Document:

Exhibit 10.15

 

CONSULTING
AGREEMENT

 

This Consulting Agreement (“Consulting Agreement”) is
entered into this 23rd day of September, 2004 (the “Effective Date”), by and
between Louis A. Greco, an individual (“Consultant”), and MSC.Software
Corporation, a Delaware corporation (“MSC”).

 

WHEREAS,
Consultant has been employed as an Executive Vice President and the Chief
Financial Officer and Corporate Secretary of MSC;

 

WHEREAS,
Consultant and MSC have mutually agreed to terminate Consultant’s employment
relationship with MSC pursuant to an Employment Separation and General Release
Agreement dated on or about the date hereof (the “Separation Agreement”); and

 

WHEREAS,
Consultant is willing to provide advice to and consult with MSC, on an exclusive
basis, as MSC may reasonably request from time to time on matters with which
Consultant was familiar and/or about which Consultant acquired knowledge,
expertise and/or experience during the time that Consultant was employed by MSC.

 

NOW,
THEREFORE, Consultant and MSC agree as follows:

 

I.                                    Engagement.  MSC hereby engages Consultant and Consultant
hereby accepts such engagement, upon the terms and conditions hereinafter set
forth, for the period commencing [September 23,], 2004 and ending on [September 22,
2007] unless earlier terminated by mutual
agreement of the parties or as provided in Section IV herein (such period
is referred to as the “Consulting Term”). 
Notwithstanding anything else contained herein to the contrary, this
Consulting Agreement shall be null and void if Consultant revokes the
Separation Agreement during the seven (7) day period following the
execution of that agreement.

 

II.                                Service.

 

A.                                    Consultant
shall perform consulting services during the Consulting Term which shall
include providing advice to and consultation with MSC and such of its
affiliates as MSC may reasonably request from time to time on matters with
which Consultant was familiar and/or about which Consultant acquired knowledge,
expertise and/or experience during the time that Consultant was employed by MSC.

 

B.                                    Consultant
shall report exclusively to the Chief Executive Officer of MSC or his designee
(the “CEO”) and, except as expressly authorized by the CEO from time to time,
shall not have contact with any other employee of MSC or its affiliates.  Consultant shall provide in writing to and as
requested by the CEO a detailed summary of all business contacts involved in
any consulting activity performed hereunder and report on services performed.

 

C.                                    The
consulting services that Consultant may be required to perform during the
Consulting Term may include, without limiting other consulting services that
the CEO may request from time to time, advice, research, planning and similar
services as to business strategy, marketing, litigation, finance, and
administration.

 

1

 

D.                                    Consultant
agrees to devote sufficient time and energy to the business of MSC and its
affiliates to accomplish the projects assigned by MSC.

 

E.                                      Consultant
agrees to honestly and faithfully present and conduct himself at all times
during the performance of services for MSC.  Consultant agrees to perform the
responsibilities in a diligent, timely, and competent manner.  Consultant agrees to truthfully and faithfully
account for and deliver to MSC all property (including, without limitation, monies,
materials, securities, etc.) belonging to MSC or any of its affiliates which
Consultant may receive from or on account of MSC or any of its affiliates, and
that upon Consultant’s termination or MSC’s demand Consultant will immediately
deliver to MSC all such property belonging to MSC or any of its affiliates.

 

III.                            Compensation.

 

A.                               Monthly
Consulting Fee.  As consideration
for Consultant’s services each month during the Consulting Term, MSC shall pay
Consultant a consulting fee (the “Monthly Consulting Fee”).  The Monthly Consulting Fee for any given
month during the Consulting Term shall be paid no later than the fifteenth (15th)
business day of the month following the month in question.  As to any month during the first eighteen
(18) months during the Consulting Term, the Monthly Consulting Fee shall be $25,511.00
for such month.  As to any month during
the Consulting Term after the eighteenth (18th) month of the
Consulting Term, the Monthly Consulting Fee shall be $28,511.00 for such month.  The Monthly Consulting Fee shall be
proportionately adjusted as to any partial calendar month that occurs during
the Consulting Term.  (For purposes of
clarity, assuming that the entire intended thirty-six month Consulting Term is
completed, the aggregate of the Monthly Consulting Fee payments to Consultant
pursuant to the foregoing shall equal $972,396.00 ((18 x $25,511.00) + (18 x
$28,511.00).)

 

B.                               Benefits.  Consultant shall not be entitled to participate
in any vacation, medical, retirement, or other fringe benefit of MSC and shall
not make claim of entitlement to any such employee program or benefit.  For purposes of clarity, the preceding
sentence does not limit or supersede any express rights that Consultant may
have under and pursuant to Section III of the Separation Agreement.

 

IV.                            Termination.

 

A.                               Termination. MSC may terminate Consultant’s
engagement at any time, with or without cause, upon fourteen (14) days’ written
notice.

 

B.                               Obligations
of MSC Upon Termination.

 

1.                                       Termination
for Cause.  If Consultant’s
engagement is terminated by MSC for Cause, this Consulting Agreement, save and
except Sections VI, VII, VIII, IX, X, XI and XII, shall terminate without
further obligations to Consultant under this Consulting Agreement, other than
for payment of Consultant’s Monthly Consulting Fee through the date of
termination to the extent not theretofore paid (with the Monthly Consulting Fee
for the month of such termination pro-rated for the number of days in the month
completed prior to such termination).

 

2

 

For purposes of this Consulting Agreement and except
as provided in the next sentence, “Cause” shall mean any time the MSC Board of
Directors determines, based on its reasonable belief at the time based on the
information then known to it, that any of the following events or contingencies
exists or has occurred: (i) Consultant has been negligent in the discharge
of Consultant’s responsibilities and obligations hereunder; (ii) Consultant
has refused to perform Consultant’s responsibilities and obligations hereunder;
(iii) Consultant has failed to perform his responsibilities and
obligations hereunder in a reasonably satisfactory manner; (iv) Consultant
has been dishonest or committed or engaged in an act of moral turpitude, theft,
embezzlement or fraud, a breach of confidentiality, an unauthorized disclosure
or use of inside information, customer lists, trade secrets or other
confidential information; or (v) Consultant has breached any of the
provisions of any agreement with MSC or any of its affiliates (including,
without limitation, a breach by Consultant of any provision of this Consulting
Agreement or the Separation Agreement).  For
purposes of this Consulting Agreement upon and after the occurrence of a Change
in Control Event (as such term is defined in the MSC.Software Corporation 2001
Stock Option Plan, as amended) of MSC that occurs after the Effective Date, “Cause”
shall mean any time the MSC Board of Directors determines, based on its
reasonable belief at the time based on the information then known to it, that
any of the following events or contingencies exists or has occurred: (i) Consultant
has willfully refused to perform Consultant’s responsibilities and obligations
hereunder; (ii) Consultant has willfully been dishonest or committed or
engaged in an act of moral turpitude, theft, embezzlement or fraud, a breach of
confidentiality, an unauthorized disclosure or use of inside information,
customer lists, trade secrets or other confidential information that, in any
event either alone or together, has (or have) a material adverse effect on MSC;
or (iii) Consultant has willfully breached any of the provisions of any
agreement with MSC or any of its affiliates (including, without limitation, a
breach by Consultant of any provision of this Consulting Agreement or the
Separation Agreement) that (alone or together with any other such breaches) has
a material adverse effect on MSC.  Notwithstanding
anything in the preceding two sentences to the contrary, if Consultant’s
conduct or actions (or lack thereof) would otherwise constitute Cause and a
cure by Consultant is reasonable in the circumstances, Cause shall not exist
for purposes of this Consulting Agreement unless MSC gives notice to Consultant
of the conduct or actions (or lack thereof) at issue and, after a reasonable
period of time not to exceed thirty (30) days after the date of such notice,
Consultant has failed to remedy the situation to the reasonable satisfaction of
MSC; provided that in the case of any reoccurring conduct or actions (or lack
thereof), MSC shall be required to provide only one notice to Consultant of the
reoccurring conduct or actions (or lack thereof) at issue during any six-month
period of time.

 

2.                                       Termination
without Cause.  If Consultant’s
engagement is terminated by MSC without Cause (and other than due to Consultant’s
death), this Consulting Agreement, save and except paragraphs VI, VII, VIII,
IX, X, XI and XII, shall terminate without further
obligations to Consultant under this Consulting Agreement, other than for continued
payment of Consultant’s Monthly Consulting 

 

3

 

Fee through the Consulting Term.  Such payments, if any, shall be payable at
the time they would have become due if Consultant’s engagement had continued
under this Consulting Agreement for the balance of the Consulting Term.

 

C.                               Exclusive
Remedy.  Consultant agrees that
the payments contemplated by this Consulting Agreement shall constitute the
exclusive and sole remedy for any termination of his engagement and Consultant
covenants not to assert or pursue any other remedies, at law or in equity, with
respect to any termination of the engagement.

 

V.                                Relationship.  Consultant shall operate at all times as
an independent contractor of MSC.  This
Consulting Agreement does not authorize Consultant to act as an agent of MSC or
any of its affiliates or to make commitments on behalf of MSC or any of its affiliates.  Consultant and MSC intend that an independent
contractor relationship be created by this Consulting Agreement, and nothing
herein shall be construed as creating an employer/employee relationship,
partnership, joint venture, or other business group or concerted action.  Consultant at no time shall hold himself out
as an agent of MSC or any of its affiliates for any purpose, including
reporting to any governmental authority or agency, and shall have no authority
to bind MSC or any of its affiliates to any obligation whatsoever.

 

A.                               Right
to Control.  Consultant shall have
the right to control and determine the method and means of performing the above
services; MSC shall not have the right to control or determine such method or
means, being interested only in the results obtained, and having the general
right of inspection and supervision in order to secure the satisfactory
completion of such services.

 

B.                               Taxes.  Consultant and MSC agree that Consultant is
not an employee for state or federal tax purposes.  Consultant shall be solely responsible for any
taxes due as a result of the payment of the Monthly Consulting Fee, and
Consultant will defend and indemnify MSC and each of its affiliates from and
against any tax liability that any of them may have with respect to any such
payment and against any and all losses or liabilities, including defense costs,
arising out of Consultant’s failure to pay any taxes due with respect to any
such payment.  If MSC reasonably
determines that applicable law requires that taxes should be withheld from any
payment of the Monthly Consulting Fee, MSC reserves the right to withhold, as
legally required, and to notify Consultant accordingly.

 

C.                               Workers’
Compensation and Unemployment Insurance. 
Consultant is not entitled to worker’s compensation benefits or
unemployment compensation benefits provided by MSC.  Consultant shall be solely responsible for the
payment of his worker’s compensation, unemployment compensation, and other such
payments.  MSC will not pay for worker’s
compensation for Consultant.  MSC will
not contribute to a state unemployment fund for Consultant.  MSC will not pay the federal unemployment tax
for Consultant.

 

D.                               Employment
Policies Not Applicable.  Consultant
and MSC agree that Consultant shall not be subject to the provisions of any
personnel policy or rules and regulations applicable to employees, and
Consultant shall fulfill his duties independent of and without supervisory
control by MSC.

 

4

 

VI.                            Noncompetition.

 

A.                                    Consultant
agrees that, during the Consulting Term and any period thereafter when he
continues to receive payment under this Consulting Agreement, he will not,
directly or indirectly, without the prior written consent of the CEO, provide
consultative service with or without pay, own, manage, operate, join, control,
participate in, or be connected as a stockholder, general partner, employee or
otherwise with, any business, individual, partner, firm, corporation, or other
entity which is currently or at that particular point in time in competition
with (or has plans to engage in business which would be in competition with) the
business of MSC or any of its affiliates. 
Nothing in this section is intended to prevent Consultant from
owning up to one percent (1%) of the publicly traded stock of any company.

 

B.                                    It
is expressly agreed that MSC and its affiliates will or would suffer
irreparable injury if Consultant were to compete with the business of any of
such entities in violation of this Consulting Agreement and that any such
entity would by reason of such competition be entitled to injunctive relief in
a court of appropriate jurisdiction. 
Consultant consents and stipulates to the entry of such injunctive
relief in such a court prohibiting him from competing with MSC or any of its affiliates
in violation of this Consulting Agreement.

 

C.                               For
purposes of this Consulting Agreement, a business in competition with MSC or
its affiliates will be deemed to include (without limiting any other business
in competition with MSC or its affiliates) any business which is engaged in the
development, marketing and/or support of virtual product development tools for
the computer-aided engineering marketplace (including, without limitation,
simulation software and/o professional services).

 

VII.                        Confidential Information.

 

A.                                    Consultant,
in the performance of Consultant’s services on behalf of MSC, may have access
to, receive and be entrusted with (and in the past has, in fact, had access to,
received and been entrusted with) confidential information, including but in no
way limited to development, marketing, organizational, financial, management,
administrative, production, distribution and sales information, data,
specifications and processes presently owned or at any time in the future
developed, by MSC or any of its affiliates or its or their agents or
consultants, or used presently or at any time in the future in the course of
its or their business that is not otherwise part of the public domain
(collectively, the “Confidential Material”). 
All such Confidential Material is considered secret and, to the extent
made available to Consultant, will be available to Consultant in
confidence.  Except in the performance of
services on behalf of MSC and its affiliates, Consultant shall not, directly or
indirectly for any reason whatsoever, disclose or use any such Confidential
Material, unless such Confidential Material ceases (through no fault of
Consultant’s) to be confidential because it has become part of the public
domain or he is otherwise obligated to disclose such information by the lawful
order of any competent jurisdiction.  All
records, files, drawings, documents, equipment and other tangible items,
wherever located, relating in any way to the Confidential Material or otherwise
to the business of MSC or any of its affiliates, which Consultant prepares,
uses or encounters, shall be and remain the sole and exclusive property of such
entity or entities and shall be included in the Confidential Material.  Upon the termination or expiration, as
applicable, of the Consulting Term, or 

 

5

 

whenever requested by MSC, Consultant shall promptly
deliver to MSC any and all of the Confidential Material, not previously
delivered to MSC, that may be or at any previous time has been in Consultant’s
possession or under Consultant’s control.

 

B.                                    Consultant
hereby acknowledges that the sale or unauthorized use or disclosure of any of
the Confidential Material by any means whatsoever and any time before, during
or after Consultant’s engagement with MSC shall constitute “Unfair Competition.”  Consultant agrees that Consultant shall not
engage in Unfair Competition either during the time engaged by MSC or any time
thereafter.

 

VIII.                    Soliciting Customers.  Consultant promises and agrees that he
will not, during the Consulting Term and for a period of one year following the
termination or expiration, as applicable, of the Consulting Term, influence or
attempt to influence any customers of MSC or any of its affiliates, either
directly or indirectly, to divert their business to any individual,
partnership, firm, corporation or other entity which is currently or at that
particular point in time in competition with (or has plans to engage in
business which would be in competition with) the business of MSC or any of its affiliates.  Consultant acknowledges that during his
engagement with MSC, he will be given access to Confidential Material of MSC
and its affiliates (and in the past has, in fact, had access to, received and
been entrusted with Confidential Material), and that such Confidential Material
constitutes MSC’s trade secrets.  
Consultant acknowledges and agrees that this restriction is necessary in
order for MSC and its affiliates to preserve and protect their legitimate
proprietary interest in the Confidential Material and trade secrets.

 

IX.                           Soliciting Employees.  Consultant promises and agrees that he
will not, during the Consulting Term and for a period of one year following the
termination or expiration, as applicable, of the Consulting Term, directly or
indirectly solicit any employee of any MSC or any of its affiliates who earned
annually $25,000 or more as an employee of such entity during the last six
months of his or her own employment to work for any business, individual,
partnership, firm, or corporation.

 

X.                               Ownership.  Consultant agrees that any
software, hardware, equipment, or records, including all copies or extracts of
them which Consultant prepares, uses or sees during the Consulting Term in
relation to the performance of services hereunder shall be and remain the sole
property of MSC (or, if applicable, any affiliate of MSC).

 

A.                               Ownership
of Copyrights. Consultant agrees that any work product, documentation,
and improvements made by Consultant during the term of this Consulting Agreement
that relate to the business activities of MSC belong exclusively to MSC as
works made for hire under the U.S. Copyright Law when such work is within the
scope of the services to be performed under this Consulting Agreement or if
they were created using any of MSC’s facilities or resources.

 

B.                               Invention
Assignment.  Consultant agrees,
without further compensation or consideration, to disclose promptly to MSC any
and all inventions, improvements, data, processes, products, and computer
software (hereafter “matters subject to disclosure”) which, during the term of
this Consulting Agreement, Consultant may conceive, make, develop, or work on,
in whole or in part, solely or jointly with others, whether or not during
regular working 

 

6

 

hours, and which relate to the actual or anticipated
business, research, and/or development of MSC or any of its affiliates, or
which result from tasks assigned to Consultant by MSC or its affiliates.

 

1.                                       Consultant
agrees that all matters subject to disclosure, together with all related rights
(such as patents, trademarks, copyrights, designs, and trade secrets), shall be
the property of MSC.

 

2.                                       Consultant
will, without further compensation or consideration, assign any and all
worldwide rights in and to the matters subject to disclosure to MSC and assist MSC
in every proper way including, without limitation.

 

a.                                       The
execution of any and all papers, applications for patents, and assignments to MSC.

 

b.                                      The
making and keeping of proper records.

 

c.                                       The
giving of evidence and testimony.

 

3.                                       Consultant
will do all of the above, and whatever else is necessary, to assist MSC in
obtaining patent, copyright, trademark, or trade secret protection in all
countries, and to perfect MSC’s ownership of the matters subject to
disclosure.  MSC agrees to pay all
reasonable expenses incurred by Consultant in providing this assistance.

 

4.                                       Consultant’s obligation to assign inventions
shall not apply to inventions, improvements, or discoveries listed below,
patented or unpatented, which Consultant developed and owned prior to the Effective
Date of this Consulting Agreement (if “None,” so state in Consultant’s
handwriting):

 

None

 

XI.                           Freedom to Enter Agreement. 
Consultant represents and warrants that Consultant is free to enter into
this Consulting Agreement and to perform each of its terms and covenants.  Consultant’s execution and performance of
this Consulting Agreement is not a violation or breach of any other agreement
between Consultant and any other person or entity.

 

XII.                       Miscellaneous.

 

A.                               Successors.

 

1.                                       This
Consulting Agreement is personal to Consultant and shall not, without the prior
written consent of MSC, be assignable by Consultant.

 

7

 

2.                                       This
Consulting Agreement shall inure to the benefit of and be binding upon MSC and
its respective successors and assigns and any such successor or assignee shall
be deemed substituted for MSC under the terms of this Consulting Agreement for
all purposes.  As used herein, “successor”
and “assignee” shall include any person, firm, corporation or other business
entity which at any time, whether by purchase, merger or otherwise, directly or
indirectly acquires the ownership of MSC or to which MSC assigns this Consulting
Agreement by operation of law or otherwise.

 

B.                               Waiver.  No waiver of any
breach of any term or provision of this Consulting Agreement shall be construed
to be, nor shall be, a waiver of any other breach of this Consulting Agreement.  No waiver shall be binding unless in writing
and signed by the party waiving the breach.

 

C.                               Modification.  This
Consulting Agreement may not be amended or modified other than by a written
agreement executed by Consultant and the CEO.

 

D.                               Complete Agreement. 
This Consulting Agreement and the Separation Agreement constitute and
contain the entire agreement and final understanding concerning Consultant’s
relationship with MSC and its affiliates and the other subject matters
addressed herein between the parties, and supersedes and replaces all prior
negotiations and all agreements proposed or otherwise, whether written or oral,
concerning the subject matters hereof.  The
Employee Confidentiality and Inventions Agreement by and between Consultant and
MSC and entered into on or about February 20, 2004 (the “Confidentiality
Agreement”) is outside of the scope of the preceding sentence and shall
continue in effect in accordance with its terms.  Any representation, promise or agreement not
specifically included in this Consulting Agreement, the Separation Agreement or
the Confidentiality Agreement shall not be binding upon or enforceable against
either party.  This Consulting Agreement,
along with the Separation Agreement and the Confidentiality Agreement,
constitute an integrated agreement.

 

E.                                 Litigation and Investigation Assistance. 
In addition to the consulting services described in Section II,
Consultant agrees to cooperate in the defense of MSC or any of its affiliates
against any threatened or pending litigation or in any investigation or
proceeding by any governmental agency or body that relates to any events or
actions which occurred during or prior to the term of Consultant’s employment
or which relate to any events or actions which occur during the Consulting Term.  Furthermore, Consultant agrees to cooperate
in the prosecution of any claims and lawsuits brought by MSC or any of its
affiliates that are currently outstanding or that may in the future be brought
relating to matters which occurred during or prior to the term of Consultant’s
employment or which relate to any events or actions which occur during the
Consulting Term.  Except as requested by MSC
or as required by law, Consultant shall not comment upon any (i) threatened
or pending claim or litigation (including investigations or arbitrations)
involving MSC or any of its affiliates, or (ii) threatened or pending
government investigation involving MSC or any of its affiliates.

 

F.                                 Severability.  If
any provision of this Consulting Agreement or the application thereof is held
invalid, the invalidity shall not affect other provisions or 

 

8

 

applications of the Consulting Agreement which can be
given effect without the invalid provisions or applications and to this end the
provisions of this Consulting Agreement are declared to be severable.

 

G.                               Choice of Law.  This Consulting Agreement shall be deemed to
have been executed and delivered within the State of California, and the rights
and obligations of the parties hereunder shall be construed and enforced in
accordance with, and governed by, the laws of the State of California without
regard to principles of conflict of laws.

 

H.                               Cooperation in Drafting. 
Each party has cooperated in the drafting and preparation of this Consulting
Agreement.  Hence, in any construction to
be made of this Consulting Agreement, the same shall not be construed against
any party on the basis that the party was the drafter.

 

I.                                    Counterparts.  This
Consulting Agreement may be executed in counterparts, and each counterpart,
when executed, shall have the efficacy of a signed original.  Photographic copies of such signed
counterparts may be used in lieu of the originals for any purpose.

 

J.                                 Arbitration.  Any dispute, claim or
controversy arising out of or relating to this Consulting Agreement, its
enforcement or interpretation, or because of an alleged breach, default, or
misrepresentation in connection with any of its provisions, including the
determination of the scope or applicability of this agreement to arbitrate,
shall be submitted to final and binding arbitration, to be held in Orange
County, California before a sole arbitrator; provided, however, that
provisional injunctive relief may, but need not, be sought in a court of law
while arbitration proceedings are pending, and any provisional injunctive
relief granted by such court shall remain effective until the matter is finally
determined by the arbitrator.   The
arbitration shall be administered by JAMS pursuant to its Comprehensive
Arbitration Rules and Procedures. 
Judgment on the award may be entered in any court having
jurisdiction.  In the event either party
institutes arbitration under this Consulting Agreement, the party prevailing in
any such proceeding, as determined by the arbitrator, shall be entitled, in
addition to all other relief, to reasonable attorneys’ fees relating to such
arbitration.  The nonprevailing party
shall be responsible for all costs of the arbitration, including but not
limited to, the arbitration fees, court reporter fees, etc.  Any dispute as to the reasonableness of costs
and expenses shall be determined by the arbitrator.

 

K.                               Advice of Counsel.  In entering this Consulting Agreement, the
parties represent that they have relied upon the advice of their attorneys, who
are attorneys of their own choice, and that the terms of this Consulting
Agreement have been completely read and explained to them by their attorneys,
and that those terms are fully understood and voluntarily accepted by them.

 

L.                                Supplementary Documents. 
All parties agree to cooperate fully and to execute any and all
supplementary documents and to take all additional actions that may be
necessary or appropriate to give full force to the basic terms and intent of
this Consulting Agreement and which are not inconsistent with its terms.

 

9

 

M.                             Headings.  The section headings contained in this Consulting
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Consulting Agreement.

 

[Remainder of page intentionally left blank.]

 

10

 

I have
read the foregoing Consulting Agreement and I accept and agree to the
provisions it contains and hereby execute it voluntarily with full
understanding of its consequences.

 

EXECUTED
this 23rd day of September 2004, at Orange County, California.

 

	
   

  	
  “Consultant”

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Louis A. Greco

  	
   

  
	
   

  	
  Louis A. Greco

  

 

EXECUTED this 23rd day of September 2004, at Orange
County, California.

 

	
   

  	
  “MSC”

  
	
   

  	
   

  
	
   

  	
  MSC.Software
  Corporation,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Frank
  Perna, Jr.

  	
   

  
	
   

  	
  By:

  	
  Frank Perna, Jr.

  
	
   

  	
  Its:

  	
  Chief Executive Officer

  
				

 

11Exhibit 10.16

 

Defined Contribution Prototype
Plan

 

BRYAN, PENDLETON, SWATS &
MCALLISTER, LLC

DEFINED CONTRIBUTION PROTOTYPE PLAN AND
TRUST

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I, DEFINITIONS

  	
   

  
	
  1.01

  	
  Account

  	
  1

  
	
  1.02

  	
  Account Balance or Accrued Benefit

  	
  1

  
	
  1.03

  	
  Accounting Date

  	
  1

  
	
  1.04

  	
  Adoption Agreement

  	
  1

  
	
  1.05

  	
  Beneficiary

  	
  1

  
	
  1.06

  	
  Code

  	
  1

  
	
  1.07

  	
  Compensation

  	
  1

  
	
  1.08

  	
  Disability

  	
  2

  
	
  1.09

  	
  Earned Income

  	
  2

  
	
  1.10

  	
  Effective Date

  	
  3

  
	
  1.11

  	
  Employee

  	
  3

  
	
  1.12

  	
  Employer

  	
  3

  
	
  1.13

  	
  ERISA

  	
  3

  
	
  1.14

  	
  Highly Compensated Employee

  	
  3

  
	
  1.15

  	
  Hour of Service

  	
  3

  
	
  1.16

  	
  Leased Employee

  	
  4

  
	
  1.17

  	
  Nonhighly Compensated Employee

  	
  5

  
	
  1.18

  	
  Nontransferable Annuity

  	
  5

  
	
  1.19

  	
  Paired Plans

  	
  5

  
	
  1.20

  	
  Participant

  	
  5

  
	
  1.21

  	
  Plan

  	
  5

  
	
  1.22

  	
  Plan Administrator

  	
  5

  
	
  1.23

  	
  Plan Entry Date

  	
  5

  
	
  1.24

  	
  Plan Year

  	
  5

  
	
  1.25

  	
  Protected Benefit

  	
  5

  
	
  1.26

  	
  Related Group / Related Employer

  	
  5

  
	
  1.27

  	
  Self-Employed Individual / Owner Employee /
  Shareholder Employee

  	
  6

  
	
  1.28

  	
  Separation from Service

  	
  6

  
	
  1.29

  	
  Service

  	
  6

  
	
  1.30

  	
  Service with a Predecessor Employer

  	
  6

  
	
  1.31

  	
  Trust

  	
  6

  
	
  1.32

  	
  Trust Fund

  	
  6

  
	
  1.33

  	
  Trustee

  	
  6

  
	
  1.34

  	
  Vested

  	
  6

  
	
  ARTICLE II, ELIGIBILITY AND PARTICIPATION

  	
   

  
	
  2.01

  	
  Eligibility

  	
  7

  
	
  2.02

  	
  Age and Service Conditions

  	
  7

  
	
  2.03

  	
  Break in Service - Participation

  	
  7

  
	
  2.04

  	
  Participation upon Re-employment

  	
  8

  
	
  2.05

  	
  Change in Employment Status

  	
  8

  
	
  2.06

  	
  Election Not to Participate

  	
  8

  
	
  ARTICLE III, EMPLOYER CONTRIBUTIONS AND FORFEITURES

  	
   

  
	
  3.01

  	
  Employer Contributions

  	
  9

  
	
  3.02

  	
  Deferral Contributions

  	
  9

  
	
  3.03

  	
  Matching Contributions

  	
  9

  
	
  3.04

  	
  Employer Contribution Allocation

  	
  9

  
	
  3.05

  	
  Forfeiture Allocation

  	
  11

  
	
  3.06

  	
  Allocation Conditions

  	
  12

  
	
  3.07

  	
  Annual Additions Limitation

  	
  13

  
	
  3.08

  	
  Estimating Compensation

  	
  13

  
	
  3.09

  	
  Determination Based on Actual Compensation

  	
  13

  
	
  3.10

  	
  Disposition of Allocated Excess Amount

  	
  13

  
	
  3.11

  	
  Combined Plans Annual Additions Limitation

  	
  14

  
	
  3.12

  	
  Estimating Compensation

  	
  14

  
	
  3.13

  	
  Determination Based on Actual Compensation

  	
  14

  
	
  3.14

  	
  Ordering of Annual Addition Allocations

  	
  14

  
	
  3.15

  	
  Disposition of Allocated Excess Amount Attributable
  to Plan

  	
  14

  
	
  3.16

  	
  Other Defined Contribution Plans Limitation

  	
  14

  
	
  3.17

  	
  Defined Benefit Plan Limitation

  	
  14

  
	
  3.18

  	
  Definitions – Article III

  	
  15

  
	
  ARTICLE IV, PARTICIPANT CONTRIBUTIONS

  	
   

  
	
  4.01

  	
  Participant Contributions

  	
  17

  
	
  4.02

  	
  Employee Contributions

  	
  17

  
	
  4.03

  	
  DECs

  	
  17

  
	
  4.04

  	
  Rollover Contributions

  	
  17

  
	
  4.05

  	
  Participant Contributions - Vesting

  	
  17

  
	
  4.06

  	
  Participant Contributions - Distribution

  	
  17

  
	
  4.07

  	
  Participant Contributions – Investment and
  Accounting

  	
  17

  
	
  ARTICLE V, VESTING

  	
   

  
	
  5.01

  	
  Normal/Early Retirement Age

  	
  18

  
	
  5.02

  	
  Participant Death or Disability

  	
  18

  
	
  5.03

  	
  Vesting Schedule

  	
  18

  
	
  5.04

  	
  Cash-Out Distributions to Partially-Vested
  Participants/Restoration of Forfeited Account Balance

  	
  18

  
	
  5.05

  	
  Accounting for Cash-Out Repayment

  	
  19

  
	
  5.06

  	
  Year of Service - Vesting

  	
  19

  
	
  5.07

  	
  Break in Service and Forfeiture Break in Service -
  Vesting

  	
  19

  
	
  5.08

  	
  Included Years of Service - Vesting

  	
  20

  
	
  5.09

  	
  Forfeiture Occurs

  	
  20

  
	
  5.10

  	
  Rule of Parity - Vesting

  	
  20

  
	
  5.11

  	
  Amendment to Vesting Schedule

  	
  20

  
	
  5.12

  	
  Deferral Contributions Taken into Account

  	
  20

  
	
  ARTICLE VI, DISTRIBUTIONS

  	
   

  
	
  6.01

  	
  Timing of Distribution

  	
  21

  
	
  6.02

  	
  Required Minimum Distributions

  	
  22

  
	
  6.03

  	
  Method of Distribution

  	
  24

  
	
  6.04

  	
  Annuity Distributions to Participants and to
  Surviving Spouses

  	
  25

  
	
  6.05

  	
  Waiver Election - QJSA

  	
  26

  
	
  6.06

  	
  Waiver Election - QPSA

  	
  26

  
	
  6.07

  	
  Distributions Under Qualified Domestic Relations
  Orders (QDRO)

  	
  26

  
	
  6.08

  	
  Defaulted Loan – Timing of Offset

  	
  27

  
	
  6.09

  	
  Hardship Distribution

  	
  27

  
	
  6.10

  	
  Direct Rollover of Eligible Rollover Distributions

  	
  27

  
	
  6.11

  	
  TEFRA Elections

  	
  28

  
	
  ARTICLE VII, EMPLOYER ADMINISTRATIVE PROVISIONS

  	
   

  
	
  7.01

  	
  Information to Plan Administrator

  	
  29

  
	
  7.02

  	
  No Responsibility for Others

  	
  29

  
	
  7.03

  	
  Indemnity of Certain Fiduciaries

  	
  29

  
	
  7.04

  	
  Employer Direction of Investment

  	
  29

  
	
  7.05

  	
  Evidence

  	
  29

  
	
  7.06

  	
  Plan Contributions

  	
  29

  
	
  7.07

  	
  Employer Action

  	
  29

  
	
  7.08

  	
  Fiduciaries Not Insurers

  	
  29

  
	
  7.09

  	
  Plan Terms Binding

  	
  29

  
	
  7.10

  	
  Word Usage

  	
  29

  
	
  7.11

  	
  State Law

  	
  29

  
	
  7.12

  	
  Prototype Plan Status

  	
  29

  
	
  7.13

  	
  Employment Not Guaranteed

  	
  29

  
	
  ARTICLE VIII, PARTICIPANT ADMINISTRATIVE PROVISIONS

  	
   

  
	
  8.01

  	
  Beneficiary Designation

  	
  31

  
	
  8.02

  	
  No Beneficiary Designation/Death of Beneficiary

  	
  31

  
	
  8.03

  	
  Assignment or Alienation

  	
  31

  
	
  8.04

  	
  Information Available

  	
  31

  
	
  8.05

  	
  Claims Procedure for Denial of Benefits

  	
  32

  
				

 

i

 

	
  8.06

  	
  Participant Direction of Investment

  	
  32

  
	
  ARTICLE IX, PLAN ADMINISTRATOR

  	
   

  
	
  9.01

  	
  Compensation and Expenses

  	
  33

  
	
  9.02

  	
  Resignation and Removal

  	
  33

  
	
  9.03

  	
  General Powers and Duties

  	
  33

  
	
  9.04

  	
  Plan Loans

  	
  33

  
	
  9.05

  	
  Funding Policy

  	
  33

  
	
  9.06

  	
  Individual Accounts

  	
  33

  
	
  9.07

  	
  Value of Participant’s Account Balance

  	
  34

  
	
  9.08

  	
  Allocation and Distribution of Net Income, Gain or
  Loss

  	
  34

  
	
  9.09

  	
  Individual Statement

  	
  35

  
	
  9.10

  	
  Account Charged

  	
  35

  
	
  9.11

  	
  Lost Participants

  	
  35

  
	
  9.12

  	
  Plan Correction

  	
  35

  
	
  9.13

  	
  No Responsibility for Others

  	
  36

  
	
  9.14

  	
  Notice, Designation, Election, Consent and Waiver

  	
  36

  
	
  ARTICLE X, TRUSTEE AND CUSTODIAN, POWERS AND DUTIES

  	
   

  
	
  10.01

  	
  Acceptance

  	
  37

  
	
  10.02

  	
  Receipt of Contributions

  	
  37

  
	
  10.03

  	
  Investment Powers

  	
  37

  
	
  10.04

  	
  Records and Statements

  	
  40

  
	
  10.05

  	
  Fees and Expenses from Fund

  	
  40

  
	
  10.06

  	
  Parties to Litigation

  	
  40

  
	
  10.07

  	
  Professional Agents

  	
  41

  
	
  10.08

  	
  Distribution of Cash or Property

  	
  41

  
	
  10.09

  	
  Participant or Beneficiary Incapacitated

  	
  41

  
	
  10.10

  	
  Distribution Directions

  	
  41

  
	
  10.11

  	
  Third Party Reliance

  	
  41

  
	
  10.12

  	
  Multiple Trustee

  	
  41

  
	
  10.13

  	
  Resignation and Removal

  	
  41

  
	
  10.14

  	
  Successor Trustee Acceptance

  	
  41

  
	
  10.15

  	
  Valuation of Trust

  	
  42

  
	
  10.16

  	
  Limitation on Liability - If Investment Manager,
  Ancillary Trustee or Independent Fiduciary Appointed

  	
  42

  
	
  10.17

  	
  Investment in Group Trust Fund

  	
  42

  
	
  10.18

  	
  Appointment of Ancillary Trustee or Independent
  Fiduciary

  	
  42

  
	
  ARTICLE XI, PROVISIONS RELATING TO INSURANCE AND
  INSURANCE COMPANY

  	
   

  
	
  11.01

  	
  Insurance Benefit

  	
  44

  
	
  11.02

  	
  Limitation on Life Insurance Protection

  	
  44

  
	
  11.03

  	
  Definitions

  	
  45

  
	
  11.04

  	
  Dividend Plan

  	
  45

  
	
  11.05

  	
  Insurance Company Not a Party to Agreement

  	
  45

  
	
  11.06

  	
  No Responsibility for Others

  	
  45

  
	
  11.07

  	
  Duties of Insurance Company

  	
  45

  
	
  ARTICLE XII, TOP-HEAVY PROVISIONS

  	
   

  
	
  12.01

  	
  Determination of Top-Heavy Status

  	
  46

  
	
  12.02

  	
  Definitions

  	
  46

  
	
  12.03

  	
  Top-Heavy Minimum Allocation

  	
  47

  
	
  12.04

  	
  Determining Top-Heavy Contribution Rates

  	
  47

  
	
  12.05

  	
  Plan Which Will Satisfy Top-Heavy

  	
  47

  
	
  12.06

  	
  Top-Heavy Vesting

  	
  47

  
	
  ARTICLE XIII, EXCLUSIVE BENEFIT, AMENDMENT,
  TERMINATION

  	
   

  
	
  13.01

  	
  Exclusive Benefit

  	
  48

  
	
  13.02

  	
  Amendment by Employer

  	
  48

  
	
  13.03

  	
  Amendment by Prototype Plan Sponsor

  	
  48

  
	
  13.04

  	
  Plan Termination or Suspension

  	
  49

  
	
  13.05

  	
  Full Vesting on Termination

  	
  49

  
	
  13.06

  	
  Post Termination Procedure and Distribution

  	
  49

  
	
  13.07

  	
  Merger/Direct Transfer

  	
  49

  
	
  ARTICLE XIV, CODE SECTION 401(k) AND CODE SECTION
  401(m) ARRANGEMENTS

  	
   

  
	
  14.01

  	
  Application

  	
  51

  
	
  14.02

  	
  401(k) Arrangement

  	
  51

  
	
  14.03

  	
  Definitions

  	
  54

  
	
  14.04

  	
  Matching Contributions/Employee Contributions

  	
  55

  
	
  14.05

  	
  Deferral Deposit Timing/Employer Contribution Status

  	
  55

  
	
  14.06

  	
  Special Accounting and Allocation Provisions

  	
  56

  
	
  14.07

  	
  Annual Elective Deferral Limitation

  	
  57

  
	
  14.08

  	
  Actual Deferral Percentage (ADP) Test

  	
  57

  
	
  14.09

  	
  Actual Contribution Percentage (ACP) Test

  	
  58

  
	
  14.10

  	
  Multiple Use Limitation

  	
  60

  
	
  14.11

  	
  Distribution Restrictions

  	
  60

  
	
  14.12

  	
  Special Allocation and Valuation Rules

  	
  61

  

 

ii

 

ALPHABETICAL
LISTING OF DEFINITIONS

 

	
  Plan
  Definition Section Reference 100% Limitation

  	
  3.19(l)

  
	
  Account

  	
  1.01

  
	
  Account
  Balance or Accrued Benefit

  	
  1.02

  
	
  Accounting
  Date.

  	
  1.02

  
	
  Actual
  Deferral Percentage (“ADP”) Test

  	
  14.08

  
	
  Adoption
  Agreement

  	
  1.04

  
	
  Annual
  Addition

  	
  3.19(a)

  
	
  Average
  Contribution Percentage Test

  	
  14.09

  
	
  Beneficiary

  	
  1.05

  
	
  Break
  in Service for Eligibility Purposes

  	
  2.03

  
	
  Break
  in Service for Vesting Purposes

  	
  5.07

  
	
  Cash-out
  Distribution

  	
  5.04

  
	
  Code

  	
  1.06

  
	
  Code
  §411(d)(6) Protected Benefits

  	
  13.02(A)

  
	
  Compensation

  	
  1.07

  
	
  Compensation
  for Code §401(k) Purposes

  	
  14.03(f)

  
	
  Compensation
  for Code §415 Purposes

  	
  3.19(b)

  
	
  Compensation
  for Top Heavy Purposes

  	
  12.02(d)

  
	
  Contract(s)

  	
  11.03(c)

  
	
  Custodian
  Designation

  	
  10.03[B]

  
	
  Deemed
  Cash-out Rule

  	
  5.04(C)

  
	
  Deferral
  Contributions

  	
  14.03(g)

  
	
  Deferral
  Contributions Account

  	
  14.06(A)

  
	
  Defined
  Benefit Plan

  	
  3.19(i)

  
	
  Defined
  Benefit Plan Fraction

  	
  3.19(j)

  
	
  Defined
  Contribution Plan

  	
  3.19(h)

  
	
  Defined
  Contribution Plan Fraction

  	
  3.19(k)

  
	
  Determination
  Date

  	
  12.02(h)

  
	
  Disability

  	
  1.08

  
	
  Distribution
  Date

  	
  6.01

  
	
  Distribution
  Restrictions

  	
  14.03(m)

  
	
  Earned
  Income

  	
  1.09

  
	
  Effective
  Date

  	
  1.10

  
	
  Elective
  Deferrals

  	
  14.03(h)

  
	
  Elective
  Transfer

  	
  13.06(A)

  
	
  Eligible
  Employee

  	
  14.03(c)

  
	
  Employee

  	
  1.11

  
	
  Employee
  Contributions

  	
  14.03(n)

  
	
  Employer

  	
  1.12

  
	
  Employer
  Contribution Account

  	
  14.06

  
	
  Employer
  for Code §415 Purposes

  	
  3.19(c)

  
	
  Employer
  for Top Heavy Purposes

  	
  12.02(g)

  
	
  Employment
  Commencement Date

  	
  2.02

  
	
  ERISA

  	
  1.13

  
	
  Excess
  Aggregate Contributions

  	
  14.09(D)

  
	
  Excess
  Amount

  	
  3.19(d)

  
	
  Excess
  Contributions

  	
  14.08

  
	
  Exempt
  Participant

  	
  8.01(B)

  
	
  Forfeiture
  Break in Service

  	
  5.08

  
	
  Group
  Trust Fund

  	
  10.17

  
	
  Hardship

  	
  6.09

  
	
  Hardship
  for Code §401(k) Purposes

  	
  14.11(A)

  
	
  Highly
  Compensated Employee

  	
  1.14

  
	
  Highly
  Compensated Group

  	
  14.03(d)

  
	
  Hour
  of Service

  	
  1.15

  
	
  Plan
  Definition Section Reference

  	
   

  
	
  Incidental
  Insurance Benefits

  	
  11.01(A)

  
	
  Insurable
  Participant

  	
  11.03(d)

  
	
  Investment
  Manager

  	
  9.04(i)

  
	
  Issuing
  Insurance Company

  	
  11.03(b)

  
	
  Joint
  and Survivor Annuity

  	
  6.04(A)

  
	
  Key
  Employee

  	
  12.02(a)
  (12.01

  
	
  Leased
  Employees

  	
  1.16

  
	
  Limitation
  Year

  	
  3.19(e)

  
	
  Loan
  Policy

  	
  9.04(A)

  
	
  Mandatory
  Contributions

  	
  14.04(A)

  
	
  Mandatory
  Contributions Account

  	
  14.04(A)

  
	
  Prototype
  Plan

  	
  3.19(f)

  
	
  Matching
  Contributions

  	
  14.03(i)

  
	
  Maximum
  Permissible Amount

  	
  3.19(g)

  
	
  Minimum
  Distribution Incidental Benefit

  	
  6.03(A)

  
	
  Multiple
  Use Limitation

  	
  14.10

  
	
  Named
  Fiduciary

  	
  10.03[D]

  
	
  Nonelective
  Contributions

  	
  14.03(j)

  
	
  Nonhighly
  Compensated Employee

  	
  14.03(b)

  
	
  Nonhighly
  Compensated Group

  	
  14.03(e)

  
	
  Non-Key
  Employee

  	
  12.02(b)

  
	
  Nontransferable
  Annuity

  	
  1.17

  
	
  Normal
  Retirement Age

  	
  5.01

  
	
  Paired
  Plans

  	
  1.18

  
	
  Participant

  	
  1.19

  
	
  Participant
  Deductible Contributions

  	
  4.02

  
	
  Participant
  Forfeiture

  	
  3.05

  
	
  Participant
  Loans

  	
  10.03[E]

  
	
  Participant
  Nondeductible Contributions

  	
  4.01

  
	
  Permissive
  Aggregation Group

  	
  12.02
  (f)

  
	
  Plan

  	
  1.20

  
	
  Plan
  Administrator

  	
  1.21

  
	
  Plan
  Entry Date

  	
  1.22

  
	
  Plan
  Year

  	
  1.23

  
	
  Policy

  	
  11.03(a)

  
	
  Preretirement
  Survivor Annuity

  	
  6.04(B)

  
	
  Qualified
  Domestic Relations Order

  	
  6.07

  
	
  Qualified
  Matching Contributions

  	
  14.03(k)

  
	
  Qualified
  Nonelective Contributions

  	
  14.03(l)

  
	
  Qualifying
  Employer Real Property

  	
  10.03[F]

  
	
  Qualifying
  Employer Securities

  	
  10.03[F]

  
	
  Related
  Employer

  	
  1.25

  
	
  Required
  Beginning Date

  	
  6.02

  
	
  Rollover
  Contributions

  	
  4.03

  
	
  Self-Employed
  Individual

  	
  1.26

  
	
  Service

  	
  1.28

  
	
  Term
  Life Insurance Contract

  	
  11.03

  
	
  Top
  Heavy Minimum Allocation

  	
  12.03

  
	
  Trust

  	
  1.30

  
	
  Trustee

  	
  1.32

  
	
  Trustee
  Designation

  	
  10.03[A]

  
	
  Trust
  Fund

  	
  1.31

  
	
  Weighted
  Average Allocation Method

  	
  14.12

  
	
  Year
  of Service for Eligibility Purposes

  	
  2.02

  
	
  Year
  of Service for Vesting Purposes

  	
  5.06

  

 

 

BRYAN,
PENDLETON, SWATS & MCALLISTER, LLC

DEFINED
CONTRIBUTION PROTOTYPE PLAN AND TRUST

 

DEFINED
CONTRIBUTION PROTOTYPE PLAN AND TRUST AGREEMENT

BASIC PLAN
DOCUMENT #01

 

Bryan,
Pendleton, Swats & McAllister, LLC, in its capacity as Prototype Plan Sponsor, establishes this Prototype
Plan intended to conform to and qualify under §401 and §501 of the Internal
Revenue Code of 1986, as amended. An Employer establishes a Plan and Trust
under this Prototype Plan by executing an Adoption Agreement. If the Employer
adopts this Plan as a restated Plan in substitution for, and in amendment of,
an existing plan, the provisions of this Plan, as a restated Plan, apply solely
to an Employee whose employment with the Employer terminates on or after the
restated Effective Date of the Plan. If an Employee’s employment with the
Employer terminates prior to the restated Effective Date, that Employee is
entitled to benefits under the Plan as the Plan existed on the date of the
Employee’s termination of employment.

 

ARTICLE I

DEFINITIONS

 

1.01
“Account” means the separate Account(s)
which the Plan Administrator or the Trustee maintains under the Plan for a
Participant.

 

1.02
“Account Balance” or “Accrued Benefit” means
the amount standing in a Participant’s Account(s) as of any date derived from
Employer contributions and from Participant contributions, if any.

 

1.03
“Accounting Date” means the last day of
the Plan Year. The Plan Administrator will allocate Employer contributions and
forfeitures for a particular Plan Year as of the Accounting Date of that Plan
Year, and on such other dates, if any, as the Plan Administrator determines,
consistent with the Plan’s allocation conditions and other provisions.

 

1.04
“Adoption Agreement” means the document
executed by each Employer adopting this Plan. References to Adoption Agreement
within this basic plan document are to the Adoption Agreement as completed and
executed by a particular Employer unless the context clearly indicates
otherwise. An adopting Employer’s Adoption Agreement and this basic plan
document together constitute a single Plan and Trust of the Employer. Each
elective provision of the Adoption Agreement corresponds (by its parenthetical
section reference) to the section of the Plan which grants the election. Each
Adoption Agreement offered under this Plan is either a Nonstandardized Plan or
a Standardized Plan, as identified in that Adoption Agreement. The provisions
of this Plan apply in the same manner to Nonstandardized Plans and to
Standardized Plans unless otherwise specified. All section references within an
Adoption Agreement are Adoption Agreement section references unless the context
clearly indicates otherwise.

 

1.05
“Beneficiary” means a person designated
by a Participant or by the Plan who is or may become entitled to a benefit
under the Plan. A Beneficiary who becomes entitled to a benefit under the Plan
remains a Beneficiary under the Plan until the Trustee has fully distributed to
the Beneficiary his/her Plan benefit. A Beneficiary’s right to (and the Plan
Administrator’s or a Trustee’s duty to provide to the Beneficiary) information
or data concerning the Plan does not arise until the Beneficiary first becomes
entitled to receive a benefit under the Plan.

 

1.06
“Code” means the Internal Revenue Code
of 1986, as amended and includes applicable Treasury regulations.

 

1.07
“Compensation” means a Participant’s
W-2 wages, Code §3401(a) wages, or 415 compensation except, in the case of a
Self-Employed Individual, Compensation means Earned Income as defined in
Section 1.09. The Employer in its Adoption Agreement must specify which
definition of Compensation (Section 1.07(A), (B) or (C)) applies under the Plan
and any modifications thereto, for purposes of contribution allocations under
Article III.

 

Any
reference in the Plan to Compensation is a reference to the definition in this
Section 1.07, unless the Plan reference, or the Employer in its Adoption
Agreement, modifies this definition. The Plan Administrator will take into
account only Compensation actually paid during (or as permitted under the Code,
paid for) the relevant period. A Compensation payment includes Compensation
paid by the Employer through another person under the common paymaster
provisions in Code §§3121 and 3306. Compensation, unless otherwise specified in
the Adoption Agreement, does not include any form of remuneration (including severance
pay and vacation pay) paid to the Participant after the Participant incurs a
Separation from Service.

 

(A) W-2
Wages. W-2 wages means
wages for federal income tax withholding purposes, as defined under Code
§3401(a), plus all other payments to an Employee in the course of the Employer’s
trade or business, for which the Employer must furnish the Employee a written
statement under Code §§6041, 6051 and 6052, but determined without regard to
any rules that limit the remuneration included in wages based on the nature or
location of the employment or services performed (such as the exception for
agricultural labor in Code §3401(a)(2)).

 

(B)  Code §3401(a) Wages. Code §3401(a) wages means wages within the
meaning of Code §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 the location of the employment or the
services performed (such 

 

1

 

as
the exception for agricultural labor in Code §3401(a)(2)).

 

(C)  Code §415 Compensation (current income
definition). Code §415
compensation means the Employee’s wages, salaries, fees for professional
service and other amounts received for personal services actually rendered in
the course of employment with the Employer maintaining the Plan to the extent
that the amounts are includible in gross income (including, but not limited to,
commissions paid salespersons, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums, tips, bonuses, fringe
benefits and reimbursements or other expense allowances under a nonaccountable
plan as described in Treas. Reg. §1.62-2(c)).

 

Code
§415 compensation does not include:

 

(a)  Employer contributions to a plan of deferred
compensation to the extent the contributions are not included in the gross
income of the Employee for the taxable year in which contributed, Employer
contributions on behalf of an Employee to a Simplified Employee Pension Plan to
the extent such contributions are excludible from the Employee’s gross income,
and any distributions from a plan of deferred compensation, regardless of
whether such amounts are includible in the gross income of the Employee when distributed.

 

(b)  Amounts realized from the exercise of a
non-qualified stock option, or when restricted stock (or property) held by an
Employee either becomes freely transferable or is no longer subject to a
substantial risk of forfeiture.

 

(c)  Amounts realized from the sale, exchange or
other disposition of stock acquired under a stock option described in Part II,
Subchapter D, Chapter 1, Subtitle A of the Code.

 

(d)  Other amounts which receive special tax
benefits, such as premiums for group term life insurance (but only to the
extent that the premiums are not includible in the gross income of the
Employee), or contributions made by an Employer (whether or not under a salary
reduction agreement) toward the purchase of an annuity contract described in Code
§403(b) (whether or not the contributions are excludible from the gross income
of the Employee).

 

(D)  Elective Contributions. Compensation under Sections 1.07(A), 1.07(B)
and 1.07(C) includes Elective Contributions unless the Employer in its Adoption
Agreement elects to exclude Elective Contributions. “Elective Contributions”
are amounts excludible from the Employee’s gross income under Code §§125,
132(f)(4), 402(e)(3), 402(h)(2), 403(b), 408(p) or 457, and contributed by the
Employer, at the Employee’s election, to a cafeteria plan, a qualified
transportation fringe benefit plan, a 401(k) arrangement, a SARSEP, a
tax-sheltered annuity, a SIMPLE plan or a Code §457 plan. Notwithstanding the
preceding sentence, amounts described in §132(f)(4) are not Elective
Contributions until Plan Years beginning on or after January 1, 2001, unless
the Plan Administrator operationally has included such amounts effective as of
an earlier Plan Year beginning no earlier than January 1, 1998.

 

(E)  Compensation Dollar Limitation. For any Plan Year, the Plan Administrator in
allocating contributions under Article III or in testing the Plan for
nondiscrimination, cannot take into account more than $150,000 (or such larger
or smaller amount as the Commissioner of Internal Revenue may prescribe) of any
Participant’s Compensation. Notwithstanding the foregoing, an Employee under a
401(k) arrangement may make elective deferrals with respect to Compensation
which exceeds the Plan Year Compensation limitation, provided such deferrals
otherwise satisfy Code §402(g) and other applicable limitations.

 

(F)  Nondiscrimination. For purposes of determining whether the Plan
discriminates in favor of Highly Compensated Employees, Compensation means
Compensation as defined in this Section 1.07, except: (1) the Employer annually
may elect operationally to include or to exclude Elective Contributions,
irrespective of the Employer’s election in its Adoption Agreement regarding
Elective Contributions; and (2) the Plan Administrator will disregard any
elections made in the “modifications to Compensation definition” section of
Adoption Agreement Section 1.07. The Employer’s election described in clause
(1) must be consistent and uniform with respect to all Employees and all plans
of the Employer for any particular Plan Year. The Employer, irrespective of
clause (2), may elect to exclude from this nondiscrimination definition of
Compensation any items of Compensation excludible under Code §414(s) and the
applicable Treasury regulations, provided such adjusted definition conforms to
the nondiscrimination requirements of those regulations. Furthermore, for
nondiscrimination purposes, including the computation of an Employee’s actual
deferral percentage (“ADP”) or actual contribution percentage (“ACP”), the Plan
Administrator may limit Compensation taken into account to Compensation
received only for the portion of the Plan Year in which the Employee was a
Participant and only for the portion of the Plan Year in which the Plan or the
401(k) arrangement was in effect.

 

1.08
“Disability” means the Participant,
because of a physical or mental disability, will be unable to perform the
duties of his/her customary position of employment (or is unable to engage in
any substantial gainful activity) for an indefinite period which the Plan
Administrator considers will be of long continued duration. A Participant also
is disabled if he/she incurs the permanent loss or loss of use of a member or
function of the body, or is permanently disfigured, and incurs a Separation from
Service. A Participant is disabled on the date the Plan Administrator
determines the Participant satisfies the definition of Disability. The Plan
Administrator may require a Participant to submit to a physical examination in
order to confirm Disability. The Plan Administrator will apply the provisions
of this Section 1.08 in a nondiscriminatory, consistent and uniform manner. The
Employer may provide an alternative definition of Disability in an Addendum to
its Adoption Agreement.

 

1.09
“Earned Income” means net earnings from
self-employment in the trade or business with respect to which the Employer has
established the Plan, provided personal services of the Self-Employed
Individual are a material income producing factor. The Plan Administrator will 

 

2

 

determine net earnings without regard to items excluded from gross income
and the deductions allocable to those items. The Plan Administrator will
determine net earnings after the deduction allowed to the Self-Employed
Individual for all contributions made by the Employer to a qualified plan and
after the deduction allowed to the Self-Employed Individual under Code §164(f)
for self-employment taxes.

 

1.10
“Effective Date” of this Plan is the
date specified in the Adoption Agreement unless otherwise for a specified
purpose provided within this basic plan document or within (as part of the
Adoption Agreement ) a Participation Agreement, an Addendum, or within
Appendices A or B.

 

1.11
“Employee” means any common law
employee, Self-Employed Individual, leased employee or other person the Code
treats as an employee of the Employer for purposes of the Employer’s qualified
plan. The Employer in its Adoption Agreement must elect or specify any
Employee, or class of Employees, not eligible to participate in the Plan (an “excluded
Employee”).

 

(A)  Collective Bargaining Employees. If the Employer elects in its Adoption Agreement
to exclude collective bargaining Employees from eligibility to participate, the
exclusion applies to any Employee included in a unit of Employees covered by an
agreement which the Secretary of Labor finds to be a collective bargaining
agreement between employee representatives and one or more employers if: (1)
retirement benefits were the subject of good faith bargaining; and (2) two
percent or less of the employees covered by the agreement are “professionals”
as defined in Treas. Reg. §1.410(b)-9, unless the collective bargaining
agreement requires the Employee to be included within the Plan. The term “employee
representatives” does not include any organization more than half the members
of which are owners, officers, or executives of the Employer.

 

(B)  Nonresident Aliens. If the Employer elects in its Adoption Agreement
to exclude nonresident aliens from eligibility to participate, the exclusion
applies to any nonresident alien Employee who does not receive any earned
income, as defined in Code §911(d)(2), from the Employer which constitutes
United States source income, as defined in Code §861(a)(3).

 

(C)  Reclassified Employees. If the Employer elects in its Adoption Agreement
to exclude reclassified Employees from eligibility to participate, the
exclusion applies to any person the Employer does not treat as an Employee
(including, but not limited to, independent contractors, persons the Employer
pays outside of its payroll system and out-sourced workers) for federal income
tax withholding purposes under Code §3401(a), but for whom there is a binding
determination the individual is an Employee or a Leased Employee of the
Employer.

 

1.12
“Employer” means each employer who
establishes a Plan under this Prototype Plan by executing an Adoption Agreement
and includes to the extent described in Section 1.26 a Related Employer and a
Participating Employer. The Employer for purposes of acting as Plan
Administrator, including Plan amendments, terminating the Plan or performing
other ERISA settlor functions, means the signatory Employer to the Adoption
Agreement Execution Page and does not include any related Employer or
Participating Employer.

 

1.13
“ERISA” means the Employee Retirement
Income Security Act of 1974, as amended, and includes applicable Department of
Labor regulations.

 

1.14
“Highly Compensated Employee” means an
Employee who:

 

(a)  during the Plan Year or during the preceding
Plan Year, is a more than 5% owner of the Employer (applying the constructive
ownership rules of Code §318, and applying the principles of Code §318, for an
unincorporated entity); or

 

(b)  during the preceding Plan Year had Compensation
in excess of $80,000 (as adjusted by the Commissioner of Internal Revenue for
the relevant year) and, if the Employer under its Adoption Agreement Appendices
A or B, makes the top-paid group election, was part
of the top-paid 20% group of Employees (based on Compensation for the preceding
Plan Year).

 

For
purposes of this Section 1.14, “Compensation” means Compensation as defined in
Section 1.07, except any exclusions from Compensation the Employer elects in
Adoption Agreement Section 1.07 do not apply, and Compensation specifically
includes Elective Contributions. The Plan Administrator must make the
determination of who is a Highly Compensated Employee, including the
determinations of the number and identity of the top-paid 20% group, consistent
with Code §414(q) and regulations issued under that Code section. The Employer
in its Adoption Agreement Appendices A or B may make a calendar year data
election to determine the Highly Compensated Employees for the Plan Year, as
prescribed by Treasury regulations or by other guidance published in the
Internal Revenue Bulletin. A calendar year data election must apply to all
plans of the Employer which reference the highly compensated employee
definition in Code §414(q). For purposes of this Section 1.14, if the current
Plan Year is the first year of the Plan, then the term “preceding Plan Year”
means the 12-consecutive month period immediately preceding the current Plan
Year.

 

1.15
“Hour of Service” means:

 

(a)  Each Hour of Service for which the Employer,
either directly or indirectly, pays an Employee, or for which the Employee is
entitled to payment, for the performance of duties. The Plan Administrator
credits Hours of Service under this Paragraph (a) to the Employee for the
computation period in which the Employee performs the duties, irrespective of
when paid;

 

(b)  Each Hour of Service for back pay,
irrespective of mitigation of damages, to which the Employer has agreed or for
which the Employee has received an award. The Plan Administrator credits Hours
of Service under this Paragraph (b) to the Employee for the computation
period(s) to which the award or the agreement pertains rather than for the
computation period in which the award, agreement or payment is made; and

 

3

 

(c)  Each Hour of Service for which the Employer,
either directly or indirectly, pays an Employee, or for which the Employee is
entitled to payment (irrespective of whether the employment relationship is
terminated), for reasons other than for the performance of duties during a
computation period, such as leave of absence, vacation, holiday, sick leave,
illness, incapacity (including disability), layoff, jury duty or military duty.
The Plan Administrator will credit no more than 501 Hours of Service under this
Paragraph (c) to an Employee on account of any single continuous period during
which the Employee does not perform any duties (whether or not such period
occurs during a single computation period). The Plan Administrator credits Hours
of Service under this Paragraph (c) in accordance with the rules of paragraphs
(b) and (c) of Labor Reg. §2530.200b-2, which the Plan, by this reference,
specifically incorporates in full within this Paragraph (c).

 

The
Plan Administrator will not credit an Hour of Service under more than one of
the above Paragraphs (a), (b) or (c). A computation period for purposes of this
Section 1.15 is the Plan Year, Year of Service period, Break in Service period
or other period, as determined under the Plan provision for which the Plan
Administrator is measuring an Employee’s Hours of Service. The Plan
Administrator will resolve any ambiguity with respect to the crediting of an
Hour of Service in favor of the Employee.

 

(A)  Method of Crediting Hours of Service. The Employer must elect in its Adoption Agreement
the method the Plan Administrator will use in crediting an Employee with Hours
of Service and the purpose for which the elected method will apply.

 

(B)  Actual Method. Under the Actual Method as determined from
records, an Employee receives credit for Hours of Service for hours worked and
hours for which the Employer makes payment or for which payment is due from the
Employer.

 

(C)  Equivalency Method. Under an Equivalency Method, for each equivalency
period for which the Plan Administrator would credit the Employee with at least
one Hour of Service, the Plan Administrator will credit the Employee with: (i)
10 Hours of Service for a daily equivalency; (ii) 45 Hours of Service for a
weekly equivalency; (iii) 95 Hours of Service for a semimonthly payroll period
equivalency; and (iv) 190 Hours of Service for a monthly equivalency.

 

(D)  Elapsed Time Method. Under the Elapsed Time Method, an Employee
receives credit for Service for the aggregate of all time periods (regardless
of the Employee’s actual Hours of Service) commencing with the Employee’s
Employment Commencement Date, or with his/her Re-employment Commencement Date,
and ending on the date a Break in Service begins. An Employee’s Employment
Commencement Date or his/her Re-employment Commencement Date begins on the
first day he/she performs an Hour of Service following employment or
re-employment. In applying the Elapsed Time Method, the Plan Administrator will
credit an Employee’s Service for any Period of Severance of less than
12-consecutive months and will express fractional periods of Service in days.

 

Under
the Elapsed Time Method, a Break in Service is a Period of Severance of at
least 12 consecutive months. A Period of Severance is a continuous period of
time during which the Employee is not employed by the Employer. The continuous
period begins on the date the Employee retires, quits, is discharged, or dies
or if earlier, the first 12-month anniversary of the date on which the Employee
otherwise is absent from Service for any other reason (including disability,
vacation, leave of absence, layoff, etc.). In the case of an Employee who is
absent from work for maternity or paternity reasons, the 12-consecutive month
period beginning on the first anniversary of the first date the Employee is
otherwise absent from Service does not constitute a Break in Service.

 

(E)  Maternity/Paternity Leave/Family and Medical
Leave Act. Solely for
purposes of determining whether an Employee incurs a Break in Service under any
provision of this Plan, the Plan Administrator must credit Hours of Service
during the Employee’s unpaid absence period: (i) due to maternity or paternity
leave; or (ii) as required under the Family and Medical Leave Act. An Employee
is on maternity or paternity leave if the Employee’s absence is due to the
Employee’s pregnancy, the birth of the Employee’s child, the placement with the
Employee of an adopted child, or the care of the Employee’s child immediately
following the child’s birth or placement. The Plan Administrator credits Hours
of Service under this Section 1.15(E) on the basis of the number of Hours of
Service for which the Employee normally would receive credit or, if the Plan
Administrator cannot determine the number of Hours of Service the Employee
would receive credit for, on the basis of 8 hours per day during the absence
period. The Plan Administrator will credit only the number (not exceeding 501)
of Hours of Service necessary to prevent an Employee’s Break in Service. The
Plan Administrator credits all Hours of Service described in this Section
1.15(E) to the computation period in which the absence period begins or, if the
Employee does not need these Hours of Service to prevent a Break in Service in
the computation period in which his/her absence period begins, the Plan
Administrator credits these Hours of Service to the immediately following
computation period.

 

(F)  Qualified Military Service. Hour of Service also includes any Service the
Plan must credit for contributions and benefits in order to satisfy the
crediting of Service requirements of Code §414(u). The provisions of this
Section 1.15(F) apply beginning December 12, 1994, or if the Employer’s Plan is
effective after that date, as of the Plan’s Effective Date.

 

1.16
“Leased Employee” means an individual
(who otherwise is not an Employee of the Employer) who, pursuant to an
agreement between the Employer and any other person, has performed services for
the Employer (or for the Employer and any persons related to the Employer within
the meaning of Code §144(a)(3)) on a substantially full time basis for at least
one year and who performs such services under primary direction or control of
the Employer within the meaning of Code §414(n)(2). Except as described in
Section 1.16(A), a Leased Employee is an Employee for purposes of the Plan. If
a Leased Employee is an Employee, “Compensation” includes Compensation 

 

4

 

from the leasing organization which is attributable to services performed
for the Employer.

 

(A)  Safe Harbor Plan Exception. A Leased Employee is not an Employee if the
leasing organization covers the employee in a safe harbor plan and, prior to
application of this safe harbor plan exception, 20% or less of the Employer’s
Employees (other than Highly Compensated Employees) are Leased Employees. A
safe harbor plan is a money purchase pension plan providing immediate
participation, full and immediate vesting, and a nonintegrated contribution
formula equal to at least 10% of the employee’s compensation, without regard to
employment by the leasing organization on a specified date. The safe harbor
plan must determine the 10% contribution on the basis of compensation as
defined in Code §415(c)(3) including Elective Contributions.

 

(B)  Other Requirements. The Plan Administrator must apply this Section
1.16 in a manner consistent with Code §§414(n) and 414(o) and the regulations
issued under those Code sections. If a Participant is a Leased Employee covered
by a plan maintained by the leasing organization, the Plan Administrator will
determine the allocation of Employer contributions and Participant forfeitures
on behalf of the Participant under the Employer’s Plan without taking into
account the Leased Employee’s allocation, if any, under the leasing
organization’s plan.

 

1.17
“Nonhighly Compensated Employee” means
any Employee who is not a Highly Compensated Employee.

 

1.18
“Nontransferable Annuity” means an
annuity contract which by its terms provides that it may not be sold, assigned,
discounted, pledged as collateral for a loan or security for the performance of
an obligation or for any purpose to any person other than the insurance
company. If the Plan distributes an annuity contract, the contract must be a
Nontransferable Annuity.

 

1.19
“Paired Plans” means the Employer has
adopted two Standardized Plan Adoption Agreements offered with this Prototype
Plan, one Adoption Agreement being a Paired Profit Sharing Plan and one
Adoption Agreement being a Paired Pension Plan. A Paired Profit Sharing Plan
may include a 401(k) arrangement. A Paired Pension Plan must be a money
purchase pension plan, defined benefit plan or a target benefit pension plan.
Paired Plans must be the subject of a favorable opinion letter issued by the
National Office of the Internal Revenue Service. If an Employer adopts paired
plans, only one of the plans may provide for permitted disparity.

 

1.20
“Participant” means an eligible
Employee who becomes a Participant in accordance with the provisions of Section
2.01. An eligible Employee means an Employee who is not an excluded Employee
under Adoption Agreement Section 1.11.

 

1.21
“Plan” means the retirement plan
established or continued by the Employer in the form of this Prototype Plan,
including the Adoption Agreement under which the Employer has elected to
establish this Plan. The Employer must designate the name of the Plan in its
Adoption Agreement. An Employer may execute more than one Adoption Agreement
offered under this Plan, each of which will constitute a separate Plan and
Trust established or continued by that Employer. The Plan and the Trust created
by each adopting Employer is a separate Plan and a separate Trust, independent
from the plan and the trust of any other employer adopting this Prototype Plan.
All section references within this basic plan document are Plan section
references unless the context clearly indicates otherwise. The Plan includes
any Addendum or Appendix permitted by the basic plan document or by the
Employer’s Adoption Agreement and which the Employer attaches to its Adoption
Agreement. An Addendum must correspond by section reference to the section of
the basic plan document or Adoption Agreement permitting the Addendum.

 

1.22
“Plan Administrator” means the Employer
unless the Employer designates another person or persons to hold the position
of Plan Administrator. Any person(s) the Employer appoints as Plan
Administrator may or may not be Participants in the Plan. In addition to its
other duties, the Plan Administrator has full responsibility for the Plan’s
compliance with the reporting and disclosure rules under ERISA.

 

1.23
“Plan Entry Date” means the date(s) the
Employer elects in Adoption Agreement Section 2.01.

 

1.24
“Plan Year” means the consecutive month
period the Employer specifies in its Adoption Agreement. The Employer also must
specify in its Adoption Agreement the “Limitation Year” applicable to the
limitations on allocations described in Article III. If the Employer maintains
Paired Plans, each Plan must have the same Plan Year.

 

1.25
“Protected Benefit” means any accrued
benefit described in Treas. Reg. §1.411(d)-4, including any optional form of
benefit provided under the Plan which may not (except in accordance with such
Regulations) be reduced, eliminated or made subject to Employer discretion.

 

1.26
“Related Group”/”Related Employer.” A
Related Group is a controlled group of corporations (as defined in Code
§414(b)), trades or businesses (whether or not incorporated) which are under
common control (as defined in Code §414(c)), an affiliated service group (as
defined in Code §414(m)) or an arrangement otherwise described in Code §414(o).
Each Employer/member of the Related Group is a Related Employer. The term “Employer”
includes every Related Employer for purposes of crediting Service and Hours of
Service, determining Years of Service and Breaks in Service under Articles II
and V, determining Separation from Service, applying the Coverage Test under
Section 3.06(E), applying the limitations on allocations in Part 2 of Article
III, applying the top-heavy rules and the minimum allocation requirements of
Article XII, applying the definitions of Employee, Highly Compensated Employee,
Compensation and Leased Employee, applying the safe harbor 401(k) provisions of
Section 14.02(D), applying the SIMPLE 401(k) provisions of Section 14.02(E) and
for any other purpose the Code or the Plan require.

 

(A)  Participating Employer. An Employer may contribute to the Plan only by
being a signatory to the Execution Page of the Adoption Agreement or to a 

 

5

 

Participation
Agreement to the Adoption Agreement. If a Related Employer executes a
Participation Agreement to the Adoption Agreement, the Related Employer is a
Participating Employer. A Participating Employer is an Employer for all
purposes of the Plan except as provided in Section 1.12.

 

(B)  Standardized/Nonstandardized Plan. If the Employer’s Plan is a Standardized Plan,
all Employees of the Employer or of any Related Employer, are eligible to
participate in the Plan, irrespective of whether the Related Employer directly
employing the Employee is a Participating Employer. Notwithstanding the
immediately preceding sentence, individuals who become Employees of a Related
Employer as a result of a transaction described in Code §410(b)(6)(C) are not
eligible to participate in the Plan during the Plan Year in which such
transaction occurs nor in the following Plan Year, unless the Related Employer
which employs such Employees becomes during such period a Participating
Employer, by executing a Participation Agreement to the Adoption Agreement. If
the Plan is a Nonstandardized Plan, the Employees of a Related Employer are not
eligible to participate in the Plan unless the Related Employer is a Participating
Employer.

 

1.27
“Self-Employed Individual”/”Owner-Employee”/ “Shareholder-Employee.”
“Self-Employed Individual” means an individual who has Earned Income
(or who would have had Earned Income but for the fact that the trade or
business did not have net profits) for the taxable year from the trade or
business for which the Plan is established. “Owner-Employee” means a
Self-Employed Individual who is the sole proprietor in the case of a sole
proprietorship. If the Employer is a partnership, or a limited liability
company taxed for federal income tax purposes as a partnership, “Owner-Employee”
means a Self-Employed Individual who is a partner or member and owns more than
10% of either the capital or the profits interest of the partnership or of the
limited liability company. “Shareholder-Employee” means an employee or officer
of an “S” corporation who owns (or is considered as owning under Code
§318(a)(1)) more than 5% of the outstanding stock of the corporation on any day
of the corporation’s taxable year.

 

1.28
“Separation from Service” means an
event after which the Employee no longer has an employment relationship with
the Employer maintaining this Plan or with a Related Employer.

 

1.29
“Service” means any period of time the
Employee is in the employ of the Employer, including any period the Employee is
on an unpaid leave of absence authorized by the Employer under a uniform,
nondiscriminatory policy applicable to all Employees.

 

1.30
“Service with a Predecessor Employer.”
If the Employer maintains the plan of a predecessor employer, service of the
Employee with the predecessor employer is Service with the Employer. If the
Employer does not maintain the plan of a predecessor employer, the Plan does
not credit service with the predecessor employer, unless the Employer in its
Adoption Agreement (or in a Participation Agreement, if applicable) elects to
credit designated predecessor employer service and specifies the purposes for
which the Plan will credit service with that predecessor employer.

 

Unless
the Employer under its Adoption Agreement Section 2.01 provides for this
purpose specific Plan Entry Dates, an Employee who satisfies the Plan’s
eligibility condition(s) by reason of the crediting of predecessor service will
enter the Plan in accordance with the provisions of Section 2.04 as if the
Employee were a re-employed Employee on the first day the Plan credits
predecessor service.

 

1.31
“Trust” means the separate Trust
created under the Plan.

 

1.32
“Trust Fund” means all property of
every kind acquired by the Plan and held by the Trust, other than incidental
benefit insurance contracts.

 

1.33
“Trustee” means the person or persons
who as Trustee execute the Adoption Agreement, or any successor in office who
in writing accepts the position of Trustee. The Employer must designate in its
Adoption Agreement whether the Trustee will administer the Trust as a
discretionary Trustee or as a nondiscretionary Trustee. If a person acts as a
discretionary Trustee, the Employer also may appoint a Custodian. See Article X.
If the Prototype Plan Sponsor is a bank, savings and loan association, credit
union, mutual fund, insurance company, or other institution qualified to serve
as Trustee, a person other than the Prototype Plan Sponsor (or its affiliate)
may not serve as Trustee or as Custodian of the Plan without the written
consent of the Prototype Plan Sponsor.

 

1.34
“Vested” means a Participant or a
Beneficiary has an unconditional claim, legally enforceable against the Plan,
to the Participant’s Account Balance or Accrued Benefit.

 

6

 

ARTICLE II

ELIGIBILITY AND PARTICIPATION

 

2.01
ELIGIBILITY. Each eligible Employee becomes a Participant in the Plan in
accordance with the eligibility provisions the Employer elects in its Adoption
Agreement. If this Plan is a restated Plan, each Employee who was a Participant
in the Plan on the day before the restated Effective Date continues as a
Participant in the restated Plan, irrespective of whether he/she satisfies the
eligibility conditions of the restated Plan, unless the Employer provides
otherwise in its Adoption Agreement. If the Employer contributes to the Plan
under a Davis-Bacon contract, except as the contract provides, the Employer’s
Adoption Agreement elections imposing age and service eligibility conditions do
not apply with respect to an Employee performing Davis-Bacon contract Service.

 

2.02
AGE AND SERVICE CONDITIONS. For purposes of an Employee’s participation
in the Plan, the Plan: (1) may not impose an age condition exceeding age 21;
and (2) takes into account all of the Employee’s Years of Service with the
Employer, except as provided in Section 2.03. “Year of Service” for purposes of
an Employee’s participation in the Plan, means a 12-consecutive month
eligibility computation period during which the Employee completes the number
of Hours of Service (not exceeding 1,000) the Employer specifies in its
Adoption Agreement.

 

The
initial eligibility computation period is the first 12-consecutive month period
measured from the Employee’s Employment Commencement Date. The Plan measures
succeeding 12-consecutive month eligibility computation periods in accordance
with the Employer’s election in its Adoption Agreement. If the Employer elects
to measure subsequent periods on a Plan Year basis, an Employee who receives
credit for the required number of Hours of Service during the initial
eligibility computation period and also during the first applicable Plan Year
receives credit for two Years of Service under Article II. “Employment
Commencement Date” means the date on which the Employee first performs an Hour
of Service for the Employer.

 

If
the Employer under Adoption Agreement Section 2.01 elects an alternative
Service condition to one Year of Service or two Years of Service, the Employer
must elect in the Adoption Agreement the Hour of Service and any other
requirement(s), if any, after the Employee completes one Hour of Service. Under
any alternative Service condition election, the Plan may not require an
Employee to complete more than one Year of Service (1,000 Hours of Service in
12-consecutive months) or two Years of Service if applicable.

 

If
the Employer in its Adoption Agreement elects to apply the Equivalency Method
or the Elapsed Time Method in applying the Plan’s eligibility Service
condition, the Plan Administrator will credit Service in accordance with
Sections 1.15(C) and (D).

 

2.03
BREAK IN SERVICE - PARTICIPATION. An Employee incurs a “Break in Service”
if during any applicable 12-consecutive month period he/she does not complete
more than 500 Hours of Service with the Employer. The “12-consecutive month
period” under this Section 2.03 is the same 12-consecutive month period for
which the Plan measures a “Year of Service” under Section 2.02. If the Plan
applies the Elapsed Time Method of crediting Service under Section 1.15(D), a
Participant incurs a “Break in Service” if the Participant has a Period of
Severance of at least 12 consecutive months.

 

(A)  Two Year Eligibility. If the Employer under Adoption Agreement Section
2.01 elects a two Years of Service condition for eligibility purposes, an
Employee who incurs a one year Break in Service prior to completing two Years
of Service is a new Employee on the date he/she first performs an Hour of
Service for the Employer after the Break in Service, and the Employee
establishes a new Employment Commencement Date for purposes of the initial
eligibility computation period under Section 2.02.

 

(B)  One Year Hold-Out Rule. The Employer must elect in its Adoption
Agreement whether to apply the one year hold-out rule under Code §410(a)(5)(C).
Under this rule, a Participant will incur a suspension of participation in the
Plan after incurring a one year Break in Service and the Plan disregards a
Participant’s Service completed prior to a Break in Service until the
Participant completes one Year of Service following the Break in Service. The
Plan suspends the Participant’s participation in the Plan as of the first day
of the Plan Year following the Plan Year in which the Participant incurs the
Break in Service. If the Participant completes one Year of Service following
his/her Break in Service, the Plan restores that Participant’s pre-Break
Service (and the Participant resumes active participation in the Plan)
retroactively to the first day of the computation period in which the
Participant first completes one Year of Service following his/her Break in
Service. The initial computation period under this Section 2.03(B) is the
12-consecutive month period measured from the date the Participant first
receives credit for an Hour of Service following the one year Break in Service.
The Plan measures any subsequent computation periods, if necessary, in a manner
consistent with the Employer’s eligibility computation period election in
Adoption Agreement Section 2.02. If the Employer elects to apply the one year
hold-out rule, the Employer also must elect in its Adoption Agreement whether
to limit application of the rule only to a Participant who has incurred a
Separation from Service.

 

The
Plan Administrator also will apply the one-year hold out rule, if applicable,
to an Employee who satisfies the Plan’s eligibility conditions but who incurs a
Separation from Service and a one year Break in Service prior to becoming a
Participant.

 

This
Section 2.03(B) does not affect a Participant’s vesting credit under Article V
and, during a suspension period, the Participant’s Account continues to share
fully in Trust Fund allocations under Article IX. Furthermore, the Plan
Administrator in applying this Section 2.03(B) does not restore any Service
disregarded under the Break in Service rule of Section 2.03(A).

 

(C)  No Application to 401(k) Arrangement. If the Plan includes a 401(k) arrangement and the
Employer in its Adoption Agreement elects to apply the Section 2.03(B)

 

7

 

one
year hold-out rule, the Plan Administrator will apply the provisions of Section
2.04 to the deferral contributions portion of the Plan without regard to
Section 2.03(B).

 

(D)  No Rule of Parity – Participation. For purposes of Plan participation, the Plan does
not apply the “rule of parity” under Code §410(a)(5)(D).

 

2.04
PARTICIPATION UPON RE-EMPLOYMENT.   A Participant who incurs a
Separation from Service will re-enter the Plan as a Participant on the date of
his/her re-employment with the Employer, subject to the one year hold-out rule,
if applicable, under Section 2.03(B). An Employee who satisfies the Plan’s
eligibility conditions but who incurs a Separation from Service prior to
becoming a Participant will become a Participant on the later of the Plan Entry
Date on which he/she would have entered the Plan had he/she not incurred a
Separation from Service or the date of his/her re-employment, subject to the
one year hold-out rule, if applicable, under Section 2.03(B). Any Employee who
incurs a Separation from Service prior to satisfying the Plan’s eligibility
conditions becomes a Participant in accordance with Adoption Agreement Section
2.01.

 

2.05
CHANGE IN EMPLOYMENT STATUS. The Employer in its Adoption Agreement
Section 1.11 may elect to exclude certain Employees from Plan participation (“excluded
Employees”). If a Participant has not incurred a Separation from Service but
becomes an excluded Employee, during the period of exclusion the excluded
Employee will not share in the allocation of any Employer contributions or
Participant forfeitures, and may not make deferral contributions if the Plan
includes a 401(k) arrangement, with respect to Compensation paid to the
excluded Employee during the period of exclusion. However, during such period
of exclusion, the Participant, without regard to employment classification,
continues to receive credit for vesting under Article V for each included Year
of Service and the Participant’s Account continues to share fully in Trust Fund
allocations under Article IX. If a Participant who becomes an excluded Employee
subsequently resumes status as an eligible Employee, the Participant will
participate in the Plan immediately upon resuming eligible status, subject to
the one year hold-out rule, if applicable, under Section 2.03(B).

 

If
an excluded Employee who is not a Participant becomes an eligible Employee,
he/she will participate immediately in the Plan if he/she has satisfied the
eligibility conditions of Adoption Agreement Section 2.01 and would have been a
Participant had he/she not been an excluded Employee during his/her period of
Service. Furthermore, the excluded Employee receives credit for vesting under
Article V for each included vesting Year of Service notwithstanding the
Employee’s excluded Employee status.

 

2.06
ELECTION NOT TO PARTICIPATE. If the Plan is a Standardized Plan, the
Plan does not permit an otherwise eligible Employee nor any Participant to
elect not to participate in the Plan (“opt-out”). If the Plan is a
Nonstandardized Plan, the Employer in its Adoption Agreement must elect whether
any eligible Employee may elect irrevocably to opt-out. The Employee prior to
his/her Plan Entry Date must file an opt-out election in writing with the Plan
Administrator on a form provided by the Plan Administrator for this purpose.

 

8

 

ARTICLE III

EMPLOYER CONTRIBUTIONS AND FORFEITURES

 

Part 1. Amount
of Employer Contributions and Plan Allocations: Sections 3.01 through 3.06

 

3.01
EMPLOYER CONTRIBUTIONS.

 

(A)  Amount and Types of Contribution. The Employer in its Adoption Agreement will elect
the amount and type(s) of Employer Plan contribution(s). The Employer will not
make a contribution to the Trust for any Plan Year to the extent the
contribution would exceed the Participants’ Maximum Permissible Amounts. Unless
otherwise provided in an Addendum to its Adoption Agreement, the Employer need
not have net profits to make a contribution under the Plan. If the Employer’s
Plan is a money purchase pension plan and the Employer also maintains a defined
benefit pension plan, notwithstanding the money purchase pension plan formula
in the Employer’s Adoption Agreement, the Employer’s required contribution to
its money purchase pension plan for a Plan Year is limited to the amount which
the Employer may deduct under Code §404(a)(7). If the Employer under Code
§404(a)(7) must reduce its money purchase pension plan contribution, the Plan
Administrator will reduce each Participant’s allocation in the same ratio as
the reduced total Employer contribution bears to the original (unreduced)
Employer contribution.

 

(B)  Form of Contribution/Related Employer. Subject to the consent of the Trustee, the
Employer may make its contribution in property instead of cash, provided the
contribution of property is not a prohibited transaction under the Code or
under ERISA. Unless the Employer in its Adoption Agreement makes a contrary
election, the Plan Administrator will allocate all Employer contributions and
forfeitures without regard to which contributing Related Employer directly
employs the affected Participants.

 

(C)  Time of Payment of Contribution. The Employer may pay its contribution for any
Plan Year in one or more installments without interest. Unless otherwise
required by contract, by the Code or by ERISA, the Employer may make its
contribution to the Plan for a particular Plan Year at such time(s) as the
Employer in its sole discretion determines. If the Employer makes a contribution
for a particular Plan Year after the close of that Plan Year, the Employer will
designate in writing to the Trustee the Plan Year for which the Employer is
making its contribution.

 

(D)  Return of Employer Contribution. The Employer contributes to the Plan on the
condition its contribution is not due to a mistake of fact and the Internal
Revenue Service will not disallow the deduction of the Employer’s contribution.
The Trustee, upon written request from the Employer, must return to the
Employer the amount of the Employer’s contribution made by the Employer by
mistake of fact or the amount of the Employer’s contribution disallowed as a
deduction under Code §404. The Trustee will not return any portion of the
Employer’s contribution under the provisions of this Section 3.01(D) more than
one year after:

 

(1)  The Employer made the contribution by mistake
of fact; or

 

(2)  The disallowance of the contribution as a
deduction, and then, only to the extent of the disallowance.

 

The Trustee will not
increase the amount of the Employer contribution returnable under this Section
3.01(D) for any earnings attributable to the contribution, but the Trustee will
decrease the Employer contribution returnable for any losses attributable to
the contribution.  The Trustee may
require the Employer to furnish the Trustee whatever evidence the Trustee deems
necessary to enable the Trustee to confirm the amount the Employer has
requested be returned is properly returnable under ERISA.

 

3.02
DEFERRAL CONTRIBUTIONS. If the Plan includes a 401(k) arrangement, the
Employer in its Adoption Agreement must elect the Plan limitations and
restrictions, if any, which apply to deferral contributions or to cash or
deferred contributions, if applicable. Under Adoption Agreement Section 3.02,
for purposes of applying any Plan limit the Employer has elected on deferral
contributions, the Employer must elect to take into account the Employee’s
entire Plan Year Compensation or to limit Compensation to the portion of the
Plan Year in which the Employee actually is a Participant.

 

3.03
MATCHING CONTRIBUTIONS. If the Plan includes a 401(k) arrangement, the
Employer in its Adoption Agreement must elect the type(s) of matching
contributions, the time period applicable to any matching contribution formula,
and as applicable, the amount of matching contributions and the Plan
limitations and restrictions, if any, which apply to matching contributions.

 

3.04
EMPLOYER CONTRIBUTION ALLOCATION.

 

(A)  Method of Allocation. The Employer in its Adoption Agreement must
specify, subject to this Section 3.04, the manner of allocating Employer
contributions to the Trust. For purposes of this Section 3.04, Employer
contributions include as applicable, the Employer’s nonelective contributions,
money purchase pension and target benefit contributions, but do not include
deferral contributions or, except under Section 3.04(B), matching
contributions.

 

(B)  Compensation Taken into Account. The Employer in its Adoption Agreement Section
1.07 must specify the Compensation the Plan Administrator is to take into
account in allocating an Employer contribution to a Participant’s Account. For
the Plan Year in which the Employee first becomes a Participant in the Plan (or
in any portion of the Plan), the Employer may elect to take into account the
Employee’s entire Plan Year Compensation or to limit Compensation to the
portion of the Plan Year in which the Employee actually is a Participant. For
all other Plan Years, the Plan Administrator will take into account only the
Compensation determined for the portion of the Plan Year in which the Employee
actually is a Participant. The Plan Administrator must take into account the
Employee’s entire Compensation for the Plan Year to determine whether the Plan
satisfies the top-heavy minimum allocation requirements of Article XII. The 

 

9

 

Employer,
in its Adoption Agreement, may elect to measure Compensation for allocating its
Employer contribution for a Plan Year on the basis of a specified period other
than the Plan Year.

 

(C)  Top-Heavy Minimum Allocation. Unless the Employer in an Addendum to its
Adoption Agreement elects to satisfy any top-heavy minimum allocation
requirement in another plan (not maintained under this basic plan document),
the Employer in this Plan must satisfy the top-heavy requirements of Article
XII.

 

(D)  Allocation Conditions. Subject to any restoration allocation required
under the Plan, the Plan Administrator will allocate and credit Employer
contributions to the Account of each Participant who satisfies the allocation
conditions of Section 3.06.

 

(E)  Alternative Allocation Formulas. The Plan Administrator will allocate Employer
contributions for the Plan Year or other applicable period in accordance with
the allocation formula the Employer elects in its Adoption Agreement. The Plan
Administrator, in allocating under any allocation formula which is based in
whole or in part on Compensation, only will take into account Compensation of
those Participants entitled to an allocation.

 

The
Employer in its Adoption Agreement must elect, one or more as applicable of the
following allocation formulas:

 

(1)  Nonintegrated (pro rata)
allocation formula. The Plan Administrator will allocate the
Employer contributions for a Plan Year in the same ratio that each Participant’s
Compensation for the Plan Year bears to the total Compensation of all
Participants for the Plan Year.

 

(2)  Two-tiered permitted
disparity allocation formula. Under the first tier, the Plan
Administrator will allocate the Employer contributions for a Plan Year in the
same ratio that each Participant’s Compensation plus Excess Compensation (as
defined in Adoption Agreement Section 3.04) for the Plan Year bears to the
total Compensation plus Excess Compensation of all Participants for the Plan
Year. The allocation under this first tier, as a percentage of each Participant’s
Compensation plus Excess Compensation, must not exceed the applicable
percentage (5.7%, 5.4% or 4.3%) listed under Section 3.04(D)(4).

 

Under the second tier,
the Plan Administrator will allocate any remaining Employer contributions for a
Plan Year in the same ratio that each Participant’s Compensation for the Plan
Year bears to the total Compensation of all Participants for the Plan Year.

 

(3)  Four-tiered permitted
disparity allocation formula. Under the first tier, the Plan
Administrator will allocate the Employer contributions for a Plan Year in the
same ratio that each Participant’s Compensation for the Plan Year bears to the
total Compensation of all Participants for the Plan Year, but not exceeding 3%
of each Participant’s Compensation. Solely for purposes of this first tier
allocation, a “Participant” means, in addition to any Participant who satisfies
the allocation conditions of Section 3.06 for the Plan Year, any other
Participant entitled to a top-heavy minimum allocation under the Plan.

 

Under the second tier,
the Plan Administrator will allocate the Employer contributions for a Plan Year
in the same ratio that each Participant’s Excess Compensation (as defined in
Adoption Agreement Section 3.04) for the Plan Year bears to the total Excess
Compensation of all Participants for the Plan Year, but not exceeding 3% of
each Participant’s Excess Compensation.

 

Under the third tier, the
Plan Administrator will allocate the Employer contributions for a Plan Year in
the same ratio that each Participant’s Compensation plus Excess Compensation
for the Plan Year bears to the total Compensation plus Excess Compensation of
all Participants for the Plan Year. The allocation under this third tier, as a
percentage of each Participant’s Compensation plus Excess Compensation, must
not exceed the applicable percentage (2.7%, 2.4% or 1.3%) listed under Section
3.04(D)(4).

 

Under the fourth tier,
the Plan Administrator will allocate any remaining Employer contributions for a
Plan Year, in the same ratio that each Participant’s Compensation for the Plan
Year bears to the total Compensation of all Participants for the Plan Year.

 

(4)  Maximum disparity table. For
purposes of the permitted disparity allocation formulas under this Section
3.04, the applicable percentage is:

 

	
  Integration
  level %

  of taxable wage

  base

  	
   

  	
  Applicable %

  for 2-tiered

  formula

  	
   

  	
  Applicable %

  for 4-tiered

  formula

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  100%

  	
   

  	
  5.7

  	
  %

  	
  2.7

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  More than 80% but less than 100%

  	
   

  	
  5.4

  	
  %

  	
  2.4

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  More than 20% (but not less than $10,001) and not
  more than 80%

  	
   

  	
  4.3

  	
  %

  	
  1.3

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20% (or $10,000, if greater) or less

  	
   

  	
  5.7

  	
  %

  	
  2.7

  	
  %

  

 

(5)  Overall permitted
disparity limits.

 

(i)  Annual overall permitted
disparity limit. Notwithstanding Sections 3.04(D)(2) and (3), for
any Plan Year the Plan benefits any Participant who benefits under another
qualified plan or under a simplified employee pension plan (as defined in Code
§408(k)) maintained by the Employer that provides for permitted disparity (or
imputes disparity), the Plan Administrator will allocate Employer contributions
to the Account of each Participant in the same ratio that each Participant’s
Compensation bears to the total Compensation of all Participants for the Plan
Year.

 

10

 

(ii)  Cumulative permitted
disparity limit. Effective for Plan Years beginning after December
31, 1994, the cumulative permitted disparity limit for a Participant is 35
total cumulative permitted disparity years. “Total cumulative permitted
disparity years” means the number of years credited to the Participant for
allocation or accrual purposes under the Plan, any other qualified plan or
simplified employee pension plan (whether or not terminated) ever maintained by
the Employer. For purposes of determining the Participant’s cumulative
permitted disparity limit, the Plan Administrator will treat all years ending
in the same calendar year as the same year. If the Participant has not
benefited under a defined benefit plan or under a target benefit plan of the
Employer for any year beginning after December 31, 1993, the Participant does
not have a cumulative permitted disparity limit.

 

For purposes of this
Section 3.04(D)(5), a Participant “benefits” under the Plan for any Plan Year
during which the Participant receives, or is deemed to receive, a contribution
allocation in accordance with Treas. Reg. §1.410(b)-3(a).

 

(6)  Uniform points allocation
formula. The Plan Administrator will allocate the Employer
contributions for a Plan Year in the same ratio that each Participant’s points
(as elected in Adoption Agreement Section 3.04) bear to the total points of all
Participants for the Plan Year.

 

(7)  Incorporation of contribution
formula. The Plan Administrator will allocate the Employer’s
contributions for a Plan Year in accordance with the contribution formula the
Employer has elected under Section 3.01.

 

(8)  Target benefit allocation
formula. The Plan Administrator will allocate the Employer
contributions for a Plan Year as provided in the Employer’s target benefit
Adoption Agreement.

 

(9)  Davis-Bacon contract
allocation formula. The Plan Administrator will allocate the
Employer contributions for a Plan Year in accordance with the applicable
Davis-Bacon contract pursuant to which the Employer has made its contributions
for the Plan Year. The Employer’s contributions will take into account each
Participant’s hourly rate, employment category, employment classification and
such other factors the Davis-Bacon contract may specify. For purposes of the
Plan, “Davis-Bacon contract” includes a contract under any state prevailing
wage law.

 

(F)  Qualified Nonelective Contributions. The Employer operationally may designate all or
any portion of its nonelective contributions as a qualified nonelective
contribution. The Employer, to facilitate the Plan Administrator’s correction
of test failures under Sections 14.08, 14.09 and 14.10, also may make qualified
nonelective contributions to the Plan irrespective of whether the Employer in
its Adoption Agreement has elected to provide nonelective contributions. The
Employer in its Adoption Agreement must elect whether the Plan Administrator
will allocate the Employer contributions designated as a qualified nonelective
contribution to all Participants or solely to Nonhighly Compensated Employee
Participants. The Employer operationally must elect whether the Plan
Administrator will allocate qualified nonelective contributions: (1) to eligible
Participants pro rata in relation to Compensation; (2) to eligible Participants
in the same amount without regard to Compensation (flat dollar); or (3) under
the reverse allocation or other similar method. Under the reverse allocation
method, the Plan Administrator, subject to Section 3.06, will allocate a
qualified nonelective contribution first to the Nonhighly Compensated Employee
Participant(s) with the lowest Compensation for the Plan Year not exceeding the
Maximum Permissible Amount for each Participant, with any remaining amounts
allocated to the next highest paid Nonhighly Compensated Employee
Participant(s) not exceeding his/her Maximum Permissible Amount and continuing
in this manner until the Plan Administrator has fully allocated the qualified nonelective
contribution.

 

(G)  Qualified Replacement Plan. The Employer may establish or maintain this Plan
as a qualified replacement plan as described in Code §4980 under which the Plan
may receive a transfer from a terminating qualified plan the Employer also
maintains. The Plan Administrator will credit the transferred amounts to a
suspense account under the Plan and thereafter the Plan Administrator will
allocate the transferred amounts under this Section 3.04(G) in the same manner
as the Plan Administrator allocates Employer nonelective contributions, unless
the Employer specifies in an Addendum to its Adoption Agreement: (1) to apply
such transferred amounts to the Plan’s administrative expenses; or (2) if the
Plan includes a 401(k) arrangement, the Employer in its Addendum designates
such transferred amounts as matching contributions.

 

3.05
FORFEITURE ALLOCATION. The amount of a Participant’s Account forfeited
under the Plan is a Participant forfeiture. The Plan Administrator, subject to
Section 3.06, will allocate Participant forfeitures at the time and in the
manner the Employer specifies in its Adoption Agreement. The Plan Administrator
will continue to hold the undistributed, non-Vested portion of the Account of a
Participant who has separated from Service solely for his/her benefit until a
forfeiture occurs at the time specified in Section 5.09 or if applicable, until
the time specified in Section 9.11. Except as provided under Section 5.04, a
Participant will not share in the allocation of a forfeiture of any portion of
his/her Account. If the Plan includes a 401(k) arrangement, the Plan
Administrator first will determine if a Participant’s forfeitures are
attributable to nonelective or to matching contributions, and the Plan
Administrator then will allocate the forfeitures in the manner the Employer has
elected in its Adoption Agreement. If the Employer elects to allocate
forfeitures to reduce nonelective or matching contributions and the forfeitures
exceed the amount of the contribution to which the Plan Administrator will
apply the forfeitures, the Plan Administrator will allocate the remaining
forfeitures as an additional discretionary nonelective or discretionary
matching contribution or the Plan Administrator will apply the forfeitures to
the Employer’s nonelective or matching contribution in the succeeding Plan
Year. A Participant’s forfeiture is attributable to matching contributions if
the forfeiture is: (1) a non-Vested matching Account forfeited in accordance
with Section 5.09 or, if applicable, Section 

 

11

 

9.11;
(2) a non-Vested excess aggregate contribution (adjusted for earnings)
forfeited in correcting for nondiscrimination failures under Section 14.09 or
Section 14.10; or (3) an “associated matching contribution,” which includes any
Vested or non-Vested matching contribution (adjusted for earnings) made with
respect to elective deferrals or Employee contributions the Plan Administrator
distributes in correction of Code §402(g), Code §415 or nondiscrimination
failures under Sections 14.07, 14.08, 14.09 or 14.10. An Employee forfeits an
associated matching contribution unless the matching contribution is a Vested
excess aggregate contribution distributed in accordance with Sections 14.09 or 14.10.

 

3.06
ALLOCATION CONDITIONS. The Plan Administrator will determine the
allocation conditions which apply to Employer contributions (including matching
contributions) and Participant forfeitures on the basis of the Plan Year (or on
any other basis representing a reasonable division of the Plan Year) in
accordance with the Employer’s elections in its Adoption Agreement. A
Participant does not accrue an Employer contribution with respect to a Plan
Year or other applicable period until the Participant satisfies the allocation
conditions described in this Section 3.06. The Plan under a 401(k) arrangement
may not impose any allocation conditions with respect to deferral
contributions, safe harbor contributions or SIMPLE contributions.

 

(A)  Hours of Service Requirement. Except as required to satisfy the top-heavy
minimum allocation requirement of Article XII, the Plan Administrator will not
allocate any portion of an Employer contribution for a Plan Year to any
Participant’s Account if the Participant does not complete the applicable
minimum Hours of Service or consecutive calendar days of employment requirement
the Employer specifies in its Adoption Agreement for the relevant period. The
Employer in its Standardized Adoption Agreement must elect whether to require a
Participant to complete during a Plan Year 501 Hours of Service or to be
employed for at least 91 consecutive calendar days under the Elapsed Time
Method, to share in the allocation of Employer contributions for that Plan Year
where the Participant is not employed by the Employer on the Accounting Date of
that Plan Year, including the Plan Year in which the Employer terminates the
Plan.

 

(B)  “Last Day” Employment Requirement. If the Plan is a Standardized Plan, a Participant
who is employed by the Employer on the Accounting Date of a Plan Year will
share in the allocation of Employer contributions for that Plan Year without
regard to the Participant’s Hours of Service completed during that Plan Year.
If the Plan is a Nonstandardized Plan, the Employer must specify in its
Adoption Agreement whether the Participant will benefit under the Plan if the
Participant is not employed by the Employer on the Accounting Date of the Plan
Year or other specified date. If the Plan is a Nonstandardized money purchase
Plan or target benefit Plan, the Plan conditions Employer contribution
allocations on a Participant’s employment with the Employer on the last day of
the Plan Year for the Plan Year in which the Employer terminates the Plan.

 

(C)  Death, Disability or Normal Retirement Age. Unless the Employer otherwise elects in its
Adoption Agreement, any allocation condition elected under Adoption Agreement
Section 3.06 does not apply for a Plan Year if a Participant incurs a
Separation from Service during the Plan Year on account of the Participant’s
death, Disability or attainment of Normal Retirement Age in the current Plan
Year or on account of the Participant’s Disability or attainment of Normal
Retirement Age in a prior Plan Year.

 

(D)  Other Conditions. In allocating Employer contributions under the
Plan, the Plan Administrator will not apply any other conditions except those
the Employer elects in its Adoption Agreement or otherwise as the Plan may
require.

 

(E)  Suspension of Allocation Conditions Under a
Nonstandardized Plan. The
suspension provisions of this Section 3.06(E) do not apply unless the Employer
elects in its Nonstandardized Adoption Agreement to apply them. If Section
3.06(E) applies, the Plan suspends for a Plan Year the Adoption Agreement
Section 3.06 allocation conditions if the Plan fails in that Plan Year to
satisfy coverage under the Ratio Percentage Test, unless in an Addendum to its
Adoption Agreement, the Employer specifies the Plan Administrator will apply
this Section 3.06(E) using the Average Benefit Percentage Test described in
Code §410(b)(2). A Plan satisfies coverage under the Ratio Percentage Test if,
on the last day of the Plan Year, the Plan’s benefiting ratio of the Nonhighly
Compensated Includible Employees is at least 70% of the benefiting ratio of the
Highly Compensated Includible Employees.

 

The
benefiting ratio of the Nonhighly Compensated Includible Employees is the
number of Nonhighly Compensated Includible Employees benefiting under the Plan
over the number of the Includible Employees who are Nonhighly Compensated
Employees. “Includible” Employees are all Employees other than: (1) those
Employees excluded from participating in the Plan for the entire Plan Year by
reason of the collective bargaining unit or the nonresident alien exclusions
under Code §410(b)(3) or by reason of the age and service requirements of
Article II; and (2) those Employees who incur a Separation from Service during
the Plan Year and for the Plan Year fail to complete more than 500 Hours of
Service or at least 91 consecutive calendar days under the Elapsed Time Method.

 

For
purposes of coverage, an Employee is benefiting under the Plan on a particular
date if, under Section 3.04 of the Plan, he/she is entitled to an Employer
contribution or to a Participant forfeiture allocation for the Plan Year.

 

If
this Section 3.06(E) applies for a Plan Year, the Plan Administrator will
suspend the allocation conditions for the Nonhighly Compensated Includible
Employees who are Participants, beginning first with the Includible Employee(s)
employed by the Employer on the last day of the Plan Year, then the Includible
Employee(s) who have the latest Separation from Service during the Plan Year,
and continuing to suspend the allocation conditions for each Includible Employee
who incurred an earlier Separation from Service, from the latest to the
earliest Separation from Service date, until the Plan satisfies coverage for
the Plan Year. If two or more Includible Employees have a Separation from
Service on the same day, the Plan Administrator will suspend the allocation
conditions for all such Includible Employees, irrespective of whether the Plan
can satisfy coverage by accruing 

 

12

 

benefits for fewer than all such Includible Employees. If the Plan for
any Plan Year suspends the allocation conditions for an Includible Employee,
that Employee will share in the allocation for that Plan Year of the Employer
contribution and Participant forfeitures, if any, without regard to whether
he/she has satisfied the allocation conditions of this Section 3.06.

 

If
the Plan includes Employer matching contributions subject to ACP testing, this
Section 3.06(E) applies separately to the Code §401(m) portion of the Plan.

 

Part 2. Limitations
On Allocations: Sections 3.07 through 3.18

 

[Note:
Sections 3.07 through 3.10 apply only to Participants in this Plan who do not
participate, and who have never participated, in another qualified plan,
individual medical account (as defined in Code §415(l)(2)), simplified employee
pension plan (as defined in Code §408(k)) or welfare benefit fund (as defined
in Code §419(e)) maintained by the Employer, which provides an Annual
Addition.]

 

3.07
ANNUAL ADDITIONS LIMITATION. The amount of Annual Additions which the
Plan Administrator may allocate under this Plan to a Participant’s Account for
a Limitation Year may not exceed the Maximum Permissible Amount. If the Annual
Additions the Plan Administrator otherwise would allocate under the Plan to a
Participant’s Account would for the Limitation Year exceed the Maximum
Permissible Amount, the Plan Administrator will not allocate the Excess Amount,
but will instead take any reasonable, uniform and nondiscriminatory action the
Plan Administrator determines necessary to avoid allocation of an Excess
Amount. Such actions include, but are not limited to, those described in this
Section 3.07. If the Plan includes a 401(k) arrangement, the Plan Administrator
may apply this Section 3.07 in a manner which maximizes the allocation to a
Participant of Employer contributions (exclusive of the Participant’s deferral
contributions). Notwithstanding any contrary Plan provision, the Plan
Administrator, for the Limitation Year, may: (1) suspend or limit a Participant’s
additional Employee contributions or deferral contributions; (2) notify the
Employer to reduce the Employer’s future Plan contribution(s) as necessary to
avoid allocation to a Participant of an Excess Amount; or (3) suspend or limit
the allocation to a Participant of any Employer contribution previously made to
the Plan (exclusive of deferral contributions) or of any Participant
forfeiture. If an allocation of Employer contributions previously made
(excluding a Participant’s deferral contributions) or of Participant forfeitures
would result in an Excess Amount to a Participant’s Account, the Plan
Administrator will allocate the Excess Amount to the remaining Participants who
are eligible for an allocation of Employer contributions for the Plan Year in
which the Limitation Year ends. The Plan Administrator will make this
allocation in accordance with the Plan’s allocation method as if the
Participant whose Account otherwise would receive the Excess Amount, is not
eligible for an allocation of Employer contributions. If the Plan Administrator
allocates to a Participant an Excess Amount, Plan Administrator must dispose of
the Excess Amount in accordance with Section 3.10 (relating to certain “reasonable
errors” and allocation of forfeitures) or, if Section 3.10 does not apply, the Plan
Administrator will dispose of the Excess Amount under Section 9.12.

 

3.08
ESTIMATING COMPENSATION. Prior to the determination of the Participant’s
actual Compensation for a Limitation Year, the Plan Administrator may determine
the Maximum Permissible Amount on the basis of the Participant’s estimated
annual Compensation for such Limitation Year. The Plan Administrator must make
this determination on a reasonable and uniform basis for all Participants
similarly situated. The Plan Administrator must reduce the allocation of any
Employer contributions (including any allocation of forfeitures) based on
estimated annual Compensation by any Excess Amounts carried over from prior
Limitation Years.

 

3.09
DETERMINATION BASED ON ACTUAL COMPENSATION. As soon as is
administratively feasible after the end of the Limitation Year, the Plan
Administrator will determine the Maximum Permissible Amount for the Limitation
Year on the basis of the Participant’s actual Compensation for such Limitation
Year.

 

3.10
DISPOSITION OF ALLOCATED EXCESS AMOUNT. 
If, because of a reasonable error in estimating a Participant’s actual
Limitation Year Compensation, because of the allocation of forfeitures, because
of a reasonable error in determining a Participant’s deferral contributions or
because of any other facts and circumstances the Internal Revenue Service (“Revenue
Service”) considers to constitute reasonable error, a Participant receives an
allocation of an Excess Amount for a Limitation Year, the Plan Administrator
will dispose of such Excess Amount as follows:

 

(a)  The Plan Administrator first will return to
the Participant any Employee contributions (adjusted for earnings) and then any
Participant deferral contributions (adjusted for earnings) to the extent
necessary to reduce or eliminate the Excess Amount.

 

(b)  If, after the application of Paragraph (a),
an Excess Amount still exists and the Plan covers the Participant at the end of
the Limitation Year, the Plan Administrator then will use the Excess Amount(s)
to reduce future Employer contributions (including any allocation of
forfeitures) under the Plan for the next Limitation Year and for each
succeeding Limitation Year, as is necessary, for the Participant. If the
Employer’s Plan is a profit sharing plan, a Participant who is a Highly
Compensated Employee may elect to limit his/her Compensation for allocation
purposes to the extent necessary to reduce his/her allocation for the
Limitation Year to the Maximum Permissible Amount and to eliminate the Excess
Amount.

 

(c)  If, after the application of Paragraph (a),
an Excess Amount still exists and the Plan does not cover the Participant at
the end of the Limitation Year, the Plan Administrator then will hold the
Excess Amount unallocated in a suspense account. The Plan Administrator will
apply the suspense account to reduce Employer Contributions (including the
allocation of forfeitures) for all remaining Participants in the next
Limitation Year, and in each succeeding Limitation Year if necessary. Neither
the Employer nor any Employee may contribute to the Plan for any 

 

13

 

Limitation Year in which
the Plan is unable to allocate fully a suspense account maintained pursuant to
this Paragraph (c). Amounts held unallocated in a suspense account will not
share in any allocation of Trust Fund net income, gain or loss.

 

(d)  The Plan Administrator under Paragraphs (b)
or (c) will not distribute any Excess Amount(s) to Participants or to former
Participants.

 

[Note:
Sections 3.11 through 3.15 apply only to Participants who, in addition to this
Plan, participate in one or more M&P defined contribution plans (including
Paired Plans), welfare benefit funds (as defined in Code §419(e)), individual
medical accounts (as defined in Code §415(l)(2), or simplified employee pension
plans (as defined in Code §408(k)) maintained by the Employer and which provide
an Annual Addition during the Limitation Year (collectively “Code §415
aggregated plans”).]

 

3.11  COMBINED
PLANS ANNUAL ADDITIONS LIMITATION. The amount of Annual Additions which the
Plan Administrator may allocate under this Plan to a Participant’s Account for
a Limitation Year may not exceed the Maximum Permissible Amount, reduced by the
sum of any Annual Additions allocated to the Participant’s accounts for the
same Limitation Year under the Code §415 aggregated plans. If the amount the
Employer otherwise would allocate to the Participant’s Account under this Plan
would cause the Annual Additions for the Limitation Year to exceed this Section
3.11 combined plans limitation, the Employer will reduce the amount of its
allocation to that Participant’s Account in the manner described in Section
3.07, so the Annual Additions under all of the Code §415 aggregated plans for
the Limitation Year will equal the Maximum Permissible Amount. If the Plan
Administrator allocates to a Participant an amount attributed to this Plan
under Section 3.14 which exceeds this Section 3.11 combined plans limitation,
the Plan Administrator must dispose of the Excess Amount in accordance with
Section 3.15 (relating to certain “reasonable errors” and allocation of
forfeitures) or, if Section 3.15 does not apply, the Plan Administrator will
dispose of the Excess Amount under Section 9.12.

 

3.12  ESTIMATING
COMPENSATION. Prior to the determination of the Participant’s actual
Compensation for the Limitation Year, the Plan Administrator may determine the
Section 3.11 combined plans limitation on the basis of the Participant’s
estimated annual Compensation for such Limitation Year. The Plan Administrator
will make this determination on a reasonable and uniform basis for all
Participants similarly situated. The Plan Administrator must reduce the
allocation of any Employer contribution (including the allocation of
Participant forfeitures) based on estimated annual Compensation by any Excess
Amounts carried over from prior years.

 

3.13  DETERMINATION
BASED ON ACTUAL COMPENSATION. As soon as is administratively feasible after
the end of the Limitation Year, the Plan Administrator will determine the
Section 3.11 combined plans limitation on the basis of the Participant’s actual
Compensation for such Limitation Year.

 

3.14  ORDERING
OF ANNUAL ADDITION ALLOCATIONS. If, because of a reasonable error in
estimating a Participant’s actual Limitation Year Compensation, because of the
allocation of forfeitures, because of a reasonable error in determining a
Participant’s deferral contributions or because of any other facts and
circumstances the Revenue Service considers to constitute reasonable error, a
Participant’s Annual Additions under this Plan and the Code §415 aggregated
plans result in an Excess Amount, such Excess Amount will consist of the
Amounts last allocated. The Plan Administrator will determine the Amounts last
allocated by treating the Annual Additions attributable to a simplified
employee pension as allocated first, followed by allocation to a welfare
benefit fund or individual medical account, irrespective of the actual
allocation date. If the Plan Administrator allocates an Excess Amount to a
Participant on an allocation date of this Plan which coincides with an
allocation date of another plan, unless the Employer specifies otherwise in an
Addendum to its Adoption Agreement, the Excess Amount attributed to this Plan
will equal the product of:

 

(a)  the total Excess Amount allocated as of such
date, multiplied by

 

(b)  the ratio of (i) the Annual Additions
allocated to the Participant as of such date for the Limitation Year under the
Plan to (ii) the total Annual Additions allocated to the Participant as of such
date for the Limitation Year under this Plan and the Code §415 aggregated
plans.

 

3.15  DISPOSITION
OF ALLOCATED EXCESS AMOUNT ATTRIBUTABLE TO PLAN. The Plan Administrator
will dispose of any allocated Excess Amounts described in and attributed to
this Plan under Section 3.14 as provided in Section 3.10 or, as applicable
under Section 9.12.

 

[Note:
Section 3.16 applies only to Participants who, in addition to this Plan,
participate in one or more qualified defined contribution plans maintained by
the Employer during the Limitation Year, but which are not M&P plans
described in Sections 3.11 through 3.15.]

 

3.16
OTHER DEFINED CONTRIBUTION PLANS LIMITATION. If a Participant is a
participant in another defined contribution plan maintained by the Employer,
but which plan is not an M&P plan described in Sections 3.11 through 3.15,
the Plan Administrator must limit the allocation to the Participant of Annual
Additions under this Plan as provided in Sections 3.11 through 3.15, as though
the other defined contribution plan were an M&P plan, unless the Employer
specifies otherwise in an Addendum to its Adoption Agreement.

 

3.17
DEFINED BENEFIT PLAN LIMITATION. If the Employer maintains a defined
benefit plan, or has ever maintained a defined benefit plan which the Employer
has terminated, then the sum of the defined benefit plan fraction and the
defined contribution plan fraction for any Participant for any Limitation Year
beginning before January 1, 2000, must not exceed 1.0. The 1.0 limitation of
the immediately preceding sentence does not apply for Limitation Years
beginning after December 31, 1999, unless the Employer in Appendix B to its
Adoption Agreement specifies a later effective date. To the extent necessary to
satisfy the 1.0 limitation, if the Employer still 

 

14

 

maintains the defined benefit plan as an active plan, the Employer in its
Adoption Agreement Appendix B will elect whether to reduce the Participant’s
projected annual benefit under the defined benefit plan under which the
Participant participates, or to reduce its contribution or allocation on behalf
of the Participant to the defined contribution plan(s) under which the
Participant participates. If the Employer has frozen or terminated the defined
benefit plan, the Employer will reduce its contribution or allocation on behalf
of the Participant to the defined contribution plan(s) under which the
Participant participates. The Employer must provide in Appendix B to its Adoption
Agreement the manner in which the Plan will satisfy the top-heavy requirements
of Code §416 after taking into account the existence (or prior maintenance) of
the defined benefit plan.

 

3.18
DEFINITIONS - ARTICLE III.  For
purposes of Article III:

 

(a)  “Annual Additions” means the sum of the
following amounts allocated to a Participant’s Account for a Limitation Year:
(i) all Employer contributions (including Participant deferral contributions);
(ii) all forfeitures; (iii) all Employee contributions; (iv) Excess Amounts
reapplied to reduce Employer contributions under Section 3.10 or Section 3.15;
(v) amounts allocated after March 31, 1984, to an individual medical account
(as defined in Code §415(l)(2)) included as part of a pension or annuity plan
maintained by the Employer; (vi) contributions paid or accrued after December
31, 1985, for taxable years ending after December 31, 1985, attributable to
post-retirement medical benefits allocated to the separate account of a
key-employee (as defined in Code §419A(d)(3)) under a welfare benefit fund (as
defined in Code §419(e)) maintained by the Employer; (vii) amounts allocated
under a Simplified Employee Pension Plan; and (viii) corrected excess
contributions described in Code §401(k) and corrected excess aggregate
contributions described in Code §401(m). Excess deferrals described in Code
§402(g), which the Plan Administrator corrects by distribution by April 15 of
the following calendar year, are not Annual Additions.

 

(b)  “Compensation” for purposes of applying the
limitations of Part 2 of this Article III, means Compensation as defined in
Section 1.07, except, for Limitation Years beginning after December 31, 1997,
Compensation includes Elective Contributions, irrespective of whether the
Employer has elected to include these amounts as Compensation under Section
1.07 of its Adoption Agreement and any exclusion the Employer has elected in
Section 1.07 of the Adoption Agreement does not apply.

 

(c)  “Employer” means the Employer and any Related
Employer. Solely for purposes of applying the limitations of Part 2 of this
Article III, the Plan Administrator will determine Related Employer by
modifying Code §§414(b) and (c) in accordance with Code §415(h).

 

(d)  “Excess Amount” means the excess of the
Participant’s Annual Additions for the Limitation Year over the Maximum
Permissible Amount.

 

(e)  “Limitation Year” means the period the
Employer elects in its Adoption Agreement Section 1.24. All qualified plans of
the Employer must use the same Limitation Year. If the Employer amends the
Limitation Year to a different 12-consecutive month period, the new Limitation
Year must begin on a date within the Limitation Year for which the Employer
makes the amendment, creating a short Limitation Year.

 

(f)  “M&P Plan” means a prototype plan the
form of which is the subject of a favorable opinion letter (or prior to Revenue
Procedure 2000-20, a favorable notification or favorable opinion letter) from
the Revenue Service.

 

(g)  “Maximum Permissible Amount” means the lesser
of: (i) $30,000 (or, if greater, the $30,000 amount as adjusted under Code
§415(d)), or (ii) 25% of the Participant’s Compensation for the Limitation
Year. If there is a short Limitation Year because of a change in Limitation
Year, the Plan Administrator will multiply the $30,000 (or adjusted) limitation
by the following fraction:

 

Number of months in the
short Limitation Year

12

The
25% limitation does not apply to any contribution for medical benefits within
the meaning of Code §401(h) or Code §419A(f)(2) which otherwise is an Annual
Addition.

 

(h)  “Defined contribution plan” means a
retirement plan which provides for an individual account for each participant
and for benefits based solely on the amount contributed to the participant’s
account, and any income, expenses, gains and losses, and any forfeitures of
accounts of other participants which the plan may allocate to such participant’s
account. The Plan Administrator must treat all defined contribution plans
(whether or not terminated) maintained by the Employer as a single plan. Solely
for purposes of the limitations of Part 2 of this Article III, employee
contributions made to a defined benefit plan maintained by the Employer is a
separate defined contribution plan. The Plan Administrator also will treat as a
defined contribution plan an individual medical account (as defined in Code
§415(l)(2)) included as part of a defined benefit plan maintained by the
Employer and, for taxable years ending after December 31, 1985, a welfare
benefit fund under Code §419(e) maintained by the Employer to the extent there
are post-retirement medical benefits allocated to the separate account of a key
employee (as defined in Code §419A(d)(3)).

 

(i)  “Defined benefit plan” means a retirement
plan which does not provide for individual accounts for Employer contributions.
All defined benefit plans (whether or not terminated) maintained by the
Employer are a single plan.

 

[Note:
The definitions in Paragraphs (j), (k) and (l) apply only if the limitation
described in Section 3.17 applies to the Plan.]

 

15

 

(j)  “Defined benefit plan fraction” means the
following fraction:

 

Projected annual benefit of the Participant under the

defined benefit plan(s)

The lesser of: (i) 125%
(subject to the “100%

limitation” in Paragraph (l)) of the dollar limitation in

effect under Code §415(b)(1)(A) for the Limitation

Year, or (ii) 140% of the Participant’s average

Compensation for his/her high three (3) consecutive

Years of Service

 

To
determine the denominator of this fraction, the Plan Administrator will make
any adjustment required under Code §415(b) and will determine a Year of
Service, unless the Employer provides otherwise in an Addendum to its Adoption
Agreement, as a Plan Year in which the Employee completed at least 1,000 Hours
of Service. The “projected annual benefit” is the annual retirement benefit
(adjusted to an actuarially equivalent straight life annuity if the defined
benefit plan expresses such benefit in a form other than a straight life
annuity or qualified joint and survivor annuity) of the Participant under the
terms of the defined benefit plan on the assumptions he/she continues
employment until his/her normal retirement age (or current age, if later) as
stated in the defined benefit plan, his/her compensation continues at the same
rate as in effect in the Limitation Year under consideration until the date of
his/her normal retirement age and all other relevant factors used to determine
benefits under the defined benefit plan remain constant as of the current
Limitation Year for all future Limitation Years.

 

Current Accrued Benefit. If the Participant accrued benefits in one or more defined benefit plans
maintained by the Employer which were in existence on May 6, 1986, the dollar limitation
used in the denominator of this fraction will not be less than the Participant’s
Current Accrued Benefit. A Participant’s Current Accrued Benefit is the sum of
the annual benefits under such defined benefit plans which the Participant had
accrued as of the end of the 1986 Limitation Year (the last Limitation Year
beginning before January 1, 1987), determined without regard to any change in
the terms or conditions of the defined benefit plan made after May 5, 1986, and
without regard to any cost of living adjustment occurring after May 5, 1986.
This Current Accrued Benefit rule applies only if the defined benefit plans
individually and in the aggregate satisfied the requirements of Code §415 as in
effect at the end of the 1986 Limitation Year.

 

(k)  “Defined contribution plan fraction” means the
following fraction:

 

The sum, as of the close of the Limitation Year, of the

Annual Additions for all Limitation Years

to the Participant’s Account under

the defined contribution plan(s)

The sum of the lesser of
the following amounts

determined for the Limitation Year and for each prior

Limitation Year of service with the Employer: (i)

125% (subject to the “100% limitation” in Paragraph

(l)) of the dollar limitation in effect under Code

§415(c)(1)(A) for the Limitation Year (determined

without regard to the special dollar limitations for

employee stock ownership plans), or (ii) 35% of the

Participant’s Compensation for the Limitation Year

 

For
purposes of determining the defined contribution plan fraction, the Plan
Administrator will not recompute Annual Additions in Limitation Years beginning
prior to January 1, 1987, to treat all Employee contributions as Annual
Additions. If the Plan satisfied Code §415 for Limitation Years beginning prior
to January 1, 1987, the Plan Administrator will redetermine the defined
contribution plan fraction and the defined benefit plan fraction as of the end
of the 1986 Limitation Year, in accordance with this Section 3.18. If the sum
of the redetermined fractions exceeds 1.0, the Plan Administrator will subtract
permanently from the numerator of the defined contribution plan fraction an
amount equal to the product of: (1) the excess of the sum of the fractions over
1.0, times (2) the denominator of the defined contribution plan fraction. In
making the adjustment, the Plan Administrator must disregard any accrued
benefit under the defined benefit plan which is in excess of the Current
Accrued Benefit. This Plan continues any transitional rules applicable to the
determination of the defined contribution plan fraction under the Plan as of
the end of the 1986 Limitation Year.

 

(l)  “100% limitation” means the limitation in
Code §416(h) which applies if the plan is top-heavy. If the 100% limitation
applies, the Plan Administrator must determine the denominator of the defined
benefit plan fraction and the denominator of the defined contribution plan
fraction by substituting 100% for 125%. If this Plan is a Standardized Plan,
the 100% limitation applies in all Limitation Years, unless the Employer
specifies otherwise in an Addendum to its Adoption Agreement. If the Employer
overrides the 100% limitation under a Standardized Plan, the Employer must
specify in its Addendum the manner in which the Plan satisfies the extra
minimum benefit requirement of Code §416(h) and the 100% limitation must
continue to apply if the Plan’s top-heavy ratio exceeds 90%. If this Plan is a
Nonstandardized Plan, the 100% limitation applies only if: (i) the Plan’s
top-heavy ratio exceeds 90%; or (ii) the Plan’s top-heavy ratio is greater than
60%, and the Employer does not specify in its Adoption Agreement to provide
extra minimum benefits which satisfy Code §416(h)(2).

 

16

 

ARTICLE IV

PARTICIPANT CONTRIBUTIONS

 

4.01  PARTICIPANT
CONTRIBUTIONS. For purposes of this Article IV, Participant contributions
means all Employee contributions described in Section 4.02, deductible
Participant contributions described in Section 4.03 (“DECs”) and rollover
contributions described Section 4.04.

 

4.02  EMPLOYEE
CONTRIBUTIONS. An Employee contribution is a nondeductible contribution
which a Participant makes to the Trust as permitted under this Section 4.02. A
deferral contribution made by a Participant under a 401(k) arrangement is not
an Employee contribution. Employee contributions must satisfy the
nondiscrimination requirements of Code §401(m). See Section 14.09. An Employer
must elect in its Adoption Agreement whether to permit Employee contributions.
If the Employer elects to permit Employee contributions, the Employer also must
specify in its Adoption Agreement any conditions or limitations which may apply
to Employee contributions. If the Employer permits Employee contributions, the
Employer operationally will determine if a Participant will make Employee
contributions through payroll deduction or by other means.

 

The
Employer must elect in its Adoption Agreement whether the Employer will make
matching contributions with respect to any Employee contributions and any
conditions or limitations which may apply to those matching contributions. Any
matching contribution must satisfy the nondiscrimination requirements of Code
§401(m). See Section 14.09.

 

4.03  DECs.
A DEC is a deductible Participant contribution made to the Plan for a taxable
year commencing prior to 1987. If a Participant has made DECs to the Plan, the
Plan Administrator must maintain a separate Account for the Participant’s DECs
as adjusted for earnings, including DECs which are part of a rollover
contribution described in Section 4.04. The DECs Account is part of the
Participant’s Account for all purposes of the Plan, except for purposes of
determining the top-heavy ratio under Article XII. The Plan Administrator may
not use a Participant’s DECs Account to purchase life insurance on the
Participant’s behalf.

 

4.04  ROLLOVER
CONTRIBUTIONS. A rollover contribution is an amount of cash or property
which the Code permits an eligible Employee or Participant to transfer directly
or indirectly to this Plan from another qualified plan. A rollover contribution
excludes Employee contributions, as adjusted for earnings. An Employer
operationally and on a nondiscriminatory basis, may elect to permit or not to
permit rollover contributions to this Plan or may elect to limit an eligible
Employee’s right or a Participant’s right to make a rollover contribution. If
an Employer permits rollover contributions, any Participant (or as applicable,
any eligible Employee), with the Employer’s written consent and after filing
with the Trustee the form prescribed by the Plan Administrator, may make a
rollover contribution to the Trust. Before accepting a rollover contribution,
the Trustee may require a Participant (or eligible Employee) to furnish
satisfactory evidence the proposed transfer is in fact a “rollover contribution”
which the Code permits an employee to make to a qualified plan. The Trustee, in
its sole discretion, may decline to accept a rollover contribution of property
which could: (1) generate unrelated business taxable income; (2) create
difficulty or undue expense in storage, safekeeping or valuation; or (3) create
other practical problems for the Trust. A rollover contribution is not an
Annual Addition under Part 2 of Article III.

 

If
an eligible Employee makes a rollover contribution to the Trust prior to
satisfying the Plan’s eligibility conditions, the Plan Administrator and
Trustee must treat the Employee as a limited Participant (as described in Rev.
Rul. 96-48 or in any successor ruling). A limited Participant does not share in
the Plan’s allocation of Employer contributions nor Participant forfeitures and
may not make deferral contributions if the Plan includes a 401(k) arrangement
until he/she actually becomes a Participant in the Plan. If a limited
Participant has a Separation from Service prior to becoming a Participant in
the Plan, the Trustee will distribute his/her rollover contributions Account to
him/her in accordance with Article VI as if it were an Employer contributions
Account.

 

4.05  PARTICIPANT
CONTRIBUTIONS – VESTING. A Participant’s Participant contributions Account
is, at all times, 100% Vested.

 

4.06  PARTICIPANT
CONTRIBUTIONS – DISTRIBUTION. Subject to any contrary Employer election in
its Adoption Agreement Appendix A, an Employee, after attaining age 701⁄2 may elect
to receive distribution prior to Separation from Service (“in-service
distribution”) of all or any part of his/her Participant contributions Account.
The Employer in its Adoption Agreement Section 6.01 must elect the additional
in-service distribution election rights, if any, a Participant has with respect
to his/her Participant contributions Account. For purposes of the Employer’s
Adoption Agreement elections regarding in-service distribution of Participant
contributions, a Participant’s Employee contributions also includes DECs. A
Participant will not incur a forfeiture of any Account under the Plan solely as
a result of the distribution of his/her Participant contributions.

 

The
Trustee, following a Participant’s Separation from Service, will distribute to
the Participant his/her Participant contributions Account in accordance with
Article VI in the same manner as the Trustee distributes the Participant’s
Employer contributions Account.

 

4.07  PARTICIPANT
CONTRIBUTIONS- INVESTMENT AND ACCOUNTING. The Plan Administrator must
maintain a separate Account in the name of each Participant to reflect his/her
Participant contributions (including, if applicable, the different types of
Participant contributions), as adjusted for earnings. The Trustee will invest
all Participant contributions as part of the Trust Fund.

 

17

 

ARTICLE V

VESTING

 

5.01  NORMAL/EARLY
RETIREMENT AGE. The Employer in its Adoption Agreement must specify the
Plan’s Normal Retirement Age. An Employer in its Adoption Agreement may specify
an Early Retirement Age. A Participant’s Account Balance derived from Employer
contributions is 100% Vested upon and after his/her attaining Normal Retirement
Age (or if applicable, Early Retirement Age) if the Participant is employed by
the Employer on or after that date.

 

5.02  PARTICIPANT
DEATH OR DISABILITY. Unless the Employer elects otherwise in its Adoption
Agreement, a Participant’s Account Balance derived from Employer contributions
is 100% Vested if the Participant’s Separation from Service is a result of
his/her death or his/her Disability.

 

5.03  VESTING
SCHEDULE. Except as provided in Sections 5.01 and 5.02, for each Year of
Service as described in Section 5.06, a Participant’s Vested percentage of his/her
Account Balance derived from Employer contributions equals the percentage under
the vesting schedule the Employer has elected in its Adoption Agreement.

 

For
purposes of Adoption Agreement Section 5.03, “6-year graded,” “3-year cliff,” “7-year
graded” or “5-year cliff” means an Employee’s Vested percentage, based on each
included Year of Service, under the following applicable schedule:

 

	
  6-year graded

  	
   

  	
  7-year graded

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  0-1 year / 0%

  	
   

  	
  0-2
  years / 0%

  	
   

  
	
  2 years / 20%

  	
   

  	
  3
  years / 20%

  	
   

  
	
  3 years / 40%

  	
   

  	
  4
  years / 40%

  	
   

  
	
  4 years / 60%

  	
   

  	
  5
  years / 60%

  	
   

  
	
  5 years / 80%

  	
   

  	
  6
  years / 80%

  	
   

  
	
  6 years / 100%

  	
   

  	
  7
  years / 100%

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3-year cliff

  	
   

  	
  5-year cliff

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  0-2 years / 0%

  	
   

  	
  0-4
  years/ 0%

  	
   

  
	
  3 years / 100%

  	
   

  	
  5
  years / 100%

  	
   

  

 

(A)  “Grossed-Up” Vesting Formula. If the Trustee makes a distribution (other than a
cash-out distribution described in Section 5.04) to a partially-Vested
Participant, and the Participant has not incurred a Forfeiture Break in Service
at the relevant time, the provisions of this Section 5.03(A) apply to the
Participant’s Account Balance. At any relevant time following the distribution,
the Plan Administrator will determine the Participant’s Vested Account Balance
derived from Employer contributions in accordance with the following formula:
P(AB + D) - D.

 

To
apply this formula, “P” is the Participant’s current vesting percentage at the
relevant time, “AB” is the Participant’s Employer-derived Account Balance at
the relevant time and “D” is the amount of the earlier distribution. If, under
a restated Plan, the Plan has made distribution to a partially-Vested
Participant prior to its restated Effective Date and is unable to apply the
cash-out provisions of Section 5.04 to that prior distribution, this special
vesting formula also applies to that Participant’s remaining Account Balance.
The Employer, in an Addendum to its Adoption Agreement, may elect to modify
this formula to read as follows: P(AB + (R x D)) - (R x D). For purposes of
this alternative formula, “R” is the ratio of “AB” to the Participant’s
Employer-derived Account Balance immediately following the earlier
distribution.

 

(B)  Special Vesting Elections. The Employer in its Adoption Agreement may elect
other specified vesting provisions which are consistent with Code §411 and
applicable Treasury regulations.

 

5.04  CASH-OUT
DISTRIBUTIONS TO PARTIALLY- VESTED PARTICIPANTS/ RESTORATION OF FORFEITED
ACCOUNT BALANCE. If, pursuant to Article VI, a partially-Vested Participant
receives a cash-out distribution before he/she incurs a Forfeiture Break in
Service, the Participant will incur an immediate forfeiture of the non-Vested
portion of his/her Account Balance. If a partially-Vested Participant’s Account
is entitled to an allocation of Employer contributions or Participant
forfeitures for the Plan Year in which he/she otherwise would incur a
forfeiture by reason of a cash-out distribution, the Plan Administrator will
apply the cash-out forfeiture rule as if the partially-Vested Participant
received a cash-out distribution on the first day of the immediately following
Plan Year. A partially-Vested Participant is a Participant whose Vested
percentage determined under Section 5.03 is more than 0% but is less than 100%.
A cash-out distribution is a distribution to the Participant (whether involuntary
or with required consent as described in Article VI), of his/her entire Vested
Account Balance due to the Participant’s Separation from Service.

 

(A)  Forfeiture Restoration and Conditions for
Restoration. A
partially-Vested Participant re-employed by the Employer after receiving a
cash-out distribution of the Vested percentage of his/her Account Balance may
repay to the Trust the entire amount of the cash-out distribution attributable
to Employer contributions without any adjustment for gains and losses, unless
the Participant no longer has a right to restoration under this Section
5.04(A). If a re-employed Participant repays his/her cash-out distribution, the
Plan Administrator, subject to the conditions of this Section 5.04(A), must
restore the Participant’s Account Balance attributable to Employer
contributions to the same dollar amount as the dollar amount of his/her Account
Balance on the Accounting Date, or other valuation date, immediately preceding
the date of the cash-out distribution, unadjusted for any gains or losses
occurring subsequent to that Accounting Date, or other valuation date.
Restoration of the Participant’s Account Balance includes restoration of all
Protected Benefits with respect to that restored Account Balance, in accordance
with applicable Treasury regulations. The Plan Administrator will not restore a
re-employed Participant’s Account Balance under this Section 5.04 (A) if:

 

18

 

(1)  5 years have elapsed since the Participant’s
first re-employment date with the Employer following the cash-out distribution;

 

(2)  The Participant is not in the Employer’s
Service on the date the Participant repays his/her cash-out distribution; or

 

(3)  The Participant has incurred a Forfeiture
Break in Service. This condition also applies if the Participant makes
repayment within the Plan Year in which he/she incurs the Forfeiture Break in
Service and that Forfeiture Break in Service would result in a complete
forfeiture of the amount the Plan Administrator otherwise would restore.

 

(B)  Time and Method of Forfeiture Restoration. If none of the conditions in Section 5.04(A)
preventing restoration of the Participant’s Account Balance applies, the Plan
Administrator will restore the Participant’s Account Balance as of the Plan
Year Accounting Date coincident with or immediately following the repayment. To
restore the Participant’s Account Balance, the Plan Administrator, to the
extent necessary, will allocate to the Participant’s Account:

 

(1)  First, the amount, if any, of Participant
forfeitures the Plan Administrator otherwise would allocate under Section 3.05;

 

(2)  Second, the amount, if any, of the Trust Fund
net income or gain for the Plan Year; and

 

(3)  Third, the Employer contribution for the Plan
Year to the extent made under a discretionary formula.

 

In
an Addendum to its Adoption Agreement, the Employer may eliminate as a means of
restoration any of the amounts described in clauses (1), (2) and (3) or may
change the order of priority of these amounts. To the extent the amounts
described in clauses (1), (2) and (3) are insufficient to enable the Plan
Administrator to make the required restoration, the Employer must contribute,
without regard to any requirement or condition of Article III, the additional
amount necessary to enable the Plan Administrator to make the required
restoration. If, for a particular Plan Year, the Plan Administrator must
restore the Account Balance of more than one re-employed Participant, the Plan
Administrator will make the restoration allocations from the amounts described
in clauses (1), (2) and (3) to each such Participant’s Account in the same
proportion that a Participant’s restored amount for the Plan Year bears to the
restored amount for the Plan Year of all re-employed Participants. A cash-out
restoration allocation is not an Annual Addition under Part 2 of Article III.

 

(C)  Deemed Cash-out of 0% Vested Participant. Except as the Employer may provide in an Addendum
to its Adoption Agreement, the deemed cash-out rule of this Section 5.04(C)
applies to any 0% Vested Participant. A “0% Vested Participant” is a
Participant whose Account Balance derived from Employer contributions is
entirely forfeitable at the time of his/her Separation from Service. If a 0%
Vested Participant’s Account is not entitled to an allocation of Employer
contributions for the Plan Year in which the Participant has a Separation from
Service, the Plan Administrator will apply the deemed cash-out rule as if the
0% Vested Participant received a cash-out distribution on the date of the
Participant’s Separation from Service. If a 0% Vested Participant’s Account is
entitled to an allocation of Employer contributions or Participant forfeitures
for the Plan Year in which the Participant has a Separation from Service, the
Plan Administrator will apply the deemed cash-out rule as if the 0% Vested
Participant received a cash-out distribution on the first day of the first Plan
Year beginning after his/her Separation from Service. For purposes of applying
the restoration provisions of this Section 5.04, the Plan Administrator will
treat a re-employed 0% Vested Participant as repaying his/her cash-out “distribution”
on the date of the Participant’s re-employment with the Employer.

 

5.05  ACCOUNTING
FOR CASH-OUT REPAYMENT. As soon as is administratively practicable, the
Plan Administrator will credit to the Participant’s Account the cash-out amount
a Participant has repaid to the Plan. Pending the restoration of the
Participant’s Account Balance, the Plan Administrator under Section 9.08(B) may
direct the Trustee to place the Participant’s cash-out repayment in a temporary
segregated investment Account. Unless the cash-out repayment qualifies as a
Participant rollover contribution, the Plan Administrator will direct the
Trustee to repay to the Participant as soon as is administratively practicable,
the full amount of the Participant’s cash-out repayment if the Plan
Administrator determines any of the conditions of Section 5.04(A) prevents
restoration as of the applicable Accounting Date, notwithstanding the
Participant’s repayment.

 

5.06  YEAR
OF SERVICE - VESTING. For purposes of determining a Participant’s vesting
under Section 5.03, “Year of Service” means the 12-consecutive month vesting
computation period the Employer elects in its Adoption Agreement during which
an Employee completes the number of Hours of Service (not exceeding 1,000)
specified in the Adoption Agreement or, if the Plan applies the Elapsed Time
Method of crediting Vesting Service, the vesting computation period for which
the Employee receives credit for a Year of Service under the Service crediting
rules of Section 1.15(D). A Year of Service includes any Year of Service
completed prior to the Effective Date of the Plan, except as provided in Section
5.08.

 

5.07  BREAK
IN SERVICE AND FORFEITURE BREAK IN SERVICE - VESTING. For purposes of this
Article V, a Participant incurs a “Break in Service” if during any vesting
computation period he/she does not complete more than 500 Hours of Service or,
if the Plan applies the Elapsed Time Method of crediting Service, the
Participant has a Period of Severance of at least 12 consecutive months. If,
pursuant to Section 5.06, the Plan does not require more than 500 Hours of
Service to receive credit for a Year of Service, a Participant incurs a Break
in Service in a vesting computation period in which he/she fails to complete a
Year of Service. A Participant incurs a Forfeiture Break in Service when he/she
incurs 5 consecutive Breaks in Service. The Plan does not apply the Break in
Service (one year hold-out) rule for vesting under Code §411(a)(6)(B).
Therefore, an Employee need not complete a Year of Service after a Break in
Service before 

 

19

 

the Plan takes into account the Employee’s otherwise includible pre-Break
Years of Service under this Article V.

 

5.08  INCLUDED
YEARS OF SERVICE - VESTING. For purposes of determining “Years of Service”
under Section 5.06, the Plan takes into account all Years of Service an
Employee completes with the Employer except:

 

(a)  For the sole purpose of determining a
Participant’s Vested percentage of his/her Account Balance derived from
Employer contributions which accrued for his/her benefit prior to a Forfeiture
Break in Service or receipt of a cash-out distribution, the Plan disregards any
Year of Service after the Participant first incurs a Forfeiture Break in
Service or receives a cash-out distribution (except where the Plan
Administrator restores the Participant’s Account under Section 5.04(A)).

 

(b)  Consistent with Code §411(a)(4), any Year of
Service the Employer elects to exclude under its Adoption Agreement.

 

5.09  FORFEITURE
OCCURS. A Participant’s forfeiture of his/her non-Vested Account Balance
derived from Employer contributions occurs under the Plan on the earlier of:

 

(a)  The last day of the vesting computation
period in which the Participant first incurs a Forfeiture Break in Service; or

 

(b)  The date the Participant receives a cash-out
distribution.

 

The Plan Administrator
determines the percentage of a Participant’s Account Balance forfeiture, if
any, under this Section 5.09 solely by reference to the vesting schedule the
Employer elected in its Adoption Agreement. A Participant does not forfeit any
portion of his/her Account Balance for any other reason or cause except as
expressly provided by this Section 5.09 or as provided under Section 9.11.

 

5.10  RULE
OF PARITY - VESTING. The Employer may elect in its Adoption Agreement to
apply the “rule of parity” under Code §411(a)(6)(D) for purposes of determining
vesting Years of Service. Under the rule of parity, the Plan Administrator
excludes a Participant’s Years of Service before a Break in Service if: (a) the
number of the Participant’s consecutive Breaks in Service equals or exceeds 5;
and (b) the Participant is 0% Vested in his/her Account Balance derived from
Employer contributions at the time he/she has the Breaks in Service.

 

5.11  AMENDMENT
TO VESTING SCHEDULE. The Employer under Section 13.02 may amend the Plan’s
vesting schedule(s) under Section 5.03 at any time. However, the Plan
Administrator will not apply the amended vesting schedule to reduce any
Participant’s existing Vested percentage (determined on the later of the date
the Employer adopts the amendment, or the date the amendment becomes effective)
in the Participant’s existing and future Account Balance attributable to
Employer contributions, to a percentage less than the Vested percentage
computed under the Plan without regard to the amendment. Furthermore, an
amended vesting schedule will apply to a Participant only if the Participant
receives credit for at least one Hour of Service after the new vesting schedule
becomes effective.

 

If
the Employer amends the Plan’s vesting schedule, each Participant having
completed at least 3 Years of Service (as described in Section 5.06) with the
Employer prior to the expiration of the election period described below, may
irrevocably elect to have the Plan Administrator determine the Vested
percentage of his/her Account Balance without regard to the amendment. The
Participant must file his/her election with the Plan Administrator within 60
days of the latest of: (a) the Employer’s adoption of the amendment; (b) the
effective date of the amendment; or (c) the Participant’s receipt of a copy of
the amendment. The Plan Administrator, as soon as practicable, must forward a
true copy of any amendment to the vesting schedule to each affected
Participant, together with a written explanation of the effect of the amendment,
the appropriate form upon which the Participant may make an election to remain
under the pre-amendment vesting schedule and notice of the time within which
the Participant must make an election to remain under the pre-amendment vesting
schedule. The election described in this Section 5.11 does not apply to a
Participant if the amended vesting schedule provides for vesting at least as
rapid at any time as the vesting schedule in effect prior to the amendment. For
purposes of this Section 5.11, an amendment to the vesting schedule includes
any Plan amendment which directly or indirectly affects the computation of the
Vested percentage of a Participant’s Account Balance. Furthermore, any shift in
the Plan’s vesting schedule under Article XII, due to a change in the Plan’s
top-heavy status, is an amendment to the vesting schedule for purposes of this
Section 5.11.

 

5.12  DEFERRAL
CONTRIBUTIONS TAKEN INTO ACCOUNT.  If
the Plan includes a 401(k) arrangement, the vesting rules described in Article
V must take into account a Participant’s deferral contributions for purposes of
determining: (1) if a Participant’s distribution is of his/her entire Vested
Account balance as required for a cash-out distribution under Section 5.04; (2)
if a Participant repays the entire amount of a prior cash-out distribution so
the Participant is entitled to restoration under Section 5.04(A); and (3) if a
Participant is 0% vested under Section 5.04(C) and under Section 5.10.

 

20

 

ARTICLE VI

DISTRIBUTIONS

 

6.01  TIMING
OF DISTRIBUTION. The Plan Administrator will direct the Trustee to commence
distribution of a Participant’s Vested Account Balance in accordance with this
Section 6.01 upon the Participant’s Separation from Service for any reason, or
if the Participant exercises an in-Service distribution right under the Plan.
The Trustee may make Plan distributions on any administratively practicable
date during the Plan Year, consistent with the Employer’s elections in its
Adoption Agreement.

 

(A)  Distribution upon Separation from Service
(other than death).

 

(1)  Participant’s Vested
Account Balance not exceeding $5,000. Upon the Participant’s
Separation from Service for any reason other than death, the Plan Administrator
without any requirement of Participant or spousal consent) will direct the
Trustee to distribute the Participant’s Vested Account Balance (determined in
accordance with Section 6.01(A)(6)) not exceeding $5,000 in a lump sum (without
regard to Section 6.04), at the time specified in the Adoption Agreement, but
in no event later than the 60th day following the close of the Plan Year in
which the later of the following events occur: (a) the Participant attains
Normal Retirement Age; or (b) the Participant Separates from Service.

 

(2)  Participant’s Vested
Account Balance exceeds $5,000. Upon the Participant’s Separation
from Service for any reason other than death, the Plan Administrator, subject
to the Participant’s election to postpone distribution under this Section
6.01(A)(2) and the consent requirements of Section 6.01(A)(5), will direct the
Trustee to commence distribution of the Participant’s Vested Account Balance
(determined in accordance with Section 6.01(A)(6)) exceeding $5,000, at the
time specified in the Adoption Agreement and in a form under Section 6.03
elected by the Participant. Any election under this Section 6.01(A)(2) is
subject to the requirements of Section 6.02 and of Section 6.04.

 

A
Participant eligible to make an election under this Section 6.01(A)(2) may elect
to postpone distribution beyond the time the Employer has elected in its
Adoption Agreement, to any specified date including, but not beyond the
Participant’s Required Beginning Date, unless the Employer, in its Adoption
Agreement, specifically limits a Participant’s right to postpone distribution
of his/her Account Balance to the later of the date the Participant attains age
62 or Normal Retirement Age. The Plan Administrator will reapply the notice and
consent requirements of Section 6.01(A)(4) and Section 6.01(A)(5) to any
distribution postponed under this Section 6.01(A)(2).

 

In
the absence of a Participant’s consent and distribution election (as described
in Section 6.01(A)(5)) or in the absence of the Participant’s election to
postpone distribution prior to his/her annuity starting date, the Plan
Administrator, consistent with the Employer’s elections in its Adoption
Agreement, will treat the Participant as having elected to postpone his/her
distribution until the 60th day following the close of the Plan Year in which
the latest of the following events occurs: (a) the Participant attains Normal
Retirement Age; (b) the Participant attains age 62; or (c) the Participant
Separates from Service. At the applicable date, the Plan Administrator then will
direct the Trustee to distribute the Participant’s Vested Account Balance in a
lump sum (or, if applicable, the annuity form of distribution required under
Section 6.04).

 

(3)  Disability. If
the Participant’s Separation from Service is because of his/her Disability, the
Plan Administrator will direct the Trustee to pay the Participant’s Vested
Account Balance in the same manner as if the Participant had incurred a
Separation from Service without Disability.

 

(4)  Distribution
notice/annuity starting date. At least 30 days and not more than 90
days prior to the Participant’s annuity starting date, the Plan Administrator
must provide a written notice (or a summary notice as permitted under Treasury
regulations) to a Participant who is eligible to make an election under Section
6.01(A)(2) (“distribution notice”). The distribution notice must explain the
optional forms of benefit in the Plan, including the material features and
relative values of those options, and the Participant’s right to postpone
distribution until the applicable date described in Section 6.01(A)(2). For all
purposes of this Article VI, the term “annuity starting date” means the first
day of the first period for which the Plan pays an amount as an annuity or in
any other form but in no event is the “annuity starting date” earlier than a
Participant’s Separation from Service.

 

(5)  Consent
requirements/Participant distribution election. A Participant must
consent, in writing, following receipt of the distribution notice, to any
distribution under this Section 6.01, if at the time of the distribution to the
Participant, the Participant’s Vested Account Balance exceeds $5,000 and the
Participant has not attained the later of Normal Retirement Age or age 62.
Accounts which are distributable prior to the foregoing applicable age are “immediately
distributable.” Furthermore, the Participant’s spouse also must consent, in
writing, to any distribution, for which Section 6.04 requires the spouse’s
consent. The Participant may reconsider his/her distribution election at any
time prior to the annuity starting date and elect to commence distribution as
of any other distribution date permitted under the Plan or under the Adoption
Agreement. A Participant may elect to receive distribution at any administratively
practicable time which is earlier than 30 days following the Participant’s
receipt of the distribution notice, by waiving in writing the balance of the 30
days. However, if the requirements of Section 6.04 apply, the Participant may
not elect to commence distribution less than 7 days following the Participant’s
receipt of the distribution notice. The consent requirements of this Section
6.01(A)(5) do not apply with respect to defaulted loans described in Section
10.03(E).

 

(6)  Determination of Vested Account
Balance. For purposes of the consent requirements under this Article
VI, the Plan Administrator determines a Participant’s Vested Account Balance as
of the most recent valuation date immediately prior to the distribution date,
and takes into 

 

21

 

account the Participant’s entire Account, including deferral
contributions. The Plan Administrator in determining the Participant’s Vested
Account Balance at the relevant time, will disregard a Participant’s Vested
Account Balance existing on any prior date, except as the Code otherwise may
require.

 

(7)  Consent to
cash-out/forfeiture. If a Participant is partially-Vested in his/her
Account Balance, a Participant’s election under Section 6.01(A)(2) to receive distribution
prior to the Participant’s incurring a Forfeiture Break in Service, must be in
the form of a cash-out distribution as defined in Section 5.04.

 

(8)  Return to employment. A
Participant may not receive a distribution by reason of Separation from
Service, or continue any installment distribution based on a prior Separation
from Service, if, prior to the time the Trustee actually makes the
distribution, the Participant returns to employment with the Employer.

 

(B)  Distribution upon Death. In the event of the Participant’s Separation
from Service on account of death, the Plan Administrator will direct the
Trustee, in accordance with this Section 6.01(B) and subject to Section
6.02(D), to distribute to the Participant’s Beneficiary the Participant’s Vested
Account Balance remaining in the Trust at the time of the Participant’s death.

 

The
Plan Administrator, subject to the requirements of Sections 6.04 and 6.02(D) or
to a Beneficiary’s written election (if authorized by the next paragraph of
this Section 6.01(B)), must direct the Trustee to distribute or commence
distribution of the deceased Participant’s Vested Account Balance, as soon as
administratively practicable following the Participant’s death or, if later,
the date on which the Plan Administrator receives notification of, or otherwise
confirms, the Participant’s death. If the Participant’s Vested Account Balance
determined in accordance with Section 6.01(A)(6) does not exceed $5,000, the
Trustee will distribute the balance in a lump sum without regard to Section
6.04. If the Participant’s Vested Account Balance exceeds $5,000, the Trustee
will distribute the balance subject to Section 6.02(D).

 

If
the Participant’s death benefit is payable in full to the Participant’s
surviving spouse, the surviving spouse may elect distribution at any time and
in any form (except a joint and survivor annuity) the Plan would permit a
Participant to elect upon Separation from Service. The Participant, on a form
prescribed by the Plan Administrator, may (subject to the requirements of
Section 6.04) elect the payment method or the payment term or both, which will
apply to any Beneficiary, including his/her surviving spouse. The Participant’s
election may limit any Beneficiary’s right to increase the frequency or the amount
of any payments. Any payment term elected by the Participant must not exceed
the payment term the Code otherwise would permit the Beneficiary to elect upon
the Participant’s death.

 

(C)  In-Service Distribution. The Employer must elect in its Adoption
Agreement the distribution election rights, if any, a Participant has prior to
his/her Separation from Service (“in-service distribution”). Subject to any
contrary Employer election in Appendix A to its Adoption Agreement, a
Participant upon attaining age 701⁄2, until he/she incurs a Separation from
Service, has a continuing election to receive all or any portion of his/her
Account Balance, including Employer contributions and Participant
contributions. If the Employer elects in its Adoption Agreement additional
in-service distribution of any Employer contribution (including deferral
contributions), the Employer in its Adoption Agreement must specify events or
conditions, if any, applicable to such in-service distributions. For special
requirements regarding hardship distributions, see Section 6.09. The Employer
also must elect in its Adoption Agreement the additional in-service
distribution rights, if any, a Participant has with respect to Participant
contributions as defined in Section 4.01. If a Participant receives an
in-service distribution as to a partially-Vested Account, and the Participant
has not incurred a Forfeiture Break in Service, the Plan Administrator will
apply the vesting provisions of Section 5.03(A).

 

A
Participant must make any permitted in-service distribution election under this
Section 6.01(C) in writing and on a form prescribed by the Plan Administrator
which specifies the percentage or dollar amount of the distribution and the
Participant’s Plan Account (Employer contributions or Participant contributions
and type) to which the election applies. If the Plan permits in-service
distributions, a Participant only may elect to receive one in-service
distribution per Plan Year under this Section 6.01(C) unless the election form
prescribed by the Plan Administrator provides for more frequent distributions.
The Trustee, as directed by the Plan Administrator and subject to Sections
6.01(A)(4), 6.01(A)(5) and 6.04, will distribute the amount(s) a Participant
elects in single sum, as soon as administratively practicable after the
Participant files his/her in-service distribution election with the Plan
Administrator. The Trustee will distribute the Participant’s remaining Account
Balance in accordance with the other provisions of this Article VI.

 

The
Trustee, prior to a Participant’s Normal Retirement Age or Disability may not
make any in-service distribution to the Participant with respect to his/her
Account Balance attributable to assets (including post-transfer earnings on
those assets) and liabilities transferred, within the meaning of Code §414(l),
to a profit sharing plan from a money purchase pension plan or from a target
benefit plan qualified under Code §401(a) (other than any portion of those
assets and liabilities attributable to Employee contributions).

 

6.02 REQUIRED
MINIMUM DISTRIBUTIONS.

 

(A)  Priority of Required Minimum Distribution. If any distribution under this Article VI (by
Plan provision or by Participant election or nonelection), would commence later
than the Participant’s required beginning date (“RBD”), the Plan Administrator
instead must direct the Trustee to make distribution on the Participant’s RBD,
subject only to the TEFRA election, if applicable, under Section 6.11. The
Employer in its Adoption Agreement Appendix B may elect to apply a special
effective date to the RBD definition or may elect in Appendix A to continue to
apply the RBD definition in effect prior to 1997 (“pre-SBJPA RBD”). The
Employer in its Adoption Agreement also may elect to require distribution earlier
than the RBD.

 

(1)  RBD – more than 5% owner.
A Participant’s 

 

22

 

RBD is the April 1 following the close of the calendar year in which the
Participant attains age 701⁄2 if the Participant is a more than 5% owner (as
defined in Code §416) with respect to the Plan Year ending in that calendar
year. If a Participant is a more than 5% owner at the close of the relevant
calendar year, the Participant may not discontinue required minimum
distributions notwithstanding the Participant’s subsequent change in ownership
status.

 

(2)  RBD – non 5% owners. If
the Participant is not a more than 5% owner, his/her RBD is the April 1
following the close of the calendar year in which the Participant incurs a
Separation from Service or, if later, the April 1 following the close of the
calendar year in which the Participant attains age 701⁄2. If a Participant is not
a more than 5% owner, his/her pre-SBJPA RBD (if applicable) is April 1
following the close of the calendar year in which the Participant attains age
701⁄2.

 

(3)  Form of distribution. The
Trustee will make a required minimum distribution at the Participant’s RBD in a
lump sum (or, if applicable, the annuity form of distribution required under
Section 6.04) unless the Participant, pursuant to the provisions of this
Article VI, makes a valid election to receive an alternative form of payment.

 

(B)  Participant Transitional Elections.

 

(1)  Election to discontinue
distributions. A Participant who: (a) is not a more than 5% owner;
(b) had attained age 701⁄2 prior to 1997; (c) had commenced prior to 1997
required minimum distributions under the pre-SBJPA RBD; and (d) has not
incurred a Separation from Service, has a continuing election to discontinue
receiving distributions from the Plan (which previously were required minimum
distributions under the Plan). A Participant who makes an election under this
Section 6.02(B)(1) must establish a new annuity starting date when he/she
recommences payment of his/her Account Balance under the Plan. A married
Participant who is subject to Section 6.04 must obtain spousal consent: (a) to
discontinue his/her distributions under this Section 6.04(B)(1) if
distributions are in QJSA form; and (b) to recommence benefits in a form other
than a QJSA. A Participant may not make any election under this Section
6.02(B)(1) which is inconsistent with any QDRO applicable to the Participant’s
Account.

 

(2)  Election to postpone
distributions. A Participant who: (a) is not a more than 5% owner;
and (b) attained age 701⁄2 after 1996 (or who attained age 701⁄2 in 1996, but who
had not commenced his/her required minimum distributions in 1996) may elect
under this Section 6.02(B)(2) to postpone distribution of required minimum
distributions until the Participant’s RBD established under Section 6.02(A). If
the Participant attained age 701⁄2 in 1996, he/she must have elected under this
Section 6.02(B)(2) to postpone distributions by December 31, 1997. If the
Participant attained age 701⁄2 after 1996, he/she must make the election to
postpone distribution under this Section 6.01(B)(2) not later than April 1 of
the calendar year following the year in which the Participant attains age 701⁄2.

 

(3)  Election requirements. All
Participant elections made under this Section 6.01(B) are subject to and must
be consistent with the Employer’s RBD elections in its Adoption Agreement
Appendices A and B. A Participant makes his/her election under this Section
6.02(B) in writing on a form prescribed by the Plan Administrator.

 

(C)  Minimum Distribution Requirements for
Participants. The Plan
Administrator may not direct the Trustee to distribute the Participant’s Vested
Account Balance, nor may the Participant elect to have the Trustee distribute
his/her Vested Account Balance, under a method of payment which, as of the
Participant’s RBD, does not satisfy the minimum distribution requirements under
Code §401(a)(9) and the applicable Treasury regulations.

 

(1)  Calculation of amount. The
required minimum distribution for a calendar year (“distribution calendar year”)
equals the Participant’s Vested Account Balance as of the latest valuation date
preceding the beginning of the distribution calendar year (such valuation date
being within the “valuation calendar year”) divided by the Participant’s life expectancy
or, if applicable, the joint and last survivor expectancy of the Participant
and his/her designated Beneficiary (as determined under Article VIII, subject
to the requirements of Code §401(a)(9)). The Plan Administrator will increase
the Participant’s Vested Account Balance, as determined on the relevant
valuation date, for contributions or forfeitures allocated after the valuation
date and by December 31 of the valuation calendar year, and will decrease the
valuation by distributions made after the valuation date and by December 31 of
the valuation calendar year. For purposes of this valuation, any portion of the
required minimum distribution for the first distribution calendar year made
after the close of that year is a distribution occurring in that first
distribution calendar year.

 

(2)  Recalculation. In
computing a required minimum distribution, the Plan Administrator must use the
unisex life expectancy multiples under Treas. Reg. §1.72-9. The Plan
Administrator, only upon the Participant’s timely election, will compute the
required minimum distribution for a distribution calendar year subsequent to
the first distribution calendar year by redetermining (“recalculation” of) the
Participant’s life expectancy or the Participant’s and spouse designated
Beneficiary’s life expectancies as elected. However, the Plan Administrator may
not redetermine the joint life and last survivor expectancy of the Participant
and a nonspouse designated Beneficiary in a manner which takes into account any
adjustment to a life expectancy other than the Participant’s life expectancy. A
Participant must elect recalculation under this Section 6.02(C)(2) in writing
and on a form the Plan Administrator prescribes, not later than the Participant’s
RBD.

 

(3)  Minimum distribution
incidental benefit (MDIB). If the Participant’s spouse is not
his/her designated Beneficiary, a method of payment to the Participant (whether
by Participant election or by Plan Administrator direction) must satisfy the
MDIB requirement under Code §401(a)(9) for distributions made on or after the
Participant’s RBD and before the Participant’s death. To satisfy the MDIB
requirement, the Plan Administrator will compute the Participant’s required
minimum distribution by substituting the applicable MDIB divisor for the
applicable life expectancy factor, if the MDIB divisor is a lesser number.
Following the Participant’s death, the Plan Administrator will compute the
minimum distribution required by Section 6.02(D) 

 

23

 

solely on the basis of the applicable life expectancy factor and will
disregard the MDIB factor.

 

(4)  Payment due date. The
required minimum distribution for the first distribution calendar year is due
by the Participant’s RBD. The required minimum distribution for each subsequent
distribution calendar year, including the calendar year in which the
Participant’s RBD occurs, is due by December 31 of that year.

 

(5)  Nontransferable annuity. If
the Participant receives distribution in the form of a Nontransferable Annuity,
the distribution satisfies this Section 6.02(C) if the contract complies with
the requirements of Code §401(a)(9).

 

(D)  Minimum Distribution Requirements for
Beneficiaries. The method
of distribution to the Participant’s Beneficiary must satisfy Code §401(a)(9).

 

(1)  Death after RBD. If
the Participant’s death occurs after his/her RBD (or earlier, if the
Participant had commenced an irrevocable annuity pursuant to Section 6.04), the
Trustee must distribute the Participant’s remaining benefit to the Beneficiary
at least as rapidly as under the method in effect for the Participant,
determined without regard to the MDIB requirements of Section 6.02(C)(3).

 

(2)  Death prior to RBD. If
the Participant’s death occurs prior to his/her RBD (and the Participant had
not commenced an irrevocable annuity pursuant to Section 6.04), the method of
payment to the Beneficiary, subject to Section 6.04, must provide for
completion of payment to the Beneficiary over a period not exceeding: (a) 5
years after the date of the Participant’s death; or (b) if the Beneficiary is a
designated Beneficiary, the designated Beneficiary’s life expectancy. A
designated Beneficiary is a Beneficiary designated by the Participant or
determined under Section 8.02. The Plan Administrator may not direct payment of
the Participant’s Vested Account Balance over a period described in clause (b)
unless the Trustee will commence payment to the designated Beneficiary no later
than the December 31 following the close of the calendar year in which the
Participant’s death occurred or, if later, and the designated Beneficiary is
the Participant’s surviving spouse, December 31 of the calendar year in which
the Participant would have attained age 701⁄2.

 

If
the Trustee will make distribution in accordance with clause (b) of this
Section 6.02(D)(2), the minimum distribution for a distribution calendar year
equals the Participant’s Vested Account Balance as of the latest valuation date
preceding the beginning of the distribution calendar year divided by the
designated Beneficiary’s life expectancy. The Plan Administrator must use the
unisex life expectancy multiples under Treas. Reg. §1.72-9 for purposes of
applying this Section 6.02(D).

 

(3)  Recalculation. The
Plan Administrator, only upon the Participant’s election (under Section
6.02(C)(2)) or the Participant’s surviving spouse designated Beneficiary’s
election, will recalculate the life expectancy of the Participant’s surviving
spouse not more frequently than annually. However, the Plan Administrator may
not recalculate the life expectancy of a nonspouse designated Beneficiary after
the Trustee commences payment to the designated Beneficiary. The Plan
Administrator will apply this Section 6.02(D) by treating any amount paid to
the Participant’s child, which becomes payable to the Participant’s surviving
spouse upon the child’s attaining the age of majority, as paid to the
Participant’s surviving spouse. A surviving spouse designated Beneficiary must
elect recalculation under this §6.02(D)(3) in writing and on a form the Plan
Administrator prescribes not later than the last day of the spouse’s first
distribution year.

 

(4)  Beneficiary election.
If the Participant under Section 6.01(B) had not elected the payment method or
payment term, the Participant’s Beneficiary must elect the method of
distribution no later than the date specified above upon which the Trustee must
commence distribution to the Beneficiary. If the Beneficiary fails to elect
timely a distribution method, the Plan Administrator must commence distribution
within the time required for a Participant who dies without a designated
Beneficiary.

 

(E)  Model Amendment. The employer in Appendix B to its Adoption
Agreement may elect to apply the following IRS Model Amendment:

 

With respect to
distributions under the Plan made on or after the effective date the Employer
specifies in Appendix B to its Adoption Agreement, for calendar years beginning
on or after January 1, 2001, the Plan will apply the minimum distribution
requirements of section 401(a)(9) of the Internal Revenue Code in accordance
with the regulations under section 401(a)(9) that were proposed on January 17,
2001, (the “2001 Proposed Regulations”), notwithstanding any provision of the
Plan to the contrary. If the total amount of required minimum distributions
made to a Participant for 2001 prior to the Appendix B effective date are equal
to or greater than the amount of required minimum distributions determined
under the 2001 Proposed Regulations, then no additional distributions are
required for such Participant for 2001 on or after such date. If the total
amount of required minimum distributions made to a Participant for 2001 prior
to the Appendix B effective date are less than the amount determined under the
2001 Proposed Regulations, then the amount of required minimum distributions
for 2001 on or after such date will be determined so that the total amount of
required minimum distributions for 2001 is the amount determined under the 2001
Proposed Regulations. This amendment shall continue in effect until the last
calendar year beginning before the effective date of final regulations under
section 401(a)(9) or such other date as may be published by the Internal
Revenue Service.

 

6.03  METHOD
OF DISTRIBUTION. Subject to any contrary requirements imposed by Sections
6.01 (including 6.01(C) regarding in-service distributions), 6.02 or 6.04, a
Participant or a Beneficiary may elect distribution under one, or any
combination, of the following methods: (a) by payment in a lump sum; or (b) by
payment in monthly, quarterly or annual installments over a fixed reasonable
period of time, not exceeding the life expectancy of the Participant, or the
joint life and last survivor expectancy of the Participant and his/her
designated Beneficiary. The Employer may elect in its Adoption Agreement to
modify the methods of payment available under this Section 6.03. 

 

24

 

If the Employer’s Plan is a restated Plan, the Employer in its Adoption
Agreement and in accordance with Treas. Reg. §1.411(d)-4, may elect to
eliminate from the prior Plan certain Protected Benefits. If the Employer
elects or is required to provide an annuity, the annuity must: (1) be a
Nontransferable Annuity; and (2) otherwise comply with the Plan terms.

 

The
distribution options permitted under this Section 6.03 are available only if
the Participant’s Vested Account Balance, as determined under Section
6.01(A)(6), exceeds $5,000. To facilitate installment payments under this
Article VI, the Plan Administrator under Section 9.08(B) may direct the Trustee
to segregate all or any part of the Participant’s Account Balance in a
segregated investment Account. Under an installment distribution, the
Participant or the Beneficiary, at any time, may elect to accelerate the
payment of all, or any portion, of the Participant’s unpaid Vested Account
Balance.

 

Pending
final accounting for a valuation date, the Plan Administrator may make a
partial distribution to a Participant who has incurred a Separation from
Service or to a Beneficiary.

 

6.04  ANNUITY
DISTRIBUTIONS TO PARTICIPANTS AND TO SURVIVING SPOUSES.

 

(A)  Qualified Joint and Survivor Annuity (QJSA). The Plan Administrator must direct the Trustee
to distribute a married or unmarried Participant’s Vested Account Balance in
the form of a QJSA, unless the Participant, and spouse if the Participant is
married, waive the QJSA in accordance with Section 6.05. If, as of the annuity
starting date, the Participant is married (even if the Participant has not been
married throughout the one year period ending on the annuity starting date), a
QJSA is an immediate annuity which is purchasable with the Participant’s Vested
Account Balance and which provides a life annuity for the Participant and a
survivor annuity payable for the remaining life of the Participant’s surviving
spouse equal to 50% of the amount of the annuity payable during the life of the
Participant. If, as of the annuity starting date, the Participant is not
married, a QJSA is an immediate life annuity for the Participant which is
purchasable with the Participant’s Vested Account Balance. A life annuity means
an annuity payable in equal installments for the life of the Participant that
terminates upon the Participant’s death.

 

(B)  Qualified Preretirement Survivor Annuity
(QPSA). If a married
Participant dies prior to his/her annuity starting date, the Plan Administrator
will direct the Trustee to distribute a portion of the Participant’s Vested
Account Balance to the Participant’s surviving spouse in the form of a QPSA,
unless: (1) the Participant has a valid waiver election (as described in
Section 6.06) in effect; or (2) the Participant and his/her spouse were not
married throughout the one year period ending on the date of the Participant’s
death. The Employer in an Addendum to its Adoption Agreement may elect not to
apply the one year of marriage requirement in clause (2). A QPSA is an annuity
which is purchasable with 50% of the Participant’s Vested Account Balance
(determined as of the date of the Participant’s death) and which is payable for
the life of the Participant’s surviving spouse. The value of the QPSA is
attributable to Employer contributions and to Participant contributions in the
same proportion as the Participant’s Vested Account Balance is attributable to
those contributions. The portion of the Participant’s Vested Account Balance
not payable as a QPSA is payable to the Participant’s Beneficiary, in
accordance with the remaining provisions of this Article VI.

 

(C)  Surviving Spouse Elections. If the Participant’s Vested Account Balance which
the Trustee would apply to purchase the QPSA exceeds $5,000, the Participant’s
surviving spouse may elect to have the Trustee commence payment of the QPSA at
any time following the date of the Participant’s death, but not later than the
mandatory distribution periods described in Section 6.02, and may elect any of
the forms of payment described in Section 6.03, in lieu of the QPSA. In the
absence of an election by the surviving spouse, the Plan Administrator must
direct the Trustee to distribute the QPSA on the earliest administratively
practicable date following the close of the Plan Year in which the latest of
the following events occurs: (1) the Participant’s death; (2) the date the Plan
Administrator receives notification of or otherwise confirms the Participant’s
death; (3) the date the Participant would have attained Normal Retirement Age;
or (4) the date the Participant would have attained age 62.

 

(D)  Effect of Waiver. If the Participant has in effect a valid waiver
election regarding the QJSA or the QPSA, the Plan Administrator must direct the
Trustee to distribute the Participant’s Vested Account Balance in accordance
with Sections 6.01, 6.02 and 6.03.

 

(E)  Loan Offset. The Plan Administrator will reduce the
Participant’s Vested Account Balance by any security interest (pursuant to any
offset rights authorized by Section 10.03(E)) held by the Plan by reason of a
Participant loan, to determine the value of the Participant’s Vested Account
Balance distributable in the form of a QJSA or QPSA, provided the loan
satisfied the spousal consent requirement described in Section 10.03(E).

 

(F)  Effect of QDRO. For purposes of applying this Article VI, a
former spouse (in lieu of the Participant’s current spouse) is the Participant’s
spouse or surviving spouse to the extent provided under a QDRO described in
Section 6.07. The provisions of this Section 6.04, and of Sections 6.05 and
6.06, apply separately to the portion of the Participant’s Vested Account
Balance subject to a QDRO and to the portion of the Participant’s Vested
Account Balance not subject to the QDRO.

 

(G)  Vested Account Balance Not Exceeding $5,000. The Trustee must distribute in a lump sum, a
Participant’s Vested Account Balance which the Trustee otherwise under Section
6.04 would apply to provide a QJSA or QPSA benefit, where the Participant’s
Vested Account Balance determined under Section 6.01(A)(6) does not exceed
$5,000.

 

(H)  Profit Sharing Plan Exception. If this Plan is a profit sharing plan, the
Employer in its Adoption Agreement must elect the extent to which the preceding
provisions of Section 6.04 apply. The Employer may elect to exempt from the
provisions of Section 6.04, all Participants (“Exempt Participants”) except the
following Participants to whom Section 6.04 must be applied: (1) a Participant
as respects whom the Plan is a direct or indirect transferee from a plan
subject to the Code §417 requirements and the 

 

25

 

Plan
received the transfer after December 31, 1984, unless the transfer is an
elective transfer described in Section 13.07; (2) a Participant who elects a
life annuity distribution (if Section 13.02 of the Plan requires the Plan to
provide a life annuity distribution option); and (3) a Participant whose
benefits under a defined benefit plan maintained by the Employer are offset by
benefits provided under this Plan. If the Employer elects to apply this Section
6.04 to all Participants, the preceding provisions of this Section 6.04 apply
to all Participants without regard to the limitations of this Section 6.04(H).
Sections 6.05 and 6.06 only apply to Participants to whom the provisions of
this Section 6.04 apply.

 

6.05  WAIVER
ELECTION - QJSA. At least 30 days and not more than 90 days before the
Participant’s annuity starting date, the Plan Administrator must provide the
Participant a written explanation of the terms and conditions of the QJSA, the
Participant’s right to make, and the effect of, an election to waive the QJSA
benefit, the rights of the Participant’s spouse regarding the waiver election
and the Participant’s right to make, and the effect of, a revocation of a
waiver election (“QJSA notice”). The Plan does not limit the number of times
the Participant may revoke a waiver of the QJSA or make a new waiver during the
election period. The Participant (and his/her spouse, if the Participant is
married), may revoke an election to receive a particular form of benefit at any
time until the annuity starting date.

 

A
married Participant’s QJSA waiver election is not valid unless: (a) the
Participant’s spouse (to whom the survivor annuity is payable under the QJSA),
after the Participant has received the QJSA notice, has consented in writing to
the waiver election, the spouse’s consent acknowledges the effect of the
election, and a notary public or the Plan Administrator (or his/her
representative) witnesses the spouse’s consent; (b) the spouse consents to the
alternative form of payment designated by the Participant or to any change in
that designated form of payment; and (c) unless the spouse is the Participant’s
sole primary Beneficiary, the spouse consents to the Participant’s Beneficiary
designation or to any change in the Participant’s Beneficiary designation. The
spouse’s consent to a waiver of the QJSA is irrevocable, unless the Participant
revokes the waiver election. The spouse may execute a blanket consent to the
Participant’s future payment form election or Beneficiary designation, if the
spouse acknowledges the right to limit his/her consent to a specific
designation but, in writing, waives that right.

 

The
Plan Administrator will accept as valid a waiver election which does not
satisfy the spousal consent requirements if the Plan Administrator establishes
the Participant does not have a spouse, the Plan Administrator is not able to
locate the Participant’s spouse, the Participant is legally separated or has
been abandoned (within the meaning of applicable state law) and the Participant
has a court order to that effect, or other circumstances exist under which the
Secretary of the Treasury will excuse the spousal consent requirement. If the
Participant’s spouse is legally incompetent to give consent, the spouse’s legal
guardian (even if the guardian is the Participant) may give consent.

 

6.06
WAIVER ELECTION – QPSA. The Plan Administrator must provide a written
explanation of the QPSA to each married Participant (“QPSA notice”), within the
following period which ends last: (1) the period beginning on the first day of
the Plan Year in which the Participant attains age 32 and ending on the last
day of the Plan Year in which the Participant attains age 34; (2) a reasonable
period after an Employee becomes a Participant; (3) a reasonable period after
Section 6.04 of the Plan becomes applicable to the Participant; or (4) a
reasonable period after the Plan no longer satisfies the requirements for a
fully subsidized benefit. A “reasonable period” described in clauses (2), (3)
and (4) is the period beginning one year before and ending one year after the
applicable event. If the Participant separates from Service before attaining
age 35, clauses (1), (2), (3) and (4) do not apply and the Plan Administrator
must provide the QPSA notice within the period beginning one year before and
ending one year after the Separation from Service. The QPSA notice must
describe, in a manner consistent with Treasury regulations, the terms and
conditions of the QPSA and of the waiver of the QPSA, comparable to the QJSA
notice required under Section 6.05. The Plan does not limit the number of times
the Participant may revoke a waiver of the QPSA or make a new waiver during the
election period. The election period for waiver of the QPSA ends on the date of
the Participant’s death.

 

A Participant’s
QPSA waiver election is not valid unless: (a) the Participant makes the waiver
election after the Participant has received the QPSA notice and no earlier than
the first day of the Plan Year in which he/she attains age 35; and (b) the
Participant’s spouse (to whom the QPSA is payable) satisfies or is excused from
the consent requirements as described in Section 6.05, except the spouse need
not consent to the form of benefit payable to the designated Beneficiary. The
spouse’s consent to the waiver of the QPSA is irrevocable, unless the
Participant revokes the waiver election. The spouse also may execute a blanket
consent as described in Section 6.05. Irrespective of the time of election
requirement described in clause (a), if the Participant separates from Service
prior to the first day of the Plan Year in which he/she attains age 35, the
Plan Administrator will accept a waiver election as respects the Participant’s
Account Balance attributable to his/her Service prior to his/her Separation
from Service. Furthermore, if a Participant who has not separated from Service
makes a valid waiver election, except for the timing requirement of clause (a),
the Plan Administrator will accept that election as valid, but only until the
first day of the Plan Year in which the Participant attains age 35.

 

6.07  DISTRIBUTIONS
UNDER QUALIFIED DOMESTIC RELATIONS ORDERS (QDRO). Notwithstanding any other
provision of this Plan, the Trustee, in accordance with the direction of the
Plan Administrator, must comply with the provisions of a QDRO, as defined in
Code §414(p), which is issued with respect to the Plan. This Plan specifically
permits distribution to an alternate payee under a QDRO at any time,
irrespective of whether the Participant has attained his/her earliest retirement
age (as defined under Code §414(p)) under the Plan. A distribution to an
alternate payee prior to the Participant’s attainment of earliest retirement
age is available only if: (1) the QDRO specifies distribution at that time or
permits an agreement between the Plan and the alternate payee to authorize an
earlier distribution; and (2) if the present value of the alternate payee’s
benefits under the Plan exceeds $5,000, and the QDRO requires, the alternate
payee 

 

26

 

consents to any distribution occurring prior to the Participant’s
attainment of earliest retirement age. Nothing in this Section 6.07 gives a
Participant a right to receive distribution at a time the Plan otherwise does
not permit nor does Section 6.07 authorize the alternate payee to receive a
form of payment the Plan does not permit.

 

The
Plan Administrator must establish reasonable procedures to determine the
qualified status of a domestic relations order. Upon receiving a domestic relations
order, the Plan Administrator promptly will notify the Participant and any
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 must determine the qualified status of the order and must
notify the Participant and each alternate payee, in writing, of the Plan
Administrator’s determination. The Plan Administrator must provide notice under
this paragraph by mailing to the individual’s address specified in the domestic
relations order, or in a manner consistent with DOL regulations.

 

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

 

To
the extent it is not inconsistent with the provisions of the QDRO, the Plan
Administrator under Section 9.08(B) may direct the Trustee to segregate the
QDRO amount in a segregated investment account. The Trustee will make any
payments or distributions required under this Section 6.07 by separate benefit
checks or other separate distribution to the alternate payee(s).

 

6.08
DEFAULTED LOAN – TIMING OF OFFSET. If a Participant or a Beneficiary
defaults on a Plan loan, the Plan Administrator will determine the timing of
the reduction (offset) of the Participant’s Vested Account Balance in
accordance with this Section 6.08 and the Plan Administrator’s loan policy. If,
under the loan policy a loan default also is a distributable event under the
Plan, the Trustee, at the time of the loan default, will offset the Participant’s
Vested Account Balance by the lesser of the amount in default (including
accrued interest) or the Plan’s security interest in that Vested Account
Balance. If the loan is from a money purchase pension plan or from a target
benefit plan and the loan default is a distributable event under the loan
policy, the Trustee will offset the Participant’s Account Balance in the manner
described above, only if the Participant has incurred a Separation from Service
or has attained Normal Retirement Age. If the loan is under a 401(k)
arrangement, to the extent the loan is attributable to the Participant’s
deferral contributions Account, qualified matching contributions Account,
qualified nonelective contributions Account or safe harbor contributions
Account, the Trustee will not offset the Participant’s Vested Account Balance unless
the Participant has incurred a Separation from Service or unless the
Participant has attained age 591⁄2.

 

6.09
HARDSHIP DISTRIBUTION. For purposes of this Plan, unless the Employer in
its Adoption Agreement Section 6.01 elects otherwise, a hardship distribution
is a distribution on account of one or more of the following immediate and
heavy financial needs: (1) expenses for medical care described in Code §213(d)
incurred by the Participant, by the Participant’s spouse, or by any of the
Participant’s dependents, or necessary to obtain such medical care; (2) costs
directly related to the purchase (excluding mortgage payments) of a principal
residence of the Participant; (3) payment of post-secondary education tuition
and related educational fees (including room and board), for the next 12-month
period, for the Participant, for the Participant’s spouse, or for any of the
Participant’s dependents (as defined in Code §152); (4) payments necessary to
prevent the eviction of the Participant from his/her principal residence or the
foreclosure on the mortgage of the Participant’s principal residence; or (5)
any need the Revenue Service prescribes in a revenue ruling, notice or other
document of general applicability which satisfies the safe harbor definition of
hardship under Treas. Reg. §1.401(k)-1(d)(2)(iv)(A). See Section 14.11(A) if a
hardship distribution is from a Participant’s elective deferral Account in a
401(k) arrangement. The Employer in its Adoption Agreement Section 6.01 may
elect to apply Section 14.11(A) to all Plan hardship distributions. If the Plan
permits a hardship distribution from more than one Account type, the Plan
Administrator may determine any ordering of a Participant’s hardship
distribution from the hardship distribution eligible Accounts.

 

6.10  DIRECT
ROLLOVER OF ELIGIBLE ROLLOVER DISTRIBUTIONS.

 

(A)  Participant Election. A Participant (including for this purpose, a
former Employee) may elect, at the time and in the manner prescribed by the
Plan Administrator, to have any portion of his/her eligible rollover
distribution from the Plan paid directly to an eligible retirement plan
specified by the Participant in a direct rollover election. For purposes of
this Section 6.10, a Participant includes as to their respective interests, a
Participant’s surviving spouse and the Participant’s spouse or former spouse
who is an alternate payee under a QDRO.

 

(B)  Rollover and Withholding Notice. At least 30 days and not more than 90 days prior
to the Trustee’s distribution of an eligible rollover distribution, the Plan
Administrator must provide a written notice (including a summary notice as
permitted under applicable Treasury regulations) explaining to the distributee
the rollover option, the applicability of mandatory 20% federal withholding to any
amount not directly rolled over, and the recipient’s right to roll over within
60 days after the date of receipt of the distribution (“rollover notice”). If
applicable, the rollover notice also must explain the availability of income
averaging and the exclusion of net unrealized appreciation. A recipient of an
eligible rollover distribution 

 

27

 

(whether
he/she elects a direct rollover or elects to receive the distribution), also
may elect to receive distribution at any administratively practicable time
which is earlier than 30 days (but not less than 7 days if Section 6.04
applies) following receipt of the rollover notice.

 

(C)  Default rollover. The Plan Administrator, in the case of a
Participant who does not respond timely to the notice described in Section
6.10(B), may make a direct rollover of the Participant’s Account (as described
in Revenue Ruling 2000-36 or in any successor guidance) in lieu of distributing
the Participant’s Account.

 

(D)  Definitions. The following definitions apply to this Section
6.10:

 

(1)  Eligible rollover
distribution. An eligible rollover distribution is any distribution
of all or any portion of the balance to the credit of the Participant, except
an eligible rollover distribution does not include: (a) any distribution which
is one of a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy) of the
Participant or the joint lives (or joint life expectancies) of the Participant
and the Participant’s designated beneficiary, or for a specified period of ten
years or more; (b) any Code §401(a)(9) required minimum distribution; (c) the
portion of any distribution which is not includible in gross income (determined
without regard to the exclusion of net unrealized appreciation with respect to
employer securities); (d) any hardship distribution made after December 31,
1998, from a Participant’s deferral contributions Account (except where the
Participant also satisfies a non-hardship distribution event described in
Section 14.03(d)); and (e) any distribution which otherwise would be an
eligible rollover distribution, but where the total distributions to the
Participant during that calendar year are reasonably expected to be less than
$200.

 

(2)  Eligible retirement plan. An
eligible retirement plan is an individual retirement account described in Code
§408(a), an individual retirement annuity described in Code §408(b), an annuity
plan described in Code §403(a), or a qualified trust described in Code §401(a),
which accepts the Participant’s or alternate payee’s eligible rollover
distribution. However, in the case of an eligible rollover distribution to the
surviving spouse, an eligible retirement plan is either an individual
retirement account or individual retirement annuity.

 

(3)  Direct rollover. A
direct rollover is a payment by the Plan to the eligible retirement plan
specified by the distributee.

 

6.11  TEFRA
ELECTIONS. Notwithstanding the provisions of Sections 6.01, 6.02 and 6.03,
if the Participant (or Beneficiary) signed a written distribution designation
prior to January 1, 1984, (“TEFRA election”) the Plan Administrator must direct
the Trustee to distribute the Participant’s Vested Account Balance in
accordance with that election, subject however, to the survivor annuity
requirements, if applicable, of Sections 6.04, 6.05 and 6.06. This Section 6.11
does not apply to a TEFRA election, and the Plan Administrator will not comply
with that election, if any of the following applies: (1) the elected method of
distribution would have disqualified the Plan under Code §401(a)(9) as in
effect on December 31, 1983; (2) the Participant did not have an Account
Balance as of December 31, 1983; (3) the election does not specify the timing
and form of the distribution and the death Beneficiaries (in order of
priority); (4) the substitution of a Beneficiary modifies the distribution
payment period; or, (5) the Participant (or Beneficiary) modifies or revokes
the election. In the event of a revocation, the Trustee must distribute, no
later than December 31 of the calendar year following the year of revocation,
the amount which the Participant would have received under Section 6.02 if the
distribution designation had not been in effect or, if the Beneficiary revokes
the distribution designation, the amount which the Beneficiary would have
received under Section 6.02 if the distribution designation had not been in
effect. The Plan Administrator will apply this Section 6.11 to rollovers and
transfers  in accordance with Part J of
the Code §401(a)(9) Treasury regulations.

 

28

 

ARTICLE VII

EMPLOYER ADMINISTRATIVE PROVISIONS

 

7.01  INFORMATION
TO PLAN ADMINISTRATOR. The Employer must supply current information to the
Plan Administrator as to the name, date of birth, date of employment,
Compensation, leaves of absence, Years of Service and date of Separation from
Service of each Employee who is, or who will be eligible to become, a
Participant under the Plan, together with any other information which the Plan
Administrator considers necessary to administer properly the Plan. The Employer’s
records as to the current information the Employer furnishes to the Plan
Administrator are conclusive as to all persons.

 

7.02  NO
RESPONSIBILITY FOR OTHERS. Except as required under ERISA, the Employer has
no responsibility or obligation under the Plan to Employees, Participants or
Beneficiaries for any act (unless the Employer also serves in such capacities)
required of the Plan Administrator, the Trustee, the Custodian, or of any other
service provider to the Plan.

 

7.03  INDEMNITY
OF CERTAIN FIDUCIARIES. The Employer will indemnify, defend and hold
harmless the Plan Administrator from and against any and all loss resulting
from liability to which the Plan Administrator may be subjected by reason of
any act or omission (except willful misconduct or gross negligence) in its
official capacities in the administration of this Trust or Plan or both,
including attorneys’ fees and all other expenses reasonably incurred in the
Plan Administrator’s defense, in case the Employer fails to provide such defense.
The indemnification provisions of this Section 7.03 do not relieve the Plan
Administrator from any liability the Plan Administrator may have under ERISA
for breach of a fiduciary duty. Furthermore, the Plan Administrator and the
Employer may execute a written agreement further delineating the
indemnification agreement of this Section 7.03, provided the agreement is
consistent with and does not violate ERISA. The indemnification provisions of
this Section 7.03 extend to any Trustee, third party administrator, Custodian
or other Plan service provider solely to the extent provided by a written
agreement executed by such persons and the Employer.

 

7.04  EMPLOYER
DIRECTION OF INVESTMENT. The Employer has the right to direct the Trustee
with respect to the investment and re-investment of assets comprising the Trust
Fund only if and to the extent the Trustee consents in writing to permit such
direction.

 

7.05  EVIDENCE.
Anyone including the Employer, required to give data, statements or other
information relevant under the terms of the Plan (“evidence”) may do so by
certificate, affidavit, document or other form which the person to act in
reliance may consider pertinent, reliable and genuine, and to have been signed,
made or presented by the proper party or parties. The Plan Administrator and
the Trustee are protected fully in acting and relying upon any evidence
described under the immediately preceding sentence.

 

7.06  PLAN
CONTRIBUTIONS. The Employer is solely responsible to determine the proper
amount of any Employer contribution it makes to the Plan and for the timely
deposit to the Trust of the Employer’s Plan contributions.

 

7.07  EMPLOYER
ACTION. The Employer must take any action under the Plan in accordance with
applicable Plan provisions and with proper authority such that the action is
valid and under applicable law and is binding upon the Employer.

 

7.08  FIDUCIARIES
NOT INSURERS. The Trustee, the Plan Administrator and the Employer in no
way guarantee the Trust Fund from loss or depreciation. The Employer does not
guarantee the payment of any money which may be or becomes due to any person
from the Trust Fund. The liability of the Employer, the Plan Administrator and
the Trustee to make any payment from the Trust Fund at any time and all times
is limited to the then available assets of the Trust.

 

7.09  PLAN
TERMS BINDING. The Plan is binding upon the Employer, Trustee, Plan
Administrator, Custodian (and all other service providers to the Plan), upon
Participants, Beneficiaries and all other persons entitled to benefits, and
upon the successors and assigns of the foregoing persons.

 

7.10  WORD
USAGE. Words used in the masculine also apply to the feminine where
applicable, and wherever the context of the Plan dictates, the plural includes
the singular and the singular includes the plural. Titles of Plan and Adoption
Agreement sections are for reference only.

 

7.11  STATE
LAW. The law of the state of the Employer’s principal place of business
will determine all questions arising with respect to the provisions of the
Plan, except to the extent superseded by ERISA or other federal law. The
Employer in an Addendum to its Adoption Agreement and subject to applicable
law, may elect to apply the law of another state.

 

7.12  PROTOTYPE
PLAN STATUS. If the Plan fails initially to qualify or to maintain
qualification or if the Employer makes any amendment or modification to a
provision of the Plan (other than a proper completion of an elective provision
under the Adoption Agreement or the attachment of an Addendum authorized by the
Plan or by the Adoption Agreement), the Employer no longer may participate
under this Prototype Plan. The Employer also may not participate (or continue
to participate) in this Prototype Plan if the Trustee or Custodian does not
have the written consent of the Prototype Plan Sponsor required under Section
1.33 to serve in the capacity of Trustee or Custodian. If the Employer is not
entitled to participate under this Prototype Plan, the Plan is an
individually-designed plan and the reliance procedures specified in the
applicable Adoption Agreement no longer apply.

 

7.13  EMPLOYMENT NOT GUARANTEED.  Nothing contained in this Plan, or with
respect to the establishment of the Trust, or any modification or any amendment
to the Plan or Trust, or in the creation of any Account, or with respect to the
payment of any benefit, gives any Employee, Participant or any Beneficiary any 

 

29

 

right to
employment or to continued employment by the Employer, or any legal or
equitable right against the Employer, the Trustee, the Plan Administrator or
any employee or agent thereof, except as expressly provided by the Plan, the
Trust, ERISA or other applicable law.

 

30

 

ARTICLE
VIII

PARTICIPANT ADMINISTRATIVE PROVISIONS

 

8.01  BENEFICIARY
DESIGNATION. A Participant from time to time may designate, in writing, any
person(s) (including a trust or other entity), contingently or successively, to
whom the Trustee will pay the Participant’s Vested Account Balance (including
any life insurance proceeds payable to the Participant’s Account) in the event
of death. A Participant also may designate the form and method of payment of
his/her Account. The Plan Administrator will prescribe the form for the
Participant’s written designation of Beneficiary and, upon the Participant’s
filing the form with the Plan Administrator, the form effectively revokes all
designations filed prior to that date by the same Participant. A divorce
decree, or a decree of legal separation, revokes the Participant’s designation,
if any, of his/her spouse as his/her Beneficiary under the Plan unless: (1) the
decree or a QDRO provides otherwise; or (2) the Employer provides otherwise in
an Addendum to its Adoption Agreement. The foregoing revocation provision (if
applicable) applies only with respect to a Participant whose divorce or legal
separation becomes effective on or following the date the Employer executes
this Plan, unless the Employer in its Adoption Agreement specifies a different
effective date.

 

(A)                                                                               Coordination with Survivor Annuity Requirements. If Section 6.04 applies to the Participant, this
Section 8.01 does not impose any special spousal consent requirements on the
Participant’s Beneficiary designation unless the Participant waives the QJSA or
QPSA benefit. If the Participant waives the QJSA or QPSA benefit without
spousal consent to the Participant’s Beneficiary designation: (1) any waiver of
the QJSA or of the QPSA is not valid; and (2) if the Participant dies prior to
his/her annuity starting date, the Participant’s Beneficiary designation will
apply only to the portion of the death benefit which is not payable as a QPSA.
Regarding clause (2), if the Participant’s surviving spouse is a primary Beneficiary
under the Participant’s Beneficiary designation, the Trustee will satisfy the
spouse’s interest in the Participant’s death benefit first from the portion
which is payable as a QPSA.

 

(B)  Profit
Sharing Plan Exception. If
the Plan is a profit sharing plan, the Beneficiary designation of a married
Exempt Participant, as described in Section 6.04(H), is not valid unless the
Participant’s spouse consents (in a manner described in Section 6.05) to the
Beneficiary designation. The spousal consent requirement in this Section
8.01(B) does not apply if the Participant’s spouse is the Participant’s sole
primary Beneficiary, or if the Exempt Participant and his/her spouse are not
married throughout the one-year period ending on the date of the Participant’s death.

 

(C)  Incapacity
of Beneficiary. If, in
the opinion of the Plan Administrator, a Beneficiary is not able to care for
his/her affairs because of a mental condition, physical condition or by reason
of age, the Plan Administrator will apply the provisions of Section 10.09.

 

8.02
NO BENEFICIARY DESIGNATION /DEATH OF BENEFICIARY. If a Participant fails
to name a Beneficiary in accordance with Section 8.01, or if the Beneficiary
named by a Participant predeceases the Participant, then the Trustee will pay the
Participant’s Vested Account Balance in accordance with Section 6.03 in the
following order of priority (unless the Employer specifies a different order of
priority in an Addendum to its Adoption Agreement), to:

 

(a)  The Participant’s surviving spouse (without
regard to the one-year marriage rule of Sections 6.04(B) and 8.01(B); and if no
surviving spouse to

 

(b)  The Participant’s children (including adopted
children), in equal shares by right of representation (one share for each
surviving child and one share for each child who predeceases the Participant
with living descendents); and if none to

 

(c)  The Participant’s surviving parents, in equal
shares; and if none to

 

(d)  The Participant’s estate.

 

If the Beneficiary
survives the Participant, but dies prior to distribution of the Participant’s
entire Vested Account Balance, the Trustee will pay the remaining Vested
Account Balance to the Beneficiary’s estate unless: (1) the Participant’s
Beneficiary designation provides otherwise; (2) the Beneficiary has properly
designated a beneficiary; or (3) the Employer provides otherwise in an Addendum
to its Adoption Agreement. A Beneficiary only may designate a beneficiary for
the Participant’s Account Balance remaining at the Beneficiary’s death, if the
Participant has not previously designated a successive contingent beneficiary
and the Beneficiary’s designation otherwise complies with the Plan terms. If
the Plan is a profit sharing plan, and the Plan includes Exempt Participants,
the Employer may not specify a different order of priority in an Addendum
unless the Participant’s surviving spouse will be the sole primary Beneficiary
in the different order of priority. The Plan Administrator will direct the
Trustee as to the method and to whom the Trustee will make payment under this
Section 8.02.

 

8.03  ASSIGNMENT
OR ALIENATION. Except as provided in Code §414(p) relating to QDROs and in
Code §401(a)(13) relating to certain voluntary, revocable assignments,
judgments and settlements, neither a Participant nor a Beneficiary may
anticipate, assign or alienate (either at law or in equity) any benefit
provided under the Plan, and the Trustee will not recognize any such
anticipation, assignment or alienation. Furthermore, except as provided by Code
§401(a)(13) or other applicable law, a benefit under the Plan is not subject to
attachment, garnishment, levy, execution or other legal or equitable process.

 

8.04  INFORMATION
AVAILABLE. Any Participant or Beneficiary may examine copies of the Plan
description, latest annual report, any bargaining agreement, this Plan and
Trust, and any contract or any other instrument which relates to the
establishment or administration of the Plan or Trust. The Plan Administrator
will maintain all of the items listed in this Section 8.04 in its office, or in
such other place or places as it may designate from time to time in order to
comply with the regulations issued under ERISA, for examination during
reasonable business hours. Upon 

 

31

 

the written request of a Participant or a Beneficiary, the Plan
Administrator must furnish the Participant or Beneficiary with a copy of any
item listed in this Section 8.04. The Plan Administrator may make a reasonable
copying charge to the requesting person.

 

8.05  CLAIMS
PROCEDURE FOR DENIAL OF BENEFITS. A Participant or a Beneficiary may file
with the Plan Administrator a written claim for benefits, if the Participant or
the Beneficiary disputes the Plan Administrator’s determination regarding the
Participant’s or Beneficiary’s Plan benefit. However, the Plan will distribute
only such Plan benefits to Participants or Beneficiaries as the Plan
Administrator in its discretion determines a Participant or Beneficiary is
entitled to. The Plan Administrator will maintain a separate written document
as part of (or which accompanies) the Plan’s summary plan description
explaining the Plan’s claims procedure. This Section 8.05 specifically
incorporates the written claims procedure as from time to time published by the
Plan Administrator as a part of the Plan. If the Plan Administrator pursuant to
the Plan’s written claims procedure makes a final written determination denying
a Participant’s or Beneficiary’s benefit claim, the Participant or Beneficiary
to preserve the claim must file an action with respect to the denied claim not
later than 180 days following the date of the Plan Administrator’s final
determination.

 

8.06  PARTICIPANT
DIRECTION OF INVESTMENT. A Participant’s direction of the investment of
his/her Account is subject to the provisions of this Section 8.06. For purposes
of this Section 8.06, a Participant shall also include a Beneficiary where the
Beneficiary has succeeded to the Participant’s Account and the Plan affords the
Beneficiary the same self-direction or loan rights as a Participant.

 

(A)  Trustee Authorization and Procedures. A Participant has the right to direct the Trustee
with respect to the investment or re-investment of the assets comprising the
Participant’s individual Account only if the Trustee consents in writing to
permit such direction. If the Trustee consents to Participant direction of
investment, the Trustee only will accept direction from each Participant on a
written direction of investment form the Plan Administrator provides for this
purpose. The Trustee, or with the Trustee’s consent, the Plan Administrator,
may establish written procedures relating to Participant direction of
investment under this Section 8.06, including procedures or conditions for
electronic transfers or for changes in investments by Participants. The Plan
Administrator will maintain, or direct the Trustee to maintain, an appropriate
individual investment Account to the extent a Participant’s Account is subject
to Participant self-direction.

 

(B)  ERISA §404(c). No Plan fiduciary (including the Employer and
Trustee) is liable for any loss or for any breach resulting from a Participant’s
direction of the investment of any part of his/her directed Account to the
extent the Participant’s exercise of his/her right to direct the investment of
his/her Account satisfies the requirements of ERISA §404(c).

 

(C)  Participant Loans. The Plan Administrator, to the extent provided in
a written loan policy adopted under Section 9.04, will treat a Plan loan made
to a Participant as a Participant direction of investment under this Section
8.06, even if the Plan otherwise does not permit a Participant to direct
his/her Account investments. Where a loan is treated as a directed investment,
the borrowing Participant’s Account alone shares in any interest paid on the
loan, and it alone bears any expense or loss it incurs in connection with the
loan. The Trustee may retain any principal or interest paid on the borrowing
Participant’s loan in a segregated Account (as described in Section 9.08(B)) on
behalf of the borrowing Participant until the Trustee (or the Named Fiduciary,
in the case of a nondiscretionary Trustee) deems it appropriate to add the loan
payments to the Participant’s Account under the Plan.

 

(D)  Collectibles. If the Trustee consents to Participant direction
of investment of his/her Account, any post-December 31, 1981, investment by a
Participant’s directed Account in collectibles (as defined by Code §408(m)) is
a deemed distribution to the Participant for Federal income tax purposes.

 

32

 

ARTICLE IX

PLAN ADMINISTRATOR

 

9.01  COMPENSATION
AND EXPENSES. The Plan Administrator (and any individuals serving as Plan
Administrator) will serve without compensation for services as such, but the
Employer will pay all expenses of the Plan Administrator, except to the extent
the Trustee properly pays for such expenses, pursuant to Article X.

 

9.02  RESIGNATION
AND REMOVAL. If the Employer appoints one or more persons to serve as Plan
Administrator, such person(s) shall serve until they resign by written notice
to the Employer or until the Employer removes them by written notice. In case
of a vacancy in the position of Plan Administrator, the Employer will exercise
any and all of the powers, authority, duties and discretion conferred upon the
Plan Administrator pending the filling of the vacancy.

 

9.03  GENERAL
POWERS AND DUTIES. The Plan Administrator has the following general powers
and duties which are in addition to those the Plan otherwise accords to the
Plan Administrator:

 

(a)  To determine the rights of eligibility of an
Employee to participate in the Plan, all factual questions that arise in the
course of administering the Plan, the value of a Participant’s Account Balance
(based on the value of the Trust assets, as determined by the Trustee) and the
Vested percentage of each Participant’s Account Balance;

 

(b)  To adopt rules of procedure and regulations
necessary for the proper and efficient administration of the Plan, provided the
rules are not inconsistent with the terms of the Plan, the Code, ERISA or other
applicable law;

 

(c)  To construe and enforce the terms of the Plan
and the rules and regulations the Plan Administrator adopts, including
interpretation of the basic plan document, the Adoption Agreement and any
document related to the Plan’s operation;

 

(d)  To direct the Trustee regarding the crediting
and distribution of the Trust Fund and to direct the Trustee to conduct interim
valuations under Section 10.15;

 

(e)  To review and render decisions regarding a
claim for (or denial of a claim for) a benefit under the Plan;

 

(f)  To furnish the Employer with information
which the Employer may require for tax or other purposes;

 

(g)  To engage the service of agents whom the Plan
Administrator may deem advisable to assist it with the performance of its
duties;

 

(h)  To engage the services of an Investment
Manager or Managers (as defined in ERISA §3(38)), each of whom will have full
power and authority to manage, acquire or dispose (or direct the Trustee with
respect to acquisition or disposition) of any Plan asset under such Manager’s
control;

 

(i)  To make any other determinations and
undertake any other actions the Plan Administrator believes are necessary or
appropriate for the administration of the Plan; and

 

(j)  To establish and maintain a funding standard
account and to make credits and charges to the account to the extent required
by and in accordance with the provisions of the Code.

 

The
Plan Administrator must exercise all of its powers, duties and discretion under
the Plan in a uniform and nondiscriminatory manner. The Plan Administrator
shall have total and complete discretion to interpret and construe the Plan and
to determine all questions arising in the administration, interpretation and
application of the Plan. Any determination the Plan Administrator makes under
the Plan is final and binding upon any affected person.

 

9.04  PLAN
LOANS. The Plan Administrator may, in its sole discretion, in accordance
with Section 10.03(E) establish, amend or terminate from time to time, a
nondiscriminatory policy which the Trustee must observe in making Plan loans,
if any, to Participants and to Beneficiaries. If the Plan Administrator adopts
a loan policy, the loan policy must be a written document and must include: (1)
the identity of the person or positions authorized to administer the
participant loan program; (2) the procedure for applying for a loan; (3) the
criteria for approving or denying a loan; (4) the limitations, if any, on the
types and amounts of loans available; (5) the procedure for determining a
reasonable rate of interest; (6) the types of collateral which may secure the
loan; and (7) the events constituting default and the steps the Plan will take
to preserve Plan assets in the event of default. A loan policy the Plan
Administrator adopts under this Section 9.04 is part of the Plan, except that
the Plan Administrator may amend or terminate the policy without regard to
Section 13.02.

 

9.05  FUNDING
POLICY. The Plan Administrator will review, not less often than annually,
all pertinent Employee information and Plan data in order to establish the
funding policy of the Plan and to determine the appropriate methods of carrying
out the Plan’s objectives. The Plan Administrator must communicate
periodically, as it deems appropriate, to the Trustee and to any Plan
Investment Manager the Plan’s short-term and long-term financial needs for the
coordination of the Plan’s investment policy with Plan financial requirements.

 

9.06  INDIVIDUAL
ACCOUNTS. The Plan Administrator will maintain, or direct the Trustee to
maintain, a separate Account, or multiple Accounts, in the name of each
Participant to reflect the Participant’s Account Balance under the Plan.

 

(A)  Forfeitures. If a Participant re-enters the Plan subsequent to
his/her having a Forfeiture Break in Service, the Plan Administrator, or the
Trustee, must maintain a separate Account for the Participant’s pre-Forfeiture
Break in Service Account Balance and a separate Account for his post-Forfeiture
Break in Service Account Balance, unless 

 

33

 

the
Participant’s entire Account Balance under the Plan is 100% Vested.

 

If
the Plan is subject to Participant direction of investment under Section 8.06,
the Plan Administrator may maintain, or may direct the Trustee to maintain, a
separate temporary forfeiture Account in the name of the Plan to account for
Participant forfeitures which occur during the Plan Year. The Trustee will
direct the investment of any separate temporary forfeiture Account. As of each
Accounting Date, or interim valuation date, if applicable, the Plan
Administrator will allocate the net income, gain or loss from the temporary
forfeiture Account, if any, to the Accounts of the Participants in accordance
with the provisions of Section 9.08.

 

(B)  Net Income, Gain or Loss. The Plan Administrator will make its allocations
of net income, gain or loss or request the Trustee to make its allocations, to
the Accounts of the Participants in accordance with the provisions of Section
9.08. The Plan Administrator may direct the Trustee under Section 9.08(B) to
maintain a temporary segregated investment Account in the name of a Participant
to prevent a distortion of income, gain or loss allocations. The Plan
Administrator must maintain records of its activities.

 

9.07  VALUE
OF PARTICIPANT’S ACCOUNT BALANCE. If any or all Plan investment accounts
are pooled, each Participant’s Account has an undivided interest in the assets
comprising the pooled account. In a pooled account, the value of each
Participant’s Account Balance consists of that proportion of the net worth (at
fair market value) of the Trust Fund which the net credit balance in his/her
Account (exclusive of the cash value of incidental benefit insurance contracts)
bears to the total net credit balance in the Accounts (exclusive of the cash
value of the incidental benefit insurance contracts) of all Participants plus
the cash surrender value of any incidental benefit insurance contracts held by
the Trustee on the Participant’s life. If any or all Plan investment accounts
are Participant directed, the directing Participant’s Account Balance is
comprised of the assets held within the Account and the value of the Account is
the fair market value of such assets. For purposes of a distribution under the
Plan, the value of a Participant’s Account Balance is its value as of the
valuation date immediately preceding the date of the distribution.

 

9.08  ALLOCATION
AND DISTRIBUTION OF NET INCOME, GAIN OR LOSS. This Section 9.08 applies
solely to the allocation of net income, gain or loss of the Trust Fund. The
Plan Administrator will allocate Employer contributions and Participant
forfeitures, if any, in accordance with Article III.

 

A “valuation
date” under this Plan is each: (1) Accounting Date; (2) valuation date the
Employer elects in its Adoption Agreement Section 10.15; or (3) valuation date
the Plan Administrator establishes under Section 9.03. The Employer in its
Adoption Agreement Section 10.15 or the Plan Administrator may elect
alternative valuation dates for the different Account types which the Plan
Administrator maintains under the Plan. As of each valuation date, the Plan
Administrator must adjust Accounts to reflect net income, gain or loss since
the last valuation date. The valuation period is the period beginning on the
day after the last valuation date and ending on the current valuation date.

 

The
Plan Administrator will allocate net income, gain or loss to the Participant Accounts
in accordance with the daily valuation method, balance forward method, weighted
average method, or other method the Employer elects under its Adoption
Agreement. The Employer in its Adoption Agreement may elect alternative methods
under which the Plan Administrator will allocate the net income, gain or loss
to the different Account types which the Plan Administrator maintains under the
Plan. If the Employer in its Adoption Agreement elects to apply a weighted
average allocation method, the Plan Administrator will treat a weighted portion
of the applicable contributions as if includible in the Participant’s Account
as of the beginning of the valuation period. The weighted portion is a
fraction, the numerator of which is the number of months in the valuation
period, excluding each month in the valuation period which begins prior to the
contribution date of the applicable contributions, and the denominator of which
is the number of months in the valuation period. The Employer in its Adoption
Agreement may elect to substitute a weighting period other than months for
purposes of this weighted average allocation. If the Employer in its Adoption
Agreement elects to apply the daily valuation method, the Plan Administrator
will allocate the net income, gain or loss on each day of the Plan Year for
which Plan assets are valued on an established market and the Trustee is
conducting business. If the Employer in its Adoption Agreement elects to apply
the balance forward method, the Plan Administrator first will adjust the
Participant Accounts, as those Accounts stood at the beginning of the current
valuation period, by reducing the Accounts for any forfeitures arising under
the Plan, for amounts charged during the valuation period to the Accounts in
accordance with Section 9.10 (relating to distributions and to loan
disbursement payments) and Section 11.01 (relating to insurance premiums), and
for the cash value of incidental benefit insurance contracts. The Plan
Administrator then, subject to the restoration allocation requirements of the
Plan, will allocate the net income, gain or loss pro rata to the adjusted
Participant Accounts. The allocable net income, gain or loss is the net income
(or net loss), including the increase or decrease in the fair market value of assets,
since the last valuation date.

 

(A)  Trust Fund (Pooled) Investment Accounts. A pooled investment account is an Account which
is not a segregated investment Account or an individual investment Account.

 

(B)  Segregated Investment Accounts. A segregated investment Account receives all
income it earns and bears all expense or loss it incurs. Pursuant to the Plan
Administrator’s direction, the Trustee may establish for a Participant a
segregated investment Account to prevent a distortion of Plan income, gain or
loss allocations or for such other purposes as the Plan Administrator may
direct. The Trustee will invest the assets of a segregated investment Account
consistent with such purposes. As of each valuation date, the Plan
Administrator must reduce a segregated Account for any forfeiture arising under
Section 5.09 after the Plan Administrator has made all other allocations,
changes or adjustments to the Account for the valuation period.

 

34

 

(C)  Individual (Directed) Investment Accounts. An individual investment Account is an Account
which is subject to Participant or Beneficiary self-direction under Section
8.06. An individual investment Account receives all income it earns and bears
all expense or loss it incurs. As of each valuation date, the Plan
Administrator must reduce an individual Account for any forfeiture arising from
Section 5.09 after the Plan Administrator has made all other allocations,
changes or adjustment to the Account for the valuation period.

 

(D)  Code §415 Excess Amounts. An Excess Amount or suspense account described in
Part 2 of Article III does not share in the allocation of net income, gain or
loss described in this Section 9.08.

 

(E)  Interest Adjustment. Any distribution (other than a distribution from
a segregated or individual Account) made to a Participant or Beneficiary more
than 90 days after the most recent valuation date may include interest on the
amount of the distribution as an expense of the Trust Fund. The interest, if any,
accrues from such valuation date to the date of the distribution at the rate
the Employer specifies in its Adoption Agreement.

 

(F)  Contributions Prior to Accrual. If the Employer in its Adoption Agreement elects
to impose one or more allocation conditions under Section 3.06 and the Employer
contributes to the Plan amounts which at the time of the contribution have not
accrued under the Plan terms (“pre-accrual contributions”), the Trustee will
hold the pre-accrual contributions in the Trust and will invest such
contributions as the Trustee determines, pending accrual and allocation to
Participant Accounts. When the Plan Administrator allocates to Participants who
have satisfied the Plan’s allocation conditions the Employer’s pre-accrual
contributions, the Plan Administrator also will allocate the net income, gain
or loss thereon pro rata in relation to each Participant’s share of the
pre-accrual contribution.

 

9.09  INDIVIDUAL
STATEMENT. As soon as practicable after the Accounting Date of each Plan
Year, but within the time prescribed by ERISA and the regulations under ERISA,
the Plan Administrator will deliver to each Participant (and to each
Beneficiary) a statement reflecting the condition of his/her Account Balance in
the Trust as of that date and such other information ERISA requires be
furnished the Participant or the Beneficiary. No Participant, except the Plan
Administrator, has the right to inspect the records reflecting the Account of
any other Participant.

 

9.10  ACCOUNT
CHARGED. The Plan Administrator will charge a Participant’s Account for all
distributions made from that Account to the Participant, to his/her Beneficiary
or to an alternate payee, including a disbursement payment for a Participant
loan. The Plan Administrator, except as prohibited by the Code or ERISA, also
will charge a Participant’s Account for any reasonable administrative expenses
incurred by the Plan directly related to that Account.

 

9.11  LOST
PARTICIPANTS. If the Plan Administrator is unable to locate any Participant
or Beneficiary whose Account becomes distributable under Article VI or under
Section 13.06 (a “lost Participant”), the Plan Administrator will apply the
provisions of this Section 9.11.

 

(A)  Attempt to Locate. The Plan Administrator will use one or more of
the following methods to attempt to locate a lost Participant: (1) provide a
distribution notice to the lost Participant at his/her last known address by
certified or registered mail; (2) use of the IRS letter forwarding program
under Rev. Proc. 94-22; (3) use of a commercial locator service, the internet
or other general search method; or (4) use of the Social Security
Administration search program.

 

(B)  Failure to Locate. If a lost Participant remains unlocated for 6
months following the date of the Plan Administrator first attempts to locate
the lost Participant using one or more of the methods described in Section
9.11(A), the Plan Administrator may forfeit the lost Participant’s Account. If
the Plan Administrator will forfeit the lost Participant’s Account, the
forfeiture occurs at the end of the above-described 6 month period and the Plan
Administrator will allocate the forfeiture in accordance with Section 3.05. If
a lost Participant whose Account was forfeited thereafter at any time but
before the Plan has been terminated makes a claim for his/her forfeited
Account, the Plan Administrator will restore the forfeited Account to the same
dollar amount as the amount forfeited, unadjusted for net income, gains or
losses occurring subsequent to the forfeiture. The Plan Administrator will make
the restoration in the Plan Year in which the lost Participant makes the claim,
first from the amount, if any, of Participant forfeitures the Plan
Administrator otherwise would allocate for the Plan Year, then from the amount,
if any, of Trust net income or gain for the Plan Year and last from the amount
or additional amount the Employer contributes to the Plan for the Plan Year.
The Plan Administrator will distribute the restored Account to the lost
Participant not later than 60 days after the close of the Plan Year in which
the Plan Administrator restores the forfeited Account. The Plan Administrator
under this Section 9.11(B) will forfeit the entire Account of the lost
Participant, including deferral contributions and Participant contributions.

 

(C)  Nonexclusivity and Uniformity. The provisions of Section 9.11 are intended to
provide permissible but not exclusive means for the Plan Administrator to
administer the Accounts of lost Participants. The Plan Administrator may
utilize any other reasonable method to locate lost Participants and to
administer the Accounts of lost Participants, including the default rollover
under Section 6.10(C) and such other methods as the Revenue Service or the U.S.
Department of Labor (“DOL”) may in the future specify. The Plan Administrator
will apply Section 9.11 in a reasonable, uniform and nondiscriminatory manner,
but may in determining a specific course of action as to a particular Account,
reasonably take into account differing circumstances such as the amount of a
lost Participant’s Account, the expense in attempting to locate a lost
Participant, the Plan Administrator’s ability to establish and the expense of
establishing a rollover IRA, and other factors. The Plan Administrator may charge
to the Account of a lost Participant the reasonable expenses incurred under
this Section 9.11 and which are associated with the lost Participant’s Account.

 

9.12  PLAN
CORRECTION. The Plan Administrator in conjunction with the
Employer may undertake such 

 

35

 

correction of Plan errors as the Plan Administrator deems necessary,
including correction to preserve tax qualification of the Plan under Code
§401(a) or to correct a fiduciary breach under ERISA. Without limiting the Plan
Administrator’s authority under the prior sentence, the Plan Administrator, as
it determines to be reasonable and appropriate, may undertake correction of
Plan document, operational, demographic and employer eligibility failures under
a method described in the Plan or under the Employee Plans Compliance
Resolution System (“EPCRS”) or any successor program to EPCRS. The Plan
Administrator, as it determines to be reasonable and appropriate, also may
undertake or assist the appropriate fiduciary or plan official in undertaking
correction of a fiduciary breach, including correction under the Voluntary
Fiduciary Correction Program (“VFC”) or any successor program to VFC. If the
Plan includes a 401(k) arrangement, the Plan Administrator to correct an
operational error may require the Trustee to distribute from the Plan elective
deferrals or vested matching contributions, including earnings, where such
amounts result from an operational error other than a failure of Code §415,
Code §402(g), a failure of the ADP or ACP tests, or a failure of the multiple
use limitation.

 

9.13  NO
RESPONSIBILITY FOR OTHERS. Except as required under ERISA, the Plan
Administrator has no responsibility or obligation under the Plan to
Participants or Beneficiaries for any act (unless the Plan Administrator also
serves in such capacities) required of the Employer, the Trustee, the Custodian
or of any other service provider to the Plan. The Plan Administrator is not
responsible to collect any required plan contribution or to determine the
correctness or deductibility or any Employer contribution. The Plan
Administrator in administering the Plan is entitled to, but is not required to
rely upon, information which a Participant, Beneficiary, Trustee, Custodian,
the Employer, a Plan service provider or representatives thereof provide to the
Plan Administrator.

 

9.14
NOTICE, DESIGNATION, ELECTION, CONSENT AND WAIVER. All notices under the
Plan and all Participant or Beneficiary designations, elections, consents or
waivers must be in writing and made in a form the Plan Administrator specifies
or otherwise approves. To the extent permitted by Treasury regulations or other
applicable guidance, any Plan notice, election, consent or waiver may be
transmitted electronically. Any person entitled to notice under the Plan may
waive the notice or shorten the notice period except as otherwise required by
the Code or ERISA.

 

36

 

ARTICLE X

TRUSTEE AND CUSTODIAN, POWERS AND DUTIES

 

10.01  ACCEPTANCE.
The Trustee accepts the Trust created under the Plan and agrees to perform the
obligations imposed. The Trustee must provide bond for the faithful performance
of its duties under the Trust to the extent required by ERISA.

 

10.02  RECEIPT
OF CONTRIBUTIONS. The Trustee is accountable to the Employer for the Plan
contributions made by the Employer, but the Trustee does not have any duty to
ensure that the contributions received comply with the provisions of the Plan.
The Trustee is not obliged to collect any contributions from the Employer, nor
is the Trustee obliged to ensure that funds deposited with it are deposited
according to the provisions of the Plan.

 

10.03  INVESTMENT
POWERS.

 

(A)  Discretionary Trustee Designation. If the Employer, in its Adoption Agreement,
designates the Trustee to administer the Trust as a discretionary Trustee, then
the Trustee has full discretion and authority with regard to the investment of
the Trust Fund, except with respect to a Plan asset under the control or the direction
of a properly appointed Investment Manager or with respect to a Plan asset
properly subject to Employer, or to Participant direction of investment. The
Trustee must coordinate its investment policy with Plan financial needs as
communicated to it by the Plan Administrator. The Trustee is authorized and
empowered, but not by way of limitation, with the following powers, rights and
duties:

 

(a)  To invest consistent with and subject to
applicable law any part or all of the Trust Fund in any common or preferred
stocks, open-end or closed-end mutual funds (including proprietary funds), put
and call options traded on a national exchange, United States retirement plan
bonds, corporate bonds, debentures, convertible debentures, commercial paper,
U.S. Treasury bills, U.S. Treasury notes and other direct or indirect
obligations of the United States Government or its agencies, improved or
unimproved real estate situated in the United States, limited partnerships,
insurance contracts of any type, mortgages, notes or other property of any
kind, real or personal, to buy or sell options on common stock on a nationally
recognized exchange with or without holding the underlying common stock, to
open and to maintain margin accounts, to engage in short sales, to buy and sell
commodities, commodity options and contracts for the future delivery of
commodities, and to make any other investments the Trustee deems appropriate,
as a prudent person would do under like circumstances with due regard for the
purposes of this Plan. Any investment made or retained by the Trustee in good
faith is proper but must be of a kind constituting a diversification considered
by law suitable for trust investments.

 

(b)  To retain in cash so much of the Trust Fund
as it may deem advisable to satisfy liquidity needs of the Plan and to deposit
any cash held in the Trust Fund in a bank account at reasonable interest.

 

(c)  To invest, if the Trustee is a bank or
similar financial institution supervised by the United States or by a state, in
any type of deposit of the Trustee (or of a bank related to the Trustee within
the meaning of Code §414(b)) at a reasonable rate of interest or in a common
trust fund, as described in Code §584, or in a collective investment fund, the
provisions of which govern the investment of such assets and which the Plan
incorporates by this reference, which the Trustee (or its affiliate, as defined
in Code §1504) maintains exclusively for the collective investment of money
contributed by the bank (or the affiliate) in its capacity as trustee and which
conforms to the rules of the Comptroller of the Currency.

 

(d)  To manage, sell, contract to sell, grant
options to purchase, convey, exchange, transfer, abandon, improve, repair,
insure, lease for any term even though commencing in the future or extending
beyond the term of the Trust, and otherwise deal with all property, real or
personal, in such manner, for such considerations and on such terms and
conditions as the Trustee decides.

 

(e)  To credit and distribute the Trust Fund as
directed by the Plan Administrator. The Trustee is not obliged to inquire as to
whether any payee or distributee is entitled to any payment or whether the
distribution is proper or within the terms of the Plan, or as to the manner of
making any payment or distribution. The Trustee is accountable only to the Plan
Administrator for any payment or distribution made by it in good faith on the
order or direction of the Plan Administrator.

 

(f)  To borrow money, to assume indebtedness,
extend mortgages and encumber by mortgage or pledge.

 

(g)  To compromise, contest, arbitrate or abandon
claims and demands, in the Trustee’s discretion.

 

(h)  To have with respect to the Trust all of the
rights of an individual owner, including the power to exercise any and all voting
rights associated with Trust assets, to give proxies, to participate in any
voting trusts, mergers, consolidations or liquidations, to tender shares and to
exercise or sell stock subscriptions or conversion rights.

 

(i)  To lease for oil, gas and other mineral
purposes and to create mineral severances by grant or reservation; to pool or
unitize interests in oil, gas and other minerals; and to enter into operating
agreements and to execute division and transfer orders.

 

(j)  To hold any securities or other property in
the name of the Trustee or its nominee, with depositories or agent depositories
or in another form as it may deem best, with or without disclosing the trust
relationship.

 

(k)  To perform any and all other acts in its
judgment necessary or appropriate for the proper and 

 

37

 

advantageous management,
investment and distribution of the Trust.

 

(l)  To retain any funds or property subject to
any dispute without liability for the payment of interest, and to decline to
make payment or delivery of the funds or property until a court of competent
jurisdiction makes final adjudication.

 

(m)  To file all information and tax returns
required of the Trustee.

 

(n)  To furnish to the Employer and to the Plan
Administrator an annual statement of account showing the condition of the Trust
Fund and all investments, receipts, disbursements and other transactions
effected by the Trustee during the Plan Year covered by the statement and also
stating the assets of the Trust held at the end of the Plan Year, which
accounts are conclusive on all persons, including the Employer and the Plan
Administrator, except as to any act or transaction concerning which the
Employer of the Plan Administrator files with the Trustee written exceptions or
objections within 90 days after the receipt of the accounts or for which ERISA
authorizes a longer period within which to object.

 

(o)  To begin, maintain or defend any litigation
necessary in connection with the administration of the Plan, except the Trustee
is not obliged nor required to do so unless indemnified to its satisfaction.

 

(B)  Nondiscretionary Trustee Designation/
Appointment of Custodian.
If the Employer, in its Adoption Agreement, designates the Trustee to
administer the Trust as a nondiscretionary Trustee, then the Trustee will not
have any discretion or authority with regard to the investment of the Trust
Fund, but must act solely as a directed trustee of the funds contributed to it.
A nondiscretionary Trustee, as directed trustee of the funds held by it under
the Plan, is authorized and empowered, by way of limitation, with the following
powers, rights and duties, each of which the nondiscretionary Trustee exercises
solely as directed trustee in accordance with the written direction of the
Named Fiduciary (except to the extent a Plan asset is subject to the control
and the management of a properly appointed Investment Manager or subject to
Employer or Participant direction of investment):

 

(a)  To invest any part or all of the Trust Fund
in any common or preferred stocks, open-end or closed-end mutual funds
(including proprietary funds), put and call options traded on a national
exchange, United States retirement plan bonds, corporate bonds, debentures,
convertible debentures, commercial paper, U.S. Treasury bills, U.S. Treasury
notes and other direct or indirect obligations of the United States Government
or its agencies, improved or unimproved real estate situated in the United
States, limited partnerships, insurance contracts of any type, mortgages, notes
or other property of any kind, real or personal, to buy or sell options on
common stock on a nationally recognized options exchange with or without
holding the underlying common stock, to open and to maintain margin accounts,
to engage in short sales, to buy and sell commodities, commodity options and
contracts for the future delivery of commodities, and to make any other
investments the Named Fiduciary deems appropriate.

 

(b)  To retain in cash so much of the Trust Fund
as the Named Fiduciary may direct in writing to satisfy liquidity needs of the
Plan and to deposit any cash held in the Trust Fund in a bank account at
reasonable interest.

 

(c)  To invest, if the Trustee is a bank or
similar financial institution supervised by the United States or by a State, in
any type of deposit of the Trustee (or of a bank related to the Trustee within
the meaning of Code §414(b)) at a reasonable rate of interest or in a common
trust fund, as described in Code §584, or in a collective investment fund, the
provisions of which govern the investment of such assets and which the Plan
incorporates by this reference, which the Trustee (or its affiliate, as defined
in Code §1504) maintains exclusively for the collective investment of money contributed
by the bank (or the affiliate) in its capacity as trustee and which conforms to
the rules of the Comptroller of the Currency.

 

(d)  To sell, contract to sell, grant options to
purchase, convey, exchange, transfer, abandon, improve, repair, insure, lease
for any term even though commencing in the future or extending beyond the term
of the Trust, and otherwise deal with all property, real or personal, in such
manner, for such considerations and on such terms and conditions as the Named
Fiduciary directs in writing.

 

(e)  To credit and distribute the Trust Fund as
directed by the Plan Administrator. The Trustee is not obliged to inquire as to
whether any payee or distributee is entitled to any payment or whether the
distribution is proper or within the terms of the Plan, or as to the manner of
making any payment or distribution. The Trustee is accountable only to the Plan
Administrator for any payment or distribution made by it in good faith on the
order or the direction of the Plan Administrator.

 

(f)  To borrow money, to assume indebtedness,
extend mortgages and encumber by mortgage or pledge in accordance with and at
the written direction of the Named Fiduciary.

 

(g)  To have with respect to the Trust all of the
rights of an individual owner, including the power to exercise any and all
voting rights associated with Trust assets, to give proxies, to participate in
any voting trusts, mergers, consolidations or liquidations, to tender shares
and to exercise or sell stock subscriptions or conversion rights, provided the
exercise of any such powers is in accordance with and at the written direction
of the Named Fiduciary.

 

(h)  To lease for oil, gas and other mineral
purposes and to create mineral severances by grant or reservation; to pool or
unitize interests in oil, gas and other minerals; and to enter into operating
agreements and to execute division and transfer orders, provided the exercise
of any such powers is in accordance with and at the written direction of the
Named Fiduciary.

 

38

 

(i)  To hold any securities or other property in
the name of the nondiscretionary Trustee or its nominee, with depositories or
agent depositories or in another form as the Named Fiduciary may direct in
writing, with or without disclosing the custodial relationship.

 

(j)  To retain any funds or property subject to
any dispute without liability for the payment of interest, and to decline to
make payment or delivery of the funds or property until a court of competent
jurisdiction makes final adjudication.

 

(k)  To file all information and tax returns
required of the Trustee.

 

(l)  To furnish to the Named Fiduciary, the
Employer and the Plan Administrator an annual statement of account showing the
condition of the Trust Fund and all investments, receipts, disbursements and
other transactions effected by the nondiscretionary Trustee during the Plan
Year covered by the statement and also stating the assets of the Trust held at
the end of the Plan Year, which accounts are conclusive on all persons,
including the Named Fiduciary, the Employer and the Plan Administrator, except
as to any act or transaction concerning which the Named Fiduciary, the Employer
or the Plan Administrator files with the nondiscretionary Trustee written exceptions
or objections within 90 days after the receipt of the accounts or for which
ERISA authorizes a longer period within which to object.

 

(m)  To begin, maintain or defend any litigation
necessary in connection with the administration of the Plan, except the Trustee
is not obliged nor required to do so unless indemnified to its satisfaction.

 

Appointment of Custodian. The Employer may appoint a Custodian under the Plan, the acceptance by
the Custodian indicated on the execution page of the Adoption Agreement. If the
Employer appoints a Custodian, the Plan must have a discretionary Trustee, as
described in Section 10.03(A). A Custodian has the same powers, rights and
duties as a nondiscretionary Trustee, as described in this Section 10.03(B).
The Custodian accepts the terms of the Plan and Trust by executing the Adoption
Agreement. Any reference in the Plan to a Trustee also is a reference to a
Custodian where the context of the Plan dictates. A limitation of the Trustee’s
liability by Plan provision also acts as a limitation of the Custodian’s
liability. Any action taken by the Custodian at the discretionary Trustee’s
direction satisfies any provision in the Plan referring to the Trustee’s taking
that action.

 

Modification of Powers/Limited Responsibility. The Employer and the nondiscretionary Trustee (or
the Custodian), in writing, may limit the powers of the Custodian or the
nondiscretionary Trustee to any combination of powers listed within this
Section 10.03(B). If there is a Custodian or a nondiscretionary Trustee under
the Plan, then the Employer, in adopting this Plan acknowledges the Custodian
or the nondiscretionary Trustee does not have any discretion with respect to
the investment or the re-investment of the Trust Fund and the Custodian or the
nondiscretionary Trustee is acting solely as a custodian or as a directed
trustee with respect to the assets comprising the Trust Fund.

 

(C)  Limitation of Powers of Certain Custodians. If a Custodian is a bank which, under its
governing state law, does not possess trust powers, then Paragraphs (a), (c) as
it relates to common trust funds or collective investment funds, (d), (f), (g)
and (h) of Section 10.03(B), Section 10.17 and Article XI do not apply to that
bank and that bank only has the power and the authority to exercise the
remaining powers, rights and duties under Section 10.03(B).

 

(D)  Named Fiduciary/Limitation of Liability of
Nondiscretionary Trustee or Custodian. The Named Fiduciary under the Plan has the sole responsibility for the
management and the control of the Trust Fund, except with respect to a Plan
asset under the control or the direction of a properly appointed Investment
Manager or with respect to a Plan asset properly subject to Participant or
Employer direction of investment. If the Employer appoints a discretionary
Trustee, the Named Fiduciary is the discretionary Trustee. If the Employer
appoints a Custodian, the Named Fiduciary is the discretionary Trustee. Under a
nondiscretionary Trustee designation, unless the Employer designates in writing
another person or persons to serve as Named Fiduciary, the Named Fiduciary
under the Plan is the president of a corporate Employer, the managing partner
of a partnership Employer, the managing member of a limited liability company
Employer or the sole proprietor, as appropriate. The Named Fiduciary will
exercise its management and control of the Trust Fund through its written
direction to the nondiscretionary Trustee or to the Custodian, whichever
applies to the Plan.

 

The
nondiscretionary Trustee or the Custodian does not have any duty to review or
to make recommendations regarding investments made at the written direction of
the Named Fiduciary. The nondiscretionary Trustee or the Custodian must retain
any investment obtained at the written direction of the Named Fiduciary until
further directed in writing by the Named Fiduciary to dispose of such
investment. The nondiscretionary Trustee or the Custodian is not liable in any
manner or for any reason for making, retaining or disposing of any investment
pursuant to any written direction of the Named Fiduciary. The Employer will
indemnify, defend and hold the nondiscretionary Trustee or the Custodian
harmless from any damages, costs or expenses, including reasonable attorneys’
fees, which the nondiscretionary Trustee or the Custodian may incur as a result
of any claim asserted against the nondiscretionary Trustee, the Custodian or
the Trust arising out of the nondiscretionary Trustee’s or Custodian’s full and
timely compliance with any written direction of the Named Fiduciary.

 

(E)  Participant Loans. This Section 10.03(E) specifically authorizes the
Trustee to make loans on a nondiscriminatory basis to a Participant or to a
Beneficiary in accordance with the loan policy established by the Plan Administrator,
provided: (1) the loan policy satisfies the requirements of Section 9.04; (2)
loans are available to all Participants and Beneficiaries on a reasonably
equivalent basis and are not available in a greater amount for Highly
Compensated Employees than for Nonhighly Compensated Employees; (3) any loan is
adequately secured and bears a reasonable rate of interest; (4) the loan
provides for 

 

39

 

repayment
within a specified time (however, the loan policy may suspend loan payments
pursuant to Code §414(u)(4) or otherwise in accordance with applicable Treasury
Regulations); (5) the default provisions of the note permit offset of the
Participant’s Vested Account Balance only at the time when the Participant has a
distributable event under the Plan, but without regard to whether the
Participant consents to distribution as otherwise may be required under Section
6.01(A)(5); (6) the amount of the loan does not exceed (at the time the Plan
extends the loan) the present value of the Participant’s Vested Account
Balance; and (7) the loan otherwise conforms to the exemption provided by Code
§4975(d)(1). The loan policy may provide a Participant’s loan default is a
distributable event with respect to the defaulted amount, irrespective of
whether the Participant otherwise has incurred a distributable event at the
time of default, except as to amounts which the Participant used to secure
his/her loan which remain subject to distribution restrictions under Section
14.11 or are money purchase pension plan or target benefit plan balances which
may not be distributed in-service at the time of default. If the joint and
survivor requirements of Article VI apply to the Participant, the Participant
may not pledge any portion of his/her Account Balance as security for a loan
unless, within the 90 day period ending on the date the pledge becomes
effective, the Participant’s spouse, if any, consents (in a manner described in
Section 6.05 other than the requirement relating to the consent of a subsequent
spouse) to the security or, by separate consent, to an increase in the amount
of security.

 

A
Participant who is an Owner-Employee (including other persons described in Code
§4975(f)(6)), or who is a Shareholder-Employee may not receive a loan from the
Plan, unless he/she has obtained a prohibited transaction exemption from the
DOL.

 

(F)  Investment in Qualifying Employer Securities
and Qualifying Employer Real Property. The Trustee (or as applicable, Investment
Manager, Employer or Participant) may invest in qualifying Employer securities
or in qualifying Employer real property, as defined in and as limited by ERISA.
If the Employer’s Plan is a profit sharing plan, the aggregate investments in
qualifying Employer securities and in qualifying Employer real property may
exceed 10% of the value of Plan assets, unless the Employer elects in its
Adoption Agreement to restrict such investments to 10% (or to some other
percentage which is less than 100%). Notwithstanding the foregoing, except where
permitted under ERISA §407(b)(2), if the Plan includes a 401(k) arrangement, a
participant’s Deferral Contributions Account accumulated in Plan Years
beginning after December 31, 1998, including earnings thereon, may not be
invested more than 10% in qualifying employer securities and qualifying
employer real property, unless such investments are directed by the Participant
or the Participant’s Beneficiary.

 

(G)  Modifications to or Substitution of Trust. The Employer in its Standardized Adoption
Agreement may not amend any provision of Article X (or any other provision of
the Plan related to the Trust) except to specify the Trust year, the names of
the Plan, the Employer, the Trustee, the Custodian, the Plan Administrator,
other fiduciaries or the name of any pooled trust in which the Trust will
participate. The Employer in its Nonstandardized Adoption Agreement, in
addition to the foregoing amendments, may amend or override the administrative
provisions of Article X (or any other provision of the Plan related to the
Trust), including provisions relating to Trust investment and Trustee duties.
Any such amendment: (1) must not conflict with any other provisions of the Plan
(except as expressly are intended to override an existing Trust provision); (2)
must not cause the Plan to violate Code §401(a); and (3) must be made in
accordance with Rev. Proc. 2000-20 or any successor thereto. The Employer using
either a Standardized or Nonstandardized Adoption Agreement to establish its
Plan, subject to the conditions (1), (2) and (3) described above, may elect to
substitute in place of Article X and the remaining trust provisions of the
basic plan document, any other trust or custodial account agreement. All
Section 10.03(G) Trust modifications or substitutions are subject to Section
13.02 and require the written consent or signature of the Trustee.

 

(H)  Cofiduciary Liability. Each fiduciary under the Plan is responsible
solely for his/her or its own acts or omissions. A fiduciary does not have any
liability for another fiduciary’s breach of fiduciary responsibility with
respect to the Plan and the Trust unless the fiduciary: (1) participates
knowingly in or undertakes to conceal the breach; (2) has actual knowledge of
the breach and fails to take reasonable remedial action to remedy the breach;
or (3) through negligence in performing his/her or its own specific fiduciary
responsibilities that give rise to fiduciary status, the fiduciary has enabled
the other fiduciary to commit a breach of the latter’s fiduciary responsibility.

 

10.04  RECORDS
AND STATEMENTS. The records of the Trustee pertaining to the Plan must be
open to the inspection of the Plan Administrator and the Employer at all
reasonable times and may be audited from time to time by any person or persons
as the Employer or Plan Administrator may specify in writing. The Trustee must
furnish the Plan Administrator with whatever information relating to the Trust
Fund the Plan Administrator considers necessary to perform its duties as Plan
Administrator.

 

10.05  FEES
AND EXPENSES FROM FUND. A Trustee or a Custodian will receive reasonable
compensation as may be agreed upon from time to time between the Employer and
the Trustee or the Custodian. No person who is receiving full pay from the
Employer may receive compensation (except for reimbursement of Plan expenses)
for services as Trustee or as Custodian. The Trustee will pay from the Trust
Fund all fees and reasonable expenses incurred by the Plan, to the extent such
fees and expenses are for the ordinary and necessary administration and
operation of the Plan and are not “settlor expenses” as determined by the DOL
unless the Employer pays such fees and expenses. Any fee or expense paid,
directly or indirectly, by the Employer is not an Employer contribution to the
Plan, provided the fee or the expense relates to the ordinary and necessary
administration of the Trust Fund.

 

10.06  PARTIES
TO LITIGATION. Except as otherwise provided by ERISA, a Participant or a
Beneficiary is not a necessary party or required to receive notice of process
in any court proceeding involving the Plan, the Trust Fund or any fiduciary of
the Plan. Any final judgment entered in any such proceeding will be binding
upon the Employer, the Plan Administrator, the Trustee, 

 

40

 

Custodian, Participants and Beneficiaries and upon their successors and
assigns.

 

10.07  PROFESSIONAL
AGENTS. The Trustee may employ and pay from the Trust Fund reasonable
compensation to agents, attorneys, accountants and other persons to advise the
Trustee as in its opinion may be necessary. The Trustee reasonably may delegate
to any agent, attorney, accountant or other person selected by it any
non-Trustee power or duty vested in it by the Plan, and the Trustee may
reasonably act or refrain from acting on the advice or opinion of any agent,
attorney, accountant or other person so selected.

 

10.08
DISTRIBUTION OF CASH OR PROPERTY. The Trustee will make Plan distributions in
the form of cash except where: (1) the required form of distribution is a QJSA
or QPSA which has not been waived; (2) the Plan is a restated Plan and under
the prior Plan, distribution in the form of property (“in-kind distribution”)
is a Protected Benefit (3) the Plan Administrator adopts a written policy which
provides for in-kind distribution; or (4) the Employer is terminating the Plan,
and in the reasonable judgement of the Trustee, some or all Plan assets may not
within a reasonable time for making final distribution of Plan assets, be
liquidated to cash or may not be so liquidated without undue loss in value. The
Plan Administrator’s policy under clause (3) may restrict in-kind distributions
to certain types of Trust investments or specify any other reasonable and
nondiscriminatory condition or restriction applicable to in-kind distributions.
Under clause (4), the Trustee will make Plan termination distributions to
Participants and Beneficiaries in cash, in-kind or in a combination of these
forms, in a reasonable and nondiscriminatory manner which may take into account
the preferences of the distributees. All in-kind distributions will be made
based on the current fair market value of the property, as determined by the
Trustee.

 

10.09  PARTICIPANT
OR BENEFICIARY INCAPACITATED. If, in the opinion of the Plan Administrator
or of the Trustee, a Participant or Beneficiary entitled to a Plan distribution
is not able to care for his/her affairs because of a mental condition, a
physical condition, or by reason of age, at the direction of the Plan
Administrator the Trustee may make the distribution to the Participant’s or
Beneficiary’s guardian, conservator, trustee, custodian (including under a
Uniform Transfers or Gifts to Minors Act) or to his/her attorney-in-fact or to
other legal representative upon furnishing evidence of such status satisfactory
to the Plan Administrator and to the Trustee. The Plan Administrator and the
Trustee do not have any liability with respect to payments so made and neither
the Plan Administrator nor the Trustee has any duty to make inquiry as to the
competence of any person entitled to receive payments under the Plan.

 

10.10  DISTRIBUTION
DIRECTIONS. The Trustee must promptly notify the Plan Administrator of any
unclaimed Plan distribution and then dispose of the distribution in accordance
with the Plan Administrator’s subsequent direction.

 

10.11  THIRD
PARTY RELIANCE. A person dealing with the Trustee is not obligated to see
to the proper application of any money paid or property delivered to the
Trustee, or to inquire whether the Trustee has acted pursuant to any of the
terms of the Plan. Each person dealing with the Trustee may act upon any
notice, request or representation in writing by the Trustee, or by the Trustee’s
duly authorized agent, and is not liable to any person in so acting. The
certificate of the Trustee that it is acting in accordance with the Plan is
conclusive in favor of any person relying on the certificate.

 

10.12  MULTIPLE
TRUSTEES. If more than two persons act as Trustee, a decision of the
majority of such persons controls with respect to any decision regarding the
administration or the investment of the Trust Fund or of any portion of the
Trust Fund with respect to which such persons act as Trustee. If there is more
than one Trustee, the Trustees jointly will manage and control the assets of
the Trust Fund. However, the Trustees may allocate among themselves specific
responsibilities or obligations or may authorize one or more of them, either
individually or in concert, to exercise any or all of the powers granted to the
Trustee under Article X. In addition, the signature of only one Trustee is
necessary to effect any transaction on behalf of the Trust.

 

10.13  RESIGNATION
AND REMOVAL. The Trustee or the Custodian may resign its position by giving
written notice to the Employer and to the Plan Administrator. The Trustee’s
notice must specify the effective date of the Trustee’s resignation, which date
must be at least 30 days following the date of the Trustee’s notice, unless the
Employer consents in writing to shorter notice.

 

The
Employer may remove a Trustee or a Custodian by giving written notice to the
effected party. The Employer’s notice must specify the effective date of
removal which date must be at least 30 days following the date of the Employer’s
notice, except where the Employer reasonably determines a shorter notice period
or immediate removal is necessary to protect Plan assets.

 

In
the event of the resignation or the removal of a Trustee, where no other
Trustee continues to service, the Employer must appoint a successor Trustee if
it intends to continue the Plan. If two or more persons hold the position of
Trustee, in the event of the removal of one such person, during any period the
selection of a replacement is pending, or during any period such person is unable
to serve for any reason, the remaining person or persons will act as the
Trustee. If the Employer fails to appoint a successor Trustee as of the
effective date of the Trustee resignation or removal and no other Trustee
remains, the Trustee will treat the Employer as having appointed itself as
Trustee and as having filed the Employer’s acceptance of appointment as
successor Trustee with the former Trustee. If state law prohibits the Employer
from serving as successor Trustee, the appointed successor Trustee is the
president of a corporate Employer, the managing partner of a partnership
Employer, the managing member of a limited liability company Employer or the
sole proprietor, as appropriate. If the Employer removes and does not replace a
Custodian, the discretionary Trustee will assume possession of Plan assets held
by the former Custodian.

 

10.14  SUCCESSOR
TRUSTEE ACCEPTANCE. Each successor Trustee succeeds its predecessor Trustee
by accepting in writing its appointment as successor Trustee and by filing the
acceptance with the former Trustee and 

 

41

 

the Plan Administrator without the signing or filing of any further
statement. The resigning or removed Trustee, upon receipt of acceptance in
writing of the Trust by the successor Trustee, must execute all documents and
do all acts necessary to vest the title of record in any successor Trustee.
Each successor Trustee has and enjoys all of the powers, both discretionary and
ministerial, conferred under the Plan upon its predecessor. A successor Trustee
is not personally liable for any act or failure to act of any predecessor
Trustee, except as required under ERISA. With the approval of the Employer and
the Plan Administrator, a successor Trustee, with respect to the Plan, may
accept the account rendered and the property delivered to it by a predecessor
Trustee without liability.

 

10.15  VALUATION
OF TRUST. The Trustee must value the Trust Fund as of each Accounting Date
to determine the fair market value of each Participant’s Account Balance in the
Trust. The Trustee also must value the Trust Fund on such other valuation dates
as directed in writing by the Plan Administrator or as the Adoption Agreement
may require.

 

10.16  LIMITATION
ON LIABILITY - IF INVESTMENT MANAGER, ANCILLARY TRUSTEE OR INDEPENDENT
FIDUCIARY APPOINTED. The Trustee is not liable for the acts or omissions of
any Investment Manager the Plan Administrator may appoint, nor is the Trustee
under any obligation to invest or otherwise to manage any asset of the Trust
Fund which is subject to the management of a properly appointed Investment
Manager. The Plan Administrator, the Trustee and any properly appointed
Investment Manager may execute a written agreement as a part of this Plan
delineating the duties, responsibilities and liabilities of the Investment
Manager with respect to any part of the Trust Fund under the control of the
Investment Manager.

 

The
limitation on liability described in this Section 10.16 also applies to the
acts or omissions of any ancillary trustee or independent fiduciary properly
appointed under Section 10.18. However, if a discretionary Trustee, pursuant to
the delegation described in Section 10.18, appoints an ancillary trustee, the
discretionary Trustee is responsible for the periodic review of the ancillary
trustee’s actions and must exercise its delegated authority in accordance with
the terms of the Plan and in a manner consistent with ERISA. The Employer, the
discretionary Trustee and an ancillary trustee may execute a written agreement
as a part of this Plan delineating any indemnification agreement among the
parties.

 

10.17  INVESTMENT
IN GROUP TRUST FUND. The Employer, by adopting this Plan, specifically
authorizes the Trustee to invest all or any portion of the assets comprising
the Trust Fund in any group trust fund which at the time of the investment
provides for the pooling of the assets of plans qualified under Code §401(a).
This authorization applies solely to a group trust fund exempt from taxation
under Code §501(a) and the trust agreement of which satisfies the requirements
of Revenue Ruling 81-100, or any successor thereto. The provisions of the group
trust fund agreement, as amended from time to time, are by this reference
incorporated within this Plan and Trust. The provisions of the group trust fund
will govern any investment of Plan assets in that fund. The Employer must
specify in an Addendum to its Adoption Agreement the group trust fund(s) to
which this authorization applies. If the Trustee is acting as a
nondiscretionary Trustee, the investment in the group trust fund is available
only in accordance with a proper direction, by the Named Fiduciary, in
accordance with Section 10.03(B). Pursuant to Paragraph (c) of Section
10.03(A), a Trustee has the authority to invest in certain common trust funds
and collective investment funds without the need for the authorizing Addendum
described in this Section 10.17.

 

Furthermore,
at the Employer’s direction, the Trustee, for collective investment purposes,
may combine into one trust fund the Trust created under this Plan with the
trust created under any other qualified retirement plan the Employer maintains.
However, the Trustee must maintain separate records of account for the assets
of each Trust in order to reflect properly each Participant’s Account Balance
under the qualified plans in which he/she is a participant.

 

10.18  APPOINTMENT
OF ANCILLARY TRUSTEE OR INDEPENDENT FIDUCIARY. The Employer, in writing, may appoint any qualified person in any state
to act as ancillary trustee with respect to a designated portion of the Trust
Fund, subject to any consent required under Section 1.33. An ancillary trustee
must acknowledge in writing its acceptance of the terms and conditions of its
appointment as ancillary trustee and its fiduciary status under ERISA. The
ancillary trustee has the rights, powers, duties and discretion as the Employer
may delegate, subject to any limitations or directions specified in the
agreement appointing the ancillary trustee and to the terms of the Plan or of
ERISA. The investment powers delegated to the ancillary trustee may include any
investment powers available under Section 10.03. The delegated investment
powers may include the right to invest any portion of the assets of the Trust
Fund in a common trust fund, as described in Code §584, or in any collective
investment fund, the provisions of which govern the investment of such assets
and which the Plan incorporates by this reference, but only if the ancillary
trustee is a bank or similar financial institution supervised by the United
States or by a state and the ancillary trustee (or its affiliate, as defined in
Code §1504) maintains the common trust fund or collective investment fund
exclusively for the collective investment of money contributed by the ancillary
trustee (or its affiliate) in a trustee capacity and which conforms to the
rules of the Comptroller of the Currency. The Employer also may appoint as an
ancillary trustee, the trustee of any group trust fund designated for investment
pursuant to the provisions of Section 10.17.

 

The
ancillary trustee may resign its position and the Employer may remove an
ancillary trustee as provided in Section 10.13 regarding resignation and
removal of the Trustee or Custodian. In the event of such resignation or
removal, the Employer may appoint another ancillary trustee or may return the
assets to the control and management of the Trustee. The Employer may delegate
its responsibilities under this Section 10.18 to a discretionary Trustee under
the Plan, but not to a nondiscretionary Trustee or to a Custodian, subject to
the acceptance by the discretionary Trustee of that delegation.

 

If
the DOL requires engagement of an independent fiduciary to have control or
management of all or a portion of the Trust Fund, the Employer will appoint
such independent fiduciary, as directed by the DOL. The 

 

42

 

independent fiduciary will have the duties, responsibilities and powers
prescribed by the DOL and will exercise those duties, responsibilities and
powers in accordance with the terms, restrictions and conditions established by
the DOL and, to the extent not inconsistent with ERISA, the terms of the Plan.
The independent fiduciary must accept its appointment in writing and must
acknowledge its status as a fiduciary of the Plan.

 

43

 

ARTICLE XI

PROVISIONS RELATING TO INSURANCE AND INSURANCE COMPANY

 

11.01  INSURANCE
BENEFIT. The Employer may elect to provide incidental life insurance
benefits for insurable Participants who consent to life insurance benefits by
executing the appropriate insurance company application form. The Trustee will
not purchase any incidental life insurance benefit for any Participant prior to
a contribution allocation to the Participant’s Account. At an insured
Participant’s written direction, the Trustee will use all or any portion of the
Participant’s Employee contributions, if any, to pay insurance premiums
covering the Participant’s life. This Section 11.01 also authorizes (except if
the Plan is a money purchase pension plan) the purchase of life insurance, for
the benefit of the Participant, on the life of a family member of the
Participant or on any person in whom the Participant has an insurable interest.
However, if the policy is on the joint lives of the Participant and another
person, the Trustee may not maintain that policy if the other person
predeceases the Participant.

 

The
Employer will direct the Trustee as to the insurance company and insurance
agent through which the Trustee is to purchase the insurance contracts, the
amount of the coverage and the applicable dividend plan. Each application for a
policy, and the policies themselves, must designate the Trustee as sole owner,
with the right reserved to the Trustee to exercise any right or option
contained in the policies, subject to the terms and provisions of this Plan.
The Trustee must be the named beneficiary for the Account of the insured
Participant. Proceeds of insurance contracts paid to the Participant’s Account
under this Article XI are subject to the distribution requirements of Article
VI. The Trustee will not retain any such proceeds for the benefit of the Trust.

 

The
Trustee will charge the premiums on any incidental benefit insurance contract
covering the life of a Participant against the Account of that Participant and
will treat the insurance contract as a directed investment of the Participant’s
Account, even if the Plan otherwise does not permit a Participant to direct the
investment of his/her own Account. The Trustee will hold all incidental benefit
insurance contracts issued under the Plan as assets of the Trust created and
maintained under the Plan.

 

(A)  Incidental insurance benefits. The aggregate of life insurance premiums paid for
the benefit of a Participant, at all times, may not exceed the following
percentages of the aggregate of the Employer’s contributions (including
Deferral Contributions and forfeitures) allocated to any Participant’s Account:
(i) 49% in the case of the purchase of ordinary life insurance contracts; or
(ii) 25% in the case of the purchase of term life insurance or universal life
insurance contracts. If the Trustee purchases a combination of ordinary life
insurance contract(s) and term life insurance or universal life insurance
contract(s), then the sum of one-half of the premiums paid for the ordinary
life insurance contract(s) and the premiums paid for the term life insurance or
universal life insurance contract(s) may not exceed 25% of the Employer
contributions allocated to any Participant’s Account.

 

(B)  Exception for certain profit sharing plans. If the Plan is a profit sharing plan, the
incidental insurance benefits requirement does not apply to the Plan if the
Plan purchases life insurance benefits only from Employer contributions
accumulated in the Participant’s Account for at least two years (measured from
the allocation date).

 

(C)  Exception for other amounts. The incidental insurance benefits requirement
does not apply to life insurance purchased with Employee contributions,
rollover contributions, or earnings on Employer contributions.

 

11.02  LIMITATION
ON LIFE INSURANCE PROTECTION. The Trustee will not continue any life
insurance protection for any Participant beyond his/her annuity starting date
as defined in Section 6.01(A)(4). If the Trustee holds any incidental benefit
insurance contract(s) for the benefit of a Participant when he/she terminates
his/her employment (other than by reason of death), the Trustee must proceed as
follows:

 

(a)  If the entire cash value of the contract(s)
is Vested in the terminating Participant, or if the contract(s) will not have
any cash value at the end of the policy year in which Separation from Service
occurs, the Trustee will transfer the contract(s) to the Participant endorsed
so as to vest in the transferee all right, title and interest to the
contract(s), free and clear of the Trust; subject however, to restrictions as
to surrender or payment of benefits as the issuing insurance company may permit
and as the Plan Administrator directs;

 

(b)  If only part of the cash value of the
contract(s) is Vested in the terminating Participant, the Trustee, to the
extent the Participant’s interest in the cash value of the contract(s) is not
Vested, may adjust the Participant’s interest in the value of his/her Account
attributable to Trust assets other than incidental benefit insurance contracts
and proceed as in (a), or the Trustee must effect a loan from the issuing
insurance company on the sole security of the contract(s) for an amount equal
to the difference between the cash value of the contract(s) at the end of the
policy year in which termination of employment occurs and the amount of the
cash value that is Vested in the terminating Participant, and the Trustee must
transfer the contract(s) endorsed so as to vest in the transferee all right,
title and interest to the contract(s), free and clear of the Trust; subject
however, to the restrictions as to surrender or payment of benefits as the
issuing insurance company may permit and the Plan Administrator directs;

 

(c)  If no part of the cash value of the
contract(s) is Vested in the terminating Participant, the Trustee must
surrender the contract(s) for cash proceeds as may be available.

 

In accordance with the
written direction of the Plan Administrator, the Trustee will make any transfer
of contract(s) under this Section 11.02 on the Participant’s annuity starting
date (or as soon as administratively practicable after that date). The Trustee
may not transfer any contract under this Section 11.02 which contains a method of payment not specifically authorized by
Article VI or which fails to comply with the joint and survivor annuity
requirements, if applicable, of Article VI. In this regard, the Trustee either
must convert such a contract to cash and distribute the cash instead of the
contract, or

 

44

 

before making the transfer, must require the issuing company to delete
the unauthorized method of payment option from the contract.

 

11.03  DEFINITIONS.
For purposes of this Article XI:

 

(a)  “Policy” means an ordinary life, term life or
universal life insurance contract issued by an insurer on the life of a
Participant.

 

(b)  “Issuing insurance company” is any life
insurance company which has issued a policy upon application by the Trustee
under the terms of this Plan.

 

(c)  “Contract” or “Contracts” means a policy of
insurance. In the event of any conflict between the provisions of this Plan and
the terms of any contract or policy of insurance issued in accordance with this
Article XI, the provisions of the Plan control.

 

(d)  “Insurable Participant” means a Participant
to whom an insurance company, upon an application being submitted in accordance
with the Plan, will issue insurance coverage, either as a standard risk or as a
risk in an extra mortality classification.

 

11.04  DIVIDEND
PLAN. The dividend plan is premium reduction unless the Plan Administrator
directs the Trustee to the contrary. The Trustee must use all dividends for a
contract to purchase insurance benefits or additional insurance benefits for
the Participant on whose life the insurance company has issued the contract.
Furthermore, the Trustee must arrange, where possible, for all policies issued on
the lives of Participants under the Plan to have the same premium due date and
all ordinary life insurance contracts to contain guaranteed cash values with as
uniform basic options as are possible to obtain. The term “dividends” includes
policy dividends, refunds of premiums and other credits.

 

11.05  INSURANCE
COMPANY NOT A PARTY TO AGREEMENT. No insurance company, solely in its
capacity as an issuing insurance company, is a party to this Plan nor is the
company responsible for its validity.

 

11.06  NO
RESPONSIBILITY FOR OTHERS. Except as required by ERISA, an issuing
insurance company has no responsibility or obligation under the Plan to
Participants or Beneficiaries for any act (unless the insurance company also
serves in such capacities) required of the Employer, the Plan Administrator,
the Trustee, the Custodian or any other service provider to the Plan. No
insurance company, solely in its capacity as an issuing insurance company, need
examine the terms of this Plan. For the purpose of making application to an
insurance company and in the exercise of any right or option contained in any
policy, the insurance company may rely upon the signature of the Trustee and is
held harmless and completely discharged in acting at the direction and
authorization of the Trustee. An insurance company is discharged from all
liability for any amount paid to the Trustee or paid in accordance with the
direction of the Trustee, and is not obliged to see to the distribution or
further application of any moneys the insurance company so pays.

 

11.07  DUTIES
OF INSURANCE COMPANY. Each insurance company must keep such records, make
such identification of contracts, funds and accounts within funds, and supply
such information as may be necessary for the proper administration of the Plan
under which it is carrying insurance benefits.

 

Note: The
provisions of this Article XI are not applicable, and the Plan may not invest
in insurance contracts, if a Custodian signatory to the Adoption Agreement is a
bank which does not have trust powers from its governing state banking
authority.

 

45

 

ARTICLE XII

TOP-HEAVY PROVISIONS

 

12.01  DETERMINATION
OF TOP-HEAVY STATUS. If this Plan is the only qualified plan maintained by
the Employer, the Plan is top-heavy for a Plan Year if the top-heavy ratio as
of the Determination Date exceeds 60%. The top-heavy ratio is a fraction, the
numerator of which is the sum of the Account Balances of all Key Employees as
of the Determination Date and the denominator of which is a similar sum
determined for all Employees.

 

The
Plan Administrator must include in the top-heavy ratio, as part of the Account
Balances, any contribution not made as of the Determination Date but includible
under Code §416 and the applicable Treasury regulations, and distributions made
within the Determination Period. The Plan Administrator must calculate the
top-heavy ratio by disregarding the Account Balance (and distributions, if any,
of the Account Balance) of any Non-Key Employee who was formerly a Key
Employee, and by disregarding the Account Balance (including distributions, if
any, of the Account Balance) of an individual who has not received credit for
at least one Hour of Service with the Employer during the Determination Period.
The Plan Administrator must calculate the top-heavy ratio, including the extent
to which it must take into account distributions, rollovers and transfers, in
accordance with Code §416 and the regulations under that Code section.

 

If
the Employer maintains other qualified plans (including a simplified employee
pension plan), or maintained another such plan now terminated, this Plan is
top-heavy only if it is part of the Required Aggregation Group, and the
top-heavy ratio for the Required Aggregation Group and for the Permissive
Aggregation Group, if any, each exceeds 60%. The Plan Administrator will
calculate the top-heavy ratio in the same manner as required by the first two
paragraphs of this Section 12.01, taking into account all plans within the
Aggregation Group. To the extent the Plan Administrator must take into account
distributions to a Participant, the Plan Administrator must include
distributions from a terminated plan which would have been part of the Required
Aggregation Group if it were in existence on the Determination Date. The Plan
Administrator will calculate the present value of accrued benefits under
defined benefit plans or the account balances under simplified employee pension
plans included within the group in accordance with the terms of those plans,
Code §416 and the regulations under that Code section.

 

If
a Participant in a defined benefit plan is a Non-Key Employee, the Plan
Administrator will determine his/her accrued benefit under the accrual method,
if any, which is applicable uniformly to all defined benefit plans maintained
by the Employer or, if there is no uniform method, in accordance with the
slowest accrual rate permitted under the fractional rule accrual method
described in Code §411(b)(1)(C). If the Employer maintains a defined benefit
plan, the Plan Administrator will use the actuarial assumptions (interest and
mortality only) stated in that plan to calculate the present value of benefits
from that defined benefit plan. If an aggregated plan does not have a valuation
date coinciding with the Determination Date, the Plan Administrator must value
the Account Balance in the aggregated plan as of the most recent valuation date
falling within the twelve-month period ending on the Determination Date, except
as Code §416 and applicable Treasury regulations require for the first and for
the second plan year of a defined benefit plan. The Plan Administrator will
calculate the top-heavy ratio with reference to the Determination Dates that
fall within the same calendar year. The top-heavy provisions of the Plan apply
only for Plan Years in which Code §416 requires application of the top-heavy
rules.

 

12.02  DEFINITIONS.
For purposes of applying the top-heavy provisions of the Plan:

 

(a)  “Compensation” means Compensation as
determined under Section 3.18(b) for Code §415 purposes and includes
Compensation for the entire Plan Year.

 

(b)  “Determination Date” means for any Plan Year,
the Accounting Date of the preceding Plan Year or, in the case of the first
Plan Year of the Plan, the Accounting Date of that Plan Year.

 

(c)  “Determination Period” means the 5-year
period ending on the Determination Date.

 

(d)  “Employer” means the Employer that adopts
this Plan and any Related Employer.

 

(e)  “Key Employee” means, as of any Determination
Date, any Employee or former Employee (or Beneficiary of such Employee) who, at
any time during the Determination Period: (i) has Compensation in excess of 50%
of the dollar amount prescribed in Code §415(b)(1)(A) (relating to defined
benefit plans) and is an officer of the Employer; (ii) has Compensation in
excess of the dollar amount prescribed in Code §415(c)(1)(A) (relating to
defined contribution plans), owns a more than 1⁄2% interest in the Employer and
is one of the Employees owning the ten largest interests in the Employer; (iii)
is a more than 5% owner of the Employer; or (iv) is a more than 1% owner of the
Employer and has Compensation of more than $150,000. The constructive ownership
rules of Code §318 (or the principles of that Code section, in the case of an
unincorporated Employer,) will apply to determine ownership in the Employer.
The number of officers taken into account under clause (i) will not exceed the
greater of 3 or 10% of the total number (after application of the Code §414(q)
exclusions) of Employees, but no more than 50 officers. The Plan Administrator
will make the determination of who is a Key Employee in accordance with Code
§416(i)(1) and the regulations under that Code section.

 

(f)  “Non-Key Employee” means an Employee who does
not meet the definition of Key Employee.

 

(g)  “Participant” means any Employee otherwise
eligible to participate in the Plan but who is not entitled to receive any
allocation under the Plan (or would have received a lesser allocation) for the
Plan Year because of his/her Compensation level or because of his/her failure:
(i) to make elective deferrals under a 401(k) arrangement; (ii) to make
Employee contributions; or (iii) to complete 1,000 Hours of Service or any
other service requirement the 

 

46

 

Employer specifies in its Adoption Agreement as a condition to receive an
allocation except for employment on the last day of the Plan Year.

 

(h)  “Permissive Aggregation Group” means the
Required Aggregation Group plus any other qualified plans maintained by the
Employer, but only if such group would satisfy in the aggregate the
nondiscrimination requirements of Code §401(a)(4) and the coverage requirements
of Code §410. The Plan Administrator will determine the Permissive Aggregation
Group.

 

(i)  “Required Aggregation Group” means: (i) each
qualified plan of the Employer in which at least one Key Employee participates
or participated at any time during the Determination Period (including
terminated plans); and (ii) any other qualified plan of the Employer which
enables a plan described in clause (i) to meet the requirements of Code
§401(a)(4) or of Code §410.

 

12.03  TOP-HEAVY
MINIMUM ALLOCATION. The top-heavy minimum allocation requirement applies to
the Plan only in a Plan Year for which the Plan is top-heavy. If the Plan is
top-heavy in any Plan Year:

 

(a)  Each Non-Key Employee who is a Participant
(as described in Section 12.02(g)) and employed by the Employer on the last day
of the Plan Year will receive a top-heavy minimum allocation for that Plan
Year.

 

(b)  The top-heavy minimum allocation is equal to
the lesser of 3% of the Non-Key Employee’s Compensation for the Plan Year or
the highest contribution rate for the Plan Year made on behalf of any Key
Employee. However, if a defined benefit plan maintained by the Employer which
benefits a Key Employee depends on this Plan to satisfy the nondiscrimination
rules of Code §401(a)(4) or the coverage rules of Code §410 (or another plan
benefiting the Key Employee so depends on such defined benefit plan), the
top-heavy minimum allocation is 3% of the Non-Key Employee’s Compensation
regardless of the contribution rate for the Key Employees.

 

(c)  If, for a Plan Year, there are no allocations
of Employer contributions or of forfeitures for any Key Employee, the Plan does
not require any top-heavy minimum allocation for the Plan Year, unless a
top-heavy minimum allocation applies because of the maintenance by the Employer
of more than one plan.

 

12.04  DETERMINING
TOP-HEAVY CONTRIBUTION RATES. In determining under Section 12.03(b) the
highest contribution rate for any Key Employee, the Plan Administrator takes
into account all Employer contributions (including deferral contributions and
including matching contributions but not including Employer contributions to
Social Security) and forfeitures allocated to the Participant’s Account for the
Plan Year, divided by his/her Compensation for the entire Plan Year. For
purposes of satisfying the Employer’s top-heavy minimum allocation requirement,
the Plan Administrator disregards the elective deferrals and matching
contributions allocated to a Non-Key Employee’s Account in determining the
Non-Key Employee’s contribution rate. However, the Plan Administrator
operationally may include in the contribution rate of a Non-Key Employee any
matching contributions not necessary to satisfy the nondiscrimination
requirements of Code §401(k) or of Code §401(m).

 

To
determine a Participant’s contribution rate, the Plan Administrator must treat
all qualified top-heavy defined contribution plans maintained by the Employer
(or by any Related Employer) as a single plan.

 

12.05  PLAN
WHICH WILL SATISFY TOP-HEAVY. The Plan will satisfy the top-heavy minimum
allocation requirement in accordance with the following requirements:

 

(a)  If the Employer makes the top-heavy minimum
allocation to this Plan, the Employer will make any necessary additional
contribution to this Plan. The Plan Administrator first will allocate the
Employer contributions (and Participant forfeitures, if any) for the Plan Year
in accordance with the provisions of Adoption Agreement Section 3.04. The
Employer then will contribute an additional amount for the Account of any
Participant entitled under Section 12.03 to a top-heavy minimum allocation and
whose contribution rate for the Plan Year, under this Plan and any other plan
aggregated under Section 12.02, is less than the top-heavy minimum allocation.
The additional amount is the amount necessary to increase the Participant’s
contribution rate to the top-heavy minimum allocation. The Plan Administrator
will allocate the additional contribution to the Account of the Participant on
whose behalf the Employer makes the contribution.

 

(b)  If the Employer makes the top-heavy minimum
allocation under another plan, this Plan does not provide the top-heavy minimum
allocation and the Plan Administrator will allocate the annual Employer
contributions (and Participant forfeitures) under the Plan solely in accordance
with the allocation method selected under Adoption Agreement Section 3.04.

 

12.06  TOP-HEAVY
VESTING. If the Plan is top-heavy and the Employer in its Adoption
Agreement does not elect immediate vesting, the Employer must elect a top-heavy
(or modified top-heavy) vesting schedule. The specified top-heavy vesting
schedule applies to the Plan’s first top-heavy Plan Year and to all subsequent
Plan Years, except as the Employer otherwise elects in its Adoption Agreement.
If the Employer elects in its Adoption Agreement to apply the specified
top-heavy vesting schedule only in Plan Years in which the Plan is top-heavy,
any change in the Plan’s vesting schedule resulting from this election is
subject to Section 5.11.

 

47

 

ARTICLE XIII

EXCLUSIVE BENEFIT, AMENDMENT, TERMINATION

 

13.01  EXCLUSIVE
BENEFIT. Except as provided under Article III, the Employer does not have
any beneficial interest in any asset of the Trust Fund and no part of any asset
in the Trust Fund may ever revert to or be repaid to the Employer, either
directly or indirectly; nor, prior to the satisfaction of all liabilities with
respect to the Participants and their Beneficiaries under the Plan, may any
part of the corpus or income of the Trust Fund, or any asset of the Trust Fund,
be (at any time) used for, or diverted to, purposes other than the exclusive
benefit of the Participants or their Beneficiaries and for defraying reasonable
expenses of administering the Plan.

 

However,
if the Commissioner of Internal Revenue, upon the Employer’s application for
initial approval of this Plan, determines the Trust created under the Plan is
not a qualified trust exempt from Federal income tax, then (and only then) the
Trustee, upon written notice from the Employer, will return the Employer’s
contributions (and the earnings thereon) to the Employer. The immediately
preceding sentence applies only if the Employer makes the application for the
determination by the time prescribed by law for filing the Employer’s tax
return for the taxable year in which the Employer adopted the Plan, or by such
later date as the Internal Revenue Service may prescribe. The Trustee must make
the return of the Employer contribution under this Section 13.01 within one
year of a final disposition of the Employer’s request for initial approval of
the Plan. The Employer’s Plan and Trust will terminate upon the Trustee’s
return of the Employer’s contributions.

 

13.02  AMENDMENT
BY EMPLOYER. The Employer, consistent with this Section 13.02 and other
applicable Plan provisions, has the right, at any time:

 

(a)  To amend the elective provisions of the
Adoption Agreement in any manner it deems necessary or advisable;

 

(b)  To add overriding language in the Adoption
Agreement to satisfy Code §§415 or 416 because of the required aggregation of
multiple plans; and

 

(c)  To add model amendments published by the
Revenue Service (the adoption of which the Revenue Service provides will not
cause the Plan to be individually designed).

 

(A)  Amendment Formalities. The Employer must make all Plan amendments in
writing by means of substituted Adoption Agreement pages or by restatement of
the Adoption Agreement. The Employer (and Trustee if the Trustee’s written
consent to the amendment is required under Section 10.03(G)), must execute a
new Adoption Agreement Execution Page each time the Employer amends the Plan.
Each amendment must specify the date as of which the amendment is either
retroactively or prospectively effective. See Section 7.12 for the effect of
certain amendments adopted by the Employer which will result in the Employer’s
Plan losing Prototype Plan status.

 

(B)  Impermissible Amendment/Protected Benefits. An amendment may not authorize or permit any of
the Trust Fund (other than the part required to pay taxes and reasonable
administration expenses) to be used for or diverted to purposes other than for
the exclusive benefit of the Participants or their Beneficiaries or estates. An
amendment may not cause or permit any portion of the Trust Fund to revert to or
become a property of the Employer. Furthermore, the Employer may not make any
amendment which affects the rights, duties or responsibilities of the Trustee
or of the Plan Administrator without the written consent of the affected
Trustee or the Plan Administrator.

 

An
amendment (including the adoption of this Plan as a restatement of an existing
plan) may not decrease a Participant’s Account Balance, except to the extent
permitted under Code §412(c)(8), and except as provided in Treasury
regulations, may not reduce or eliminate Protected Benefits determined
immediately prior to the adoption date (or, if later, the effective date) of
the amendment. An amendment reduces or eliminates Protected Benefits if the
amendment has the effect of either (1) eliminating or reducing an early
retirement benefit or a retirement-type subsidy (as defined in Treasury
regulations), or (2) except as provided by Treasury regulations, eliminating an
optional form of benefit.

 

The
Plan Administrator must disregard an amendment to the extent application of the
amendment would fail to satisfy this Section 13.02(B). If the Plan
Administrator must disregard an amendment because the amendment would violate
clause (1) or clause (2), the Plan Administrator must maintain a schedule of
the early retirement option or other optional forms of benefit the Plan must
continue for the affected Participants.

 

13.03  AMENDMENT
BY PROTOTYPE PLAN SPONSOR. The Prototype Plan Sponsor (or the mass
submitter, as agent of the Prototype Plan Sponsor), without the Employer’s
consent, may amend the Plan and Trust, from time to time, in order to conform
the Plan and Trust to any requirement for qualification of the Plan and Trust
under the Internal Revenue Code. The Prototype Plan Sponsor may not amend the
Plan in any manner which would modify any election made by the Employer under
the Plan without the Employer’s written consent. Furthermore, the Prototype
Plan Sponsor may not amend the Plan in any manner which would violate the
proscriptions of Section 13.02(B). If the Prototype Plan Sponsor does not adopt
the amendments made by the mass submitter, it will no longer be the sponsor of
an identical or minor modifier Prototype Plan of the mass submitter.

 

48

 

13.04  PLAN
TERMINATION OR SUSPENSION. The Employer subject to Section 13.02(B) and by
proper Employer action has the right, at any time, to suspend or discontinue
its contributions under the Plan and thereafter to continue to maintain the
Plan (subject to such suspension or discontinuance) until the Employer
terminates the Plan. The Employer subject to Section 13.02(B) and by proper
Employer action has the right, at any time, to terminate this Plan and the
Trust created and maintained under the Plan. The Plan will terminate upon the
first to occur of the following:

 

(a)  The date terminated by proper action of the
Employer; or

 

(b)  The dissolution or merger of the Employer,
unless a successor makes provision to continue the Plan, in which event the
successor must substitute itself as the Employer under this Plan. Any
termination of the Plan resulting from this Paragraph (b) is not effective
until compliance with any applicable notice requirements under ERISA.

 

13.05  FULL
VESTING ON TERMINATION. Upon either full or partial termination of the
Plan, or, if applicable, upon complete discontinuance of profit sharing plan
contributions to the Plan, an affected Participant’s right to his/her Account
Balance is 100% Vested, irrespective of the Vested percentage which otherwise
would apply under Article V.

 

13.06  POST
TERMINATION PROCEDURE AND DISTRIBUTION.

 

(A)  General Procedure. Upon termination of the Plan, the distribution
provisions of Article VI remain operative, with the following exceptions:

 

(1)          if the Participant’s
Vested Account Balance does not exceed $5,000 (or exceeds $5,000 but is not “immediately
distributable” in accordance with Section 6.01(A)(5)), the Plan Administrator
will direct the Trustee to distribute in cash (subject to Section 10.08) the
Participant’s Vested Account Balance to him/her in lump sum as soon as
administratively practicable after the Plan terminates; and

 

(2)          if the present value of
the Participant’s Vested Account Balance exceeds $5,000 and is immediately
distributable, the Participant or the Beneficiary, may elect to have the
Trustee commence distribution in cash (subject to Section 10.08) of his/her
Vested Account Balance in a lump sum as soon as administratively practicable
after the Plan terminates. If a Participant with consent rights under this
paragraph (2) does not elect an immediate lump sum distribution with spousal
consent if required, to liquidate the Trust, the Plan Administrator will
purchase a deferred annuity contract for each Participant which protects the
Participant’s distribution rights under the Plan.

 

(B)  Profit Sharing Plan. If the Plan is a profit sharing plan, in lieu of
applying Section 13.06(A) and the distribution provisions of Article VI, the
Plan Administrator will direct the Trustee to distribute in cash (subject to
Section 10.08) each Participant’s Vested Account Balance, in lump sum, as soon
as administratively practicable after the termination of the Plan, irrespective
of the Participant’s Vested Account Balance, the Participant’s age and whether
the Participant consents to that distribution. This paragraph does not apply
if: (1) the Plan at termination provides an annuity option which is a Protected
Benefit and which the Employer may not eliminate by Plan amendment; or (2) as
of the period between the Plan termination date and the final distribution of
assets, the Employer maintains any other defined contribution plan (other than
an ESOP). The Employer, in an Addendum to its Adoption Agreement, may elect not
to have this paragraph apply.

 

(C)  Distribution restrictions under Code §401(k).
If the Plan includes a
401(k) arrangement or if the Plan holds transferred assets described in Section
13.07 such that in either case, the distribution restrictions of Sections
14.03(d) and 14.11 apply, a Participant’s restricted balances are distributable
on account of Plan termination, as described in this Section 13.06, only if:
(a) the Employer does not maintain a successor plan and the Plan Administrator
distributes the Participant’s entire Vested Account Balance in a lump sum; or
(b) the Participant otherwise is entitled under the Plan to a distribution of
his/her Vested Account Balance.

 

A
successor plan under clause (b) is a defined contribution plan (other than an
ESOP) maintained by the Employer (or by a Related Employer) at the time of the
termination of the Plan or within the period ending twelve months after the
final distribution of assets. However, a plan is not a successor plan if less
than 2% of the Employees eligible to participate in the terminating Plan are
eligible to participate (beginning 12 months prior to and ending 12 months
after the Plan’s termination date) in the potential successor plan.

 

(D)  “Lost Participants.” If the Plan Administrator is unable to locate any
Participant or Beneficiary whose Account becomes distributable upon Plan
termination, the Plan Administrator will apply Section 9.11 except Section
9.11(B) does not apply.

 

(E)  Continuing Trust Provisions. The Trust will continue until the Trustee in
accordance with the direction of the Plan Administrator has distributed all of
the benefits under the Plan. On each valuation date, the Plan Administrator
will credit any part of a Participant’s Account Balance retained in the Trust
with its share of the Trust net income, gains or losses. Upon termination of
the Plan, the amount, if any, in a suspense account under Article III will
revert to the Employer, subject to the conditions of the Treasury regulations
permitting such a reversion. A resolution or an amendment to discontinue all
future benefit accrual but otherwise to continue maintenance of this Plan, is
not a termination for purposes of this Section 13.06.

 

13.07  MERGER/DIRECT
TRANSFER. The Trustee possesses the specific authority to enter into merger
agreements or direct transfer of assets agreements with the trustees of other
retirement plans described in Code §401(a), including an elective transfer, and
to accept the direct transfer of plan assets, or to transfer plan assets, as a 

 

49

 

party to any such agreement. Except as provided in Section 13.07(A), the
Trustee may not consent to, or be a party to, any merger or consolidation with
another plan, or to a transfer of assets or liabilities to another plan (or
from the other plan to this Plan), unless immediately after the merger,
consolidation or transfer, the surviving plan provides each Participant a
benefit equal to or greater than the benefit each Participant would have
received had the transferring plan terminated immediately before the merger or
the consolidation or the transfer. The Trustee will hold, administer and
distribute the transferred assets as a part of the Trust Fund and the Trustee
must maintain a separate Employer contribution Account for the benefit of the
Employee on whose behalf the Trustee accepted the transfer in order to reflect
the value of the transferred assets.

 

The
Trustee may accept a direct transfer of plan assets on behalf of an Employee
prior to the date the Employee satisfies the Plan’s eligibility conditions. If
the Trustee accepts such a direct transfer of plan assets, the Plan
Administrator and the Trustee must treat the Employee as a limited Participant
as described in Section 4.04.

 

Sections
13.07(A) and (B) are effective for elective transfers made on or following
September 6, 2000. Under an elective transfer which is made pursuant to Section
13.07(A) or (B), the Protected Benefits in the transferring plan are not
required to be preserved under Section 13.02(B), except as provided in Section
13.07(B).

 

(A)  Distributable Event Elective Transfer. The Trustee may consent to, or be a party to, a
merger, consolidation or transfer of assets with another qualified plan in
accordance with this Section 13.07(A).

 

A
transfer between qualified plans is a distributable event elective transfer if:
(1) the Participant has a right to immediate distribution from the transferor
plan; (2) the transfer is voluntary, under a fully informed election by the
Participant; (3) the Participant has an alternative that retains his/her
Protected Benefits (including an option to leave his/her benefit in the
transferor plan, if that plan is not terminating); (4) the transferor plan
satisfies applicable consent and joint and survivor annuity requirements of the
Code; (5) the amount transferred, together with the amount of any
contemporaneous direct rollover of the Participant’s remaining Vested Account
Balance, constitutes the Participant’s entire Vested Account Balance; (6) the
Participant has a 100% Vested interest in the transferred benefit in the
transferee plan; and (7) if the transfer is from this Plan to a defined benefit
plan, the transferee plan provides a benefit for the affected Participant equal
to the benefit (expressed as an annuity payable at normal retirement age)
derived solely with respect to the transferred assets.

 

An
elective transfer under this Section 13.07(A) may occur between qualified plans
of any type. Any direct transfer of assets from a defined benefit plan to this
Plan which does not satisfy the requirements of this Section 13.07(A) renders
the Plan individually-designed. See Section 7.12.

 

Commencing
January 1, 2002, the Trustee may not undertake an elective transfer of a
Participant’s Account under this Section 13.07(A) if the Participant is
eligible to receive an immediate distribution of his/her entire Vested Account
Balance which would consist entirely of an eligible rollover distribution as
described in Section 6.10(D).

 

(B)  Transaction/Employment Change Elective
Transfer. The Trustee may
consent to, or be a party to, a merger, consolidation or transfer of assets
with another qualified defined contribution plan in accordance with this
Section 13.07(B).

 

A
transfer is a transaction or employment change transfer irrespective of whether
the Participant has a right to an immediate distribution from the transferor
plan provided: (1) the transfer satisfies requirements (2) and (3) of Section
13.07(A); (2) the transfer only may occur as between plans described in
applicable Treasury regulations; (3) the transfer must occur in connection with
a merger, asset or stock acquisition, or change in employment resulting in the
participant’s loss of right to additional allocations in the transferor plan or
in such other circumstances as described in applicable Treasury regulations;
(4) the transfer must consist of the Participant’s entire Vested and non-Vested
Account Balance within the transferor plan; and (5) the transferee plan must
protect the QJSA and QPSA benefits (if any) in the transferor plan.

 

(C)  Other Transfers. Any transfer which is not an elective transfer
under Sections 13.07(A) or 13.07(B) and which includes Protected Benefits is
subject to Section 13.02(B). The trustee of the transferee plan in receipt of
assets which are Protected Benefits must preserve the Protected Benefits in
accordance with applicable Treasury regulations. If the transferor plan
contains a 401(k) arrangement with restricted balances as described in Section
14.11, such balances remain subject in the transferee plan to the distribution
restrictions described in Section 14.03(d). Any transfer under this Section
13.07(C) from a defined benefit plan to this Plan must be in the form of the
transfer of a paid up individual annuity contract which guarantees the payment
of benefits in accordance with the transferor plan. Notwithstanding any Plan
language to the contrary, if this Plan is a target benefit or money purchase
pension plan, and the Trustee merges or the Employer converts by amendment the
Plan into another type of defined contribution plan, the Employer operationally
may elect whether to vest immediately the Participants’ Account Balances.

 

50

 

ARTICLE XIV

CODE
SECTION 401(k) AND CODE SECTION 401(m) ARRANGEMENTS

 

14.01  APPLICATION.
This Article XIV applies to the Plan only if the Employer is maintaining its
Plan under a Code §401(k) Adoption Agreement.

 

14.02  401(k)
ARRANGEMENT. The Employer under Article III of its Adoption Agreement will
elect the terms of the 401(k) arrangement as described in Code §401(k)(2), if
any, under the Plan. If the Plan is a Standardized Plan, the 401(k) arrangement
must be a salary reduction arrangement. If the Plan is a Nonstandardized Plan,
the 401(k) arrangement may be a salary reduction arrangement or a cash or
deferred arrangement, or both.

 

(A)  Salary Reduction Arrangement. If the Employer in its Adoption Agreement Section
3.01 elects a salary reduction arrangement, a Participant (or an Employee in
anticipation of becoming a Participant) may file a salary reduction agreement
with the Plan Administrator. The salary reduction agreement may not be
effective earlier than the following date which occurs last: (1) the
Participant’s Plan Entry Date (or, in the case of a re-employed Employee,
his/her re-participation date under Article II); (2) the execution date of the
Participant’s salary reduction agreement; (3) the date the Employer adopts the
401(k) arrangement by executing the Adoption Agreement; or (4) the effective
date of the 401(k) arrangement, as specified in the Adoption Agreement.

 

A
salary reduction agreement must specify the dollar amount of Compensation or
percentage of Compensation the Participant wishes to defer. The salary
reduction agreement will apply only to Compensation which becomes currently
available to the Participant after the effective date of the salary reduction
agreement. The Employer will apply a salary reduction election to the
Participant’s Compensation as determined under Section 1.07 (and to increases
in such Compensation) unless the Participant elects in his/her salary reduction
agreement to limit the reduction to certain Compensation. The Plan
Administrator in the Plan’s salary reduction agreement form, subject to the
Plan terms and applicable Revenue Service guidance, will specify additional
rules and restrictions applicable to a Participant’s salary reduction
agreement.

 

(B)  Cash or Deferred Arrangement. If the Employer in its Adoption Agreement Section
3.02 elects a cash or deferred arrangement, a Participant may elect to make a
cash election against his/her proportionate share of the Employer’s cash or
deferred contribution, in accordance with the Employer’s Adoption Agreement
elections. A Participant’s proportionate share of the Employer’s cash or
deferred contribution is the percentage of the total cash or deferred
contribution which bears the same ratio that the Participant’s Compensation for
the Plan Year bears to the total Compensation of all Participants for the Plan
Year. For purposes of determining each Participant’s proportionate share of the
cash or deferred contribution, a Participant’s Compensation is his/her
Compensation as determined under Section 1.07, excluding any effect the
proportionate share may have on the Participant’s Compensation for the Plan
Year. The Plan Administrator will determine the proportionate share prior to
the Employer’s actual contribution to the Trust, to provide the Participants
the opportunity to file cash elections. The Employer will pay directly to the
Participant the portion of his/her proportionate share the Participant has
elected to receive in cash.

 

(C)  Negative Election. The Employer in its Adoption Agreement may elect
to apply prospectively to its Plan the negative election provisions of this
Section 14.02(C). Under a negative election, the Employer automatically will
reduce the Compensation of each Participant who is not deferring an amount at
least equal to the negative election amount, by the required election amount,
except those Participants who timely make a contrary election under Section
14.02(C)(1). Participants deferring an amount equal to or greater than the
negative election amount are not subject to the Plan’s negative election
provisions. Amounts deferred under negative election are treated as elective
deferrals for all purposes under the Plan. An Employer in its Adoption
Agreement must elect whether the negative election applies to all Participants
as of the effective date of the negative election or only to Employees whose
Plan Entry Date is on or following the effective date of the negative election.

 

(1)  Participant’s contrary
election. A Participant may at any time elect not to defer any
Compensation or to defer an amount which is less than the negative election
amount (“contrary election”). A Participant’s contrary election generally is
effective as of the first payroll period for the month which follows the
Participant’s contrary election. However, a Participant may make a contrary
election which is effective: (1) for the first payroll period in which he/she
becomes a Participant if the Participant makes a contrary election within a
reasonable period following the Participant’s Entry Date and before the
Compensation to which the election applies becomes currently available; or (2)
for the first payroll period following the effective date of the Employer’s
adoption of the negative election, if the Participant makes contrary election
not later than the effective date of the negative election. A Participant’s
contrary election continues in effect until the Participant subsequently
changes his/her Salary Reduction Agreement.

 

(2)  Negative election notice. If
the Employer in its Adoption Agreement adopts the negative election provision,
the Plan Administrator must provide a notice to each Eligible Employee which
explains the effect of the negative election and a Participant’s right to make
a contrary election, including the procedure and timing applicable to the
contrary election. The Plan Administrator must provide the notice to an
Eligible Employee a reasonable period prior to that Employee’s commencement of
participation in the Plan subject to the negative election. A Plan
Administrator also must notify annually those Participants then subject to the
negative election of the existing negative election deferral percentage and the
Participant’s right to make a contrary election, including the procedure and
timing applicable to the contrary election.

 

(D)  Safe Harbor 401(k) Plan. The Employer in its Adoption Agreement may elect
to apply to its Plan the safe harbor provisions of this Section 14.02(D).
Except as otherwise provided in this Plan, in the Code or in other applicable
guidance, an Employer must elect the safe harbor plan provisions of this
Section 14.02(D) and must 

 

51

 

satisfy
the applicable notice requirements prior to the beginning of the Plan Year to
which the safe harbor provisions apply. In addition, except as otherwise
indicated, the electing Employer must apply the safe harbor provisions for the
entire safe harbor Plan Year, including any short Plan Year. The provisions of
this Section 14.02(D) apply to an electing Employer notwithstanding any
contrary provision of the Plan and all other remaining Plan terms continue to
apply to the Employer’s safe harbor plan. An Employer which elects and operationally
satisfies the safe harbor provisions of this Section 14.02(D) is not subject to
the nondiscrimination provisions of Section 14.08 (ADP test). An electing
Employer which provides additional matching contributions as described in
Section 14.02(D)(3) is subject to the nondiscrimination provisions of Section
14.09 (ACP test), unless the additional matching contributions satisfy the ACP
test safe harbor described in Section 14.02(D)(3).

 

(1)  Safe harbor -
Compensation. For purposes of this Section 14.02(D), Compensation is
limited as described in Section 1.07(E) and for purposes of allocating the
Employer’s safe harbor contribution and safe harbor matching contribution, the
Employer must elect under its Adoption Agreement a nondiscriminatory definition
of Compensation as described in Section 1.07(F). An Employer in its Adoption
Agreement also may elect to limit the amount of Compensation which is subject
to deferral to any reasonable definition which: (a) permits a Participant to
receive the maximum matching contribution, if any, available under the Plan; or
(b) limits deferrals under the Plan to a whole percentage or dollar amount.

 

(2)  Safe Harbor
Contributions/ADP test safe harbor. An Employer which elects under
this Section 14.02(D) to apply the safe harbor provisions, must make a
contribution to the Plan which will satisfy the ADP test safe harbor (“safe
harbor contribution”). The Employer in its Adoption Agreement must elect
whether the Employer will make its safe harbor contribution in the form of: (a)
a safe harbor nonelective contribution; (b) a basic matching contribution; or
(c) an enhanced matching contribution. A safe harbor nonelective contribution
is a fixed nonelective contribution in an amount the Employer elects in its
Adoption Agreement and must equal at least 3% of each Participant’s
Compensation. A basic matching contribution is a fixed matching contribution
equal to 100% of a Participant’s elective deferrals which do not exceed 3% of
Compensation, plus 50% of elective deferrals which exceed 3%, but which do not
exceed 5% of Compensation. An enhanced matching contribution is a fixed
matching contribution made in accordance with any formula the Employer elects
in its Adoption Agreement under which, at any rate of elective deferrals, a Participant
receives a matching contribution which is at least equal to the match the
Participant would receive under the basic matching contribution formula and
under which the rate of match does not increase as the rate of deferrals
increases. Under a basic or enhanced safe harbor match, a Highly Compensated
Employee may not receive a greater rate of match than any Nonhighly Compensated
Employee. The Employer in its Adoption Agreement must elect the applicable time
period for computing the Employer’s safe harbor basic or enhanced matching
contributions. The Plan Administrator must allocate the Employer’s safe harbor
contribution without regard to the Section 3.06 allocation conditions, but the
Plan Administrator will not allocate a safe harbor contribution where the
allocation would exceed a Participant’s Code §§415 or 402(g) limitation or
where the Participant is suspended from making deferrals under Section
14.11(A)(1). The Plan Administrator must allocate the safe harbor contribution
to all Participants unless the Employer in an Addendum to its Adoption
Agreement elects to limit the safe harbor allocation to Nonhighly Compensated
Employees. A Participant’s Account Balance attributable to safe harbor
contributions at all times 100% Vested and subject to the distribution
restrictions described in Section 14.03(d). An Employer’s safe harbor
contribution is not subject to nondiscrimination testing under Section 14.08
(ADP test) and if the safe harbor contribution is in the form of a basic
matching contribution, it is not subject to nondiscrimination testing under
Section 14.09 (ACP test). The Employer in its Adoption Agreement must elect
whether to satisfy the ACP test safe harbor Section 14.02(D)(3)(a) amount
limitation with respect to the Employer’s enhanced matching contributions or to
test, using current year testing, its enhanced matching contributions under
Section 14.09 (ACP test).

 

An
Employer electing Section 14.02(D) which in its Adoption Agreement also elects
to apply permitted disparity in allocating the Employer’s nonelective
contributions, may not include within the permitted disparity formula
allocation, any of the Employer’s safe harbor contributions. An Employer in its
Adoption Agreement may elect to make the safe harbor contribution to another
defined contribution plan maintained by the Employer provided: (i) the Employer
maintains its safe harbor 401(k) Plan using a Nonstandardized 401(k) Adoption
Agreement; or (ii) the Employer makes its safe harbor contribution to another
defined contribution plan paired with the Employer’s safe harbor 401(k) Plan.

 

(3)  Additional Matching
Contributions/ACP test safe harbor. An Employer which satisfies the
ADP test safe harbor under Section 14.02(D)(2), in its Adoption Agreement may
elect to make matching contributions to the Plan which are in addition to the
Employer’s safe harbor contributions and which the Employer does not use to
satisfy the ADP test safe harbor (“additional matching contributions”). The
Employer in its Adoption Agreement must elect whether to subject the additional
matching contributions to the ACP test safe harbor requirements of this Section
14.02(D)(3), or for the Plan Administrator to test, using current year testing,
the additional matching contributions for nondiscrimination under Section 14.09
(ACP test). Under the ACP test safe harbor: (a) the Employer may not make
matching contributions with respect to a Participant’s deferral contributions
which exceed 6% of Plan Year Compensation; (b) the amount of any discretionary
matching contribution allocated to any Participant in Plan Years commencing
after 1999 may not exceed 4% of the Participant’s Plan Year Compensation; (c)
the rate of matching contributions may not increase as the rate of deferrals
increases; and (d) subject to application of any Section 3.06 allocation
conditions, a Highly Compensated Employee may not receive a greater rate of
match than any Nonhighly Compensated Employee. The Employer must elect in its
Adoption Agreement the vesting schedule, allocation conditions and distribution
provisions applicable to the Employer’s additional matching contributions
described in this Section 14.02(D)(3). If the Employer in its Adoption
Agreement has elected to permit Employee contributions under the Plan: (i) any
Employee 

 

52

 

contributions do not satisfy the ACP test safe harbor and the Plan
Administrator must test the Employee contributions under Section 14.09 (ACP
test) using current year testing; and (ii) if the Employer in its Adoption Agreement
elects to match the Employee contributions, the Plan Administrator in applying
the 6% amount limit in clause (a) must aggregate a Participant’s deferral
contribution and Employee contributions which are subject to the 6% limit.

 

(4)  Safe Harbor notice. The
Plan Administrator annually must provide a safe harbor notice to each
Participant a reasonable period prior to each Plan Year for which the Employer
in its Adoption Agreement has elected to apply the safe harbor provisions. For
this purpose, the Plan Administrator is deemed to provide timely notice if the
Plan Administrator provides the safe harbor notice at least 30 days and not
more than 90 days prior to the beginning of the safe harbor Plan Year. The safe
harbor notice must provide comprehensive information regarding the Participants’
rights and obligations under the Plan and must be written in a manner
calculated to be understood by the average Participant. If an Employee becomes
eligible to participate in the Plan after the Plan Administrator has provided
the annual safe harbor notice, the Plan Administrator must provide the safe
harbor notice no later than the Employee’s Plan Entry Date. A Participant may
make or modify a salary reduction agreement under the Employer’s safe harbor
401(k) Plan for 30 days following receipt of the safe harbor notice, or if
greater, for the period the Plan Administrator specifies in the salary
reduction agreement.

 

(5)  Mid-year changes in safe
harbor status. The Employer may amend its 401(k) Plan during any Plan
Year to become a safe harbor plan under this Section 14.02(D) for that Plan
Year, provided: (a) the Plan then is using current year testing; (b) the
Employer amends the Plan to add the safe harbor provisions not later than 30
days prior to the end of the Plan Year and to apply the safe harbor provisions
for the entire Plan Year; (c) the Employer elects to satisfy the safe harbor
contribution requirement using the safe harbor nonelective contribution; and
(d) the Plan Administrator provides a notice to Participants prior to the
beginning of the Plan Year for which the safe harbor amendment may become
effective, that the Employer later may amend the Plan to a safe harbor plan for
that Plan Year using the safe harbor nonelective contribution and if the Employer
so amends the Plan, the Plan Administrator will provide a supplemental notice
to Participants at least 30 days prior to the end of that Plan Year informing
Participants of the amendment. The Plan Administrator then must timely provide
any supplemental notice required under this Section 14.02(D)(5). Except as
otherwise specified, the Participant notices described in this Section
14.02(D)(5) also must satisfy the requirements applicable to safe harbor
notices under Section 14.02(D)(4).

 

The
Employer may amend its safe harbor 401(k) Plan during a Plan Year to reduce or
eliminate prospectively, any safe harbor contribution which is a basic matching
or enhanced matching contribution (under Section 14.02(D)(2)) provided: (i) the
Plan Administrator provides a notice to the Participants which explains the
effect of the amendment, specifies the amendment’s effective date and informs
Participants they will have a reasonable opportunity to modify their salary
reduction agreements, and if applicable, Employee contributions; (ii)
Participants have a reasonable opportunity and period prior to the effective
date of the amendment to modify their salary reduction agreements, and if
applicable, Employee contributions; and (iii) the amendment is not effective
earlier than the later of: (a) 30 days after the Plan Administrator gives
notice of the amendment; or (b) the date the Employer adopts the amendment. An
Employer which amends its safe harbor Plan to eliminate or reduce the safe
harbor matching contribution under this Section 14.02(D)(5), or which
terminates the Plan under Section 13.04 effective during the Plan Year, must
continue to apply all of the safe harbor requirements of this Section 14.02(D)
until the amendment or termination becomes effective and also must apply for
the entire Plan Year, using current year testing, the nondiscrimination test
under Section 14.08 (ADP test), and if applicable, the nondiscrimination test
under Section 14.09 (ACP test).

 

An
Employer maintaining a profit sharing plan, stock bonus plan or pre-ERISA money
purchase pension plan may during a Plan Year amend prospectively its Plan to
become a safe harbor 401(k) plan provided: (a) the Employer’s Plan is not a
successor plan as described in Notice 98-1 or any subsequent applicable
guidance; (b) the 401(k) arrangement is in effect for at least 3 months during
the Plan Year; (c) the Plan Administrator provides the safe harbor notice
described in Section 14.02(D)(4) a reasonable time prior to and not later than
the effective date of the amendment; and (d) the Plan satisfies commencing on
the effective date of the amendment, all of the safe harbor requirements of
this Section 14.02(D).

 

(E)  SIMPLE 401(k) Plan. The Employer in its Standardized Code §401(k)
Adoption Agreement may elect to apply prospectively to its Plan the SIMPLE
401(k) provisions of this Section 14.02(E) if: (1) the Plan Year is the
calendar year; (2) the Employer (including Related Employers under Section
1.26) has no more than 100 Employees who received Compensation of at least $5,000
in the immediately preceding calendar year; and (3) the Employer does not
maintain any other plan as described in Code §219(g)(5), with respect to which
contributions were made or benefits were accrued for Service by an eligible
Employee in the Plan Year to which the SIMPLE 401(k) provisions apply. If an
electing Employer fails for any subsequent calendar year to satisfy all of the
foregoing requirements, including where the Employer is involved in an
acquisition, disposition or similar transaction under which the Employer
satisfies Code §410(b)(6)(C)(1), the Employer remains eligible to maintain the
SIMPLE 401(k) Plan for two additional calendar years following the last year in
which the Employer satisfied the requirements. The provisions of this Section
14.02(E) apply to an electing Employer notwithstanding any contrary provision
in the Plan.

 

(1)  SIMPLE – Compensation. For
purposes of this Section 14.02(E), Compensation is limited as described in
Section 1.07(E) and: (a) in the case of an Employee, means W-2 wages but
increased by the Employee’s elective deferrals under a 401(k) arrangement,
SIMPLE IRA, SARSEP or 403(b) annuity; and (b) in the case of a Self Employed
Individual, means Earned Income determined without regard to contributions made
to this Plan.

 

53

 

(2)  Participant deferral
contributions. Each eligible Employee may enter into a salary
reduction agreement to make deferral contributions into the SIMPLE 401(k) Plan
in an amount not exceeding $6,000 per calendar year, or such other amount as in
effect under Code §408(p)(2)(E). A Participant may elect to make deferral
contributions or modify a salary reduction agreement at any time in accordance
with the Plan Administrator’s SIMPLE 401(k) salary reduction agreement form,
but must be provided at least 60 days prior to the beginning of each SIMPLE
Plan Year or commencement of participation for this purpose. A Participant also
may at any time terminate prospectively, his/her salary reduction agreement
applicable to the Employer’s SIMPLE 401(k) Plan.

 

(3)  Employer SIMPLE 401(k)
contributions. An Employer which elects under this Section 14.02(E)
to apply the SIMPLE 401(k) provisions, annually must make a SIMPLE 401(k)
contribution to the Plan as described in this Section 14.02(E)(3). The Employer
operationally must elect whether the Employer will contribute: (1) a matching
contribution equal to each Participant’s deferral contributions but not
exceeding 3% of Plan Year Compensation or such lower percentage as the Employer
may elect under Code §408(p)(2)(C)(ii)(II); or (2) a nonelective contribution
equal to 2% of Plan Year Compensation for each Participant whose Compensation
is at least $5,000. The Employer in its Adoption Agreement may not elect to apply
any Section 3.06 allocation conditions to the Plan Administrator’s allocation
of Employer SIMPLE contributions.

 

(4)  SIMPLE 401(k) notice. The
Plan Administrator must provide notice to each Participant a reasonable period
of time before the 60th day prior to the beginning of each SIMPLE 401(k) Plan
Year, describing the Participant’s deferral election rights and the Employer’s
matching or nonelective contributions which the Employer will make for the Plan
Year described in the notice.

 

(5)  Application of remaining
Plan provisions. All contributions to the SIMPLE 401(k) Plan are
Annual Additions subject to the limitations set forth in Article III. No
contributions other than those described in this Section 14.02(E) or rollover
contributions described in Section 4.04 may be made to the SIMPLE 401(k) Plan.
All contributions to the SIMPLE 401(k) Plan are 100% Vested at all times and in
the event of a conversion of a non SIMPLE Plan into a SIMPLE 401(k) Plan, all
Account Balances in existence on the first day of the Plan Year to which the
SIMPLE 401(k) provisions apply, become 100% Vested. A SIMPLE 401(k) Plan is not
subject to nondiscrimination testing under Section 14.08 (ADP test) or Section
14.09 (ACP test) of the Plan and is not subject to the top heavy provisions of
Article XII. Except as otherwise described in this Section 14.03(E), if an
Employer has elected in its Adoption Agreement to apply the SIMPLE 401(k)
provisions of this Section 14.03(E), the Plan Administrator will apply the
remaining Plan provisions to Employer’s Plan.

 

(F)  Election not to participate. A Participant’s or Employee’s election not to
participate, pursuant to Section 2.06, includes his/her right to enter into a
salary reduction agreement or to share in the allocation of a cash or deferred
contribution.

 

14.03  DEFINITIONS.
For purposes of this Article XIV:

 

(a)  “Compensation” means, except as otherwise
provided in this Article XIV, Compensation as defined for nondiscrimination
purposes in Section 1.07(F).

 

(b)  “Current year testing” means for purposes of
the ADP test described in Section 14.08 and the ACP test described in Section
14.09, the use of data from the testing year in determining the ADP or ADP for
the Nonhighly Compensated Group.

 

(c)  “Deferral contributions” are salary reduction
contributions and cash or deferred contributions the Employer contributes to
the Trust on behalf of an eligible Employee, irrespective of whether, in the
case of cash or deferred contributions, the contribution is at the election of
the Employee. For salary reduction contributions, the terms “deferral
contributions” and “elective deferrals” have the same meaning.

 

(d)  “Distribution restrictions” means the
Employee may not receive a distribution of the restricted balances described in
Section 14.11 (nor earnings on those contributions) except in the event of: (1)
the Participant’s death, Disability, Separation from Service (which for
purposes of this Section 14.03(d), means as the Plan Administrator determines
under applicable Revenue Service guidance, including the “same desk” rule and
Revenue Ruling 2000-27 with respect to certain asset sale transactions) or
attainment of age 591⁄2, (2) financial hardship satisfying Section 14.11(A), (3)
Plan termination, without establishment of a successor defined contribution
plan (other than an ESOP), (4) a sale by a corporate Employer of substantially
all of the assets (within the meaning of Code §409(d)(2)) used in a trade or
business of the Employer, to another corporation, but only to an Employee who
continues employment with the corporation acquiring those assets, or (5) a sale
by a corporate Employer of its interest in a subsidiary (within the meaning of
Code §409(d)(3)), but only to an Employee who continues employment with the
subsidiary. A distribution described in clauses (3), (4) or (5) must be a lump
sum distribution, and otherwise must satisfy Code §401(k)(10).

 

(e)  “Elective deferrals” are all salary reduction
contributions and that portion of any cash or deferred contribution which the
Employer contributes to the Plan at the election of an eligible Employee. Any
portion of a cash or deferred contribution contributed to the Trust because of
the Employee’s failure to make a cash election is an elective deferral.
However, any portion of a cash or deferred contribution over which the Employee
does not have a cash election is not an elective deferral. Elective deferrals
do not include amounts which have become currently available to the Employee
prior to the election nor amounts designated as an Employee contribution at the
time of deferral or contribution. Elective deferrals are 100% vested at all
times.

 

(f)  “Eligible Employee” means, for purposes of
the ADP test described in Section 14.08, an Employee who is eligible to enter
into a salary reduction 

 

54

 

agreement for all or any
portion of the Plan Year, irrespective of whether he/she actually enters into
such an agreement, and a Participant who is eligible for an allocation of the
Employer’s cash or deferred contribution for the Plan Year. For purposes of the
ACP test described in Section 14.09, an eligible Employee is a Participant who
is eligible to receive an allocation of matching contributions (or would be
eligible if he/she made the type of contributions necessary to receive an
allocation of matching contributions) and a Participant who is eligible to make
Employee contributions, irrespective of whether he/she actually makes Employee
contributions. An Employee continues to be an eligible Employee during a period
the Plan suspends the Employee’s right to make elective deferrals or Employee
contributions following a hardship distribution.

 

(g)  “Employee contributions” are nondeductible
contributions made by a Participant and designated, at the time of contribution,
as an Employee contribution. Elective deferrals and deferral contributions are
not Employee contributions. Employee contributions are subject to Article IV.

 

(h)  “Highly Compensated Employee” means an
eligible Employee who satisfies the definition in Section 1.14 of the Plan.

 

(i)  “Highly Compensated Group” means the group of
eligible Employees who are Highly Compensated Employees for the Plan Year.

 

(j)  “Matching contributions” are contributions
made by the Employer on account of elective deferrals under a 401(k)
arrangement or on account of Employee contributions. Matching contributions
also include Participant forfeitures allocated on account of such elective
deferrals or Employee contributions.

 

(k)  “Nonelective contributions” are contributions
made by the Employer which are not subject to a deferral election by an
Employee and which are not matching contributions.

 

(l)  “Nonhighly Compensated Employee” means an
eligible Employee who is not a Highly Compensated Employee.

 

(m)  “Nonhighly Compensated Group” means the group
of eligible Employees who are Nonhighly Compensated Employees for the Plan
Year.

 

(n)  “Prior year testing” means for purposes of
the ADP test described in Section 14.08 and the ACP test described in Section
14.09, the use of data from the Plan Year immediately prior to the testing year
in determining the ADP or ACP for the Nonhighly Compensated Group.

 

(o)  “Qualified matching contributions” are
matching contributions which are 100% Vested at all times and which are subject
to the distribution restrictions described in Section 14.03(d). Matching
contributions are not 100% Vested at all times if the Employee has a 100%
Vested interest because of his/her Years of Service taken into account under a
vesting schedule. Any matching contributions allocated to a Participant’s
qualified matching contributions Account under the Plan automatically satisfy
and are subject to the definition of qualified matching contributions.

 

(p)  “Qualified nonelective contributions” are
nonelective contributions which are 100% Vested at all times and which are
subject to the distribution restrictions described in Section 14.03(d).
Nonelective contributions are not 100% Vested at all times if the Employee has
a 100% Vested interest because of his/her Years of Service taken into account
under a vesting schedule. Any nonelective contributions allocated to a
Participant’s qualified nonelective contributions Account under the Plan
automatically satisfy and are subject to the definition of qualified nonelective
contributions.

 

(q)  “Regular matching contributions” are matching
contributions which are not qualified matching contributions.

 

(r)  “Safe harbor contributions” are Employer
nonelective or matching contributions which the Plan Administrator applies to
satisfy the ADP test safe harbor under Code §401(k)(12)(B) or (C) and which are
100% Vested at all times and subject to the distribution restrictions described
in Section 14.03(d). Safe harbor contributions are not 100% Vested at all times
if the Employee has a 100% Vested interest because of his/her Years of Service
taken into account under a vesting schedule. Any nonelective contributions
allocated to a Participant’s safe harbor contributions Account, automatically
satisfy and are subject to the definition of safe harbor contributions.

 

(s)  “Salary reduction agreement” is a written
election by a Participant to make salary reduction contributions as described
in Section 14.02(A).

 

(t)  “Salary reduction contributions” mean
Employer contributions elected by a Participant to be made from the Participant’s
Compensation pursuant to a salary reduction agreement and which the Plan
Administrator must allocate to the electing Participant’s Account.

 

(u)  “Testing year” means for purposes of the ADP
test described in Section 14.08 and the ACP test described in Section 14.09,
the Plan Year for which the ADP or ACP test is being performed.

 

14.04  MATCHING
CONTRIBUTIONS/ EMPLOYEE CONTRIBUTIONS. The Employer in Adoption Agreement
Section 3.01 may elect to provide matching contributions. The Employer in
Adoption Agreement Section 4.02 also may elect to permit a Participant to make
Employee contributions.

 

14.05  DEFERRAL
DEPOSIT TIMING/EMPLOYER CONTRIBUTION STATUS. The Employer must make salary
reduction contributions to the Trust after withholding the corresponding
Compensation from the Participant at the earliest date on which the
contributions can reasonably be segregated from the Employer’s general assets.
Furthermore, the Employer must make to the Trust salary reduction
contributions, cash or deferred contributions, matching contributions
(including qualified matching 

 

55

 

contributions), qualified nonelective contributions, safe harbor
contributions and SIMPLE contributions no later than the time prescribed by the
Code or ERISA. Salary reduction contributions and cash or deferred
contributions are Employer contributions for all purposes under this Plan,
except to the extent the Code prohibits the use of these contributions to
satisfy the qualification requirements of the Code.

 

14.06  SPECIAL
ACCOUNTING AND ALLOCATION PROVISIONS. To make allocations under the Plan,
the Plan Administrator must establish for each Participant, consistent with the
Employer’s elections under its Adoption Agreement, a deferral contributions
Account, a nonelective contributions Account, a qualified matching
contributions Account, a regular matching contributions Account, a qualified
nonelective contributions Account, a safe harbor contributions Account and a
SIMPLE contributions account.

 

(A)  Deferral contributions. The Plan Administrator will allocate to each
Participant’s deferral contributions Account the amount of deferral
contributions the Employer makes to the Trust on behalf of the Participant. The
Plan Administrator will make this allocation as of the last day of each Plan
Year or more frequently as it may determine to be appropriate and consistent
with the Plan terms, including those providing for allocation of net income,
gain or loss.

 

(B)  Matching contributions. The Plan Administrator will allocate the Employer’s
matching contributions as of the last day of each Plan Year or more frequently
as the Plan Administrator may determine to be appropriate and consistent with
the Plan terms, including those providing for allocation of net income, gain or
loss. The Plan Administrator may not allocate any fixed or discretionary
matching contributions with respect to deferral contributions that are excess
deferrals under Section 14.07. For this purpose: (a) excess deferrals relate
first to deferral contributions for the Plan Year not otherwise eligible for a
matching contribution; and (b) if the Plan Year is not a calendar year, the
excess deferrals for a Plan Year are the last elective deferrals made for a
calendar year. The Plan Administrator may not allocate a matching contribution
to a Participant’s Account to the extent the matching contribution exceeds the
Participant’s Annual Additions limitation in Part 2 of Article III. The
provisions of Section 3.05 govern the treatment of any matching contribution
the Plan Administrator allocates contrary to this Section 14.06(B), and the
Plan Administrator will compute a Participant’s ACP under Section 14.09 by
disregarding the forfeiture.

 

(1)  Fixed match. To
the extent the Employer makes matching contributions under a fixed matching
contribution formula set forth in the Employer’s Adoption Agreement, the Plan
Administrator will allocate the matching contribution to the Account of the
Participant on whose behalf the Employer makes that contribution. A fixed
matching contribution formula is a formula under which the Employer contributes
a specified percentage or dollar amount on behalf of a Participant based on
that Participant’s deferral contributions or Employee contributions eligible
for a match. The Employer may contribute on a Participant’s behalf under a
specific matching contribution formula only if the Participant satisfies the
allocation conditions for matching contributions, if any, the Employer elects
in Adoption Agreement Section 3.06. The Employer in its Adoption Agreement may
elect whether the Plan Administrator will allocate a fixed matching
contribution as a qualified matching contribution or as a regular matching
contribution.

 

(2)  Discretionary match. To
the extent the Employer makes matching contributions under a discretionary
formula, the Plan Administrator will allocate the discretionary matching
contributions to the Account of each Participant who satisfies the allocation
conditions, if any, for matching contributions the Employer elects in Adoption
Agreement Section 3.06. The allocation of discretionary matching contributions
to a Participant’s Account is in the same proportion that each Participant’s
deferral contributions bear to the total deferral contributions of all
Participants. If the discretionary formula is a tiered formula, the Plan
Administrator will make this allocation separately with respect to each tier of
deferral contributions, allocating in such manner the amount of the matching
contributions made with respect to that tier. The Employer operationally may
direct the Plan Administrator to allocate any discretionary match as a regular
matching contribution or as a qualified matching contribution.

 

(3)  Match on deferrals and
Employee contributions. If the matching contribution formula applies
both to deferral contributions and to Employee contributions, the matching
contributions apply first to deferral contributions.

 

(C)  Qualified nonelective contributions. If the Employer operationally designates a
nonelective contribution to be a qualified nonelective contribution for the
Plan Year, the Plan Administrator will allocate that qualified nonelective
contribution to the qualified nonelective contributions Account of each Participant
eligible for an allocation of that designated contribution, as the Employer
elects in Adoption Agreement Section 3.04.

 

(D)  Nonelective contributions. If the Employer makes a nonelective contribution
for the Plan Year which the Employer does not designate as a qualified
nonelective contribution, the Plan Administrator will allocate the nonelective
contribution in accordance with Adoption Agreement Section 3.04. For purposes
of the nondiscrimination tests described in Sections 14.08 (ADP test), 14.09
(ACP test) and 14.10 (multiple use limitation), the Plan Administrator may
treat nonelective contributions allocated under this Section 14.06(D) as
qualified nonelective contributions, if the contributions otherwise satisfy the
definition of qualified nonelective contributions. The Employer, to facilitate
the Plan Administrator’s correction of test failures under Sections 14.08,
14.09 and 14.10, also may make qualified nonelective contributions to the Plan
irrespective of whether the Employer in its Adoption Agreement has elected to
provide nonelective contributions.

 

(E)  Safe harbor contributions. If the Employer elects under Section 14.02(D) to
apply the safe harbor provisions to the Plan, the Employer will allocate the
safe harbor 

 

56

 

contributions
to the safe harbor contributions Account of each Participant unless the
Employer in an Addendum to its Adoption Agreement elects to limit safe harbor
allocations to Nonhighly Compensated Employees.

 

(F)  SIMPLE 401(k) Plan contributions. If the Employer elects under Section 14.02(E) to
apply the SIMPLE 401(k) provisions to the Plan, the Employer will allocate the
SIMPLE contributions to the SIMPLE contributions Account of Participants
eligible to receive an allocation of the Employer’s SIMPLE contribution
(including Participants who make deferral contributions), as specified in
Section 14.02(E).

 

14.07  ANNUAL
ELECTIVE DEFERRAL LIMITATION.

 

(A)  Annual Elective Deferral Limitation. An Employee’s elective deferrals for a calendar
year may not exceed the Code §402(g) limitation (“402(g) limitation”). The
402(g) limitation is the greater of $7,000 or the adjusted amount determined by
the Secretary of the Treasury. If, pursuant to a salary reduction agreement or
pursuant to a cash or deferral election, the Employer determines the Employee’s
elective deferrals to the Plan for a calendar year would exceed the 402(g)
limitation, the Employer will suspend the Employee’s salary reduction
agreement, if any, until the following January 1 and pay in cash the portion of
a deferral election which would result in the Employee’s elective deferrals for
the calendar year exceeding the 402(g) limitation. If the Plan Administrator
determines an Employee’s elective deferrals already contributed to the Plan for
a calendar year exceed the 402(g) limitation, the Plan Administrator will
distribute the amount in excess of the 402(g) limitation (the “excess deferral”),
as adjusted for allocable income under Section 14.07(C), no later than April 15
of the following calendar year. If the Plan Administrator distributes the
excess deferral by the appropriate April 15, the excess deferral is not an
Annual Addition under Article III, and the Plan Administrator may make the
distribution irrespective of any other provision under this Plan or under the
Code. The Plan Administrator will reduce the amount of excess deferrals for a
calendar year distributable to the Employee by the amount of excess
contributions (as determined in Section 14.08), if any, previously distributed
to the Employee for the Plan Year beginning in that calendar year. Elective
deferrals distributed to an Employee as excess Annual Additions in accordance
with Article III are not taken into account under the Employee’s 402(g) limitation.

 

(B)  More than One Plan. If an Employee participates in another plan
subject to the 402(g) limitation under which he/she makes elective deferrals
pursuant to a 401(k) arrangement, elective deferrals under a SARSEP, elective
contributions under a SIMPLE IRA or salary reduction contributions to a
tax-sheltered annuity (irrespective of whether the Employer maintains the other
plan), the Employee may provide to the Plan Administrator a written claim for
excess deferrals made to the Plan for a calendar year. The Employee must submit
the claim no later than the March 1 following the close of the particular
calendar year and the claim must specify the amount of the Employee’s elective
deferrals under this Plan which are excess deferrals. If the Plan Administrator
receives a timely claim, it will distribute the excess deferral (as adjusted
for allocable income) the Employee has assigned to this Plan, in accordance
with the distribution procedure described in Section 14.07(A).

 

(C)  Allocable Income. For purposes of making a distribution of excess
deferrals pursuant to this Section 14.07, allocable income means net income or
net loss allocable to the excess deferrals for the calendar year (but not
beyond the calendar year) in which the Employee made the excess deferral,
determined in a manner which is uniform, nondiscriminatory and reasonably
reflective of the manner used by the Plan Administrator to allocate income to
Participants’ Accounts.

 

14.08  ACTUAL
DEFERRAL PERCENTAGE (ADP) TEST. For each Plan Year, the Plan Administrator
must determine whether the Plan’s 401(k) arrangement satisfies either of the
following ADP tests:

 

(i)  The ADP for the Highly Compensated Group does
not exceed 1.25 times the ADP of the Nonhighly Compensated Group; or

 

(ii)  The ADP for the Highly Compensated Group does
not exceed the ADP for the Nonhighly Compensated Group by more than two
percentage points (or the lesser percentage permitted by the multiple use
limitation in Section 14.10) and the ADP for the Highly Compensated Group is
not more than twice the ADP for the Nonhighly Compensated Group.

 

(A)  Calculation of ADP. The ADP for a group is the average of the
separate deferral percentages calculated for each eligible Employee who is a
member of that group. An eligible Employee’s deferral percentage for a Plan
Year is the ratio of the eligible Employee’s deferral contributions for the
Plan Year to the Employee’s Compensation for the Plan Year. In determining the
ADP, the Plan Administrator must include any Highly Compensated Employee’s
excess deferrals, as described in Section 14.07(A), to this Plan or to any
other Plan of the Employer and the Plan Administrator will disregard any
Nonhighly Compensated Employee’s excess deferrals. The Plan Administrator
operationally may include in the ADP test, qualified nonelective contributions
and qualified matching contributions the Plan Administrator does not use in the
ACP test. The Plan Administrator, under prior year testing, may include
qualified nonelective contributions or qualified matching contributions in
determining the Nonhighly Compensated Employee ADP only if the Employer makes
such contribution to the Plan by the end of the testing year and the Plan
Administrator allocates the contribution to the prior Plan Year. In determining
whether the Plan’s 401(k) arrangement satisfies either ADP test, the Plan
Administrator will use prior year testing, unless the Employer in Adoption
Agreement Appendices A or B elects to use current year testing. An Employer may
not change from current year testing to prior year testing except as provided
in the Code or in other applicable guidance. For the first Plan Year the
Employer permits elective deferrals and the Plan is not a successor plan (as
provided in the Code or in other applicable guidance), under prior year
testing, the prior year ADP for the Nonhighly Compensated Group is 3% unless
the Employer in an Addendum to its Adoption Agreement elects to use the 

 

57

 

actual
first year ADP for the Nonhighly Compensated Group.

 

(B)  Special aggregation rule for Highly
Compensated Employees. To
determine the deferral percentage of any Highly Compensated Employee, the Plan
Administrator must take into account any elective deferrals made by the Highly
Compensated Employee under any other 401(k) arrangement maintained by the
Employer, unless the elective deferrals are to an ESOP. If the plans containing
the 401(k) arrangements have different plan years, the Plan Administrator will
determine the combined deferral contributions on the basis of the plan years
ending in the same calendar year.

 

(C)  Aggregation of certain 401(k) arrangements. If the Employer treats two or more plans as a
single plan for coverage or nondiscrimination purposes, the Employer must
combine the 401(k) arrangements under such plans to determine whether the plans
satisfy the ADP test. This aggregation rule applies to the ADP determination
for all eligible Employees, irrespective of whether an eligible Employee is a
Highly Compensated Employee or a Nonhighly Compensated Employee. An Employer
may aggregate 401(k) arrangements under this Section 14.08(C) only if the plans
have the same plan years and use the same testing method. An Employer may not
aggregate an ESOP (or the ESOP portion of a plan) with a non-ESOP plan (or
non-ESOP portion of a plan). If the Employer aggregating 401(k) arrangements
under this Section 14.08(C) is using prior year testing, the Plan Administrator
must adjust the Nonhighly Compensated Group ADP for the prior year as provided
in the Code or in other applicable guidance.

 

(D)  Characterization of excess contributions. If, pursuant to this Section 14.08, the Plan
Administrator has elected to include qualified matching contributions in the
ADP test, the excess contributions are attributable proportionately to deferral
contributions and to qualified matching contributions allocated on the basis of
those deferral contributions. The Plan Administrator will reduce the amount of
excess contributions for a Plan Year distributable to a Highly Compensated
Employee by the amount of excess deferrals (as determined in Section 14.07), if
any, previously distributed to that Employee for the Employee’s taxable year
ending in that Plan Year.

 

(E)  Distribution of excess contributions. If the Plan Administrator determines the Plan
fails to satisfy the ADP test for a Plan Year, the Trustee, as directed by the
Plan Administrator, must distribute the excess contributions, as adjusted for
allocable income under Section 14.08(F), during the next Plan Year. However,
the Employer may incur an excise tax with respect to the amount of excess
contributions for a Plan Year not distributed to the appropriate Highly
Compensated Employees during the first 21⁄2 months of that next Plan Year. The
excess contributions are the amount of deferral contributions made by the
Highly Compensated Employees which causes the Plan to fail the ADP test. The
Plan Administrator will determine the total amount of the excess contributions
to the Plan by starting with the Highly Compensated Employee(s) who has the
greatest deferral percentage, reducing his/her deferral percentage (but not
below the next highest deferral percentage), then, if necessary, reducing the
deferral percentage of the Highly Compensated Employee(s) at the next highest
deferral percentage level, including the deferral percentage of the Highly
Compensated Employee(s) whose deferral percentage the Plan Administrator
already has reduced (but not below the next highest deferral percentage), and
continuing in this manner until the ADP for the Highly Compensated Group
satisfies the ADP test.

 

After
the Plan Administrator has determined the total excess contribution amount, the
Trustee, as directed by the Plan Administrator, then will distribute to each
Highly Compensated Employee his/her respective share of the excess
contributions. The Plan Administrator will determine each Highly Compensated
Employee’s share of excess contributions by starting with the Highly
Compensated Employee(s) who has the highest dollar amount of elective
deferrals, reducing his/her elective deferrals (but not below the next highest
dollar amount of elective deferrals), then, if necessary, reducing the elective
deferrals of the Highly Compensated Employee(s) at the next highest dollar
amount of elective deferrals including the elective deferrals of the Highly
Compensated Employee(s) whose elective deferrals the Plan Administrator already
has reduced (but not below the next highest dollar amount of elective
deferrals), and continuing in this manner until the Trustee has distributed all
excess contributions.

 

(F)  Allocable income. To determine the amount of the corrective
distribution required under this Section 14.08, the Plan Administrator must
calculate the allocable income for the Plan Year (but not beyond the Plan Year)
in which the excess contributions arose. “Allocable income” means net income or
net loss. To calculate allocable income for the Plan Year, the Plan
Administrator will use a uniform and nondiscriminatory method which reasonably
reflects the manner used by the Plan Administrator to allocate income to
Participants’ Accounts.

 

14.09  ACTUAL
CONTRIBUTION PERCENTAGE (ACP) TEST.  For each Plan Year, the Plan Administrator must determine whether the
annual Employer matching contributions (other than qualified matching
contributions used in the ADP test under Section 14.08), if any, and the
Employee contributions, if any, satisfy either of the following ACP tests:

 

(i)  The ACP for the Highly Compensated Group does
not exceed 1.25 times the ACP of the Nonhighly Compensated Group; or

 

(ii)  The ACP for the Highly Compensated Group does
not exceed the ACP for the Nonhighly Compensated Group by more than two
percentage points (or the lesser percentage permitted by the multiple use
limitation in Section 14.10) and the ACP for the Highly Compensated Group is
not more than twice the ACP for the Nonhighly Compensated Group.

 

(A)  Calculation of ACP. The ACP for a group is the average of the
separate contribution percentages calculated for each eligible Employee who is
a member of that group. An eligible Employee’s contribution percentage for a
Plan Year is the ratio of the eligible Employee’s aggregate contributions for
the Plan Year to the Employee’s Compensation for the Plan Year. “Aggregate
contributions” are Employer matching contributions (other than qualified
matching contributions used in the ADP test under Section 

 

58

 

14.08)
and Employee contributions (as defined in Section 14.03). The Plan Administrator
operationally may include in the ACP test, qualified nonelective contributions
and elective deferrals not used in the ADP test. The Plan Administrator, under
prior year testing, may include qualified nonelective contributions or
qualified matching contributions in determining the Nonhighly Compensated
Employee ACP only if the Employer makes such contribution to the Plan by the
end of the testing year and the Plan Administrator allocates the contribution
to the prior Plan Year. In determining whether the Plan satisfies either ACP
test, the Plan Administrator will use prior year testing, unless the Employer
in Appendix A to its Adoption Agreement elects to use the current year testing.
An Employer may not change from current year testing to prior year testing
except as provided in the Code or in other applicable guidance. For the first
Plan Year the Plan permits matching contributions or Employee contributions and
the Plan is not a successor plan (as defined in the Code or in other applicable
guidance), under prior year testing, the prior year ACP for the Nonhighly
Compensated Group is 3% unless the Employer in an Addendum to its Adoption
Agreement elects to use the actual first year ACP for the Nonhighly Compensated
Group.

 

(B)  Special aggregation rule for Highly
Compensated Employees. To
determine the contribution percentage of any Highly Compensated Employee, the
aggregate contributions taken into account must include any matching
contributions (other than qualified matching contributions used in the ADP
test) and any Employee contributions made on his/her behalf to any other plan
maintained by the Employer, unless the other plan is an ESOP. If the plans have
different plan years, the Plan Administrator will determine the combined
aggregate contributions on the basis of the plan years ending in the same
calendar year.

 

(C)  Aggregation of certain 401(m) arrangements. If the Employer treats two or more plans as a
single for coverage or nondiscrimination purposes, the Employer must combine
the 401(m) arrangements under such plans to determine whether the plans satisfy
the ACP test. This aggregation rule applies to the ACP determination for all
eligible Employees, irrespective of whether an eligible Employee is a Highly
Compensated Employee or a Nonhighly Compensated Employee. An Employer may
aggregate 401(m) arrangements under this Section 14.09(C) if where the plans
have the same plan year and use the same testing method. An Employer may not
aggregate an ESOP (or the ESOP portion of a plan) with a non-ESOP plan (or
non-ESOP portion of a plan). If the Employer aggregating 401(m) arrangements
under this Section 14.09(C) is using prior year testing, the Plan Administrator
must adjust the Nonhighly Compensated Group ACP for the prior year as provided
in the Code or in other applicable guidance.

 

(D)  Distribution of excess aggregate
contributions. The Plan
Administrator will determine excess aggregate contributions after determining
excess deferrals under Section 14.07 and excess contributions under Section 14.08.
If the Plan Administrator determines the Plan fails to satisfy the ACP test for
a Plan Year, the Trustee, as directed by the Plan Administrator, must
distribute the Vested excess aggregate contributions, as adjusted for allocable
income, during the next Plan Year. However, the Employer may incur an excise
tax with respect to the amount of excess aggregate contributions for a Plan
Year not distributed to the appropriate Highly Compensated Employees during the
first 21⁄2 months of that next Plan Year. The excess aggregate contributions are
the amount of aggregate contributions allocated on behalf of the Highly
Compensated Employees which causes the Plan to fail the ACP test. The Plan
Administrator will determine the total amount of the excess aggregate contributions
by starting with the Highly Compensated Employee(s) who has the greatest
contribution percentage, reducing his/her contribution percentage (but not
below the next highest contribution percentage), then, if necessary, reducing
the contribution percentage of the Highly Compensated Employee(s) at the next
highest contribution percentage level, including the contribution percentage of
the Highly Compensated Employee(s) whose contribution percentage the Plan
Administrator already has reduced (but not below the next highest contribution
percentage), and continuing in this manner until the ACP for the Highly
Compensated Group satisfies the ACP test.

 

After
the Plan Administrator has determined the total excess aggregate contribution
amount, the Trustee, as directed by the Plan Administrator, then will
distribute (to the extent Vested) to each Highly Compensated Employee his/her
respective share of the excess aggregate contributions. The Plan Administrator
will determine each Highly Compensated Employee’s share of excess aggregate
contributions by starting with the Highly Compensated Employee(s) who has the
highest dollar amount of aggregate contributions, reducing the amount of
his/her aggregate contributions (but not below the next highest dollar amount of
the aggregate contributions), then, if necessary, reducing the amount of
aggregate contributions of the Highly Compensated Employee(s) at the next
highest dollar amount of aggregate contributions, including the aggregate
contributions of the Highly Compensated Employee(s) whose aggregate
contributions the Plan Administrator already has reduced (but not below the
next highest dollar amount of aggregate contributions), and continuing in this
manner until the Trustee has distributed all excess aggregate contributions.

 

(E)  Allocable income. To determine the amount of the corrective
distribution required under this Section 14.09, the Plan Administrator must
calculate the allocable income for the Plan Year (but not beyond the Plan Year)
in which the excess aggregate contributions arose. “Allocable income” means net
income or net loss. The Plan Administrator will determine allocable income in
the same manner as described in Section 14.08(F) for excess contributions.

 

(F)  Characterization of excess aggregate contributions.
The Plan Administrator
will treat a Highly Compensated Employee’s allocable share of excess aggregate
contributions in the following priority: (1) first as attributable to his/her
Employee contributions, if any; (2) then as matching contributions allocable
with respect to excess contributions determined under the ADP test described in
Section 14.08; (3) then on a pro rata basis to matching contributions and to
the deferral contributions relating to those matching contributions which the
Plan Administrator has included in the ACP test; and (4) last to qualified
nonelective contributions used in the ACP test. To the extent the Highly
Compensated Employee’s excess aggregate contributions are attributable to
matching contributions, and he/she is not 100% Vested in his/her 

 

59

 

Account
Balance attributable to matching contributions, the Plan Administrator will
distribute only the Vested portion and forfeit the nonVested portion. The
Vested portion of the Highly Compensated Employee’s excess aggregate
contributions attributable to Employer matching contributions is the total
amount of such excess aggregate contributions (as adjusted for allocable
income) multiplied by his/her Vested percentage (determined as of the last day
of the Plan Year for which the Employer made the matching contribution).

 

14.10  MULTIPLE
USE LIMITATION. If at least one Highly Compensated Employee is includible
in the ADP test under Section 14.08 and in the ACP test under Section 14.09,
the sum of the Highly Compensated Group’s ADP and ACP may not exceed the
multiple use limitation.

 

The
multiple use limitation is the sum of (i) and (ii):

 

(i)  125% of the greater of: (a) the ADP of the
Nonhighly Compensated Group for the prior Plan Year; or (b) the ACP of the
Nonhighly Compensated Group for the Plan Year beginning with or within the
prior Plan Year of the 401(k) arrangement.

 

(ii)  2% plus the lesser of (i)(a) or (i)(b), but
no more than twice the lesser of (i)(a) or (i)(b).

 

The
Plan Administrator, in lieu of determining the multiple use limitation as the
sum of (i) and (ii), may elect to determine the multiple use limitation as the
sum of (iii) and (iv):

 

(iii)  125% of the lesser of: (a) the ADP of the
Nonhighly Compensated Group for the prior Plan Year; or (b) the ACP of the
Nonhighly Compensated Group for the Plan Year beginning with or within the
prior Plan Year of the 401(k) arrangement.

 

(iv)  2% plus the greater of (iii)(a) or (iii)(b),
but no more than twice the greater of (iii)(a) or (iii)(b).

 

If
the Employer has elected in its Adoption Agreement to use current year testing,
the multiple use limitation is calculated using the Nonhighly Compensated Group’s
current Plan Year data. The Plan Administrator will determine whether the Plan
satisfies the multiple use limitation after applying the ADP test under Section
14.08 and the ACP test under Section 14.09 and using the deemed maximum
corrected ADP and ACP percentages in the event the Plan failed either or both
tests. If, after applying this Section 14.10, the Plan Administrator determines
the Plan has failed to satisfy the multiple use limitation, the Plan
Administrator will correct the failure by treating the excess amount as excess
contributions under Section 14.08 or as excess aggregate contributions under
Section 14.09, as the Plan Administrator determines in its sole discretion.
This Section 14.10 does not apply unless, prior to application of the multiple
use limitation, the ADP and the ACP of the Highly Compensated Group each
exceeds 125% of the respective percentages for the Nonhighly Compensated Group.

 

14.11  DISTRIBUTION
RESTRICTIONS. The Employer in Adoption Agreement Section 6.01 must elect
the distribution events permitted under the Plan. The distribution events applicable
to the Participant’s deferral contributions Account, qualified nonelective
contributions Account, qualified matching contributions Account and safe harbor
contributions Account (collectively, “restricted balances”) must satisfy the
distribution restrictions described in Section 14.03(d).

 

(A)  Hardship Distributions from Deferral
Contributions Account. The
Employer must elect in Adoption Agreement Section 6.01 whether a Participant
may receive hardship distribution (as defined in Section 6.09) from his/her
deferral contributions Account prior to the Participant’s Separation from
Service. A hardship distribution from the deferral contributions Account also
must satisfy the requirements of this Section 14.11(A). A hardship distribution
option may not apply to a Participant’s qualified nonelective contributions
Account, qualified matching contributions Account, nor to his/her safe harbor
contributions Account except as provided in Paragraph (2).

 

(1)  Restrictions. The following
restrictions apply to a Participant who receives a hardship distribution from
his/her deferral contributions Account: (a) the Participant may not make
elective deferrals or Employee contributions to the Plan for the 12-month
period following the date of his/her hardship distribution; (b) the
distribution may not exceed the amount of the Participant’s immediate and heavy
financial need (including any amounts necessary to pay any federal, state or
local income taxes or penalties reasonably anticipated to result from the
distribution); (c) the Participant must have obtained all distributions, other
than hardship distributions, and all nontaxable loans (determined at the time
of the loan) currently available under this Plan and all other qualified plans
maintained by the Employer; and (d) the Participant must limit elective
deferrals under this Plan and under any other qualified plan maintained by the
Employer, for the Participant’s taxable year immediately following the taxable
year of the hardship distribution, to the 402(g) limitation (as described in
Section 14.07), reduced by the amount of the Participant’s elective deferrals
made in the taxable year of the hardship distribution. The suspension of
elective deferrals and Employee contributions described in clause (a) also must
apply to all other qualified plans and to all nonqualified plans of deferred
compensation maintained by the Employer, other than any mandatory employee
contribution portion of a defined benefit plan, including stock option, stock
purchase and other similar plans, but not including health or welfare benefit
plans (other than the cash or deferred arrangement portion of a cafeteria
plan). The Plan Administrator, absent actual contrary knowledge, may rely on a
Participant’s written representation that the distribution is on account of
hardship (as defined in Section 6.09) and also satisfies clause (b). In
addition, clause (c) regarding loans does not apply if the loan to the
Participant would increase the Participant’s hardship need.

 

(2)  Earnings. A hardship
distribution may not include earnings on an Employee’s elective deferrals
credited after December 31, 1988. Qualified matching 

 

60

 

contributions and
qualified nonelective contributions, and any earnings on such contributions,
credited as of December 31, 1988, are subject to withdrawal for a hardship
distribution only if the Employer in an Addendum to its Adoption Agreement
elects to permit such withdrawals. The Addendum may modify the December 31,
1988, date for purposes of determining credited amounts, provided the date is
not later than the end of the last Plan Year ending before July 1, 1989.

 

(B)  Distributions after Separation from Service. Following the Participant’s Separation from
Service, the distribution events applicable to the Participant apply equally to
all of the Participant’s Accounts.

 

14.12  SPECIAL ALLOCATION AND VALUATION RULES. If the
401(k) arrangement provides for salary reduction contributions, if the Plan
accepts Employee contributions, or if the Plan allocates matching contributions
as of any date other than the last day of the Plan Year, the Employer in
Adoption Agreement Sections 9.08 and 10.15 must elect the method the Plan
Administrator will apply to allocate net income, gain or loss to such
contributions made during the Plan Year and any alternative valuation dates for
the different Account types which the Plan Administrator maintains under the
Plan.

 

61

 

AMENDMENT
TO

DEFINED CONTRIBUTION PLAN AND TRUST

 

Effective with
respect to Employers adopting this prototype plan on or after July 1,
2002, Section 10.03(G) of the Plan is amended in its entirety to read as
follows:

 

(G)                               Modifications
of Trust. The Employer in its Standardized Adoption Agreement may not amend
any provision of Article X (or any other provision of the Plan related to the
Trust) except to specify the Trust year, the names of the Plan, the Employer,
the Trustee, the Custodian, the Plan Administrator, other fiduciaries or the
name of any pooled trust in which the Trust will participate. The Employer in
its Nonstandardized Adoption Agreement, in addition to the foregoing
amendments, may amend or override the administrative provisions of Article X
(or any other provision of the Plan related to the Trust), including provisions
relating to Trust investment and Trustee duties. Any such amendment: (1) must
not conflict with any other provisions of the Plan (except as expressly are
intended to override an existing Trust provision); (2) must not cause the Plan
to violate Code §401(a); and (3) must be made in accordance with Rev. Proc.
2000-20 or any successor thereto. The Employer using either a Standardized or
Nonstandardized Adoption Agreement to establish its Plan, subject to the
conditions (1), (2) and (3) described above, may elect to substitute in place
of Article X and the remaining trust provisions of the basic plan document, any
other trust or custodial account agreement that has been approved by the IRS
for use with this Plan. All Section 10.03(G) Trust modifications or
substitutions are subject to Section 13.02 and require the written consent or
signature of the Trustee.

 

Pursuant to
Section 13.03 of the Plan, the mass submitter of the prototype plan has made
this amendment (as evidenced by the submission of the amendment to the Internal
Revenue Service for inclusion with the mass submitter prototype plan) on behalf
of minor modifier Prototype Plan Sponsors that received opinion letters prior
to March 1, 2002, and all identical Prototype Plan Sponsors of the mass
submitter prototype plan.

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