the Employer, which provides an Annual Addition, the amount of Annual
Additions which may be credited to the Participant’s Account for any Limitation
Year shall not exceed the lesser of the Maximum Annual Addition or any other
limitation contained in this Plan.  If
the Employer Contribution that would otherwise be contributed or allocated to
the Participant’s Account would cause the Annual Additions for the Limitation
Year to exceed the Maximum Annual Addition, the amount contributed or allocated
shall be reduced so that the Annual Additions for the Limitation Year will
equal the Maximum Annual Addition.


 


(c)                          This (c) applies if, in addition to this
Plan, the Participant is covered under another defined contribution plan, as
defined in section 1.415(c)-1(a)(2)(i)  of the regulations, (without
regard to whether the plan(s) have been terminated) maintained by the
Employer which provides an Annual Addition during any


 


25

















 


Limitation
Year.  The Annual Additions which may be
credited to a Participant’s Account under this Plan for any such Limitation Year
will not exceed the Maximum Annual Addition, reduced by the Annual Additions
credited to a Participant’s account under the other defined contribution plan(s) for
the same Limitation Year.  If the Annual
Additions with respect to the Participant under the other defined contribution
plan(s) maintained by the Employer are less than the Maximum Annual
Addition, and the Employer Contribution that would otherwise be contributed or
allocated to the Participant’s Account under this Plan would cause the Annual
Additions for the Limitation Year to exceed this limitation, the amount
contributed or allocated will be reduced so that the Annual Additions under all
such plans and funds for the Limitation Year will equal the Maximum Annual
Addition.  If the Annual Additions with
respect to the Participant under the other defined contribution plan(s) in
the aggregate are equal to or greater than the Maximum Annual Addition, no
amount will be contributed or allocated to the Participant’s Account under this
Plan for the Limitation Year.


 


(d)                         The limitation of this section shall be
determined and applied taking into account the rules in subparagraph (e) below.


 


(e)                          Other Rules


 


(1)                          Aggregating Plans.  For
purposes of applying the limitations of this section for a Limitation Year, all
defined contribution plans (as defined in section 1.415(c)-1(a)(2)(i) of
the regulations and without regard to whether the plan(s) have been
terminated) ever maintained by the Employer and all defined contribution plans
of a Predecessor Employer (in the Limitation Year in which such Predecessor
Employer is created) under which a Participant receives Annual Additions are
treated as one defined contribution plan.


 


(2)                          Break-up of Affiliated Employers.  The
Annual Additions under a formerly affiliated plan (as defined in section
1.415(f)-1(b)(2)(ii) of the regulations) of the Employer are taken into
account for purposes of applying the limitations of this section for the
Limitation Year in which the cessation of affiliation took place.


 


(3)                          Previously Unaggregated Plans.  The
limitations of this section are not exceeded for the first Limitation Year in
which two or more existing plans, which previously were not required to be
aggregated pursuant to section 1.415(f) of the regulations, are
aggregated, provided that no Annual Additions are credited to a Participant
after the date on which the plans are required to be aggregated if the Annual
Additions already credited to the Participant in the existing plans equal or
exceed the Maximum Annual Addition.


 


(4)                          Aggregation with Multiemployer Plan.  If
the Employer maintains a multiemployer plan, as defined in Code Section 414(f),
and the multiemployer plan so provides, only the Annual Additions under the
multiemployer plan that are provided by the Employer shall be treated as Annual
Additions provided under a plan maintained by the Employer for purposes of this
section.


 


SECTION 3.05—EXCESS AMOUNTS.


 


(a)                          Definitions.  For purposes of this section,
the following terms are defined:


 


ACP
means, for a specified group of Participants (either Highly Compensated
Employees or Nonhighly Compensated Employees) for a Plan Year, the average
(expressed as a percentage) of the Contribution Percentages of the Eligible
Participants in the group.


 


26

















 


ADP
means, for a specified group of Participants (either Highly Compensated
Employees or Nonhighly Compensated Employees) for a Plan Year, the average
(expressed as a percentage) of the Deferral Percentages of the Eligible Participants in the group.


 


Catch-up Contributions means Elective Deferral Contributions made
to a plan that are in excess of an otherwise applicable plan limit and that are
made by participants who are age 50 or older by the end of the taxable
year.  An otherwise applicable plan limit
is a limit in the plan that applies to Elective Deferral Contributions without
regard to Catch-up Contributions, such as the limits on the maximum annual
additions under Code Section 415, the dollar limitation on Elective
Deferral Contributions under Code Section 402(g) (not counting
Catch-up Contributions), and the limit imposed by the nondiscrimination test
described in Code Section 401(k)(3).


 


Contribution Percentage means the ratio (expressed as a percentage)
of the Eligible Participant’s Contribution Percentage Amounts to the Eligible
Participant’s Compensation for the Plan Year (whether or not the Eligible
Participant was an Eligible Participant for the entire Plan Year).  In modification of the foregoing,
Compensation shall be determined excluding Compensation for the portion of the
Plan Year in which an Employee was not an Eligible Participant.  For an Eligible Participant for whom such
Contribution Percentage Amounts for the Plan Year are zero, the percentage is
zero.


 


Contribution Percentage Amounts means the sum of the Participant
Contributions and Matching Contributions (that are not Qualified Matching
Contributions taken into account for purposes of the ADP Test) made under the
plan on behalf of the Eligible Participant for the plan year.  For plan years beginning on or after January 1,
2006, Matching Contributions cannot be taken into account for a plan year for a
Nonhighly Compensated Employee to the extent they are disproportionate matching
contributions as defined in section 1.401(m)-2(a)(5)(ii) of the
regulations.  Such Contribution
Percentage Amounts shall not include Matching Contributions that are forfeited
either to correct Excess Aggregate Contributions or because the contributions
to which they relate are Excess Elective Deferrals, Excess Contributions, or
Excess Aggregate Contributions.  Under
such rules as the Secretary of the Treasury shall prescribe, in
determining the Contribution Percentage the Employer may elect to include
Qualified Nonelective Contributions under this Plan that were not used in
computing the Deferral Percentage.  For
plan years beginning on or after January 1, 2006, Qualified Nonelective
Contributions cannot be taken into account for a plan year for a Nonhighly
Compensated Employee to the extent they are disproportionate contributions as
defined in section 1.401(m)-2(a)(6)(v) of the regulations.  The Employer may also elect to use Elective
Deferral Contributions in computing the Contribution Percentage so long as the
ADP Test is met before the Elective Deferral Contributions are used in the ACP
Test and continues to be met following the exclusion of those Elective Deferral
Contributions that are used to meet the ACP Test.


 


Deferral Percentage means the ratio (expressed as a percentage) of Elective Deferral
Contributions (other than Catch-up Contributions) under this Plan on behalf of
the Eligible Participant for the Plan Year to the Eligible Participant’s
Compensation  for the Plan Year (whether
or not the Eligible Participant was an Eligible Participant for the entire Plan
Year).  In modification of the foregoing,
Compensation shall be determined excluding Compensation for the portion of the
Plan Year in which an Employee was not an Eligible Participant.  The Elective Deferral Contributions used to
determine the Deferral Percentage shall include Excess Elective Deferrals
(other than Excess Elective Deferrals of Nonhighly Compensated Employees that
arise solely from Elective Deferral Contributions made under this Plan or any
other plans of the Employer or a Controlled Group member), but shall exclude
Elective Deferral Contributions that are used in computing the Contribution
Percentage (provided the ADP Test is satisfied both with and without exclusion
of these Elective Deferral Contributions). 
Under such rules as the Secretary of the Treasury shall prescribe,
the Employer may elect to include Qualified Nonelective Contributions and
Qualified Matching Contributions under this Plan in computing the Deferral
Percentage.  For Plan Years


 


27

















 


beginning
on or after January 1, 2006, Qualified Matching Contributions cannot be
taken into account for a Plan Year for a Nonhighly Compensated Employee to the
extent they are disproportionate matching contributions as defined in section
1.401(m)-2(a)(5)(ii) of the regulations. 
For Plan Years beginning on or after January 1, 2006, Qualified
Nonelective Contributions cannot be taken into account for a Plan Year for a
Nonhighly Compensated Employee to the extent they are disproportionate
contributions as defined in section 1.401(k)-2(a)(6)(iv) of the
regulations.  For an Eligible Participant
for whom such contributions on his behalf for the Plan Year are zero, the
percentage is zero.


 


Elective Deferral Contributions means any employer contributions made to a
plan at the election of a participant in lieu of cash compensation.  With respect to any taxable year, a
participant’s Elective Deferral Contributions are the sum of all employer
contributions made on behalf of such participant pursuant to an election to
defer under any qualified cash or deferred arrangement described in Code Section 401(k),
any salary reduction simplified employee pension plan described in Code Section 408(k)(6),
any SIMPLE IRA plan described in Code Section 408(p), any plan described
under Code Section 501(c)(18), and any employer contributions made on
behalf of a participant for the purchase of an annuity contract under Code Section 403(b) pursuant
to a salary reduction agreement.  For
taxable years beginning after December 31, 2005, Elective Deferral
Contributions include Pre-tax Elective Deferral Contributions and Roth Elective
Deferral Contributions.  Elective
Deferral Contributions shall not include any deferrals properly distributed as
excess annual additions.


 


Eligible Participant means, for purposes of determining the Deferral Percentage, any
Employee who is otherwise entitled to make Elective Deferral Contributions
under the terms of the plan for the plan year. 
Eligible Participant means, for purposes of determining the Contribution
Percentage, any Employee who is eligible (i) to make a Participant
Contribution or an Elective Deferral Contribution (if the Employer takes such
contributions into account in the calculation of the Contribution Percentage),
or (ii) to receive a Matching Contribution (including forfeitures) or a
Qualified Matching Contribution.  If a
Participant Contribution is required as a condition of participation in the
plan, any Employee who would be a participant in the plan if such Employee made
such a contribution shall be treated as an Eligible Participant on behalf of
whom no Participant Contributions are made.


 


Excess Aggregate Contributions means, with respect to any Plan Year, the
excess of:


 


(1)                         The aggregate Contribution Percentage Amounts
taken into account in computing the numerator of the Contribution Percentage
actually made on behalf of Highly Compensated Employees for such Plan Year,
over


 


(2)                         The maximum Contribution Percentage Amounts
permitted by the ACP Test (determined by hypothetically reducing contributions
made on behalf of Highly Compensated Employees in order of their Contribution
Percentages beginning with the highest of such percentages).


 


Such
determination shall be made after first determining Excess Elective Deferrals
and then determining Excess Contributions.


 


Excess Contributions means, with respect to any Plan Year, the excess of:


 


(1)                         The aggregate amount of employer
contributions actually taken into account in computing the Deferral Percentage
of Highly Compensated Employees for such Plan Year, over


 


(2)                         The maximum amount of such contributions
permitted by the ADP Test (determined by hypothetically reducing contributions
made on behalf of Highly Compensated Employees in the order of the Deferral
Percentages, beginning with the highest of such percentages).


 


28

















 


Such
determination shall be made after first determining Excess Elective Deferrals.


 


Excess Elective Deferrals means those Elective Deferral Contributions
of a Participant that either (i) are made during the Participant’s taxable
year and exceed the dollar limitation under Code Section 402(g) or (ii) are
made during a calendar year and exceed the dollar limitation under Code Section 402(g) for
the Participant’s taxable year beginning in such calendar year, counting only
Elective Deferral Contributions made under this Plan and any other plan,
contract, or arrangement maintained by the Employer. The dollar limitation
shall be increased by the dollar limit on Catch-up Contributions under Code Section 414(v),
if applicable.


 


Excess
Elective Deferrals shall be treated as Annual Additions, as defined in the
CONTRIBUTION LIMITATION SECTION of this article, under the Plan, unless
such amounts are distributed no later than the first April 15 following
the close of the Participant’s taxable year.


 


Matching Contributions means employer contributions made to this or
any other defined contribution plan, or to a contract described in Code Section 403(b),
on behalf of a participant on account of a Participant Contribution made by
such participant, or on account of a participant’s Elective Deferral
Contributions, under a plan maintained by the Employer or a Controlled Group
member.


 


Participant Contributions means contributions (other than Roth
Elective Deferral Contributions) made to the plan by or on behalf of a
participant that are included in the participant’s gross income in the year in
which made and that are maintained under a separate account to which the
earnings and losses are allocated.


 


Pre-tax Elective Deferral Contributions means a participant’s Elective Deferral
Contributions that are not includible in the participant’s gross income at the
time deferred.


 


Qualified Matching Contributions means Matching Contributions that are
nonforfeitable when made to the plan and that are distributable only in
accordance with the distribution provisions (other than for hardships)
applicable to Elective Deferral Contributions.


 


Qualified Nonelective Contributions means any employer contributions (other than
Matching Contributions) that an Employee may not elect to have paid to him in
cash instead of being contributed to the plan and that are nonforfeitable when
made to the plan and that are distributable only in accordance with the
distribution provisions (other than for hardships) applicable to Elective
Deferral Contributions.


 


Roth Elective Deferral Contributions means a participant’s Elective Deferral
Contributions that are not excludible from the participant’s gross income at
the time deferred and have been irrevocably designated as Roth Elective
Deferral Contributions by the participant in his elective deferral
agreement.  Whether an Elective Deferral
Contribution is not excludible from a participant’s gross income will be
determined in accordance with section 1.40(k)-1(f)(2) of the
regulations.  In the case of a
self-employed individual, an Elective Deferral Contribution is not excludible
from gross income only if the individual does not claim a deduction for such
amount.


 


(b)                         Excess Elective Deferrals.  A
Participant may assign to this Plan any Excess Elective Deferrals made during a
taxable year of the Participant by notifying the Plan Administrator in writing
on or before the first following March 1 of the amount of the Excess
Elective Deferrals to be assigned to the Plan. 
A Participant is deemed to notify the Plan Administrator of any Excess
Elective Deferrals that arise by taking into account only those Elective
Deferral Contributions made to this Plan and any other plan, contract, or
arrangement of the Employer or a Controlled Group member.  The Participant’s claim for


 


29

















 


Excess
Elective Deferrals shall be accompanied by the Participant’s written statement
that if such amounts are not distributed, such Excess Elective Deferrals will
exceed the limit imposed on the Participant by Code Section 402(g) (including,
if applicable, the dollar limitation on Catch-up Contributions under Code Section 414(v))
for the year in which the deferral occurred. 
The Excess Elective Deferrals assigned to this Plan cannot exceed the
Elective Deferral Contributions allocated under this Plan for such taxable
year.


 


Notwithstanding
any other provisions of the Plan, Elective Deferral Contributions in an amount
equal to the Excess Elective Deferrals assigned to this Plan, plus any income
and minus any loss allocable thereto, shall be distributed no later than April 15
to any Participant to whose Account Excess Elective Deferrals were assigned for
the preceding year and who claims Excess Elective Deferrals for such taxable
year or calendar year.


 


For
taxable years beginning after December 31, 2005, distribution of Excess
Elective Deferrals shall be made on a pro rata basis from the Participant’s
Account resulting from Pre-tax Elective Deferral Contributions and Roth
Elective Deferral Contributions in the same proportion that such Contributions
were made for the applicable year.


 


The
Excess Elective Deferrals shall be adjusted for any income or loss.  The income or loss allocable to such Excess
Elective Deferrals shall be equal to the income or loss allocable to the
Participant’s Elective Deferral Contributions for the taxable year in which the
excess occurred multiplied by a fraction. 
The numerator of the fraction is the Excess Elective Deferrals.  The denominator of the fraction is the
closing balance without regard to any income or loss occurring during such
taxable year (as of the end of such taxable year) of the Participant’s Account
resulting from Elective Deferral Contributions.


 


For
purposes of determining income or loss on Excess Elective Deferrals for taxable
years beginning on or after January 1, 2006, any Excess Elective
Deferrals, in addition to any adjustment for income or loss for the taxable
year in which the excess occurred, shall be adjusted for income or loss for the
gap period between the end of such taxable year and the date of
distribution.  Such income or loss
allocable to the gap period shall be equal to 10% of the income or loss allocable
to the Excess Elective Deferrals for the taxable year multiplied by the number
of complete months (counting a partial month of 16 days or more as a complete
month) in the gap period.


 


Any
Matching Contributions that were based on the Elective Deferral Contributions
distributed as Excess Elective Deferrals, plus any income and minus any loss
allocable thereto, shall be forfeited whether or not such amounts are
distributed as Excess Elective Deferrals.


 


(c)                        ADP Test.  As of the end of each Plan
Year after Excess Elective Deferrals have been determined, the Plan must
satisfy the ADP Test.  The ADP Test shall
be satisfied using the prior year testing method or the current year testing
method, as elected by the Employer.


 


(1)                          Prior Year Testing Method.  The
ADP for a Plan Year for Eligible Participants who are Highly Compensated
Employees for each Plan Year and the prior year’s ADP for Eligible Participants
who were Nonhighly Compensated Employees for the prior Plan Year must satisfy
one of the following tests:


 


(i)                            The ADP for a Plan Year for Eligible
Participants who are Highly Compensated Employees for the Plan Year shall not
exceed the prior year’s ADP for Eligible Participants who were Nonhighly
Compensated Employees for the prior Plan Year multiplied by 1.25; or


 


30

















 


(ii)                         The ADP for a Plan Year for Eligible
Participants who are Highly Compensated Employees for the Plan Year:


 


A.                            shall not exceed the prior year’s ADP for
Eligible Participants who were Nonhighly Compensated Employees for the prior
Plan Year multiplied by 2, and


 


B.                              the difference between such ADPs is not more
than 2.


 


If
this is not a successor plan, for the first Plan Year the Plan permits any
Participant to make Elective Deferral Contributions, for purposes of the
foregoing tests, the prior year’s Nonhighly Compensated Employees’ ADP shall be
3 percent or the Plan Year’s ADP for these Eligible Participants, as elected by
the Employer.


 


(2)                          Current Year Testing Method.  The
ADP for a Plan Year for Eligible Participants who are Highly Compensated
Employees for each Plan Year and the ADP for Eligible Participants who are
Nonhighly Compensated Employees for the Plan Year must satisfy one of the
following tests:


 


(i)                            The ADP for a Plan Year for Eligible
Participants who are Highly Compensated Employees for the Plan Year shall not
exceed the ADP for Eligible Participants who are Nonhighly Compensated
Employees for the Plan Year multiplied by 1.25; or


 


(ii)                         The ADP for a Plan Year for Eligible Participants
who are Highly Compensated Employees for the Plan Year:


 


A.                            shall not exceed the ADP for Eligible
Participants who are Nonhighly Compensated Employees for the Plan Year
multiplied by 2, and


 


B.                              the difference between such ADP’s is not more
than 2.


 


If
the Employer has elected to use the current year testing method, that election
cannot be changed unless (i) the Plan has been using the current year
testing method for the preceding five Plan Years, or if less, the number of
Plan Years the Plan has been in existence; or (ii) if as a result of a
merger or acquisition described in Code Section 410(b)(6)(C)(i), the
Employer maintains both a plan using the prior year testing method and a plan
using the current year testing method and the change is made within the
transition period described in Code Section 410(b)(6)(C)(ii).


 


A
Participant is a Highly Compensated Employee for a particular Plan Year if he
meets the definition of a Highly Compensated Employee in effect for that Plan
Year.  Similarly, a Participant is a
Nonhighly Compensated Employee for a particular Plan Year if he does not meet
the definition of a Highly Compensated Employee in effect for that Plan Year.


 


The
Deferral Percentage for any Eligible Participant who is a Highly Compensated
Employee for the Plan Year and who is eligible to have Elective Deferral
Contributions (and Qualified Nonelective Contributions or Qualified Matching
Contributions, or both, if treated as Elective Deferral Contributions for
purposes of the ADP Test) allocated to his account under two or more
arrangements described in Code Section 401(k) that are maintained by
the Employer or a Controlled Group member shall be determined as if such
Elective Deferral Contributions (and, if applicable, such Qualified Nonelective
Contributions or Qualified Matching Contributions, or both) were made under a
single arrangement.  For Plan Years
beginning on or after January 1, 2006, if a Highly Compensated Employee
participates in two or more cash or deferred arrangements of the Employer or of
a Controlled Group member that have


 


31

















 


different
plan years, all Elective Deferral Contributions made during the Plan Year shall
be aggregated.  For Plan Years beginning
before January 1, 2006, all such cash or deferred arrangements ending with
or within the same calendar year shall be treated as a single arrangement.  The foregoing notwithstanding, certain plans
shall be treated as separate if mandatorily disaggregated under the regulations
of Code Section 401(k).


 


In
the event this Plan satisfies the requirements of Code Section 401(k),
401(a)(4), or 410(b) only if aggregated with one or more other plans, or
if one or more other plans satisfy the requirements of such Code sections only
if aggregated with this Plan, then this section shall be applied by determining
the Deferral Percentage of Employees as if all such plans were a single
plan.  If more than 10 percent of the
Employer’s Nonhighly Compensated Employees are involved in a plan coverage
change as defined in section 1.401(k)-2(c)(4) of the regulations, then any
adjustments to the Nonhighly Compensated Employee ADP for the prior year shall
be made in accordance with such regulations if the Employer has elected to use
the prior year testing method.  Plans may
be aggregated in order to satisfy Code Section 401(k) only if they
have the same plan year and use the same testing method for the ADP Test.


 


For
purposes of the ADP Test, Elective Deferral Contributions, Qualified
Nonelective Contributions, and Qualified Matching Contributions must be made
before the end of the 12-month period immediately following the Plan Year to
which the contributions relate.


 


If
the Plan Administrator should determine during the Plan Year that the ADP Test
is not being met, the Plan Administrator may limit the amount of future
Elective Deferral Contributions of the Highly Compensated Employees.


 


Notwithstanding
any other provisions of this Plan, Excess Contributions, plus any income and
minus any loss allocable thereto, shall be distributed no later than 12 months
after the last day of a Plan Year to Participants to whose Accounts such Excess
Contributions were allocated for such Plan Year, except to the extent such
Excess Contributions are classified as Catch-up Contributions.  Excess Contributions are allocated to the
Highly Compensated Employees with the largest amounts of employer contributions
taken into account in calculating the ADP Test for the year in which the excess
arose, beginning with the Highly Compensated Employee with the largest amount
of such employer contributions and continuing in descending order until all of
the Excess Contributions have been allocated. 
For Plan Years beginning on or after January 1, 2006, if a Highly
Compensated Employee participates in two or more cash or deferred arrangements
of the Employer or of a Controlled Group member, the amount distributed shall
not exceed the amount of the employer contributions taken into account in
calculating the ADP test and made to this Plan for the year in which the excess
arose.  If Catch-up Contributions are
allowed for the Plan Year being tested, to the extent a Highly Compensated
Employee has not reached his Catch-up Contribution limit under the Plan for
such year, Excess Contributions allocated to such Highly Compensated Employee
are Catch-up Contributions and will not be treated as Excess
Contributions.  If such excess amounts
(other than Catch-up Contributions) are distributed more than 2 1/2 months
after the last day of the Plan Year in which such excess amounts arose, a 10
percent excise tax shall be imposed on the employer maintaining the plan with
respect to such amounts.


 


Excess
Contributions shall be treated as Annual Additions, as defined in the
CONTRIBUTION LIMITATION SECTION of this article, even if distributed.


 


The
Excess Contributions shall be adjusted for any income or loss.  The income or loss allocable to such Excess
Contributions allocated to each Participant shall be equal to the income or
loss allocable to the Participant’s Elective Deferral Contributions (and, if
applicable, Qualified Nonelective Contributions or Qualified Matching
Contributions, or both) for the Plan Year in which the excess occurred
multiplied by a fraction.  The numerator
of the fraction is the Excess Contributions. 
The denominator of the


 


32

















 


fraction
is the closing balance without regard to any income or loss occurring during
such Plan Year (as of the end of such Plan Year) of the Participant’s Account
resulting from Elective Deferral Contributions (and Qualified Nonelective
Contributions or Qualified Matching Contributions, or both, if such
contributions are included in the ADP Test).


 


For
purposes of determining income or loss on Excess Contributions beginning with
the 2006 Plan Year, any Excess Contributions, in addition to any adjustment for
income or loss for the Plan Year in which the excess occurred, shall be
adjusted for income or loss for the gap period between the end of such Plan
Year and the date of distribution.  Such
income or loss allocable to the gap period shall be equal to 10% of the income
or loss allocable to the Excess Contributions for the Plan Year multiplied by
the number of complete months (counting a partial month of 16 days or more as a
complete month) in the gap period.


 


Excess
Contributions allocated to a Participant shall be distributed from the
Participant’s Account resulting from Elective Deferral Contributions.  If such Excess Contributions exceed the
amount of Excess Contributions in the Participant’s Account resulting from
Elective Deferral Contributions, the balance shall be distributed from the
Participant’s Account resulting from Qualified Matching Contributions (if
applicable) and Qualified Nonelective Contributions, respectively.


 


For
taxable years beginning after December 31, 2005, distribution of Excess
Contributions shall be made on a pro rata basis from the Participant’s Account
resulting from Pre-tax Elective Deferral Contributions and Roth Elective
Deferral Contributions in the same proportion that such Contributions were made
for the applicable year.


 


Any
Matching Contributions that were based on the Elective Deferral Contributions
distributed as Excess Contributions, plus any income and minus any loss
allocable thereto, shall be forfeited whether or not such amounts are
distributed as Excess Contributions.


 


(d)                         ACP Test.  As of the end of each Plan
Year, the Plan must satisfy the ACP Test. 
The ACP Test shall be satisfied using the prior year testing method or
the current year testing method, as elected by the Employer.


 


(1)                          Prior Year Testing Method.  The
ACP for a Plan Year for Eligible Participants who are Highly Compensated
Employees for each Plan Year and the prior year’s ACP for Eligible Participants
who were Nonhighly Compensated Employees for the prior Plan Year must satisfy
one of the following tests:


 


(i)                            The ACP for a Plan Year for Eligible
Participants who are Highly Compensated Employees for the Plan Year shall not
exceed the prior year’s ACP for Eligible Participants who were Nonhighly
Compensated Employees for the prior Plan Year multiplied by 1.25; or


 


(ii)                         The ACP for a Plan Year for Eligible
Participants who are Highly Compensated Employees for the Plan Year:


 


A.                            shall not exceed the prior year’s ACP for
Eligible Participants who were Nonhighly Compensated Employees for the prior
Plan Year multiplied by 2, and


 


B.                              the difference between such ACPs is not more
than 2.


 


If
this is not a successor plan, for the first Plan Year the Plan permits any
Participant to make Participant Contributions, provides for Matching
Contributions, or both, for purposes of the


 


33

















 


foregoing
tests, the prior year’s Nonhighly Compensated Employees’ ACP shall be 3 percent
or the Plan Year’s ACP for these Eligible Participants, as elected by the
Employer.


 


(2)                          Current Year Testing Method.  The
ACP for a Plan Year for Eligible Participants who are Highly Compensated
Employees for each Plan Year and the ACP for Eligible Participants who are Nonhighly
Compensated Employees for the Plan Year must satisfy one of the following
tests:


 


(i)                            The ACP for a Plan Year for Eligible
Participants who are Highly Compensated Employees for the Plan Year shall not
exceed the ACP for Eligible Participants who are Nonhighly Compensated
Employees for the Plan Year multiplied by 1.25; or


 


(ii)                         The ACP for a Plan Year for Eligible
Participants who are Highly Compensated Employees for the Plan Year:


 


A.                            shall not exceed the ACP for Eligible
Participants who are Nonhighly Compensated Employees for the Plan Year
multiplied by 2, and


 


B.                              the difference between such ACPs is not more
than 2.


 


If
the Employer has elected to use the current year testing method, that election
cannot be changed unless (i) the Plan has been using the current year
testing method for the preceding five Plan Years, or if less, the number of
Plan Years the Plan has been in existence; or (ii) if as a result of a
merger or acquisition described in Code Section 410(b)(6)(C)(i), the
Employer maintains both a plan using the prior year testing method and a plan
using the current year testing method and the change is made within the
transition period described in Code Section 410(b)(6)(C)(ii).


 


A
Participant is a Highly Compensated Employee for a particular Plan Year if he
meets the definition of a Highly Compensated Employee in effect for that Plan
Year.  Similarly, a Participant is a
Nonhighly Compensated Employee for a particular Plan Year if he does not meet
the definition of a Highly Compensated Employee in effect for that Plan Year.


 


The
Contribution Percentage for any Eligible Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible to have Contribution
Percentage Amounts allocated to his account under two or more plans described
in Code Section 401(a) or arrangements described in Code Section 401(k) that
are maintained by the Employer or a Controlled Group member shall be determined
as if the total of such Contribution Percentage Amounts was made under each
plan and arrangement.  For Plan Years
beginning on or after January 1, 2006, if a Highly Compensated Employee
participates in two or more such plans or arrangements that have different plan
years, all Contribution Percentage Amounts made during the Plan Year shall be
aggregated.  For Plan Years beginning
before January 1, 2006, all such plans and arrangements ending with or
within the same calendar year shall be treated as a single plan or
arrangement.  The foregoing
notwithstanding, certain plans shall be treated as separate if mandatorily
disaggregated under the regulations of Code Section 401(m).


 


In
the event this Plan satisfies the requirements of Code Section 401(m),
401(a)(4), or 410(b) only if aggregated with one or more other plans, or
if one or more other plans satisfy the requirements of such Code sections only
if aggregated with this Plan, then this section shall be applied by determining
the Contribution Percentage of Employees as if all such plans were a single
plan.  If more than 10 percent of the
Employer’s Nonhighly Compensated Employees are involved in a plan coverage
change as defined in section 1.401(m)-2(c)(4) of the regulations, then any
adjustments to the Nonhighly Compensated Employee ACP for the prior year shall
be made in accordance with such regulations if the


 


34

















 


Employer
has elected to use the prior year testing method.  Plans may be aggregated in order to satisfy
Code Section 401(m) only if they have the same plan year and use the
same testing method for the ACP Test.


 


For
purposes of the ACP Test, Participant Contributions are considered to have been
made in the Plan Year in which contributed to the Plan.  Matching Contributions and Qualified
Nonelective Contributions will be considered to have been made for a Plan Year
if made no later than the end of the 12-month period beginning on the day after
the close of the Plan Year.


 


Notwithstanding
any other provisions of this Plan, Excess Aggregate Contributions, plus any
income and minus any loss allocable thereto, shall be forfeited, if not vested,
or distributed, if vested, no later than 12 months after the last day of a Plan
Year to Participants to whose Accounts such Excess Aggregate Contributions were
allocated for such Plan Year.  Excess
Aggregate Contributions are allocated to the Highly Compensated Employees with
the largest Contribution Percentage Amounts taken into account in calculating
the ACP Test for the year in which the excess arose, beginning with the Highly
Compensated Employee with the largest amount of such Contribution Percentage
Amounts and continuing in descending order until all of the Excess Aggregate
Contributions have been allocated.  For
Plan Years beginning on or after January 1, 2006, if a Highly Compensated
Employee participates in two or more plans or arrangements of the Employer or
of a Controlled Group member that include Contribution Percentage Amounts, the
amount distributed shall not exceed the Contribution Percentage Amounts taken
into account in calculating the ACP Test and made to this Plan for the year in
which the excess arose.  If such Excess
Aggregate Contributions are distributed more than 2 1/2 months after the
last day of the Plan Year in which such excess amounts arose, a 10 percent
excise tax shall be imposed on the employer maintaining the plan with respect
to such amounts.


 


Excess
Aggregate Contributions shall be treated as Annual Additions, as defined in the
CONTRIBUTION LIMITATION SECTION of this article, even if distributed.


 


The
Excess Aggregate Contributions shall be adjusted for any income or loss.  The income or loss allocable to such Excess
Aggregate Contributions allocated to each Participant shall be equal to the
income or loss allocable to the Participant’s Contribution Percentage Amounts
for the Plan Year in which the excess occurred multiplied by a fraction.  The numerator of the fraction is the Excess
Aggregate Contributions.  The denominator
of the fraction is the closing balance without regard to any income or loss
occurring during such Plan Year (as of the end of such Plan Year) of the
Participant’s Account resulting from Contribution Percentage Amounts.


 


For
purposes of determining income or loss on Excess Aggregate Contributions
beginning with the 2006 Plan Year, any Excess Aggregate Contributions, in
addition to any adjustment for income or loss for the Plan Year in which the
excess occurred, shall be adjusted for income or loss for the gap period
between the end of such Plan Year and the date of distribution.  Such income or loss allocable to the gap
period shall be equal to 10% of the income or loss allocable to the Excess
Aggregate Contributions for the Plan Year multiplied by the number of complete
months (counting a partial month of 16 days or more as a complete month) in the
gap period.


 


Excess
Aggregate Contributions allocated to a Participant shall be distributed from
the Participant’s Account resulting from Participant Contributions that are not
required as a condition of employment or participation or for obtaining
additional benefits from Employer Contributions.  If such Excess Aggregate Contributions exceed
the balance in the Participant’s Account resulting from such Participant
Contributions, the balance shall be forfeited, if not vested, or distributed,
if vested, on a pro rata basis from the Participant’s Account resulting from
Contribution Percentage Amounts.


 


35

















 


(e)                          Employer Elections.  The
Employer has made an election to use the prior year testing method.


 


36
















 


ARTICLE IV


 


INVESTMENT
OF CONTRIBUTIONS


 


SECTION 4.01—INVESTMENT AND TIMING OF
CONTRIBUTIONS.


 


The handling of Contributions and Plan assets is governed by the
provisions of the Trust Agreement and any other relevant document, such as an
Annuity Contract (for the purposes of this paragraph alone, the Trust Agreement
and such other documents will each be referred to as a “document” or
collectively as the “documents”), duly entered into by or with regard to the
Plan that govern such matters.  To the
extent permitted by the documents, the parties named below shall direct the
Contributions for investment in any of the investment options or investment
vehicles available to the Plan under or through the documents, and may request
the transfer of amounts resulting from those Contributions between such
investment options and investment vehicles. 
A Participant may not direct the investment of all or any portion of his
Account in collectibles.  Collectibles
mean any work of art, rug or antique, metal or gem, stamp or coin, alcoholic
beverage, or other tangible personal property specified by the Secretary of the
Treasury.  However, for tax years
beginning after December 31, 1997, certain coins and bullion as provided
in Code Section 408(m)(3) shall not be considered collectibles.  To the extent that a Participant who has the
ability to provide investment direction fails to give timely investment
direction, the amount for which no investment direction is in place shall be
invested in such investment options and investment vehicles as provided in the
service and expense agreement or such other documents duly entered into by or
with regard to the Plan that govern such matters.  If the Named Fiduciary has investment
direction, the Contributions shall be invested ratably in the investment
options and investment vehicles available to the Plan under or through the
documents.  The Named Fiduciary shall
have investment direction for amounts that have not been allocated to
Participants.  To the extent an
investment is no longer available, the Named Fiduciary may require that amounts
currently held in such investment be reinvested in other investments.


 


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 the Trustee and 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.


 


(a)                          Employer Contributions other than Elective
Deferral Contributions:  The Participant
shall direct the investment of such Employer Contributions and transfer of
amounts resulting from those Contributions.


 


(b)                         Elective Deferral Contributions:  The Participant shall direct the investment
of Elective Deferral Contributions and transfer of amounts resulting from those
Contributions.


 


(c)                          Rollover Contributions:  The Participant shall direct the investment
of Rollover Contributions and transfer of amounts resulting from those
Contributions.


 


However, the Named Fiduciary may delegate to the Investment Manager
investment direction for Contributions and amounts that are not subject to
Participant direction.


 


All Contributions are forwarded by the Employer to (i) the Trustee
to be deposited in the Trust Fund or otherwise invested by the Trustee in
accordance with the relevant documents; or (ii) the Insurer to be
deposited under the Annuity Contract, as applicable.  Contributions that are accumulated through
payroll deduction shall be paid to the Trustee or Insurer, as applicable, by
the earlier of (i) the date the Contributions can reasonably be segregated
from the Employer’s assets, or (ii) the 15th business day of the month
following the month in which the Contributions would otherwise have been paid
in cash to the Participant.


 


37

















 


SECTION 4.01A—INVESTMENT IN QUALIFYING
EMPLOYER SECURITIES.


 


All or some portion of the Participant’s Account may be invested in
Qualifying Employer Securities; however, no new Contributions or transfers
shall be allowed into the Qualifying Employer Securities Fund.


 


For purposes of determining the annual valuation of the Plan, and for
reporting to Participants and regulatory authorities, the assets of the Plan
shall be valued at least annually on the Valuation Date which corresponds to
the last day of the Plan Year.  The fair
market value of Qualifying Employer Securities shall be determined on such
Valuation Date.  The prices of Qualifying
Employer Securities as of the date of the transaction shall apply for purposes
of valuing distributions and other transactions of the Plan to the extent such
value is representative of the fair market value of such securities in the
opinion of the Plan Administrator.  The
value of a Participant’s Account held in the Qualifying Employer Securities
Fund may be expressed in units.


 


If the Qualifying Employer Securities are not publicly traded, or if an
extremely thin market exists for such securities so that reasonable valuation
may not be obtained from the market place, then such securities must be valued
at least annually by an independent appraiser who is not associated with the
Employer, the Plan Administrator, the Trustee, or any person related to any
fiduciary under the Plan.  The
independent appraiser may be associated with a person who is merely a contract
administrator with respect to the Plan, but who exercises no discretionary
authority and is not a plan fiduciary.


 


If there is a public market for Qualifying Employer Securities of the
type held by the Plan, then the Plan Administrator may use as the value of the
securities the price at which such securities trade in such market.  If the Qualifying Employer Securities do not
trade on the relevant date, or if the market is very thin on such date, then
the Plan Administrator may use for the valuation the next preceding trading day
on which the trading prices are representative of the fair market value of such
securities in the opinion of the Plan Administrator.


 


Cash dividends payable on the Qualifying Employer Securities shall be
reinvested in additional shares of such securities.  In the event of any cash or stock dividend or
any stock split, such dividend or split shall be credited to the Accounts based
on the number of shares of Qualifying Employer Securities credited to each
Account as of the payable date of such dividend or split.


 


In the event that the Trustee acquires Qualifying Employer Securities
by purchase from a “disqualified person” as defined in Code Section 4975(e)(2) or
from a “party-in-interest” as defined in ERISA Section 3(14), the terms of
such purchase shall contain the provision that in the event there is a final
determination by the Internal Revenue Service, the Department of Labor, or
court of competent jurisdiction that the fair market value of such securities
as of the date of purchase was less than the purchase price paid by the
Trustee, then the seller shall pay or transfer, as the case may be, to the
Trustee an amount of cash or shares of Qualifying Employer Securities equal in
value to the difference between the purchase price and such fair market value
for all such shares.  In the event that
cash or shares of Qualifying Employer Securities are paid or transferred to the
Trustee under this provision, such securities shall be valued at their fair
market value as of the date of such purchase, and interest at a reasonable rate
from the date of purchase to the date of payment or transfer shall be paid by
the seller on the amount of cash paid.


 


The Plan Administrator may direct the Trustee to sell, resell, or
otherwise dispose of Qualifying Employer Securities to any person, including
the Employer, provided that any such sales to any disqualified person or
party-in-interest, including the Employer, will be made at not less than the
fair market value and no commission will be charged.  Any such sale shall be made in conformance
with ERISA Section 408(e).


 


The Governing Board is responsible for compliance with any applicable
Federal or state securities law with respect to all aspects of the Plan.  If the Qualifying Employer Securities or
interest in this Plan are required to be registered in order to permit
investment in the Qualifying Employer Securities Fund as provided in this
section, then such investment will not be effective until the later of the
effective date of the Plan or the date such registration or


 


38

















 


qualification is effective.  The
Governing Board will take or cause to be taken any and all such actions as may
be necessary or appropriate to effect such registration or qualification.  Further, if the Trustee is directed to
dispose of any Qualifying Employer Securities held under the Plan under
circumstances which require registration or qualification of the securities
under applicable Federal or state securities laws, then the Governing Board
will take or cause to be taken any and all such action as may be necessary or appropriate
to effect such registration or qualification. 
The Governing Board is responsible for all compliance requirements under
Section 16 of the Securities Act with respect to Qualifying Employer
Securities held under the Plan.


 


39

















 


ARTICLE V


 


BENEFITS


 


SECTION 5.01—RETIREMENT BENEFITS.


 


On a Participant’s Retirement Date, his Vested 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 X.


 


SECTION 5.02—DEATH BENEFITS.


 


If a Participant dies before his Annuity Starting Date, his Vested
Account shall be distributed according to the distribution of benefits
provisions of Article VI and the provisions of the SMALL AMOUNTS SECTION of
Article X.


 


SECTION 5.03—VESTED BENEFITS.


 


If an Inactive Participant’s Vested Account is not payable under the
SMALL AMOUNTS SECTION of Article X, he may elect, but is not
required, to receive a distribution of any part of his Vested Account after he
has a Severance from Employment.  A
distribution under this paragraph shall be a retirement benefit and shall be
distributed to the Participant according to the distribution of benefits provisions
of Article VI.


 


A Participant may not elect to receive a distribution under the
provisions of this section after he again becomes an Employee until he
subsequently has a Severance from Employment and meets the requirements of this
section.


 


If an Inactive Participant does not receive an earlier distribution,
upon his Retirement Date or death, his Vested Account shall be distributed
according to the provisions of the RETIREMENT BENEFITS SECTION or the
DEATH BENEFITS SECTION of this article.


 


The Nonvested Account of an Inactive Participant who has had a
Severance from Employment shall remain a part of his Account until it becomes a
Forfeiture.  However, if he again becomes
an Employee so that his Vesting Percentage can increase, the Nonvested Account
may become a part of his Vested Account.


 


SECTION 5.04—WHEN BENEFITS START.


 


(a)                          Unless otherwise elected, benefits shall
begin before the 60th day following the close of the Plan Year in which the
latest date below occurs:


 


(1)                          The date the Participant attains age 65 (or
Normal Retirement Age, if earlier).


 


(2)                          The 10th anniversary of the Participant’s
Entry Date.


 


(3)                          The date the Participant terminates service
with the Employer.


 


Notwithstanding the foregoing, the failure of a Participant to consent
to a distribution while a benefit is immediately distributable, within the
meaning of the ELECTION PROCEDURES SECTION of Article VI, shall be
deemed to be an election to defer the start of benefits sufficient to satisfy
this section.


 


The Participant may elect to have benefits begin after the latest date
for beginning benefits described above, subject to the following provisions of
this section.  The Participant shall make
the election in writing.  Such election
must be made before his Normal Retirement Date or the date he has a


 


40

















 


Severance from Employment, if later. 
The Participant shall not elect a date for beginning benefits or a form
of distribution that would result in a benefit payable when he dies which would
be more than incidental within the meaning of governmental regulations.


 


Benefits shall begin on an earlier date if otherwise provided in the
Plan.  For example, the Participant’s
Retirement Date or Required Beginning Date, as defined in the DEFINITIONS SECTION of
Article VII.


 


(b)                         The Participant’s Vested Account that results
from Elective Deferral Contributions and Qualified Nonelective Contributions
may not be distributed earlier than Severance from Employment (separation from
service, for Plan Years beginning before January 1, 2002), death, or
disability.  Such amount may also be
distributed upon:


 


(1)                          Termination of the Plan, as permitted in Article VIII.


 


(2)                          The attainment of age 59 1/2 as
permitted in the WITHDRAWAL BENEFITS SECTION of this article or in the
definition of Normal Retirement Date in the DEFINITIONS SECTION of Article I.


 


(3)                          The hardship of the Participant as permitted
in the WITHDRAWAL BENEFITS SECTION of this article.


 


All distributions that may be made pursuant to one or more of the
foregoing distributable events will be a retirement benefit and shall be
distributed to the Participant according to the distribution of benefits
provisions of Article VI.  In
addition, distributions that are triggered by the termination of the Plan must
be made in a lump sum.  A lump sum shall
include a distribution of an annuity contract.


 


SECTION 5.05—WITHDRAWAL BENEFITS.


 


A Participant may withdraw any part of his Vested Account resulting
from Rollover Contributions.  A
Participant may make such a withdrawal at any time.


 


A Participant who has attained age 59 1/2 may withdraw any part of
his Vested Account resulting from the following Contributions:


 


Elective Deferral Contributions


Matching Contributions


Qualified Nonelective Contributions


 


A Participant may make such a
withdrawal at any time.


 


A Participant may withdraw any part of his Vested Account resulting
from the following Contributions:


 


Elective Deferral Contributions


Matching Contributions


 


in the event of hardship due to an immediate and heavy financial
need.  Withdrawals from the Participant’s
Account resulting from Elective Deferral Contributions shall be limited to the
amount of the Participant’s Elective Deferral Contributions plus income
allocable thereto credited to his Account as of December 31, 1988.


 


Immediate and heavy financial need shall be limited to:  (i) expenses incurred or necessary for
medical care that would be deductible under Code Section 213(d) (determined
without regard to whether the expenses exceed 7.5% of adjusted gross income); (ii) the
purchase (excluding mortgage payments) of a principal residence for the


 


41

















 


Participant; (iii) payment of tuition, related educational fees,
and room and board expenses, for the next 12 months of post-secondary education
for the Participant, his spouse, children, or dependents (as defined in Code Section 152
without regard to Code Sections 152(b)(1), (b)(2), and (d)(1)(B)); (iv) payments
necessary to prevent the eviction of the Participant from, or foreclosure on
the mortgage of, the Participant’s principal residence; (v) payments for
funeral or burial expenses for the Participant’s deceased parent, spouse,
child, or dependent (as defined in Code Section 152 without regard to Code
Section 152(d))1)(B)); (vi) expenses to repair damage to the
Participant’s principal residence that would qualify for a casualty loss
deduction under Code Section 165 (determined without regard to whether the
loss exceeds 10% of adjusted gross income); or (vii) any other
distribution which is deemed by the Commissioner of Internal Revenue to be made
on account of immediate and heavy financial need as provided in Treasury
regulations.


 


No withdrawal shall be allowed which is not necessary to satisfy such
immediate and heavy financial need.  Such
withdrawal shall be deemed necessary only if all of the following requirements
are met:  (i) the distribution is
not in excess of the amount of the immediate and heavy financial need
(including amounts necessary to pay any Federal, state, or local income taxes
or penalties reasonably anticipated to result from the distribution); (ii) the
Participant has obtained all distributions, other than hardship distributions,
and all nontaxable loans currently available under all plans maintained by the
Employer; and (iii) the Plan, and all other plans maintained by the
Employer, provide that the Participant’s elective contributions and participant
contributions will be suspended for at least six months after receipt of the
hardship distribution.  The Plan will
suspend elective contributions and participant contributions for six months as
provided in the preceding sentence.  A
Participant shall not cease to be an Eligible Participant, as defined in the
EXCESS AMOUNTS SECTION of Article III, merely because his elective
contributions or participant contributions are suspended.


 


A request for withdrawal shall be made in such manner and in accordance
with such rules as the Employer will prescribe for this purpose (including
by means of voice response or other electronic means under circumstances the
Employer permits). Withdrawals shall be a retirement benefit and shall be
distributed to the Participant according to the distribution of benefits
provisions of Article VI.  A
forfeiture shall not occur solely as a result of a withdrawal.


 


SECTION 5.06—DISTRIBUTIONS UNDER
QUALIFIED DOMESTIC RELATIONS ORDERS.


 


The Plan specifically permits distributions to an Alternate Payee under
a qualified domestic relations order as defined in Code Section 414(p), at
any time, irrespective of whether the Participant has attained his earliest
retirement age, as defined in Code Section 414(p), under the Plan.  A distribution to an Alternate Payee before
the Participant has attained his earliest retirement age is available only if
the order specifies that distribution shall be made prior to the earliest
retirement age or allows the Alternate Payee to elect a distribution prior to
the earliest retirement age.


 


Nothing in this section shall permit a Participant to receive a
distribution at a time otherwise not permitted under the Plan nor shall it
permit the Alternate Payee to receive a form of payment not permitted under the
Plan.


 


The benefit payable to an Alternate Payee shall be subject to the
provisions of the SMALL AMOUNTS SECTION of Article X if the value of
the benefit (disregarding the portion, if any, of the benefit resulting from
the Participant’s Rollover Contributions) does not exceed $5,000.


 


The Plan Administrator shall establish reasonable procedures to
determine the qualified status of a domestic relations order.  Upon receiving a domestic relations order,
the Plan Administrator shall promptly notify the Participant and each Alternate
Payee named in the order, in writing, of the receipt of the order and the Plan’s
procedures for determining the qualified status of the order.  Within a reasonable period of time after
receiving the domestic relations order, the Plan Administrator shall determine
the qualified status of the order and shall notify the Participant and each
Alternate Payee, in writing, of its determination.  The Plan Administrator shall provide notice
under this paragraph by mailing to the individual’s address specified in the
domestic relations order, or in a manner consistent with Department


 


42

















 


of Labor regulations.  The Plan
Administrator may treat as qualified any domestic relations order entered
before January 1, 1985, irrespective of whether it satisfies all the
requirements described in Code Section 414(p).


 


If any portion of the Participant’s Vested Account is payable during
the period the Plan Administrator is making its determination of the qualified
status of the domestic relations order, a separate accounting shall be made of
the amount payable.  If the Plan
Administrator determines the order is a qualified domestic relations order
within 18 months of the date amounts are first payable following receipt of the
order, the payable amounts shall be distributed in accordance with the
order.  If the Plan Administrator does
not make its determination of the qualified status of the order within the
18-month determination period, the payable amounts shall be distributed in the
manner the Plan would distribute if the order did not exist and the order shall
apply prospectively if the Plan Administrator later determines the order is a
qualified domestic relations order.


 


The Plan shall make payments or distributions required under this
section by separate benefit checks or other separate distribution to the
Alternate Payee(s).


 


43

















 


ARTICLE VI


 


DISTRIBUTION
OF BENEFITS


 


SECTION 6.01—AUTOMATIC FORMS OF
DISTRIBUTION.


 


Unless an optional form of benefit is selected pursuant to a qualified
election within the election period (see the ELECTION PROCEDURES SECTION of
this article), the automatic form of benefit payable to or on behalf of a
Participant is determined as follows:


 


(a)                          Retirement Benefits.  The
automatic form of retirement benefit for a Participant who does not die before
his Annuity Starting Date shall be a single sum payment.


 


(b)                         Death Benefits.  The
automatic form of death benefit for a Participant who dies before his Annuity
Starting Date shall be a single sum payment to the Participant’s Beneficiary.


 


SECTION 6.02—OPTIONAL FORMS OF DISTRIBUTION.


 


(a)                          Retirement Benefits.  The
optional forms of retirement benefit shall be the following:  a fixed period installment option and a fixed
payment installment option.  A single sum
payment is also available.  That portion
of a Participant’s Account that is held in the Qualifying Employer Securities
Fund may be distributed in kind.


 


The fixed period installment option is an optional form of benefit
under which the Participant elects to receive substantially equal annual
payments over a fixed period of whole years. 
The annual payment may be paid in annual, semi-annual, quarterly, or
monthly installments as elected by the Participant.  The Participant may elect to receive additional
payments.


 


The fixed payment installment option is an optional form of benefit
under which the Participant elects to receive a specified dollar amount each
year.  The annual payment may be paid in
annual, semi-annual, quarterly, or monthly installments as elected by the
Participant.  The Participant may elect
to receive additional payments.


 


Under the installment options the amount payable in the Participant’s
first Distribution Calendar Year, as defined in the DEFINITIONS SECTION of
Article VII, must satisfy the minimum distribution requirements of Article VII
for such year.  Distributions for later
Distribution Calendar Years must satisfy the minimum distribution requirements
of Article VII for such years.  If
the Participant’s Annuity Starting Date does not occur until his second
Distribution Calendar Year, the amount payable for such year must satisfy the
minimum distribution requirements of Article VII for both the first and
second Distribution Calendar Years.


 


Election of an optional form is subject to the qualified election
provisions of the ELECTION PROCEDURES SECTION of this article and the
distribution requirements of Article VII.


 


Any annuity contract distributed shall be nontransferable.  The terms of any annuity contract purchased
and distributed by the Plan to a Participant or spouse shall comply with the
requirements of this Plan.


 


(b)                         Death Benefits.  The
optional forms of death benefit are a single sum payment and any annuity that
is an optional form of retirement benefit.


 


44

















 


Election of an optional form is subject to the qualified election
provisions of the ELECTION PROCEDURES SECTION of this article and the
distribution requirements of Article VII.


 


SECTION 6.03—ELECTION PROCEDURES.


 


The Participant or Beneficiary 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 qualified election provisions of (c) below.


 


(a)                          Retirement Benefits.  A
Participant may elect his Beneficiary and may elect to have retirement benefits
distributed under any of the optional forms of retirement benefit available in
the OPTIONAL FORMS OF DISTRIBUTION SECTION of this article.


 


(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 available in the
OPTIONAL FORMS OF DISTRIBUTION SECTION of this article.


 


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.


 


(c)                          Qualified Election.  The
Participant or Beneficiary may make an election at any time during the election
period.  The Participant or Beneficiary
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.


 


(1)                          Election Period for Retirement Benefits.  The
Participant may make an election as to retirement benefits at any time before
the Annuity Starting Date.


 


(2)                          Election Period for Death Benefits.  A
Participant may make an election as to death benefits at any time before he
dies.  The Beneficiary’s election period
begins on the date the Participant dies and ends on the date benefits begin.


 


(3)                          Consent to Election.  If
the Participant’s Vested Account (disregarding the portion, if any, of his
Account resulting from Rollover Contributions) exceeds $5,000, any benefit that
is immediately distributable requires the consent of the Participant.


 


The consent of the Participant to a benefit that is immediately
distributable must not be made before the date the Participant is provided with
the notice of the ability to defer the distribution.  Such consent shall be in writing.


 


The consent shall not be made more than 90 days before the Annuity
Starting Date.  The consent of the
Participant shall not be required to the extent that a distribution is required
to satisfy Code Section 401(a)(9) or 415.


 


In addition, upon termination of this Plan, if the Plan does not offer
an annuity option (purchased from a commercial provider), and if the Employer (or
any entity within the same Controlled Group) does not maintain another defined
contribution plan (other than an employee stock ownership plan as defined in
Code Section 4975(e)(7)), the Participant’s Account balance will, without
the Participant’s consent, be distributed to the Participant.  However, if any entity within the same
Controlled Group maintains another defined contribution plan (other than an
employee stock ownership plan as defined in Code Section 4975(e)(7)) then
the Participant’s Account will


 


45

















 


be transferred, without the Participant’s consent, to the other plan if
the Participant does not consent to an immediate distribution.


 


A benefit is immediately distributable if any part of the benefit could
be distributed to the Participant before the Participant attains the older of
Normal Retirement Age or age 62.


 


Spousal consent is needed to name a Beneficiary other than the
Participant’s spouse.  If the Participant
names a Beneficiary other than his spouse, the spouse has the right to limit
consent only to a specific Beneficiary. 
The spouse can relinquish such right. 
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 effect of the election, including that the spouse had the right
to limit consent only to a specific Beneficiary and that the relinquishment of
such right 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 Beneficiary, 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.


 


SECTION 6.04—NOTICE REQUIREMENTS.


 


Optional Forms of Retirement Benefit and Right to Defer.  The
Plan Administrator shall furnish to the Participant a written explanation of
the right of the Participant to defer distribution until the benefit is no
longer immediately distributable.  Such
notice shall include a written explanation of the optional forms of retirement
benefit in the OPTIONAL FORMS OF DISTRIBUTION SECTION of this article,
including a general description of the material features and an explanation of
relative values of these options, in a manner that would satisfy the notice
requirements of Code Section 417(a)(3) and section 1.417(a)(3)-1 of
the regulations.


 


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.


 


However, distribution may begin less than 30 days after the notice
described in this subparagraph is given, provided the Plan Administrator
clearly informs the Participant that he has a right to a period of at least 30
days after receiving the notice to consider the decision of whether or not to
elect a distribution (and if applicable, a particular distribution option), and
the Participant, after receiving the notice, affirmatively elects a
distribution.


 


46
















 


ARTICLE VII


 


REQUIRED
MINIMUM DISTRIBUTIONS


 


SECTION 7.01—APPLICATION.


 


The optional forms
of distribution are only those provided in Article VI.  An optional form of distribution shall not be
permitted unless it meets the requirements of this article.  The timing of any distribution must meet the
requirements of this article.  Unless
otherwise specified, the provisions of this article apply to calendar years
beginning after December 31, 2002.


 


SECTION 7.02—DEFINITIONS.


 


For
purposes of this article, the following terms are defined:


 


Designated Beneficiary means the
individual who is designated by the Participant (or the Participant’s surviving
spouse) as the Beneficiary of the Participant’s interest under the Plan and who
is the designated beneficiary under Code Section 401(a)(9) and
section 1.401(a)(9)-4 of the regulations.


 


Distribution Calendar Year means a
calendar year for which a minimum distribution is required.  For distributions beginning before the
Participant’s death, the first Distribution Calendar Year is the calendar year
immediately preceding the calendar year that contains the Participant’s
Required Beginning Date.  For
distributions beginning after the Participant’s death, the first Distribution
Calendar Year is the calendar year in which distributions are required to begin
under (b)(2) of the REQUIRED MINIMUM DISTRIBUTIONS SECTION of this
article.  The required minimum
distribution for the Participant’s first Distribution Calendar Year will be
made on or before the Participant’s Required Beginning Date.  The required minimum distribution for other
Distribution Calendar Years, including the required minimum distribution for
the Distribution Calendar Year in which the Participant’s Required Beginning
Date occurs, will be made on or before December 31 of that Distribution
Calendar Year.


 


5-percent Owner means a Participant who is treated as a
5-percent Owner for purposes of this article. 
A Participant is treated as a 5-percent Owner for purposes of this
article if such Participant is a 5-percent owner as defined in Code Section 416
at any time during the Plan Year ending with or within the calendar year in
which such owner attains age 70 1/2.


 


Once
distributions have begun to a 5-percent Owner under this article, they must
continue to be distributed, even if the Participant ceases to be a 5-percent
Owner in a subsequent year.


 


Life Expectancy means life expectancy as computed by use
of the Single Life Table in Q&A-1 in section 1.401(a)(9)-9 of the
regulations.


 


Participant’s Account Balance means the
Account balance as of the last Valuation Date in the calendar year immediately
preceding the Distribution Calendar Year (valuation calendar year) increased by
the amount of any contributions made and allocated or forfeitures allocated to
the Account as of dates in the valuation calendar year after the Valuation Date
and decreased by distributions made in the valuation calendar year after the
Valuation Date.  The Account balance for
the valuation calendar year includes any amounts rolled over or transferred to
the Plan either in the valuation calendar year or in the Distribution Calendar
Year if distributed or transferred in the valuation calendar year.


 


47

















 


Required Beginning Date means, for
a Participant who is a 5-percent Owner, April 1 of the calendar year
following the calendar year in which he attains age 70 1/2.


 


Required
Beginning Date means, for any Participant who is not a 5-percent Owner, April 1
of the calendar year following the later of the calendar year in which he
attains age 70 1/2 or the calendar year in which he retires.


 


The
preretirement age 70 1/2 distribution option is only eliminated with
respect to Participants who reach age 70 1/2 in or after a calendar year
that begins after the later of December 31, 1998, or the adoption date of
the amendment which eliminated such option. 
The preretirement age 70 1/2 distribution option is an optional
form of benefit under which benefits payable in a particular distribution form
(including any modifications that may be elected after benefits begin) begin at
a time during the period that begins on or after January 1 of the calendar
year in which the Participant attains age 70 1/2 and ends April 1 of
the immediately following calendar year.


 


The
options available for Participants who are not 5-percent Owners and attained
age 70 1/2 in calendar years before the calendar year that begins after
the later of December 31, 1998, or the adoption date of the amendment
which eliminated the preretirement age 70 1/2 distribution option shall be
the following.  Any such Participant
attaining age 70 1/2 in years after 1995 may elect by April 1 of the
calendar year following the calendar year in which he attained age 70 1/2
(or by December 31, 1997 in the case of a Participant attaining age
70 1/2 in 1996) to defer distributions until April 1 of the calendar
year following the calendar year in which he retires.  If no such election is made, the Participant
shall begin receiving distributions by April 1 of the calendar year
following the year in which the Participant attained age 70 1/2 (or by December 31,
1997 in the case of a Participant attaining age 70 1/2 in 1996).  Any such Participant attaining age
70 1/2 in years prior to 1997 may elect to stop distributions that are not
purchased annuities and recommence by April 1 of the calendar year
following the calendar year in which he retires.  There shall be a new Annuity Starting Date
upon recommencement.


 


SECTION 7.03—REQUIRED
MINIMUM DISTRIBUTIONS.


 


(a)                        General Rules.


 


(1)                        The
requirements of this article shall apply to any distribution of a Participant’s
interest and will take precedence over any inconsistent provisions of this
Plan.


 


(2)                        All
distributions required under this article shall be determined and made in
accordance with the regulations under Code Section 401(a)(9) and the
minimum distribution incidental benefit requirement of Code Section 401(a)(9)(G).


 


(b)                       Time and Manner of Distribution.


 


(1)                        Required Beginning Date.  The Participant’s entire interest will be
distributed, or begin to be distributed, to the Participant no later than the
Participant’s Required Beginning Date.


 


(2)                        Death of Participant Before Distributions Begin.  If the Participant dies before
distributions begin, the Participant’s entire interest will be distributed, or
begin to be distributed, no later than as follows:


 


(i)                          If the Participant’s surviving spouse is the Participant’s sole Designated
Beneficiary, distributions to the surviving spouse will begin by December 31
of the calendar year immediately following the calendar year in which the
Participant died, or by December 31 of the calendar year in which the
Participant would have attained age 70 1/2, if later, except to the extent
that an election is made to receive distributions in accordance with the 


 


48

















 


5-year rule under (e) below.  Under the 5-year rule, the Participant’s
entire interest will be distributed to the Designated Beneficiary by December 31
of the calendar year containing the fifth anniversary of the Participant’s
death.


 


(ii)                       If the Participant’s surviving spouse is not the Participant’s sole
Designated Beneficiary, distributions to the Designated Beneficiary will begin
by December 31 of the calendar year immediately following the calendar
year in which the Participant died, except to the extent that an election is
made to receive distributions in accordance with the 5-year rule under (e) below.  Under the 5-year rule, the Participant’s
entire interest will be distributed to the Designated Beneficiary by


 


December 31 of the calendar year containing the fifth
anniversary of the Participant’s death.


 


(iii)                    If there is no Designated Beneficiary as of September 30 of the year
following the year of the Participant’s death, the Participant’s entire
interest will be distributed by December 31 of the calendar year
containing the fifth anniversary of the Participant’s death.


 


(iv)                   If the Participant’s surviving spouse is the Participant’s sole Designated
Beneficiary and the surviving spouse dies after the Participant but before
distributions to the surviving spouse are required to begin, this (b)(2), other
than (b)(2)(i), will apply as if the surviving spouse were the Participant.


 


For purposes of this (b)(2) and (d) below, unless (b)(2)(iv) above
applies, distributions are considered to begin on the Participant’s Required
Beginning Date.  If (b)(2)(iv) above
applies, distributions are considered to begin on the date distributions are
required to begin to the surviving spouse under (b)(2)(i) above.  If distributions under an annuity purchased
from an insurance company irrevocably commence to the Participant before the
Participant’s Required Beginning Date (or to the Participant’s surviving spouse
before the date distributions are required to begin to the surviving spouse
under (b)(2)(i) above), the date distributions are considered to begin is
the date distributions actually commence.


 


(3)                        Forms of Distribution.  Unless the Participant’s interest is
distributed in the form of an annuity purchased from an insurance company or in
a single sum on or before the Required Beginning Date, as of the first
Distribution Calendar Year distributions will be made in accordance with (c) and
(d) below.  If the Participant’s
interest is distributed in the form of an annuity purchased from an insurance
company, distributions thereunder will be made in accordance with the
requirements of Code Section 401(a)(9) and the regulations
thereunder.


 


(c)                        Required Minimum Distributions During Participant’s Lifetime.


 


(1)                        Amount of Required Minimum Distribution For Each Distribution Calendar
Year. 
During the Participant’s lifetime, the minimum amount that will be
distributed for each Distribution Calendar Year is the lesser of:


 


(i)                          the quotient obtained by dividing the Participant’s Account Balance by the
distribution period in the Uniform Lifetime Table set forth in Q&A-2 in
section 1.401(a)(9)-9 of the regulations, using the Participant’s age as of the
Participant’s birthday in the Distribution Calendar Year; or


 


(ii)                       if the Participant’s sole Designated Beneficiary for the Distribution
Calendar Year is the Participant’s spouse, the quotient obtained by dividing
the Participant’s Account Balance by the number in the Joint and Last Survivor
Table set forth in Q&A-3 in section 


 


49

















 


1.401(a)(9)-9 of the regulations, using the Participant’s and
spouse’s attained ages as of the Participant’s and spouse’s birthdays in the
Distribution Calendar Year.


 


(2)                        Lifetime Required Minimum Distributions Continue Through Year of
Participant’s Death.  Required minimum distributions will be
determined under this (c) beginning with the first Distribution Calendar
Year and continuing up to, and including, the Distribution Calendar Year that
includes the Participant’s date of death.


 


(d)                       Required Minimum Distributions After Participant’s Death.


 


(1)                        Death On or After Date Distributions Begin.


 


(i)                          Participant Survived by Designated Beneficiary.  If the Participant dies on or
after the date distributions begin and there is a Designated Beneficiary, the
minimum amount that will
be distributed for each Distribution Calendar Year after the year of the
Participant’s death is the quotient obtained by dividing the Participant’s
Account Balance by the longer of the remaining Life Expectancy of the
Participant or the remaining Life Expectancy of the Participant’s Designated
Beneficiary, determined as follows:


 


A.                          The Participant’s remaining Life Expectancy is calculated using the age of
the Participant in the year of death, reduced by one for each subsequent year.


 


B.                            If the Participant’s surviving spouse is the Participant’s sole Designated
Beneficiary, the remaining Life Expectancy of the surviving spouse is
calculated for each Distribution Calendar Year after the year of the
Participant’s death using the surviving spouse’s age as of the spouse’s
birthday in that year.  For Distribution
Calendar Years after the year of the surviving spouse’s death, the remaining
Life Expectancy of the surviving spouse is calculated using the age of the
surviving spouse as of the spouse’s birthday in the calendar year of the spouse’s
death, reduced by one for each subsequent calendar year.


 


C.                            If the Participant’s surviving spouse is not the Participant’s sole
Designated Beneficiary, the Designated Beneficiary’s remaining Life Expectancy
is calculated using the age of the Beneficiary in the year following the year
of the Participant’s death, reduced by one for each subsequent year.


 


(ii)                       No Designated Beneficiary.  If the Participant dies on or after the date
distributions begin and there is no Designated Beneficiary as of September 30
of the year after the year of the Participant’s death, the minimum amount that
will be distributed for each Distribution Calendar Year after the year of the
Participant’s death is the quotient obtained by dividing the Participant’s
Account Balance by the Participant’s remaining Life Expectancy calculated using
the age of the Participant in the year of death, reduced by one for each
subsequent year.


 


(2)                        Death Before Date Distributions Begin.


 


(i)                          Participant Survived by Designated Beneficiary.  If the Participant dies before
the date distributions begin and there is a Designated Beneficiary, the minimum
amount that will be distributed for each Distribution Calendar Year after the
year of the Participant’s death is the quotient obtained by dividing the
Participant’s Account Balance by the remaining Life Expectancy of the
Participant’s Designated Beneficiary, determined as provided in (d)(1) 


 


50

















 


above, except to the extent that an election is made to
receive distributions in accordance with the 5-year rule under (e) below.  Under the 5-year rule, the Participant’s
entire interest will be distributed to the Designated Beneficiary by December 31
of the calendar year containing the fifth anniversary of the Participant’s
death.


 


(ii)                       No Designated Beneficiary.  If the Participant dies before the date
distributions begin and there is no Designated Beneficiary as of September 30
of the year following the year of the Participant’s death, distribution of the
Participant’s entire interest will be completed by December 31 of the
calendar year containing the fifth anniversary of the Participant’s death.


 


(iii)                    Death of Surviving Spouse Before Distributions to Surviving Spouse Are
Required to Begin.  If the Participant dies before the date
distributions begin, the Participant’s surviving spouse is the Participant’s
sole Designated Beneficiary, and the surviving spouse dies before distributions
are required to begin to the surviving spouse under (b)(2)(i) above, this
(d)(2) will apply as if the surviving spouse were the Participant.


 


(e)                        Election of 5-year Rule.  Participants or Beneficiaries may elect on an
individual basis whether the 5-year rule in (b)(2) and (d)(2) above
applies to distributions after the death of a Participant who has a Designated
Beneficiary.  The election must be made
no later than the earlier of September 30 of the calendar year in which the
distribution would be required to begin under (b)(2) above if no such
election is made, or by September 30 of the calendar year which contains
the fifth anniversary of the Participant’s (or, if applicable, surviving spouse’s)
death.


 


SECTION 7.04—TRANSITION
RULES.


 


To the extent the
Plan was effective before 2003, required minimum distributions were made
pursuant to (a) and (b) below:


 


(a)                        2000
and Before.  Required minimum
distributions for calendar years after 1984 and before 2001 were made in
accordance with Code Section 401(a)(9) and the proposed regulations
thereunder published in the Federal Register on July 27, 1987 (the 1987
Proposed Regulations).


 


(b)                       2001
and 2002.  Required minimum
distributions for calendar years 2001 and 2002 were made pursuant to the
proposed regulations under Code Section 401(a)(9) published in the
Federal Register on January 17, 2001 (the 2001 Proposed Regulations).  Distributions were made in 2001 under the
1987 Proposed Regulations prior to June 14, 2001, and the special transition
rule in Announcement 2001-82, 2001-2 C.B. 123, applied.


 


51

















 


ARTICLE VIII


 


TERMINATION OF THE 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 constitutes complete
termination of the Plan.


 


The Account of
each Participant shall be 100% vested and nonforfeitable as of the effective
date of complete termination of the Plan. 
The Account of each Participant who is included in the group of
Participants deemed to be affected by the partial termination of the Plan shall
be 100% vested and nonforfeitable as of the effective date of the partial
termination of the Plan.  The Participant’s
Vested Account shall continue to participate in the earnings credited, expenses
charged, and any appreciation or depreciation of the Investment Fund until his
Vested Account is distributed.


 


A Participant’s
Vested Account that does not result from the Contributions listed below may be
distributed to the Participant after the effective date of the complete
termination of the Plan:


 


Elective Deferral
Contributions


 


Qualified
Nonelective Contributions


 


A Participant’s
Vested Account resulting from such Contributions may be distributed upon
complete termination of the Plan, but only if neither the Employer nor any
Controlled Group member maintain another defined contribution plan (other than
an employee stock ownership plan as defined in Code Section 4975(e)(7) or
409(a), a simplified employee pension plan as defined in Code Section 408(k),
a SIMPLE IRA plan as defined in Code Section 408(p), a plan or contract
that satisfies the requirements of Code Section 403(b), or a plan
described in Code Section 457(b) or (f)) at any time during the
period beginning on the date of complete termination of the Plan and ending 12
months after all assets have been distributed from the Plan.  Such distribution is made in a lump sum.  A distribution under this article shall be a
retirement benefit and shall be distributed to the Participant according to the
provisions of Article VI.  However,
the fixed period and fixed payment installment options shall not be available.


 


If
a Participant or Beneficiary is receiving payments under the fixed period or
fixed payment installment option, the Vested Account shall be paid to such
person in a single sum.


 


The Participant’s
entire Vested Account shall be paid in a single sum to the Participant as of
the effective date of complete termination of the Plan if (i) the
requirements for distribution of Elective Deferral Contributions in the above
paragraph are met and (ii) consent of the Participant is not required in
the ELECTION PROCEDURES SECTION of Article VI to distribute a benefit
that is immediately distributable.  This
is a small amounts payment.  The small
amounts payment is in full settlement of all benefits otherwise payable.


 


Upon complete
termination of the 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, except that, after the satisfaction of all liabilities under the
Plan, any assets remaining may be paid to the Employer.  The payment may not be made if it would
contravene any provision of law.


 


52

















 


ARTICLE IX


 


ADMINISTRATION
OF THE PLAN


 


SECTION 9.01—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
complete discretion to construe or interpret the provisions of the Plan,
including ambiguous provisions, if any, 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 or Beneficiary 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 or Annuity Contract, the Plan Administrator may delegate
recordkeeping and other duties which are necessary to assist it with 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 and Beneficiaries.  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 9.02—EXPENSES.


 


Expenses of the
Plan, to the extent that the Employer does not pay such expenses, may be paid
out of the assets of the Plan provided that such payment is consistent with
ERISA.  Such expenses include, but are
not limited to, expenses for bonding required by ERISA; expenses for
recordkeeping and other administrative services; fees and expenses of the
Trustee or Annuity Contract; expenses for investment education service; and
direct costs that the Employer incurs with respect to the Plan.  Expenses that relate solely to a specific
Participant or Alternate Payee may be assessed against such Participant or
Alternate Payee as provided in the service and expense agreement or such other
documents duly entered into by or with regard to the Plan that govern such
matters.


 


SECTION 9.03—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 9.04—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 Annuity 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 


 


53

















 


benefits under the
Plan, the Plan Administrator shall furnish him with a copy of any of these
items.  The Plan Administrator may make a
reasonable charge to the requesting person for the copy.


 


SECTION 9.05—CLAIM
PROCEDURES.


 


A Claimant must
submit any necessary forms and needed information when making a claim for
benefits under the Plan.


 


If a claim for
benefits under the Plan is wholly or partially 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 without regard to whether all of the information necessary to make
a benefit determination is received.  The
Claimant shall be notified in writing within this initial 90-day period if
special circumstances require an extension of the time needed to process the
claim.  The notice shall indicate the
special circumstances requiring an extension of time and the date by which the
Plan Administrator’s decision is expected to be rendered.  In no event shall such extension exceed a
period of 90 days from the end of the initial 90-day period.


 


The Plan
Administrator’s notice to the Claimant shall: (i) specify the reason or
reasons for the denial; (ii) reference the specific Plan provisions on
which the denial is based; (iii) describe any additional material and
information needed for the Claimant to perfect his claim for benefits; (iv) explain
why the material and information is needed; and (v) inform the Claimant of
the Plan’s appeal procedures and the time limits applicable to such procedures,
including a statement of the Claimant’s right to bring a civil action under
ERISA section 502(a) following an adverse benefit determination on appeal.


 


Any appeal made by
a Claimant must be made in writing to the Plan Administrator within 60 days
after receipt of the Plan Administrator’s notice of denial of benefits.  If the Claimant appeals to the Plan
Administrator, the Claimant may submit written comments, documents, records,
and other information relating to the claim for benefits.  The Claimant shall be provided, upon request
and free of charge, reasonable access to, and copies of, all documents,
records, and other information relevant to the Claimant’s claim for
benefits.  The Plan Administrator shall
review the claim taking into account all comments, documents, records, and
other information submitted by the Claimant relating to the claim, without
regard to whether such information was submitted or considered in the initial
benefit determination.


 


The Plan
Administrator shall provide adequate written notice to the Claimant of the Plan’s
benefit determination on review.  The
notice must be furnished within 60 days of the date that the request for review
is received by the Plan without regard to whether all of the information
necessary to make a benefit determination on review is received.  The Claimant shall be notified in writing
within this initial 60-day period if special circumstances require an extension
of the time needed to process the claim. 
The notice shall indicate the special circumstances requiring an
extension of time and the date by which the Plan Administrator expects to
render the determination on review.  In
no event shall such extension exceed a period of 60 days from the end of the
initial 60-day period.


 


In the event the
benefit determination is being made by a committee or board of trustees that
hold regularly scheduled meetings at least quarterly, the above paragraph shall
not apply.  The benefit determination
must be made by the date of the meeting of the committee or board that
immediately follows the Plan’s receipt of a request for review, unless the
request for review is filed within 30 days preceding the date of such
meeting.  In such case, the benefit
determination must be made by the date of the second meeting following the Plan’s
receipt of the request for review.  The
date of the receipt of the request for review shall be determined without
regard to whether all of the information necessary to make a benefit
determination on review is received.  The
Claimant shall be notified in writing within this initial period if special
circumstances require an extension of the time needed to process the
claim.  The notice shall indicate the
special circumstances requiring an extension of time and the date by which the
committee or board expects to render the determination on review.  In no event shall such benefit determination
be made later than 


 


54

















 


the third meeting
of the committee or board following the Plan’s receipt of the request for
review.  The Plan Administrator shall
provide adequate written notice to the Claimant of the Plan’s benefit
determination on review as soon as possible, but not later than five days after
the benefit determination is made.


 


If the claim for
benefits is wholly or partially denied on review, the Plan Administrator’s
notice to the Claimant shall: (i) specify the reason or reasons for the
denial; (ii) reference the specific Plan provisions on which the denial is
based; (iii) include a statement that the Claimant is entitled to receive,
upon request and free of charge, reasonable access to, and copies of, all
documents, records, and other information relevant to the Claimant’s claim for
benefits; and (iv) include a statement of the Claimant’s right to bring a
civil action under ERISA section 502(a).


 


A Claimant may
authorize a representative to act on the Claimant’s behalf with respect to a
benefit claim or appeal of an adverse benefit determination.  Such authorization shall be made by
completion of a form furnished for that purpose.  In the absence of any contrary direction from
the Claimant, all information and notifications to which the Claimant is
entitled shall be directed to the authorized representative.


 


The Plan
Administrator shall perform periodic examinations, reviews, or audits of
benefit claims to determine whether claims determinations are made in
accordance with the governing Plan documents and, where appropriate, Plan
provisions have been consistently applied with respect to similarly situated
Claimants.


 


SECTION 9.06—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.


 


SECTION 9.07—EXERCISE OF
DISCRETIONARY AUTHORITY.


 


The Employer, Plan Administrator, and any other person or
entity who has authority with respect to the management, administration, or
investment of the Plan may exercise that authority in its/his full discretion,
subject only to the duties imposed under ERISA. 
This discretionary authority includes, but is not limited to, the
authority to make any and all factual determinations and interpret all terms
and provisions of the Plan documents relevant to the issue under
consideration.  The exercise of authority
will be binding upon all persons; will be given deference in all courts of law
to the greatest extent allowed under law; and will not be overturned or set aside
by any court of law unless found to be arbitrary and capricious or made in bad
faith.


 


SECTION 9.08—TRANSACTION
PROCESSING.


 


Transactions (including, but not limited
to, investment directions, trades, loans, and distributions) shall be processed
as soon as administratively practicable after proper directions are received
from the Participant or other parties. 
No guarantee is made by the Plan, Plan Administrator, Trustee, Insurer,
or Employer that such transactions will be processed on a daily or other basis,
and no guarantee is made in any respect regarding the processing time of such
transactions.


 


Notwithstanding
any other provision of the Plan, the Employer, the Plan Administrator, or the
Trustee reserves the right to not value an investment option on any given
Valuation Date for any reason deemed appropriate by the Employer, the Plan
Administrator, or the Trustee.


 


Administrative practicality will be
determined by legitimate business factors (including, but not limited to,
failure of systems or computer programs, failure of the means of the
transmission of data, force majeure, the failure of a service provider to
timely receive values or prices, and correction for errors or omissions or the
errors or omissions of 


 


55

















 


any service provider) and in no event will
be deemed to be less than 14 days.  The
processing date of a transaction shall be binding for all purposes of the Plan
and considered the applicable Valuation Date for any transaction.


 


SECTION 9.09—VOTING AND
TENDER OF QUALIFYING EMPLOYER SECURITIES.


 


Voting rights with
respect to Qualifying Employer Securities will be passed through to
Participants.  Participants will be
allowed to direct the voting rights of Qualifying Employer Securities for any matter
put to the vote of shareholders.  Before
each meeting of shareholders, the Governing Board shall cause to be sent to
each person with power to control such voting rights a copy of any notice and
any other information provided to shareholders and, if applicable, a form for
instructing the Trustee how to vote at such meeting (or any adjournment
thereof) the number of full and fractional shares subject to such person’s
voting control.  The Trustee may
establish a deadline in advance of the meeting by which such forms must be
received in order to be effective.


 


Each Participant
shall be entitled to one vote for each share credited to his Account.


 


If some or all of
the Participants have not directed or have not timely directed the Trustee on
how to vote, then the Trustee shall vote such Qualifying Employer Securities in
the same proportion as those shares of Qualifying Employer Securities for which
the Trustee has received proper direction for such matter.


 


Tender rights or exchange offers for Qualifying Employer
Securities will be passed through to Participants.  As soon as practicable after the commencement
of a tender or exchange offer for Qualifying Employer Securities, the Governing
Board shall cause each person with power to control the response to such tender
or exchange offer to be advised in writing the terms of the offer and, if
applicable, to be provided with a form for instructing the Trustee, or for
revoking such instruction, to tender or exchange shares of Qualifying Employer
Securities, to the extent permitted under the terms of such offer.  In advising such persons of the terms of the
offer, the Governing Board may include statements from the board of directors
setting forth its position with respect to the offer.


 


If some or all of
the Participants have not directed or have not timely directed the Trustee on
how to tender, then the Trustee shall tender such Qualifying Employer
Securities in the same proportion as those shares of Qualifying Employer
Securities for which the Trustee has received proper direction for such matter.


 


If the tender or
exchange offer is limited so that all of the shares that the Trustee has been
directed to tender or exchange cannot be sold or exchanged, the shares that
each Participant directed to be tendered or exchanged shall be deemed to have
been sold or exchanged in the same ratio that the number of shares actually
sold or exchanged bears to the total number of shares that the Trustee was
directed to tender or exchange.


 


The Trustee shall hold the Participant’s individual
directions with respect to voting rights or tender decisions in confidence and,
except as required by law, shall not divulge or release such individual
directions to anyone associated with the Employer.  The Employer may require verification of the
Trustee’s compliance with the directions received from Participants by any
independent auditor selected by the Employer, provided that such auditor agrees
to maintain the confidentiality of such individual directions.


 


The Governing
Board may develop procedures to facilitate the exercise of votes or tender
rights, such as the use of facsimile transmissions for the Participants located
in physically remote areas.


 


56
















 


ARTICLE X


 


GENERAL
PROVISIONS


 


SECTION 10.01—AMENDMENTS.


 


The Employer may
amend this Plan at any time, including any remedial retroactive changes (within
the time specified by Internal Revenue Service regulations), to comply with any
law or regulation issued by any governmental agency to which the Plan is
subject.  The Governing Board shall also
have the authority to amend this Plan at any time as long as such amendment
does not materially increase the cost of the Plan to the Employer.


 


An amendment may not
allow reversion or diversion of Plan assets to the Employer at any time, except
as may be required to comply with any law or regulation issued by any
governmental agency to which the Plan is subject.


 


An amendment may
not eliminate or reduce a section 411(d)(6) protected benefit, as defined
in Q&A-1 in section 1.411(d)-4 of the regulations, that has already
accrued, except as provided in 1.411(d)-3 or 1.411(d)-4 of the
regulations.  This is generally the case
even if such elimination or reduction is contingent upon the Employee’s
consent.  However, the Plan may be
amended to eliminate or reduce section 411(d)(6) protected benefits with
respect to benefits not yet accrued as of the later of the amendment’s adoption
date or the effective date without violating Code Section 411(d)(6).  Notwithstanding the preceding provisions, a
Participant’s Account may be reduced to the extent permitted under Code Section 412(c)(8).


 


If, as a result of
an amendment, an Employer Contribution is removed that is not 100% immediately
vested when made, the applicable vesting schedule shall remain in effect after
the date of such amendment.  The
Participant shall not become immediately 100% vested in such Contributions as a
result of the elimination of such Contribution except as otherwise specifically
provided in the Plan.


 


An amendment shall
not decrease a Participant’s vested interest in the Plan.  If an amendment to the Plan, or a deemed
amendment in the case of a change in top-heavy status of the Plan as provided
in the MODIFICATION OF VESTING REQUIREMENTS SECTION of Article XI,
changes the computation of the percentage used to determine that portion of a
Participant’s Account attributable to Employer Contributions which is
nonforfeitable (whether directly or indirectly), in the case of an Employee who
is a Participant as of the later of the date such amendment or change is
adopted or the date it becomes effective, the nonforfeitable percentage
(determined as of such date) of such Employee’s right to his Account
attributable to Employer Contributions shall not be less than his percentage
computed under the Plan without regard to such amendment or change.  Furthermore, each Participant or former
Participant


 


(a)                        who
has completed at least three Years of Service on the date the election period
described below ends (five Years of Service if the Participant does not have at
least one Hour of Service in a Plan Year beginning after December 31,
1988) and


 


(b)                       whose
nonforfeitable percentage will be determined on any date after the date of the
change


 


may elect, during
the election period, to have the nonforfeitable percentage of his Account that
results from Employer Contributions determined without regard to the
amendment.  This election may not be
revoked.  If after the Plan is changed,
the Participant’s nonforfeitable percentage will at all times be as great as it
would have been if the change had not been made, no election needs to be
provided.  The election period shall
begin no later than the date the Plan amendment is adopted, or deemed adopted
in the case of a change in the top-heavy status of the Plan, and end no earlier
than the 60th day after the latest of the date the amendment is adopted (deemed
adopted) or 


 


57

















 


becomes effective,
or the date the Participant is issued written notice of the amendment (deemed
amendment) by the Employer or the Plan Administrator.


 


For an amendment
adopted after August 9, 2006, with respect to a Participant’s Account
attributable to Employer Contributions accrued as of the later of the adoption
or effective date of the amendment and earnings, the vested percentage of the
Participant will be the greater of the vested percentage under the old vesting
schedule or the vested percentage under the new vesting schedule.


 


SECTION 10.02—DIRECT
ROLLOVERS.


 


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.


 


In the event of a
mandatory distribution of an Eligible Rollover Distribution greater than $1,000
in accordance with the SMALL AMOUNTS SECTION of this article (or which is
a small amounts payment under Article VIII at complete termination of the
Plan), if the Participant does not elect to have such distribution paid
directly to an Eligible Retirement Plan specified by the Participant in a
Direct Rollover or to receive the distribution directly, the Plan Administrator
will pay the distribution in a Direct Rollover to an individual retirement plan
designated by the Plan Administrator.


 


In the event of
any other Eligible Rollover Distribution to a Distributee in accordance with
the SMALL AMOUNTS SECTION of this article (or which is a small amounts
payment under Article VIII at complete termination of the Plan), if the
Distributee does not elect to have such distribution paid directly to an
Eligible Retirement Plan specified by the Distributee in a Direct Rollover or
to receive the distribution directly, the Plan Administrator will pay the
distribution to the Distributee.


 


A mandatory
distribution is a distribution to a Participant that is made without the
Participant’s consent and is made to the Participant before he attains the
older of age 62 or his Normal Retirement Age.


 


SECTION 10.03—MERGERS AND
DIRECT TRANSFERS.


 


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 this Plan would (if
that plan then terminated) receive a benefit immediately after the merger,
consolidation, or transfer that 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).  The Employer may enter into merger agreements
or direct transfer of assets agreements with the employers under other
retirement plans which are qualifiable under Code Section 401(a),
including an elective transfer, and may accept the direct transfer of plan
assets, or may transfer plan assets, as a party to any such agreement.  The Employer shall not consent to, or be a
party to a merger, consolidation, or transfer of assets with a plan which is
subject to the survivor annuity requirements of Code Section 401(a)(11) if
such action would result in a survivor annuity feature being maintained under
this Plan.  The Employer will not
transfer any amounts attributable to elective deferral contributions, qualified
matching contributions, and qualified nonelective contributions unless the
transferee plan provides that the limitations of section 1.401(k)-1(d) of the
regulations shall apply to such amounts (including post-transfer earnings
thereon), unless the amounts could have been distributed at the time of the
transfer (other than for hardship), and the transfer is an elective transfer
described in Q&A-3(b)(1) in section 1.411(d)-4 of the regulations.


 


Notwithstanding any provision of the Plan to the contrary,
to the extent any optional form of benefit under the Plan permits a
distribution prior to the Employee’s retirement, death, disability, or
Severance from Employment, and prior to plan termination, the optional form of
benefit is not available with respect to benefits attributable to assets 


 


58

















 


(including the post-transfer earnings thereon) and
liabilities that are transferred, within the meaning of Code Section 414(l),
to this Plan from a money purchase pension plan qualified under Code Section 401(a) (other
than any portion of those assets and liabilities attributable to voluntary
employee contributions).  The limitations
of section 1.401(k)-1(d) of the regulations applicable to elective
deferral contributions, qualified matching contributions, and qualified
nonelective contributions shall continue to apply to any amounts attributable
to such contributions (including post-transfer earnings thereon) transferred to
this Plan, unless the amounts could have been distributed at the time of the
transfer (other than for hardship), and the transfer is an elective transfer
described in Q&A-3(b)(1) in section 1.411(d)-4 of the regulations.


 


The Plan may
accept a direct transfer of plan assets on behalf of an Eligible Employee.  If the Eligible Employee is not an Active
Participant when the transfer is made, the Eligible Employee shall be deemed to
be an Active Participant only for the purpose of investment and distribution of
the transferred assets.  Employer
Contributions shall not be made for or allocated to the Eligible Employee,
until the time he meets all of the requirements to become an Active
Participant.


 


The Plan shall hold, administer, and distribute the
transferred assets as a part of the Plan. 
The Plan shall maintain a separate account for the benefit of the
Employee on whose behalf the Plan accepted the transfer in order to reflect the
value of the transferred assets.


 


A Participant’s
section 411(d)(6) protected benefits, as defined in Q&A-1 in section
1.411(d)-4 of the regulations, may not be eliminated by reason of transfer or
any transaction amending a plan or plans to transfer benefits except as
provided below.


 


A Participant’s
section 411(d)(6) protected benefits may be eliminated or reduced upon
transfer between qualified defined contribution plans if the conditions in
Q&A-3(b)(1) in section 1.411(d)-4 of the regulations are met.  The transfer must meet all of the other
applicable qualification requirements.


 


A Participant’s
section 411(d)(6) protected benefits may be eliminated or reduced if a
transfer is an elective transfer of certain distributable benefits between
qualified plans (both defined benefit and defined contribution) and the
conditions in Q&A-3(c)(1) in section 1.411(d)-4 of the regulations are
met.  The rules applicable to
distributions under the plan would apply to the transfer, but the transfer
would not be treated as a distribution for purposes of the minimum distribution
requirements of Code Section 401(a)(9). 
Beginning January 1, 2002, if the Participant is eligible to
receive an immediate distribution of his entire nonforfeitable accrued benefit
in a single sum distribution that would consist entirely of an eligible
rollover distribution under Code Section 401(a)(31), such transfer will be
accomplished as a direct rollover under Code Section 401(a)(31).


 


SECTION 10.04—PROVISIONS
RELATING TO THE INSURER AND OTHER PARTIES.


 


The obligations of
an Insurer shall be governed solely by the provisions of the Annuity
Contract.  The Insurer shall not be
required to perform any act not provided in or contrary to the provisions of
the Annuity Contract.  Each Annuity
Contract when purchased shall comply with the Plan.  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 Trustee
with regard to such investment contracts or securities.


 


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, the Trustee, or the Named Fiduciary have the
authority to act in any particular manner or to make any contract or agreement.


 


59

















 


Until notice of
any amendment or termination of this Plan or a change in Trustee 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
Trustee according to the latest information which they have received at their
home office or principal address.


 


SECTION 10.05—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 10.06—RIGHTS TO
PLAN ASSETS.


 


An Employee shall
not have any right to or interest in any assets of the Plan upon termination of
employment or otherwise except as specifically provided under this Plan, and
then only to the extent of the benefits payable to such Employee according to
the Plan provisions.


 


Any final payment
or distribution to a Participant or his legal representative or to any
Beneficiaries 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, the Trustee, and the Employer arising under or by
virtue of the Plan.


 


SECTION 10.07—BENEFICIARY.


 


Each Participant
may name a Beneficiary to receive any death benefit 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 the Participant’s
Retirement Date, the Beneficiary of a Participant who has a spouse 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 PROCEDURES SECTION of Article VI.


 


It is the responsibility of the Participant to give written
notice to the Plan Administrator of the name of the Beneficiary on a form
furnished for that purpose.  The Plan
Administrator shall maintain records of Beneficiary designations for
Participants before their Retirement Dates. 
However, the Plan Administrator may delegate to another party the
responsibility of maintaining records of Beneficiary designations.  In that event, the written designations made
by Participants shall be filed with such other party.  If a party other than the Insurer maintains
the records of Beneficiary designations and a Participant dies before his
Retirement Date, such other party shall certify to the Insurer the Beneficiary
designation on its records for the Participant.


 


If there is no Beneficiary named or surviving when a
Participant dies, the Participant’s Beneficiary shall be the Participant’s
surviving spouse, or where there is no surviving spouse, the executor or
administrator of the Participant’s estate.


 


Except to the extent otherwise provided in a qualified
domestic relations order (as defined in Code Section 414(p)):


 


(i)                                   Any actual designation of a spouse as a Participant’s Beneficiary on a
form accepted by the Plan Administrator hereunder shall continue to be valid
and will not be revoked notwithstanding a later divorce of the spouse from the
Participant, until and unless the Participant changes his designated
Beneficiary in accordance with the procedures established by the Plan
Administrator.


 


(ii)                                If the Participant’s spouse is deemed to be the Participant’s Beneficiary
at any time on account of an absence of any other valid Beneficiary designation
and the Participant and spouse divorce, the Participant’s former spouse shall
not be treated as a Beneficiary hereunder until and unless the 


 


60

















 


Participant specifically designates such person as his
Beneficiary in accordance with the procedures established by the Plan
Administrator.


 


(iii)                             If a Participant remarries after a divorce, the new spouse will
automatically be treated as the sole designated Beneficiary hereunder until and
unless a waiver and designation of an alternate Beneficiary are thereafter
delivered in accordance with the procedures established by the Plan
Administrator.


 


SECTION 10.08—NONALIENATION
OF BENEFITS.


 


Benefits payable under the Plan are not subject to the claims
of any creditor of any Participant or Beneficiary.  A Participant or Beneficiary does not have
any rights to alienate, anticipate, commute, pledge, encumber, or assign 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 Code Section 414(p), or
any domestic relations order entered before January 1, 1985.  The preceding sentences shall not apply to
any offset of a Participant’s benefits provided under the Plan against an
amount the Participant is required to pay the Plan with respect to a judgment,
order, or decree issued, or a settlement entered into, on or after August 5,
1997, which meets the requirements of Code Sections 401(a)(13)(C) or (D).


 


SECTION 10.09—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 Annuity
Contract issued hereunder, the provisions of the Plan control.


 


SECTION 10.10—LEGAL
ACTIONS.


 


No person employed
by the Employer; no Participant, former Participant, or their Beneficiaries;
nor 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.


 


SECTION 10.11—SMALL
AMOUNTS.


 


If consent of the
Participant is not required for a benefit that is immediately distributable in
the ELECTION PROCEDURES SECTION of Article VI, a Participant’s entire
Vested Account shall be paid in a single sum as of the earliest of his
Retirement Date, the date he dies, or the date he has a Severance from
Employment for any other reason (the date the Employer provides notice to the
record keeper of the Plan of such event, if later).  For purposes of this section, if the
Participant’s Vested Account is zero, the Participant shall be deemed to have
received a distribution of such Vested Account. 
If a Participant would have received a distribution under the first
sentence of this paragraph but for the fact that the Participant’s consent was
needed to distribute a benefit which is immediately distributable, and if at a
later time consent would not be needed to distribute a benefit that is
immediately distributable and such Participant has not again become an
Employee, such Vested Account shall be paid in a single sum.  This is a small amounts payment.


 


61

















 


If a small amounts
payment is made as of the date the Participant dies, the small amounts payment
shall be made to the Participant’s Beneficiary. 
If a small amounts payment is made 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.


 


No other small
amounts payments shall be made.


 


SECTION 10.12—WORD USAGE.


 


The masculine
gender, where used in this Plan, shall include the feminine gender and the
singular words, where used in this Plan, shall include the plural, unless the
context indicates otherwise.


 


The words “in
writing” and “written,” where used in this Plan, shall include any other forms,
such as voice response or other electronic system, as permitted by any
governmental agency to which the Plan is subject.


 


SECTION 10.13—CHANGE IN
SERVICE METHOD.


 


(a)                        Change
of Service Method Under This Plan. 
If this Plan is amended to change the method of crediting service from
the elapsed time method to the hours method for any purpose under this Plan,
the Employee’s service shall be equal to the sum of (1), (2), and (3) below:


 


(1)                        The
number of whole years of service credited to the Employee under the Plan as of
the date the change is effective.


 


(2)                        One
year of service for the computation period in which the change is effective if
he is credited with the required number of Hours of Service.  For that portion of the computation period
ending on the date of the change (for the first day of the computation period
if the change is made on the first day of the computation period), the Employee
will be credited with the greater of (i) his actual Hours of Service or (ii) the
number of Hours of Service that is equivalent to the fractional part of a year
of elapsed time service credited as of the date of the change, if any.  In determining the equivalent Hours of
Service, the Employee shall be credited with 190 Hours of Service for each
month and any fractional part of a month in such fractional part of a
year.  The number of months and any
fractional part of a month shall be determined by multiplying the fractional
part of a year, expressed as a decimal, by 12. 
For the remaining portion of the computation period (the period
beginning on the second day of the computation period and ending on the last
day of the computation period if the change is made on the first day of the
computation period), the Employee will be credited with his actual Hours of
Service.


 


(3)                        The
Employee’s service determined under this Plan using the hours method after the
end of the computation period in which the change in service method was
effective.


 


If this Plan is
amended to change the method of crediting service from the hours method to the
elapsed time method for any purpose under this Plan, the Employee’s service
shall be equal to the sum of (4), (5), and (6) below:


 


(4)                        The
number of whole years of service credited to the Employee under the Plan as of
the beginning of the computation period in which the change in service method
is effective.


 


(5)                        The
greater of (i) the service that would be credited to the Employee for that
entire computation period using the elapsed time method or (ii) the
service credited to him under the Plan as of the date the change is effective.


 


62

















 


(6)                        The
Employee’s service determined under this Plan using the elapsed time method
after the end of the applicable computation period in which the change in
service method was effective.


 


(b)                       Transfers
Between Plans with Different Service Methods.  If an Employee has been a participant in
another plan of the Employer that credited service under the elapsed time
method for any purpose that under this Plan is determined using the hours
method, then the Employee’s service shall be equal to the sum of (1), (2), and (3) below:


 


(1)                        The
number of whole years of service credited to the Employee under the other plan
as of the date he became an Eligible Employee under this Plan.


 


(2)                        One
year of service for the applicable computation period in which he became an
Eligible Employee if he is credited with the required number of Hours of
Service.  For that portion of such
computation period ending on the date he became an Eligible Employee (for the
first day of such computation period if he became an Eligible Employee on the
first day of such computation period), the Employee will be credited with the
greater of (i) his actual Hours of Service or (ii) the number of
Hours of Service that is equivalent to the fractional part of a year of elapsed
time service credited as of the date he became an Eligible Employee, if
any.  In determining the equivalent Hours
of Service, the Employee shall be credited with 190 Hours of Service for each
month and any fractional part of a month in such fractional part of a
year.  The number of months and any
fractional part of a month shall be determined by multiplying the fractional
part of a year, expressed as a decimal, by 12. 
For the remaining portion of such computation period (the period
beginning on the second day of such computation period and ending on the last
day of such computation period if he became an Eligible Employee on the first
day of such computation period), the Employee will be credited with his actual
Hours of Service.


 


(3)                        The
Employee’s service determined under this Plan using the hours method after the
end of the computation period in which he became an Eligible Employee.


 


If an Employee has
been a participant in another plan of the Employer that credited service under
the hours method for any purpose that under this Plan is determined using the
elapsed time method, then the Employee’s service shall be equal to the sum of
(4), (5), and (6) below:


 


(4)                        The
number of whole years of service credited to the Employee under the other plan
as of the beginning of the computation period under that plan in which he
became an Eligible Employee under this Plan.


 


(5)                        The
greater of (i) the service that would be credited to the Employee for that
entire computation period using the elapsed time method or (ii) the
service credited to him under the other plan as of the date he became an
Eligible Employee under this Plan.


 


(6)                        The
Employee’s service determined under this Plan using the elapsed time method
after the end of the applicable computation period under the other plan in
which he became an Eligible Employee.


 


If an Employee has
been a participant in a Controlled Group member’s plan that credited service
under a different method than is used in this Plan, in order to determine entry
and vesting, the provisions in (b) above shall apply as though the
Controlled Group member’s plan was a plan of the Employer.


 


63

















 


Any modification
of service contained in this Plan shall be applicable to the service determined
pursuant to this section.


 


SECTION 10.14—MILITARY
SERVICE.


 


Notwithstanding
any provision of this Plan to the contrary, the Plan shall provide
contributions, benefits, and service credit with respect to qualified military
service in accordance with Code Section 414(u).


 


SECTION 10.15—INDEMNIFICATION.


 


To the extent not
prohibited by state or federal law, the Employer agrees to, and shall indemnify
and hold harmless, as the case may be, each Employee, officer or director of
the Employer, or of an affiliate, who has responsibilities with respect to the
operation or administration of the Plan, or the management or investment of any
of the assets of the Plan, from all claims for liability, loss, damage or
expense (including payment of reasonable expenses in connection with the
defense against such claim) which result from any exercise or failure to
exercise any of the indemnified person’s responsibilities with respect to the
Plan, other than by reason of gross negligence.


 


64

















 


ARTICLE XI


 


TOP-HEAVY
PLAN REQUIREMENTS


 


SECTION 11.01—APPLICATION.


 


The provisions of
this article shall supersede all other provisions in the Plan to the contrary.  The provisions of this article shall apply
for purposes of determining whether the Plan is a Top-heavy Plan for Plan Years
beginning after December 31, 2001, and whether the Plan satisfies the
minimum benefit requirements of Code Section 416(c) for such years.


 


For the purpose of
applying the Top-heavy Plan requirements of this article, all members of the
Controlled Group shall be treated as one Employer.  The term Employer, as used in this article,
shall be deemed to include all members of the Controlled Group, unless the term
as used clearly indicates only the Employer is meant.


 


The accrued
benefit or account of a participant that results from deductible employee
contributions shall not be included for any purpose under this article.


 


The minimum
vesting and contribution provisions of the MODIFICATION OF VESTING REQUIREMENTS
and MODIFICATION OF CONTRIBUTIONS SECTIONS of this article shall not apply to
any Employee who is included in a group of Employees covered by a collective
bargaining agreement which the Secretary of Labor finds to be a collective
bargaining agreement between employee representatives and one or more
employers, including the Employer, if there is evidence that retirement
benefits were the subject of good faith bargaining between such
representatives.  For this purpose, the
term “employee representatives” does not include any organization more than
half of whose members are employees who are owners, officers, or executives.


 


SECTION 11.02—DEFINITIONS.


 


For purposes of
this article the following terms are defined:


 


Aggregation
Group means:


 


(a)                        each
of the Employer’s qualified plans in which a Key Employee is a participant
during the Plan Year containing the Determination Date (regardless of whether
the plans have terminated) or one of the four preceding Plan Years,


 


(b)                       each
of the Employer’s other qualified plans which allows the plan(s) described
in (a) above to meet the nondiscrimination requirement of Code Section 401(a)(4) or
the minimum coverage requirement of Code Section 410, and


 


(c)                        any
of the Employer’s other qualified plans not included in (a) or (b) above
which the Employer desires to include as part of the Aggregation Group.  Such a qualified plan shall be included only
if the Aggregation Group would continue to satisfy the requirements of Code
Sections 401(a)(4) and 410.


 


The plans in (a) and
(b) above constitute the “required” Aggregation Group.  The plans in (a), (b), and (c) above
constitute the “permissive” Aggregation Group.


 


Compensation
means compensation as defined in the CONTRIBUTION LIMITATION SECTION of Article III.


 


65

















 


Determination
Date means as to any plan, for any plan year subsequent to
the first plan year, the last day of the preceding plan year.  For the first plan year of the plan, the
Determination Date is the last day of that year.


 


Key
Employee means any Employee or former Employee (including any
deceased Employee) who at any time during the Plan Year that includes the
Determination Date is:


 


(a)                        an
officer of the Employer having Compensation for the Plan Year greater than
$130,000 (as adjusted under Code Section 416(i)(1) for Plan Years
beginning after December 31, 2002),


 


(b)                       a
5-percent owner of the Employer, or


 


(c)                        a
1-percent owner of the Employer having Compensation for the Plan Year of more
than $150,000.


 


The determination of who is a Key
Employee shall be made according to Code Section 416(i)(1) and the
applicable regulations and other guidance of general applicability issued
thereunder.


 


Nonkey
Employee means any Employee who is not a Key Employee.


 


Top-heavy
Plan means a plan that is top-heavy for any plan year.  This Plan shall be top-heavy if any of the
following conditions exist:


 


(a)                        The
Top-heavy Ratio for this Plan exceeds 60 percent and this Plan is not part of
any required Aggregation Group or permissive Aggregation Group.


 


(b)                       This
Plan is a part of a required Aggregation Group, but not part of a permissive
Aggregation Group, and the Top-heavy Ratio for the required Aggregation Group exceeds
60 percent.


 


(c)                        This
Plan is a part of a required Aggregation Group and part of a permissive
Aggregation Group and the Top-heavy Ratio for the permissive Aggregation Group
exceeds 60 percent.


 


Top-heavy
Ratio means:


 


(a)                        If
the Employer maintains one or more defined contribution plans (including any
simplified employee pension plan) and the Employer has not maintained any
defined benefit plan which during the five-year period ending on the
Determination Date(s) has or has had accrued benefits, the Top-heavy Ratio
for this Plan alone or for the required or permissive Aggregation Group, as
appropriate, is a fraction, the numerator of which is the sum of the account
balances of all Key Employees as of the Determination Date(s) (including
any part of any account balance distributed in the one-year period ending on
the Determination Date(s) and distributions under a terminated plan which
if it had not been terminated would have been required to be included in the
Aggregation Group), and the denominator of which is the sum of all account
balances (including any part of any account balance distributed in the one-year
period ending on the Determination Date(s) and distributions under a
terminated plan which if it had not been terminated would have been required to
be included in the Aggregation Group), both computed in accordance with Code Section 416
and the regulations thereunder.  In the
case of a distribution made for a reason other than Severance from Employment,
death, or disability, this provision shall be applied by substituting “five-year
period” for “one-year period.”  Both the
numerator and denominator of the Top-heavy Ratio are increased to reflect any
contribution not actually made as of the Determination Date, but which is
required to be taken into account on that date under Code Section 416 and
the regulations thereunder.


 


66

















 


(b)                       If
the Employer maintains one or more defined contribution plans (including any
simplified employee pension plan) and the Employer maintains or has maintained
one or more defined benefit plans which during the five-year period ending on
the Determination Date(s) has or has had accrued benefits, the Top-heavy
Ratio for any required or permissive Aggregation Group, as appropriate, is a
fraction, the numerator of which is the sum of the account balances under the
aggregated defined contribution plan or plans of all Key Employees determined
in accordance with (a) above, and the present value of accrued benefits
under the aggregated defined benefit plan or plans for all Key Employees as of
the Determination Date(s), and the denominator of which is the sum of the
account balances under the aggregated defined contribution plan or plans for
all participants, determined in accordance with (a) above, and the present
value of accrued benefits under the defined benefit plan or plans for all
participants as of the Determination Date(s), all determined in accordance with
Code Section 416 and the regulations thereunder.  The accrued benefits under a defined benefit
plan in both the numerator and denominator of the Top-heavy Ratio are increased
for any distribution of an accrued benefit made in the one-year period ending
on the Determination Date (and distributions under a terminated plan which if
it had not been terminated would have been required to be included in the
Aggregation Group).  In the case of a
distribution made for a reason other than Severance from Employment, death, or
disability, this provision shall be applied by substituting “five-year period”
for “one-year period.”


 


(c)                        For purposes of (a) and (b) above, the
value of account balances and the present value of accrued benefits will be
determined as of the most recent Valuation Date that falls within or ends with
the 12-month period ending on the Determination Date, except as provided in
Code Section 416 and the regulations thereunder for the first and second
plan years of a defined benefit plan. 
The account balances and accrued benefits of a participant (i) who
is not a Key Employee but who was a Key Employee in a prior year or (ii) who
has not been credited with at least one hour of service with any employer
maintaining the plan at any time during the one-year period ending on the
Determination Date will be disregarded. 
The calculation of the Top-heavy Ratio and the extent to which
distributions, rollovers, and transfers are taken into account will be made in
accordance with Code Section 416 and the regulations thereunder.  Deductible employee contributions will not be
taken into account for purposes of computing the Top-heavy Ratio.  When aggregating plans, the value of account
balances and accrued benefits will be calculated with reference to the
Determination Dates that fall within the same calendar year.


 


The accrued benefit of a
participant other than a Key Employee shall be determined under (i) the
method, if any, that uniformly applies for accrual purposes under all defined
benefit plans maintained by the Employer, or (ii) if there is no such
method, as if such benefit accrued not more rapidly than the slowest accrual
rate permitted under the fractional rule of Code Section 411(b)(1)(C).


 


SECTION 11.03—MODIFICATION
OF VESTING REQUIREMENTS.


 


If a Participant’s
Vesting Percentage determined under Article I is not at least as great as
his Vesting Percentage would be if it were determined under a schedule
permitted in Code Section 416, the following shall apply.  During any Plan Year in which the Plan is a
Top-heavy Plan, the Participant’s Vesting Percentage shall be the greater of
the Vesting Percentage determined under Article I or the schedule below.


 




	
  VESTING SERVICE

  	
   

  	
  NONFORFEITABLE

  	
   

  
	
  (whole years)

  	
   

  	
  PERCENTAGE.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Less than 3

  	
   

  	
  0

  	
   

  
	
  3 or more

  	
   

  	
  100

  	
   

  






 


67

















 


The
schedule above shall not apply to Participants who are not credited with an
Hour of Service after the Plan first becomes a Top-heavy Plan.  The Vesting Percentage determined above
applies to the portion of the Participant’s Account that is multiplied by a
Vesting Percentage to determine his Vested Account, including benefits accrued
before the effective date of Code Section 416 and benefits accrued before
this Plan became a Top-heavy Plan.


 


If,
in a later Plan Year, this Plan is not a Top-heavy Plan, a Participant’s
Vesting Percentage shall be determined under Article I.  A Participant’s Vesting Percentage determined
under either Article I or the schedule above shall never be reduced and
the election procedures of the AMENDMENTS SECTION of Article X shall
apply when changing to or from the schedule as though the automatic change were
the result of an amendment.


 


The part of the Participant’s Vested Account resulting from
the minimum contributions required pursuant to the MODIFICATION OF
CONTRIBUTIONS SECTION of this article (to the extent required to be
nonforfeitable under Code Section 416(b)) may not be forfeited under Code Section 411(a)(3)(B) or
(D).


 


SECTION 11.04—MODIFICATION
OF CONTRIBUTIONS.


 


During any Plan Year in which this Plan is a Top-heavy
Plan, the Employer shall make a minimum contribution as of the last day of the
Plan Year for each Nonkey Employee who is an Employee on the last day of the
Plan Year and who was an Active Participant at any time during the Plan
Year.  A Nonkey Employee is not required
to have a minimum number of Hours of Service or minimum amount of Compensation
in order to be entitled to this minimum. 
A Nonkey Employee who fails to be an Active Participant merely because
his Compensation is less than a stated amount or merely because of a failure to
make mandatory participant contributions or, in the case of a cash or deferred
arrangement, elective contributions shall be treated as if he were an Active
Participant.  The minimum is the lesser
of (a) or (b) below:


 


(a)                        3
percent of such person’s Compensation for such Plan Year.


 


(b)                       The “highest percentage” of Compensation for such
Plan Year at which the Employer’s Contributions are made for or allocated to
any Key Employee.  The highest percentage
shall be determined by dividing the Employer Contributions made for or
allocated to each Key Employee during the Plan Year by the amount of his
Compensation for such Plan Year, and selecting the greatest quotient (expressed
as a percentage).  To determine the
highest percentage, all of the Employer’s defined contribution plans within the
Aggregation Group shall be treated as one plan. 
The minimum shall be the amount in (a) above if this Plan and a
defined benefit plan of the Employer are required to be included in the
Aggregation Group and this Plan enables the defined benefit plan to meet the
requirements of Code Section 401(a)(4) or 410.


 


For purposes of (a) and
(b) above, Compensation shall be limited by Code Section 401(a)(17).


 


If the Employer’s
contributions and allocations otherwise required under the defined contribution
plan(s) are at least equal to the minimum above, no additional
contribution shall be required. If the Employer’s total contributions and
allocations are less than the minimum above, the Employer shall contribute the
difference for the Plan Year.


 


The minimum
contribution applies to all of the Employer’s defined contribution plans in the
aggregate which are Top-heavy Plans.  A
minimum contribution under a profit sharing plan shall be made without regard
to whether or not the Employer has profits.


 


If a person who is
otherwise entitled to a minimum contribution above is also covered under
another defined contribution plan of the Employer’s which is a Top-heavy Plan
during that same Plan Year, any additional contribution required to meet the
minimum above shall be provided in this Plan.


 


68

















 


If a person who is
otherwise entitled to a minimum contribution above is also covered under a
defined benefit plan of the Employer’s that is a Top-heavy Plan during that
same Plan Year, the minimum benefits for him shall not be duplicated.  The defined benefit plan shall provide an
annual benefit for him on, or adjusted to, a straight life basis equal to the
lesser of:


 


(c)                        2
percent of his average compensation multiplied by his years of service, or


 


(d)                       20 percent of his average compensation.


 


Average
compensation and years of service shall have the meaning set forth in such
defined benefit plan for this purpose.


 


For purposes of
this section, any employer contribution made according to a salary reduction or
similar arrangement shall not apply in determining if the minimum contribution
requirement has been met, but shall apply in determining the minimum
contribution required.  Matching
contributions, as defined in Code Section 401(m), shall be taken into
account for purposes of satisfying the minimum contribution requirements of
Code Section 416(c)(2) and the Plan. 
Matching contributions that are used to satisfy the minimum contribution
requirements shall be treated as matching contributions for purposes of the
actual contribution percentage test and other requirements of Code Section 401(m).


 


The requirements
of this section shall be met without regard to any Social Security
contribution.


 


69

















 


By executing this Plan, the Primary Employer acknowledges
having counseled to the extent necessary with selected legal and tax advisors
regarding the Plan’s legal and tax implications.


 


Executed this 25th day
of February, 2008.


 


 


	
   

  	
  NATURE’S SUNSHINE
  PRODUCTS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  \s\ Stephen M. Bunker

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CFO

  
	
   

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Defined
  Contribution Plan CL2006

  



 


70