XXXXXX, XXXXXXX & X.X. DAY, INC.
SELF-EMPLOYED RETIREMENT PLAN
ARTICLE I. lNTRODUCTION
The Employer named in the Adoption Agreement has established this Plan and the
Custodial Agreement forming a part hereof under the Self-Employed Individuals
Tax Retirement Act of 1962, as amended, in order to create a fund out of the
profits of the Employer's business and the savings of the participating
self-employed individuals and employees which will help provide for their future
security.
ARTICLE II. PARTICIPATION IN THE PLAN
2.1 Definitions.
(A) "Employer" is the sole proprietor or partnership conducting the business
referred to in the Adoption Agreement, and all predecessor and successor
proprietorships and partnerships who have conducted or hereafter conduct that
business.
(B) "Owner-Employee" is the sole proprietor, or any partner owning more than a
10% interest in either the capital or profits, of the Employer's business
referred to in the Adoption Agreement.
(C) "Partner-Employee" is a partner owning an interest in the Employer which
does not make that partner an Owner-Employee.
(D) "Employee" is any person employed in the Employer's business other than an
Owner-Employee or Partner-Employee.
(E) "Year of Service" in respect to any person is a 12-month period beginning
with the date he first is employed by the Employer, and any anniversary of that
date, in which he has completed no less than 1,000 Hours of Service. "Masculine
gender is used throughout the Plan for convenience only and is intended to refer
equally to the feminine gender.) In any case in which the Employer maintains the
plan of a predecessor employer, service for such predecessor shall be treated as
service for the Employer.
(F) "Hour of Service" shall mean:
(1) Each hour for which an Employee, Owner-Employee or Partner-Employee is
directly or indirectly paid, or entitled to payment, for the performance of
duties for the Employer. These hours shall be credited to the Employee for the
computation period in which the duties are performed; and
(2) Each hour for which the Employee, Owner-Employee or Partner-Employee is
directly or indirectly paid, or entitled to payment, by the Employer on account
of a period of time during which no duties are performed (irrespective of
whether the employment relationship has terminated) due to vacation, holiday,
illness, incapacity (including disability), layoff, jury duty, military duty or
leave of absence. No more than 501 hours of service shall be credited under this
paragraph for any single continuous period (whether or not such period occurs in
a single computation period). Hours under this paragraph shall be calculated and
credited pursuant to Section 2530.200b-2 of the Department of Labor Regulations
which are incorporated herein by this reference; and
(3) Each hour for which back pay, irrespective of mitigation of damages, is
either awarded or agreed to by the Employer. The same hours of service shal1 not
be credited both under paragraph (1) or Paragraph (3). These hours shall be
credited to the Employee for the computation period or periods to which the
award or agreement pertains rather than the computation period in which the
award, agreement or payment is made.
(G) "Code" is the Internal Revenue Code of 1954, as now in effect and hereafter
amended.
2.2 In General.
Each Employee, Partner-Employee, and Owner-Employee (subject to 2.3) shall
become a Participant as of the first day of his next "Year of Service" beginning
after he has accrued the number of "Years of Service" specified in the Adoption
Agreement, but no earlier than the Plan Effective Date specified in the Adoption
Agreement.
2.3 Restrictions on Participation by Owner-Employees.
(A) An Owner-Employee shall become a Participant if (and only if) he consents
thereto in the manner prescribed by the Plan Administrator.
(B) If an Owner-Employee owns or is a partner in an unincorporated trade or
business not covered by the Plan, his participation in this Plan is restricted
as follows:
(1) Employer contributions on behalf of any Owner-Employee shall not exceed
for any taxable year the lesser of $15,000 or 15% of such individual's Earned
Income for such year. This limitation applies in the aggregate where any
Owner-Employee is covered as an Owner-Employee or Partner-Employee under more
than one BR-10 plan established with respect to other
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trades or businesses and intended to qualify under Sections 401(a) and (d) of
the Code. In the event the above limitations would otherwise be exceeded, the
amount which may be contributed with respect to each trade or business shall be
limited to that amount which bears the same ratio to the aggregate amount
deductible with respect to all trades or businesses as the Earned Income derived
from each such trade or business bears to the Earned Income derived from all the
trades or businesses with respect to which plans are established.
(2) (a) If this Plan provides contributions or benefits for one or more
Owner-Employees who control both the business with respect to which this Plan is
established, and one or more other trades or businesses, the Plan and the plan
established with respect to such other trades or businesses must, when looked at
as a single plan, satisfy Sections 401(a) and (d) of the Code with respect to
the employees of this and all such other trades or businesses.
(2) (b) If this plan provides contributions or benefits for one or more
other trades or businesses, the employees of each such other trade or business
must be included in a plan which satisfies Sections 401(a) and (d) of the Code
and which provides contributions and benefits not less favorable than provided
for such Owner-Employees under this Plan.
(2) (c) If an invididual is covered as an Owner-Employee under the plans of
two or more trades or businesses which he or she does not control, and such
individual controls a trade or business, then the contributions or benefits of
the employees under the plan of the trade or business which he or she does
control must be as favorable as those provided for him or her under the most
favorable plan of the trade or business which he or she does not control.
For purposes of this Part 2.3(B)(2), an Owner-Employee, or two or more
Owner-Employees, shall be considered to control a trade or business if such
Owner-Employee, or such two or more Owner-Employees together:
(i) own the entire interest in an unincorporated trade or business, or
(ii) in the case of a partnership, own more than 50% of either the capital
interest or the profits interest in such partnership.
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ARTICLE III. CONTRIBUTIONS
3.1 Definitions.
(A) "Net Profit" of the Employer is net income from the business covered by this
Plan, determined under generally accepted accounting principles, before income
taxes and before any contributions under the Plan.
(B) "Earned Income" is an Owner-employee's or a Partner-Employee's net earnings
from the Employer's business covered by this Plan (excluding dividends,
interest, rentals, royalties, and gains on sales or exchanges of capital assets
except for any such earnings derived in respect to property created by such
person's personal efforts), computed by deducting contributions under the Plan
for Employees other than Owner-Employees or Partner-Employees, provided his
personal services are a material income-producing factor in such business.
(C) "Compensation" is all of an Employee's compensation from the Employer's
business covered by this Plan including basic pay, bonuses, and overtime, but
not including Plan contributions by the Employer.
(D) "Plan Year" is the fiscal period specified in the Adoption Agreement.
(E) "Adoption Agreement" is the Adoption Agreement establishing the Plan and the
Custodial Agreement. The information set forth therein shall be part of this
Plan as if set forth fully herein.
(F) "Plan Administrator" shall mean the person named in the Adoption Agreement.
If a Plan Administrator is not named, the Employer shall be deemed the Plan
Administrator. Any person or persons may serve both as Named Fiduciary and Plan
Administrator.
(G) "Custodial Account" is the account established under the Custodial Agreement
entered into pursuant to Article VI, and the "Custodian" is the custodian of
such Account or any successor thereto. The Custodian (while serving hereunder)
shall be a broker-dealer registered under the Securities Exchange Act of 1934,
as now in effect and hereafter amended. The Custodian shall, directly or through
its agents, perform the duties assigned to it pursuant to the Plan and the
Custodian Agreement.
(H) "Annual Additions" is the sum of the following amounts allocated on behalf
of a Participant for a Limitation Year:
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(1) all Employer contributions;
(2) all forfeitures; and
(3) the lesser of (1) one-half of all Employee contributions under Section
3.3(B) or (C), and (2) the amount of all Employee contributions under Section
3.3(B) or (C) in excess of 6% of such Participant's Compensation or Earned
Income.
For purposes of this Article III, amounts reapplied to reduce Employer
contributions under 3.2(F) shall also be included as Annual Additions.
(I) "Employer" is the employer that adopts this Plan. In the case of a group of
employers which constitutes a controlled group of corporations (as defined in
Section 414(b) of the Internal Revenue Code as modified by Section 415(h), or
which constitutes trades or businesses (whether or not incorporated), which are
under common control (as defined in Section 414(c) as modified by Section
415(h)), all such employers shall be considered a single employer for purposes
of applying the limitations of this Part 3.2.
(J) "Excess Amount" is the excess of the Participant's Annual Additions for the
Limitation Year over the Maximum Permissible Amount, less loading and other
administrative charges allocable to such excess.
(K) "Limitation Year" is the Plan Year (or any other 12 consecutive month period
adopted for all plans of the Employer pursuant to a writing adopted by the
Employer).
(L) "Master or Prototype Plan" is a plan the form of which is the subject of a
favorable opinion letter from the Internal Revenue Service.
(M) "Maximum Permissible Amount" for a Limitation Year with respect to any
Participant shall be the lesser of (1) $25,000 (or such larger amount as may be
prescribed by the Secretary or Treasury), or (2) 25% of the Participant's Earned
Income or Compensation for the Limitation Year.
3.2 Employer Contributions.
(A) For each Plan Year, the Employer may contribute for (on behalf of) each
Owner-Employee who is a Participant (except in certain instances described in
Article below), and shall contribute for every other Participant, the lesser of
(1) 15% of the amount of his Earned Income or Compensation for that Plan Year,
or (2) $15,000, subject to the limitations in this Part 3.2.
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(B) If so specified in the Adoption Agreement, a lower percentage shall control.
(C) Contributions shall be made only out of Net Profit for the Plan Year; if so
specified in the Adoption Agreement, the Employer shall not make contributions
except out of such part of Net Profit as exceeds the dollar limit there
specified. If the Net Profit, minus any dollar limit so specified, is less than
the contributions required or permitted by this Part 3.2, then the contribution
for each Participant shall be ratably reduced.
(D) Compensation or Earned Income, for purposes of contributions or benefits on
behalf of Participants, shall be limited to:
(1) the first $200,000 of Compensation or Earned Income of the Participant
for the Plan Year, if, and only if, the Employer's contributions to the Plan for
that Plan Year on behalf of each Participant are at a rate not Less than 7.5% of
each Participant's Compensation or Earned Income; or
(2) the first $100,000 of Compensation or Earned Income of the Participant
for the Plan Year.
For purposes of this limit:
(1) all plans maintained by the same employer shall be treated as a single
plan;
(2) all plans maintained with respect to one or more trades or businesses
which are under common control, within the meanings of Sections 401(d)(9) and
(10), or 414(c) of the Internal Revenue Code, shall be treated as a single plan;
and
(3) all plans in which any Owner-Employee participates shall be treated as
a single plan with respect to such person.
Subparts (E) through (H) apply to Employers who do not maintain any qualified
plan in addition to this Plan.
(E) If the Employer does not maintain any other qualified plan, the amount of
Annual Additions which may be allocated under this Plan on a Participant's
behalf for a Limitation Year shall not exceed the Maximum Permissible Amount.
(F) Prior to the determination of the Participant's actual Compensation or
Earned Income for a Limitation Year, the Maximum Permissible Amount may be
determined on the basis of the Participant's estimated Compensation or Earned
Income for such Limitation Year. Such estimated Compensation or Earned Income
shall be determined on a reasonable basis and shall be uniformly deter-
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mined for all Participants similarly situated. Any Employer contributions based
on estimated Compensation or Earned Income shall be reduced by any Excess
Amounts carried over from prior years.
(G) As soon as is administratively feasible after the end of the Limitation
Year, the Maximum Permissible Amount for such Limitation Year shall be
determined on the basis of Participants' actual Compensation or Earned Income
for such Limitation Year.
(H) If, pursuant to this Part 3.2, there is an Excess Amount with respect to a
Participant for a Limitation Year, such Excess Amount shall be disposed of as
follows:
(l) First, any voluntary Employee Contributions under Sections 3.3(B) or
(C), to the extent that the return would reduce the Excess Amount, shall be
returned to the Participant. Any nondeductible Employer contribution on behalf
of an Owner-Employee or Partner-Employee, to the extent that the return would
reduce the Excess Amount, shall be returned to the Employer.
(2) In the event that the Participant is employed by the Employer at the
end of the Limitation Year, then remaining Excess Amounts shall be reapplied to
reduce future Employer contributions under this Plan for the next Limitation
Year (and for each succeeding year, as necessary) for such Participant, so that
in each such year the sum of actual Employer contributions, plus the reapplied
amount, shall equal the amount of Employer contributions which would otherwise
be allocated to each Participant's account.
(3) In the event that the Participant is not employed by the Employer at
the end of the Limitation Year, then remaining Excess Amounts shall be reapplied
to reduce future Employer contributions for all remaining Participants.
Subparts (I) through (N) apply to Employers who, in addition to this Plan,
maintain one or more Plans, all of which are qualified Master or Prototype
defined contribution plans.
(I) If, in addition to this Plan, the Employer maintains any other qualified
defined contribution plans (all of which are qualified Master or Prototype
plans), the amount of Annual Additions which may be allocated under this Plan on
a Participant's behalf for a Limitation Year, shall 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 this Plan and such
other defined contribution plans.
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(J) Prior to the determination of the Participant's actual Compensation or
Earned Income for the Limitation Year, the amounts referred to in 3.2(I) above
may be determined on the basis of the Participant's estimated Compensation or
Earned Income for such Limitation Year. Such estimated Compensation shall be
determined on a reasonable basis and shall be uniformly determined for all
Participants similarly situated. Any Employer contribution based on estimated
Compensation or Earned Income shall be reduced by any Excess Amounts carried
over from prior years.
(K) As soon as is administratively feasible after the end of the Limitation
Year, the amounts referred to in 3.2(I) shall be determined on the basis of the
Participant's actual Compensation or Earned Income for such Limitation Year.
(L) If a Participant's Annual Additions under this Plan and all such other plans
result in an Excess Amount, such Excess Amount shall be deemed to consist of the
amounts last allocated.
(M) If an Excess Amount was allocated to a Participant on an allocation date of
this Plan which coincides with an allocation date of another plan, the Excess
Amount attributed to this Plan will be the product of:
(1) the total Excess Amount allocates on such date (including any amount
which would have been allocated but for the limitations of Section 415 of the
Code)
times
(2) the ratio of (a) the amount allocated to the Participant as of such
date under this Plan, divided by (b) the total amount allocated as of such date
under all qualified defined contribution plans (determined without regard to the
limitations of Section 415 of the Code).
(N) Any Excess Amounts attributed to this Plan shall be disposed of as provided
in 3.2(H).
(O) THIS PLAN MAY NOT BE ADOPTED BY AN EMPLOYER WHO, IN ADDITION TO THIS PLAN,
MAINTAINS ANOTHER PLAN WHICH IS A QUALIFIED DEFINED CONTRIBUTION PLAN UNLESS
SUCH OTHER PLAN IS A MASTER OR PROTOTYPE PLAN.
3.3 Periodic Voluntary Employee Contributions.
(A) Deductible Employee Contributions.
If so specified in Paragraph 6 of the Adoption Agreement, any Participant may
voluntarily contribute to the Plan for each
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calendar year an amount up to the lesser of 100% of his or her Compensation or
Earned Income, or $2,000, and such contributions, with the income or loss
thereon, shall he credited to a separate account which shall be entitled the
"Deductible Account". Such contributions for a calendar year may be made by
payroll deduction or otherwise, as permitted by the Plan Administrator, and must
be made on or before December 31 of such year. Notwithstanding the foregoing, no
contribution may be made by a Particinant pursuant to this Section 3.3(A) in a
calendar year if such Participant has attained age 701/2 before the close of
such calendar year. All contributions made by a Participant to the Plan pursuant
to this Section 3.3(A) shall be deemed to be "Qualified Voluntary Employee
Contributions" within the meaning of Section 219(e)(2) of the Code.
Subject to the limitations set forth above, all contributions made voluntarily
by a Participant to the Plan in a calendar year shall be deemed to be made
pursuant to this Section 3.3(A) unless the Participant designates, by written
notice to the Plan Administrator on or before the date each such contribution is
paid to the Company, all or any portion of such contributions as not being
Qualified Voluntary Employee Contributions. Such notice shall be irrevocable
after the latest date on which such designation may be made. All voluntary
contributions which are designated as not being Qualified Voluntary Employee
Contributions and all voluntary contributions in excess of the limitations set
forth above shall be deemed to be nondeductible Participant Contributions made
pursuant to Section 3.3(B) or 3.3(C), below.
The amount credited to a Participant's Deductible Account shall be distributed,
or commence to be distributed, from the Plan to the Participant or his
Beneficiary at the same time and pursuant to the same payment options as are
applicable to such Participant's other accounts under the Plan; provided,
however, that unless the Participant or his Beneficiary directs the Plan
Administrator otherwise in writing, any distribution from the Plan shall not be
treated as being made from the Deductible Account until all other vested amounts
standing to the credit of the Participant under the Plan have been distributed.
(B) By Owner-Employees.
For each Plan Year, an Owner-Employee may (if contributions are made that Year
under 3.2 for one or more Partner-Employees or Employees) contribute for (on
behalf of) himself an amount (in addition to amounts provided for in Sections
3.2 and 3.3(A)) not exceeding the lesser of $2,500 or 10% of his Earned Income
as determined for that Plan Year under 3.2. If for that Year he contributes less
than such amount, the difference may (at the
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Plan Administrator's option, upon written notice to the Service Company), be
considered as contributed by him to the extent (if any) that the Employer's
total contributions for him in respect to that Year exceed the limits in 3.2(A).
However, if an Owner-Employee is covered under any other self-employed
retirement plan qualified under Section 401 of the Code to which he or she makes
voluntary contributions, the total amount of voluntary contributions to all such
qualified plans shall be taken into account in determining the maximum voluntary
contributions for such owner-employee under this paragraph.
(C) By Other Participants.
For each Plan Year, every other Participant may contribute for himself any
amount which will not cause the aggregate of such contributions made by him
under the Plan to exceed 10% of his total Earned Income or Compensation for the
current and all prior Plan Years he has been a Participant as determined for
such Years under 2.2. However, amounts withdrawn under 3.3(D) shall not be
deducted from such aggregate amount so as to be eligible for recontribution.
If the Employer maintains two or more retirement plans qualified under Section
401 of the Code, the 10% limitation applies in the aggregate to voluntary
contributions to such plans.
(D) Withdrawal of Voluntary Contributions.
Upon written notice to the Plan Administrator, a Participant may withdraw the
lesser of (1) the sum of amounts contributed by him under 3.3(A), (B) or (C)
(including earnings on such contributions), or (2) the current value of such
amounts, minus any such amounts previously distributed to him in either case.
3.4 Rollover Contributions.
A Participant may make a contribution which he identifies to the Plan
Administrator (and which the Plan Administrator identifies to the Custodian) as
being a rollover contribution to the Plan. Prior to accepting any rollover
contribution, the Plan Administrator shall require such certificates,
affidavits, representations or other proof as the Plan Administrator deems
necessary or appropriate to determine that the proposed contribution satisfies
all the requirements of the Code in order to qualify as a rollover amount. By
identifying such amount as a rollover contribution, the Plan Administrator shall
be deemed to have represented that the proposed rollover contribution satisfies
all such requirements and the Custodian shall be entitled to rely upon such
representation and shall be under no obligation to make further inquiry or
investigation with respect thereto.
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A rollover contribution shall be made in cash unless otherwise agreed by the
Custodian. Amounts attributable to "accumulated deductible employee
contributions," as defined in Section 72(o)(5) of the Code, shall be credited to
the separate account established under Section 3.3(A).
3.5 General Provisions on Contributions.
Except as permitted in 3.4, no contribution shall be made in property other than
money. Contributions shall be remitted by the Employer and Participants through
the Administrator to the Custodian and not by them directly. The Plan
Administrator may commingle such contributions for remittance; but he shall
instruct the Custodian as to the amount of each Part 3.2, 3.3(A), 3.3(B) or (C),
and 3.4 contribution to be credited to each Participant's account, and he shall
maintain records thereof and of the dates they are remitted. Before remitting a
contribution, the Plan Administrator shall notify each Participant of any
opportunity provided under 3.3 for the participant to contribute at that time.
3.6 Excess Contributions.
(A) For periods prior to January 1, 1976-Transitional Rule.
This subpart (A) applies only if this Plan is adopted as a continuation of a
Plan existing prior to January 1, 1976.
If an amount is contributed for an Owner-Employee which is in excess of the
limits set forth in the plan, such amount and the net income attributable
thereto shall be returned to the Owner Employee before the end of the six-month
period beginning on the day which the District Director sends notice of the
amount of the contribution and the net income attributable thereto are deemed
repaid to the Owner-Employee if such amounts are applied to reduce future
contributions on behalf of such Participant.
If the amount of an excess contribution and the net income attributable thereto
are not repaid to the Owner-Employee before the end of the six-month period as
stated above, the plan shall not be considered qualified with respect to such
Owner-Employee for the taxable year of the plan within which the excess contri-
bution is made and each succeeding taxable year until the beginning of the
taxable year in which repayment is made. Thus, for any such year (1) no
contribution shall be made on behalf of such Owner-Employee under the plan; and
(2) the Owner-Employee's gross income for any of his or her taxable years which
ends with or within the taxable year of the plan shall include the portion of
the net income earned under the plan for such taxable year which is attributable
to the Owner-Employee's interest under the plan.
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If an excess contribution on behalf of an Owner-Employee is determined to have
been willfully made, then there shall be distributed to the Owner-Employee his
or her entire interest in all plans in which he or she is a Participant as an
Owner-Employee. Furthermore, no plan in which he or she is covered as meeting
the requirements for qualification with respect to such Owner-Employee for any
taxable year of the plan beginning with or within the calendar year in which it
is determined that the excess contribution has been willfully made.
(B) For periods subsequent to December 31, 1975.
The Employer will incur a 6% tax under Section 4972 of the Code on the amount of
any Excess Contribution, as defined in (C) below, remaining at the close of the
taxable year and after allocation, if any, of any amounts under 3.3.
(C) For purposes of 3.6(B), "Excess Contribution" shall mean (except as
otherwise required under Section 4972 of the Code) the amount of any
contribution made:
(1) by the Employer on behalf of any Owner-Employee, for any Plan Year for
which Employer contributions are made on behalf of only Owner-Employees, which
is not deductible under Section 404 of the Code; or
(2) by the Employer on behalf of any Owner-Employee, for any Plan Year for
which Employer contributions are made on behalf of a Participant other than an
Owner-Employee, which exceeds the amount deductible under Section 404 of the
Code, except to the extent that such amount may be treated as a voluntary
contribution by such Owner-Employee pursuant to 3.3(B); or
(3) by any Owner-Employee pursuant to 3.3(B) on his own behalf -
(i) during a Plan Year in which the Employer has not made a contribution on
behalf of at least one Participant who is not an Owner-Employee;
(ii) at a rate in excess of that permitted to be made by Partner-Employees
or Employees during the Plan Year; or
(iii) which exceeds the lesser of $2,500 or 10% of such Owner-Employee's
Earned Income for the Plan Year; or
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(4) by any Owner-Employee for a Plan Year in which voluntary contributions
are made by him on his own behalf under more than one self-employed retirement
plan, which, together with any voluntary contributions to such other plans made
by such Owner-Employee on his own behalf, exceeds the limits in subpart (3). If
an Excess Contribution is made pursuant to this subpart (4), the amount thereof
considered made on behalf of the Owner-Employee hereunder shall be the amount by
which his contribution under this Plan for the Plan Year exceeds an amount which
bears the same ratio to the applicable limits set forth in subpart (3) above as
his Earned Income bears to his Earned Income derived from all trades or
businesses with respect to which all such plans are established.
3.7 Crediting and Vesting Contributions.
All contributions made for and by a Participant, and all investments thereof and
earnings thereon, shall be credited to one or more separate Accounts maintained
for him under the Custodial Agreement and the Trust referred to in Article VI. A
separate Account shall also be maintained for deductible employee contributions.
His interest in each of his Accounts shall at all times be fully vested and
nonforfeitable.
ARTICLE IV. PAYMENT OF BENEFITS UNDER THE PLAN
4.1 Definitions.
(A) "Normal Retirement Age" is 65 or the age attained on the tenth anniversary
of the day on which the person became a Participant under 2.2, whichever is
later.
(B) "Retirement" is a Participant's cessation of employment with a present
intention not to return in the future.
(C) "Disability" is a condition demonstrable under Code Section 72(m)(7) as
rendering a Participant unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or be of long-continued and indefinite duration.
(D) The "Annuity Starting Date" of a Participant is both (1) the earliest
retirement date permitted by the Plan Administrator under 4.2(C) (but no later
than when the Participant attains age 59l/2), and also (2) the Participant's
Normal Retirement Age under 4.1(A).
(E) "Election Period" is a period consisting of at least 90 days following the
furnishing by the Plan Administrator to a Married Participant of the Election
Information and ending prior to each Annuity Starting Date.
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(F) "Election Information" is a written, nontechnical notification of the
Participant's right to elect (1) against receipt by the Participant's spouse of
the survivor annuity portion of a Joint and Survivor Annuity in the event of the
Participant's death while still employed by the Employer after the earlier
Annuity Starting Date, and (2) against distribution of the Joint and Survivor
Annuity after he retires after either Xxxxxxx Starting Date. The notification
shall state that the Participant may request from the Administrator a written,
nontechnical explanation of the Single-Life Annuity and of the Joint and
Survivor Annuity and their impact on his benefit (in dollars per annuity
payment).
(G) "Joint and Survivor Annuity" is an annuity for the life of the Participant,
with a survivor annuity for the life of the Participant's spouse equal to 50%
(unless 100% is elected by the Participant or is specified by the Administrator)
of the annuity payable during their joint lives; and which is the actuarial
equivalent of the benefit purchasable by the Participant's Account balance.
(H) "Married Participant" is a Participant married on the Participant's Annuity
Starting Date.
(I) "Single-Life Annuity" is an annuity for the life of the Participant, with no
payments to a spouse or Beneficiary on the Participant's death.
4.2 Retirement Benefits.
(A) To an Owner-Employee.
The amount credited to the Accounts of each Participant who is or has been an
Owner-Employee under the Plan must be distributed to him commencing on the later
of his attaining Normal Retirement Age or his retirement, but in no case
commencing before he has attained age 591/2 (except on account of Disability or
Plan termination) or later than the last day of the taxable year in which he
attains 701/2 even though his employment continues thereafter. See Article VIII
below regarding penalties for premature distributions to Owner-Employees.
(B) To Other Participants.
The amount credited to the Accounts of any other Participant shall be
distributed to him commencing on the first day of the month following the later
of his attaining Normal Retirement Age or his retirement, but in no case
commencing later than the last day of the taxable year in which he attains 70
1/2 (unless he has not yet retired and at least 60 days before xxxxxxxxx said
age irrevocably elects deferral until retirement in a signed written notice to
the Plan Administrator).
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(C) Early Retirement.
If an Owner-Employee who has attained age 591/2, or any other Participant
regardless of age, retires before the earliest date specified in (A) or (B) for
commencement of distribution, distribution may commence prior to that date in
the Plan Administrator's discretion exercised under rules uniformly applied in
nondiscriminatory fashion to Participants experiencing similar circumstances.
(D) Postponement of Benefit after Retirement.
A Participant may elect that the payment to him of retirement benefits due to
commence under 4.2(A), (B), or (C) commence later than the latest date provided
thereunder (but not later than the last day of the taxable year in which he
attains age 701/2) by filing with the Plan Administrator, at least 60 days
before such latest date, a signed written statement describing the benefit and
the date on which such payment shall commence.
4.3 Disability Benefits.
If a Participant (of whatever age) incurs a Disability before distribution to
him of retirement benefits has commenced under 4.2, the distribution of such
benefits may commence, as of the determination of such Disability or thereafter,
in the Plan Administrator's discretion exercised under rules uniformly applied
in nondiscriminatory fashion to Participants experiencing similar circumstances.
4.4 Death Benefits.
(A) If a Participant dies before distribution of his entire amount then credited
to his Account (his "account balance") has commenced or been completed under 4.2
or 4.3, or if distribution has commenced to his surviving spouse who dies before
such distribution is completed, his account balance shall be distributed to the
"Participant's Beneficiary", as defined in (B) below, commencing within 5 years
after the death of the Participant (or his surviving spouse) in accordance with
4.6 below.
(B) "Participant's Beneficiary" means the person or persons designated as such
by the "designated person" (as defined below) on a form acceptable to the
Custodian for use in connection with the Agreement, signed by the designated
person, and filed with the Custodian through the Plan Administrator in
accordance with this subpart (B). The form may name persons or estates to take
upon the contingency of survival and may specify or limit the mode of
distribution thereto. However, the term Participant's Beneficiary means the
designating person's estate to the extent
15
no such designation on such a form effectively disposes of the account balance
as of when such distribution is to commence. The form last accepted by the
Custodian before such distribution is to commence, and filed with the Custodian
during the designating person's lifetime, shall be controlling and, whether or
not fully dispositive of the account balance thereupon, shall revoke all such
forms previously filed by that person. The term "designating person" means the
Participant; after the Participant's death, it also means the Participant's
spouse, if the Participant's spouse begins to receive a portion of the account
balance (pursuant to such a designation by the Participant) in a manner
described in 4.5(B)(2). A designation by the Participant's spouse shall relate
solely to the account balance remaining after the death of the spouse. All such
forms shall be considered part of this Agreement for purposes of 9.7.
4.5 Commencement and Modes of Distribution.
(A) Subject to (D) below and, if applicable, subject also to any designation the
Participant or Participant's Beneficiary may make pursuant to 4.4(B), the Plan
Administrator shall determine the time and manner for distribution of benefits
under this Article IV and shall direct the Custodian and (if applicable) the
Insurance Trustee by written order as to the time and manner thereof. However,
unless the Participant has elected otherwise in writing, payment of benefits
must commence not later than sixty (60) days after the close of the Plan Year in
which either (l) the Participant reaches age 65, or (2) the Participant
terminates his service with the Employer, whichever is later.
(B) Upon receipt of a proper written order as required in (A) above, the
Custodian and the Insurance Trustee shall distribute the Participant's Account
to him in cash or kind in one or more of the following ways as specified in the
order:
(1) In a lump sum.
(2) In installments ratably over a period which may either be (1) not
longer than the life expectancy of the Participant, or (2) not longer than the
joint and survivor life expectancies of the Participant and his spouse. The life
expectancies referred to in this Plan shall be determined (1) by using
applicable Internal Revenue Service tables, and (2) either once when installment
payments commence, or periodically in a consistent manner. If the period is
measured by one or more such expectancies, the amount distributed each year
shall be at least equal to the quotient obtained by dividing the amount of the
Participant's accounts remaining at the beginning of that year by the life
expectancy factor being used to measure the distribution period, reduced by the
number of whole years
16
elapsed since the Participant attained said age; provided, however, that no
distribution need be made in any year, or a lesser amount may be distributed
during such year, if the aggregate amounts distributed through the end of such
year are at least equal to the aggregate of the minimum amounts required by this
subpart (B) to have been so distributed.
(3) In a Single-Life Annuity.
(4) In a Joint and Survivor Annuity.
(C) If distribution is to be made pursuant to 4.5(B)(3) or (4), then it may be
made by purchase from an Insurer and distribution of a nontransferable Policy
providing an annuity for the life of the Participant or the joint and survivor
lives of the Participant and the Participant's spouse.
(D) Unless a Married Participant otherwise elects in a writing to the Plan
Administrator within the Election Period, his benefits under the Plan shall be
distributed in the form of a Joint and Survivor Annuity.
(E) During the Election Period, a Married Participant may revoke such an
election and later make another such election.
(F) The Administrator shall take whatever action is necessary, including giving
instructions to the Custodian and Insurance Trustee (on which they conclusively
may rely), to carry out the requirements of this Part 4.5.
4.6 Distributions upon Death of a Participant or Beneficiary.
(A) If the Custodian received from the Plan Administrator a proper written order
for distribution on account of the death of a Participant or his Beneficiary,
the Custodian shall distribute his account balance held under the Custodial
Agreement to the Participant's Beneficiary entitled thereto, in a manner
described in 4.5(B). However, if an Owner-Employee dies before complete
distribution to him has been made, except in the case of payment to his
surviving spouse for her life expectancy and in that event if she dies before
such complete distribution of the Participant's interest, then the entire amount
of such interest shall be distributed promptly and in any event within five
years after such death, except that a distribution which began over a period
certain ending with the joint life and last survivor expectancy of the
Participant and his spouse may be completed; such distribution may be made by
purchase from an Insurer (as defined in 6.2(B)(2) of the Plan) and distribution
of a nontransferable Policy providing an annuity for the life of said
Participant's Beneficiary or the joint and survivor lives of such Beneficiary
and such Beneficiary's spouse.
17
(B) Upon the death of a Participant, any of his benefits which are funded with
Policies held by the Insurance Trustee under 6.2 of the Plan shall be
distributed in accordance with (A) above, except that if the Participant has
designated a beneficiary under a Policy, that designation shall prevail (solely
as to proceeds of that Policy) over any designation under 4.4(B) of the Plan.
When distribution commences, the Insurance Trustee (acting upon instructions of
the Plan Administrator, who shall in turn follow any directions received in this
respect from the Participant) either (1) shall distribute the Policies to the
person or persons entitled to such benefits, or (2) shall convert the Policies
into cash and transfer that cash to the Custodian for investment and
distribution in accordance with the Custodial Agreement.
ARTICLE V. THE PLAN ADMINISTRATOR
5.1 The Plan Administrator (Administrator) shall carry out the duties assigned
to him under the Plan and the Custodial Agreement. He shall perform the duties
of the "plan administrator" under Title I of the Employee Retirement Income
Security Act of 1974, as now in effect and hereafter amended including successor
sections ("ERISA"), and shall be a "Named Fiduciary" under Part 4 of said Title
I. If more than one person is named as Administrator, all of them shall exercise
their duties in concert and, to the extent required by ERISA, have
responsibility for each other's actions; but they may allocate their duties
among themselves by written agreement communicated to the Employer (if any,
otherwise to a majority of the persons referred to in the third sentence of
5.2), in which case none of them shall be responsible for acts or omissions of
another except as required by Section 405(c)(2) of ERISA. In any event, the
Custodian may (but need not) rely upon instructions appearing to be genuine
instructions from any Administrator as being the will of all of them, as if no
allocation were made, without duty of further inquiry.
5.2 The Custodian shall be notified in writing by the Employer of the name of
the Administrator(s) designated by the Employer. The Custodian may conclusively
assume that the Administrator will continue to act in that capacity until the
Custodian has been notified in writing by the Employer to the contrary. If at
any time no person designated as the Administrator is able and willing to serve
as such, the Employer promptly shall designate a successor, but if the Employer
has died (if a sole proprietor) or dissolved (if a partnership), a successor
promptly shall be designated by a majority of the Participants for whom accounts
not yet fully distributed are then held in the Custodial Account (a majority of
the legally competent Beneficiaries of a deceases Participant then entitled to
receive benefits may exercise his right to participate in that designation and
shall be considered for the purpose to be one Participant in his place).
18
5.3 The Administrator shall interpret and construe the Employer's adoption of
the Plan, shall decide any disputes which may arise relative to the rights of
Participants past and present, and their beneficiaries, under the terms of the
Plan, shall give instructions and directions to the Custodian as necessary and,
in general, shall perform the duties assigned to him by the Plan. The
Administrator shall not, through interpretation of the Plan or action under the
Plan, increase the burdens imposed upon the Custodian without its consent.
5.4 The Administrator shall be responsible for (1) keeping records of employment
and other matters containing all relevant data pertaining to any person affected
hereby and his eligibility to participate, allocations to his accounts, and his
other rights under the Plan, except for records which of necessity are to be
generated by the Custodian regarding assets of the Custodial Account and the
Accounts of Participants; (2) periodic, timely filing of all statements, reports
and returns requires to be filed by the "plan administrator" with the U.S.
Departments of Labor and the Treasury, employees, and others, and for verifying
that all of the same required of the Employer are timely filed; and (3)
retention by himself and the Employer of records for periods required by law.
5.5 The Administrator shall be agent for service of legal process as required by
Section 502(d)(1) of ERISA.
S.6 The Administrator shall establish and carry out a funding policy and method
to the extent necessary from time to time to implement or supplement the
provisions of the Plan and comply with requirements of ERISA.
5.7 Any person affected hereby may consult with the Administrator on any matters
relating to the Plan. A person claiming eligibility to participate, benefits, or
other rights under the Plan shall present his signed written claim to the
Administrator, and within a reasonable time he shall be given a written answer.
If he is denied the same, the Administrator shall notify him of such denial and
the specific reasons therefor, with reference to pertinent plan provisions and a
description of any additional information necessary to perfect his claim
(including reasons why it is necessary), and an explanation of the claims review
procedure, in a manner calculated to be understood by him and afford him a
reasonable opportunity for full and fair review, by the Administrator, of that
decision. The claimant or his representative or both may at any time after such
denial request such a review, examine all pertinent documents, and submit issues
and comments orally or in writing or both. The final decision of the Plan
Administrator shall be rendered to the claimant or his representative not later
than 60
19
days after the Plan Administrator's receipt of the claimant's request for review
(unless circumstances beyond the control of the Plan Administrator require an
extension of time for processing, in which case a decision shall be made as soon
as possible but not later than 120 days after receipt of that request for
review). Such decision shall be written in a manner calculated to be understood
by the claimant and shall give specific reasons for its conclusion with specific
references to pertinent provisions of the Plan on which the decision is based.
5.8 The Administrator may resign by giving written notice to the Employer (if in
existence, otherwise to all persons then referred to in the third sentence of
5.2) not less than 15 days before the effective date of his resignation. The
Administrator may be removed at any time, without cause, by the Employer (if in
existence, otherwise by a majority of such other persons referred to in the
third sentence of 5.2).
5.9 The Administrator shall be responsible for seeing that he and every other
person required to be bonded under ERISA are so bonded. The Administrator shall
not be liable or responsible for the acts or omissions of any other fiduciary
unless (1) the Administrator knowingly participated or knowingly attempted to
conceal the acts or omissions of the other fiduciary and the Administrator knew
the act or omission was a breach of fiduciary responsibility by the other
fiduciary; or (2) the Administrator has knowledge of a breach by the other
fidiciary and does not make reasonable efforts to remedy the breach; or (3) the
Administrator's breach of his own fiduciary responsibility permitted the other
fiduciary to commit a breach.
5.10 No fee or compensation shall be paid to the Administrator for his services
as the Administrator if he already receives full-time pay from the Employer or
any other organization referred to in Code Section 4975 (d)(10). Any expenses
properly incurred by the Administrator shall be reimbursed by the Employer.
5.11 Wherever, under the provisions of this agreement, discretion is granted to
the Administrator, which shall affect anyone's benefits or other rights under
the Plan, such discretion shall be exercised uniformly so that all persons
similarly situated will be similarly treated.
5.12 The Administrator shall have the right to employ agents and others to
render advice regarding his responsibilities under the Plan and may rely upon
the written opinions or certificates of any such person, for example, counsel,
actuary, investment manager, or physician.
20
5.13 The Administrator may delegate in writing all or any part ! of his
responsibilities under this document to others by written agreement communicated
to the delegate and the Employer (if any, otherwise to the persons referred to
in the third sentence of 5.2); and, in the same manner, may revoke any such
delegation of responsibility. Any action of a delegate in the exercise of such
delegated responsibilities shall have the same force and effect for all purposes
as if such action had been taken by the Administrator. The delegate shall have
the right, in his or its sole discretion, by written instrument delivered to the
Administrator, to reject and to refuse to exercise any such delegates authority.
The Custodian need not act on instructions of such a delegate despite any
knowledge of such delegation, but may require the Administrator to give the
Custodian all instructions needed under the Plan. The Administrator shall make a
formal annual review of each such delegate's performance of his respon-
sibilities and take any necessary action pursuant thereto.
5.14 Action required of the Employer under this Article with respect to the
Administrator, or an establishment of the Plan, shall be carried out by the sole
proprietor, if that is the nature of the Employer; or by any general partner if
it is a partnership. The Custodian shall have (and assume) no responsibility for
inquiring into the authority of any person purporting to act on behalf of a
partnership Employer.
5.15 The Employer, the Administrator, and the Custodian, respectively, shall be
responsible solely for performance of those duties expressly assigned to that
person in this Agreement and assumes no responsibility as to duties assigned to
anyone else hereunder or by operation of law.
ARTICLE VI. ACCOUNTS
6.1 Custodial Account.
Except to the extent that a portion of contributions is used to buy Policies
pursuant to 6.2, all contributions under the Plan shall be paid over to a
Custodial Account to be maintained by the Employer with the Custodian. The
Custodial Agreement pursuant to which such account is maintained shall provide
that all assets of the Custodial Account shall be registered in the name of the
Custodian or a suitable nominee. The Participants shall be the beneficial owners
of all of the assets of the Custodial Account.
6.2 Insurance Trust Account.
(A) This Article shall apply if the Adoption Agreement specifies that the
insurance option is available to Participants.
21
(B) Definitions.
(1) "Insurance Anniversary Date" is specified in the Adoption Agreement.
(2) "Insurance Trustee" is the person named as such in the Adoption
Agreement, and the successors thereto. If at any time the Trustee in office is
not a bank, insured credit union, or other person satisfactory to the Secretary
of the Treasury pursuant to Section 401(d)(1) of the Code, and if the Internal
Revenue Service notifies the Employer that the Insurance Trustee is not keeping
the records, making the returns, or rendering the statements required by law,
then the Employer shall substitute as Trustee such a bank, credit union, or
other satisfactory person.
(3) "Insurer" is a life insurance company licensed to issue Policies in the
states where the Employer's business is located and where the Trustee is
located.
(4) "Policy" is an ordinary whole life policy with cash values, including
an endowment policy; a term life policy; a retirement income contract; or
annuity contract, including a variable annuity. A Policy may provide for
disability income and/or disability waiver of premium benefits. A policy must
satisfy these requirements and, if necessary, be endorsed for the purpose:
(i) Be convertible into or exchangeable for a retirement annuity contract
to pay retirement benefits under the Plan.
(ii) Be "nontransferable" when held by anyone except the Trustee, which
means it cannot be sold, assigned, discounted, or pledged as collateral or any
other purpose to anyone other than the insurer.
(iii) Prohibit automatic premium and other loans on a Policy issued for the
account of an Owner-Employee.
(5) "Trust" is the trust fund established under this Part 6.2.
(C) Selection and Management of Insurance Funding.
(1) A Participant may elect through the Administrator that all or a
designated portion of contributions made pursuant to Sections 3.2 or 3.3(B) or
(C) by and on behalf of the Participant paid over to the Insurance Trustee as of
an Insurance Anniversary Date, for the purpose of being applied to the
22
payment of premiums on Policies of a kind specified by the Participant and
purchased and held in trust by the Insurance Trustee in trust hereunder, but
only to the extent permitted by subparts (2) through (5). Nothing but Policies
and cash awaiting investment or distribution shall be held in the Trust. The
Participant shall be the beneficial owner of Trust assets held for the
Participants account; none shall revert to the Employer, and at no time shall
it be possible for any Trust assets to be used for or diverted to purposes other
than for the exclusive benefit of the Participants and their beneficiaries.
(2) If ordinary life insurance contracts are purchased to insure a
Participant's life, then the amount of the Trust Fund that may be used to pay
the aggregate premiums on such contracts is any amount less than 50% of all
Employer contributions allocated to such Participant up to that time.
(3) If term life or other life insurance contracts with premium rates lower
than those of ordinary life insurance contracts are purchased to insure a
Participant's life and/or health and welfare, then the amount of the Trust Fund
that may be used to pay the aggregate premiums on such contracts is any amount
less than 25% of all Employer contributions allocated to such Participant up to
that time.
(4) If both ordinary life and term insurance are Purchased to insure a
Participant's life, the sum of the term insurance premiums plus one-half of the
ordinary life premiums may not exceed 25% of all Employer contributions
allocated to such Participant up to that time.
(5) If retirement income (or endowment) contracts are purchased on behalf
of any Participant, the death benefit under the contract shall not be greater
than 100 times the anticipated monthly annuity provided under such contract.
(6) Policies available for Participants shall be limited to those issued by
Insurers from time to time designated by the Employer and represented by the
Custodian as their agent or broker.
(7) If a Participant electing purchase of a life insurance Policy is
insurable only at substandard rates, the Policy may provide for an appropriately
smaller benefit.
(8) A Participant who unreasonably fails or refuses to submit to whatever
examination and to provide whatever information the Insurer requires to
determine insurability shall be deemed to be uninsurable.
23
(9) If a Policy is to be purchased for a Participant who dies before it
becomes effective, the death benefit regarding that Policy shall equal the
amount of contributions allocated to that purchase.
(10) A dividend which accrues on a Policy in a Plan Year shall in that or
the next Plan Year be applied to purchase additional retirement benefits for the
Participant for whom that Policy is held. Any premium refund under a Policy
shall be applied to reduce the current or next succeeding premium. In the event
of the Plan's termination or a Participant's death or separation from service
with the Employer, any such refund alternatively may be paid as part of any
distribution of benefits being made at that time as a result of that event.
(11) To the extent sufficient contributions are made by and on behalf of a
Participant under the Plan, and subject to the limitations in subparts (2)
through (4) above, the Plan Administrator shall allocate to the Trust a portion
of such contributions which is adequate for the payment of premiums on Policies
held for that Participant. To the extent such contributions are insufficient for
that purpose, the Participant shall direct the Plan Administrator whether (1) to
order the Insurance Trustee to apply for a premium loan under one or more
Policies (unless the Participant is an Owner-Employee, as such a loan would,
under Code Section 72(m)(4), constitute a distribution in violation of Article
VIII) or to place one or more Policies on a paid-up basis; or (2) (subject to
the limitations in subparts (2) through (4) above) to request that the Employer
order the Custodian, under Section 5 of the Custodial Agreement, to sell those
Custodial Account assets held for the Participant which the Participant
specifies for sale and to transfer the proceeds to the Insurance Trustee for
payment of such premiums.
(12) To the extent consistent with other provisions of this Article VI, a
Participant may direct the Insurance Trustee through the Administrator to change
a Policy or convert it into another Policy; to surrender a Policy and transfer
the proceeds to the Custodian for investment for the Participant's account under
the Custodial Agreement; or to request that the Employer order the Custodian,
under Section 5 of the Custodial Agreement, to sell Custodial Account assets
held for the Participant which the Participant specifies for sale, and to
transfer the proceeds to the Insurance Trustee for purchase of a Policy.
(13) Neither the Employer, the Administrator, nor the Insurance Trustee
shall be responsible for a Policy's validity or failure of the Insurer to make a
payment thereunder. Except as otherwise required by law, the Insurance Trustee
shall not be liable for failure to obtain a Policy or to pay when due a
24
premium thereon except for gross negligence or wilful misconduct, and neither
the Employer nor the Administrator shall be liable in any event.
(14) Except as otherwise required by law, an Insurer shall not be
considered a party to the Plan or Trust; may rely upon a certificate of the
Employer, Administrator, or Insurance Trustee as conclusive of the facts stated
therein; and shall be fully discharged in acting upon the Insurance Trustee's
directions and need not see to the application of money paid in accordance
therewith.
(15) In the event of any conflict between the terms of the Plan and the
provisions of any Policy issued hereunder, the terms of the Plan shall control.
(D) Concerning the Insurance Trustee.
(1) The Insurance Trustee shall keep adequate records of transactions with
respect to the Trust. Not later than sixty (60) days after the close of each
Plan Year (or after the Insurance Trustee's resignation or removal), the
Insurance Trustee shall file a written report of such transactions and the
assets of the Trust, and the Employer or Administrator shall furnish or cause to
be furnished to each Participant a copy of such portions of the report or
summary thereof as required by law. Upon the expiration of sixty (60) days after
such a report is rendered, the Insurance Trustee shall be forever released and
discharged from all liability and accountability to anyone with respect to
transactions, shown in or reflected by such report, except with respect to any
such acts or transactions as to which the Employer shall have filed written
objections with the Insurance Trustee within the latter such sixty-day period.
(2) All reasonable expenses and agreed-upon fees of the Insurance Trustee
(other than Policy premiums) shall be paid or reimbursed by the Employer.
(3) The Insurance Trustee may resign, upon thirty (30) days' notice to the
Employer, or be removed by the Employer upon thirty (30) days' notice to the
Insurance Trustee. The Employer shall notify the Custodian of all changes in the
identity and address of the Insurance Trustee. When such a change occurs, the
succeeded Insurance Trustee promptly shall transfer and pay over to the
successor the records and assets of the Trust. No Insurance Trustee shall be
responsible solely for the performance of duties expressly assigned to that
Insurance Trustee hereunder and not for duties assigned to anyone else in
connection with the Plan.
25
ARTICLE VII. AMENDMENT AND TERMINATION UNDER THE PLAN
7.1 The "Sponsor" of the prototype plan under which this Plan is adopted shall
be the Custodian.
7.2 This Prototype Plan may be amended from time to time by the Sponsor (acting
alone) by an instrument in writing, but no amendment shall become effective
until the day following thirty (30) days after a copy of such amendment shall
have been furnished to each Employer (whereupon it may take effect retroactively
if so provided). The Employer may from time to time amend its elections in the
Adoption Agreement, provided it is satisfied that no such amendment will affect
the qualified status of the Plan. In the event of any amendment by the Sponsor,
each Employer shall be deemed to have consented thereto unless its dissent
thereto in writing be delivered to the Sponsor within thirty (30) days after a
copy of such amendment shall have been furnished to each Employer. In the event
that an Employer dissents to any such amendment, such dissent shall constitute a
withdrawal by the Employer of its Plan from under the prototype Plan; the
general procedures of the Internal Revenue Service governing
individually-designed plans will be applicable thereafter. Except in the case of
such dissent, upon the execution by the Sponsor of an instrument setting forth
the amendment, the Plan shall be deemed to have been so amended, effective as of
the date specified in such instrument to which may be retroactive as provided
above), and all Participants and other persons claiming any interest hereunder
shall be bound thereby. Unless required in order to obtain determination of the
Plan's initial or continuing qualified status under the Code, no amendment shall
(1) have the effect of vesting in any Employer any interest in any property held
subject to the terms of this Plan; (2) cause or permit any property held subject
to the terms of the Plan to be diverted to purposes other than the exclusive
benefit of the present or future Participants and Beneficiaries; or (3) cause
any Participant to be deprived of benefits theretofore vested in him.
7.3 Any Employer may withdraw its Plan from under the prototype plan by
dissenting to an amendment hereto as provided in 7.2 above or by giving written
notice of discontinuance of participation to the Custodian. A withdrawal from
the Plan by an Employer shall not of itself constitute a termination of the Plan
with respect to such Employer. Upon such withdrawal, the Employer shall succeed
to the Sponsor's Power (described in 7.2) to amend the Plan. If the Plan of any
participating Employer fails to retain its qualified status, such Plan will be
considered withdrawn from the prototype plan.
26
7.4 No amendment may increase the burdens of the Custodian or the Insurance
Trustee without the written consent of the affected entity.
7.5 The Plan shall terminate upon the death of the proprietor if the Employer is
a sole proprietor or, if the Employer is a partnership, upon termination of the
partnership, unless upon such event a successor to the business of the Employer
elects to continue the same and such continuation is acceptable to the
Custodian.
7.6 Upon the termination of the Plan, any and all assets remaining in the
Custodial Account shall be distributed by the Custodian to the Participants in
accordance with the amounts credited to their accounts as of the date of such
termination. Such distribution shall be in cash or in kind unless the Employer
directs another method permitted by 4.5 above. If the Plan is funded in part
with insurance, then upon termination of the Plan any and all Policies remaining
in the Trust shall be endorsed as nontransferable and be distributed by the
Insurance Trustee in kind to the Participants for whom the assets are held. Upon
the completion of such distribution, the Custodian and the Insurance Trustee
shall be relieved from all further liability with respect to all amounts so
paid.
ARTICLE VIII. PENALTY FOR PREMATURE DISTRIBUTIONS
(limitation on 4.2)
Notwithstanding any provisions to the contrary elsewhere in the Plan;
No distribution shall be made to a Participant who is or has been an
Owner-Employee prior to his attaining age 591/2 for any reason other than
disability or plan termination, to the extent that such distribution is
attributable to contributions paid while he was an Owner-Employee on his behalf
by the Employer, or by himself to the extent he could not withdraw the same at
that time under 3.3(C). If the foregoing sentence is violated, then no
contribution shall be made by or on behalf of such Participant for the five Tax
Years succeeding the Tax Year in which such distribution is made.
ARTICLE IX. - MISCELLANEOUS
9.1 Non-Reversion Provisions.
This Plan is established for the exclusive benefit of the Participants and their
Beneficiaries, and under no circumstances shall any of the assets of the
Custodial Account established hereunder revert to the Employer.
27
9.2 Inalienability of Benefits.
The benefits hereunder shall not be subject to alienation, assignment,
garnishment, attachment, execution, or levy of any kind, and any attempt to
cause such benefits to be so subjected shall not be recognized, except to the
extent required by law.
9.3 Notices.
Except where otherwise specifically required in this Plan, any notice from the
Custodian to any person provided for in this Plan shall be effective if sent by
first class mail to such person at that person's last address on the sender's
records.
9.4 Status of Participants.
Neither the establishment of the Plan and the Custodial Account nor any
modification thereof, nor the creation of any fund or account, nor the payment
of any benefits, shall be construed as giving to any Participant or other person
any legal or equitable right against the Employer or Custodian, except as
provided herein or by law; and in no event shall the terms of employment of any
Employee or Participant be modified or in any way be affected hereby.
9.5 Allocation of Charges.
Any taxes and all fees and other expenses incurred with respect to the assets of
the Custodial Account shall be payable as provided for in the Custodial
Agreement. The expenses of the Plan Administrator are provided for in 5.10
above.
9.6 Mergers and Transfers.
In the event this Plan is merged or consolidated with, or its assets and
liabilities are transferred to, any other plan, the Plan Administrator shall be
responsible for verifying that each Participant in this Plan would be entitled
to receive a benefit immediately after the merger, consolidation or transfer (if
the Plan then terminated) which would be equal to or greater than the benefit he
would have been entitled to receive immediately before the merger, consolidation
or transfer if this Plan had then terminated.
9.7 Governing Law.
This Plan shall be construed and administered in accordance with the laws of the
Commonwealth of Massachusetts to the extent not pre-empted by the laws of the
United States of America (including ERISA); any provision hereof in conflict
with applicable
28
federal law shall survive to the extent permitted by that law. This Plan is
intended to meet the requirements of Section 401 (a) of the Code, and if any
provision hereof is subject to more than one construction, such ambiguity shall
be resolved in favor of that interpretation or construction which is consistent
with that intent. However, the Custodian shall not be responsible for whether or
not such intentions are achieved through use of this Plan; the Employer should
consult the Employer's attorney on such questions.
29
XXXXXX, XXXXXXX & X.X. DAY, INC.
CUSTODIAL AGREEMENT
SECTION 1. INTRODUCTION
The Employer, as engaged in the business referred to on the Adoption Agreement,
has adopted the foregoing Prototype as its Retirement Plan (the "Plans") for the
benefit of the Participants therein pursuant to the Self-Employed Individuals
Tax Retirement Act of 1962, as amended, and pursuant to the Employee Retirement
Income Security Act of 1974 as now in effect and hereafter amended, including
successor sections ("ERISA"). As part of the Plan, the Employer has requested
the Custodian to establish a Custodial Account for the investment of
contributions under the Plan upon the terms and conditions set forth in this
Agreement. The word "Employer" and other words and phrases defined in the Plan
shall have the same meanings hereunder. The Custodian shall be entitled to all
of the protection conferred on it by the terms of the Plan; and it may assume
that the Employer is serving as the Plan Administrator unless and until it
receives written notice to the contrary.
This Agreement shall take effect upon acceptance in writing by the Custodian of
its appointment in the Adoption Agreement.
SECTION 2. ESTABLISHMENT OF PARTICIPANTS' ACCOUNTS
The Custodian shall, upon acceptance of its duties under the Plan and this
Agreement, open and maintain Participants' Accounts for such individuals as the
Administrator shall from time to time certify to it, by name, address and social
security number, as Participants in the Plan.
SECTION 3. RECEIPT OF CONTRIBUTIONS
All contributions of money by or on behalf of Participants as may be made from
time to time shall he invested in the name of the Custodian as provided herein.
All such contributions of money shall be accompanied or preceded by written
instructions from the Administrator specifying the Participants' Accounts to
which they are to be credited, the amount of each such credit which is an
Employer contribution, the amount, if any, which is the Participant's
contribution, and the amount, if any, which is a deductible employee
contribution, or a rollover contribution, and designating Owner-Employees as
such. If written instructions are not received, or if received, are unclear in
the opinion of the Custodian, the Custodian may hold all or a portion of the
contribution in cash without liability for loss of income or appreciation, and
without liability for interest, pending receipt
30
of written instructions or clarification. Contributions may be made at intervals
determined by the Employer.
In addition, the Custodian may accept assets transferred to it from any other
Plan which is maintained by the Employer for the benefit of any of the
Participants if the Administrator certifies in writing to the Custodian his
reasonable belief that such other Plan satisfies the requirements of Section
401(a) and Section 401(d), if applicable, of the Internal Revenue Code ("Code"),
and if the Custodian has received a description of the assets and such other
information as it may reasonably require. The Custodian at its option may, but
need not, accept assets other than investments of the types specified in Section
4, or cash; any such other assets shall be disposed of as promptly as possible,
the proceeds shall be reinvested as provided in this Section 3, and the
Custodian shall, in accordance with the written instructions of the
Administrator, make appropriate credits to the accounts of the Participants for
whose benefit assets have been transferred. Any amounts so credited as
contributions previously made by the Employer or by such Participants under such
other Plan, as specified by the Administrator, shall be treated as contributions
previously made under the Plan by the Employer or by such Participants, as the
case may be.
SECTION 4. INVESTMENT OF CONTRIBUTIONS
When the Custodian accepts and signs this Agreement, it shall establish a
Custodial Account consisting of all separate Participant accounts under this
Plan. All contributions to the Plan shall be invested and reinvested in such
marketable securities (including options) traded by or obtainable through the
Custodian either "over the counter" or on a recognized exchange (excluding
securities issued by the Custodian), and in such amounts, as are specifically
selected and specified by the Participant in orders to the Custodian in such
form and either directly or through the Administrator as may he acceptable to
the Custodian. The Custodian shall be responsible for the execution of such
orders and for maintaining adequate records thereof. However, if any such orders
are not received as required or, if received, are unclear in the opinion of the
Custodian, all or a portion of the contribution may be held uninvested without
liability for loss of income or appreciation, and without liability for
interest, pending receipt of such orders or clarification; or the contribution
may be returned. Amounts referred to in the next preceding sentence may be
invested, and dividends, interest, proceeds of the sale of securities, and other
cash receipts not intended as payment for securities shall be invested, in a
daily-interest money market mutual fund which is sponsored and/or managed by the
Custodian or any affiliate of the Custodian pending receipt of contrary
31
orders, except that a balance of to $200 of uninvested cash may (but need not)
be maintained for administrative convenience.
All assets of the Custodial Account shall be registered in the name of the
Custodian or of a suitable nominee. The same nominee may be used with respect to
(1) assets of the Accounts of all (or some) of the Participants, and (2) assets
of other investors whether or not held under agreements similar to this one or
in any capacity whatsoever. However, each Participant's Account shall be
separate and distinct; a separate account thereof shall be maintained by the
Custodian; and the assets thereof shall be held by the Custodian in individual
or bulk segregation either in the Custodian's vaults or in depositories approved
by the Securities and Exchange Commission under the Securities Exchange Act of
1934.
The Custodian does not assume any responsibility for rendering advice with
respect to the investment and reinvestment of a Participant's Account and shall
not be liable for any loss which results from the Participant's exercise of
control over his Account. Except only to the extent (and upon the terms) that
the Custodian specifically agrees with the Employer or the Participant in
writing from time to time that the Custodian will render such advice, the
Participant shall have and exercise exclusive responsibility for and control
over the investment of the assets of his Account, and the Custodian shall not
have any duty to question his directions in that regard or to advise him
regarding purchase, retention, or sale of such assets.
SECTION 5. DISTRIBUTIONS
On receipt of a written order from the Administrator certifying that a
Participant's benefits and/or a withdrawal of the Participant's contributions is
payable pursuant to the Plan, the Custodian shall cause all assets credited to
such participant's Account (or such portion thereof as the Administrator may so
order) to be transferred into the name of such Participant or the name of such
other person as is entitled thereto under the Plan and distribute such assets to
the transferee. Before such distribution is made, however, the Custodian shall
be furnished with any and all applications, certificates, tax waivers, signature
guarantees and other documents (including proof of the Administrator's or any
legal representative's authority) deemed necessary or advisable by the
Custodian; but the Custodian shall not be responsible for complying with an
order which appears on its face to be genuine, or for refusing to comply if not
satisfied it is genuine, and assumes no duty of further inquiry. The Custodian
shall not have any responsibility for making any distribution unless and until
such an order has been received which specifies the occasion for the
distribution and the method under the Plan in which distribution is to be made.
32
Anything else to the contrary notwithstanding, upon receiving such an order with
the necessary instructions the Custodian will make any repayment or
redistribution of any Excess Contribution required under the Plan and/or the
Custodian shall make whatever adjustment of accounts provided for in the Plan,
whichever appropriate under the circumstances.
On receipt of a written direction from the Employer, the Custodian shall
transfer assets held in the Custodial Account for the account of a Participant
or Participants to the trustee or custodian serving in respect to another plan
or plans maintained by the Employer or some other employer of such Participant
or Participants for the benefit of such Participant or Participants and others.
Such transfer shall be accompanied by instructions to the effect that such a
Participant who was an Owner-Employee under the Plan be treated as an
Owner-Employee under such other plan. However, the Custodian shall first be
furnished with a written certificate of the Administrator that the Administrator
is satisfied that the requirements of Section 401(a) and Section 401(d), if
applicable, of the Code are satisfied by such other plan or plans. The Custodian
shall have no further liability under the terms of this Agreement with respect
to assets so transferred.
SECTION 6. VOTING AND OTHER ACTION
The Custodian shall deliver, or cause to be delivered, to each Participant all
notices, prospectuses, financial statements, proxies and proxy soliciting
materials relating to assets credited to his Account. The Custodian shall not
vote any shares of stock or take any other action, pursuant to such documents,
with respect to such assets except upon receipt by the Custodian of adequate
written instructions from the Participant.
SECTION 7. RECORDS AND REPORTS OF THE CUSTODIAN AND EMPLOYER
The Custodian shall keep adequate records of the transactions it is required to
perform hereunder. Not later than sixty (60) days after the close of each Plan
Year (or after the Custodian's resignation or removal pursuant to Section 11
hereof), it shall file with the Employer a written report or reports which may
consist of regularly issued Xxxxxx, Xxxxxxx & X.X. Xxx, Inc. account statements
reflecting the transactions effected by it during such period and the fair
market value of the assets of each Participant's account in the Custodial
Account at its close or adequate information to compute that value, and
thereupon the Employer or Administrator shall furnish or cause to be furnished
to each Participant a copy of such portions of the report or summary thereof as
required by law. Upon the expiration of sixty (60) days after such a report is
rendered, the Custodian
33
shall be forever released and discharged from all liability and accountability
to anyone with respect to transactions, shown in or reflected by such report,
except with respect to any such acts or transactions as to which the Employer
shall have filed written objections with the Custodian within the latter such
sixty-day period.
The Employer and the Custodian shall furnish to each other such information
relevant to the Plan and Custodial Account as may be required under the Code and
any Regulations issued or forms adopted by the Treasury Department thereunder.
The Employer agrees by itself or through its appointed Plan Administrator to
fulfill any reporting or disclosure obligations now or hereafter imposed on the
Employer or the Custodian, or both of them, by ERISA, the Code, or any similar
federal, state or municipal requirement. To the extent the Custodian must assume
any such obligations, it may charge a reasonable fee for the service apart from
its normal fees and its expenses, as provided for in Section 8.
SECTION 8. CUSTODIAN'S FEES AND EXPENSES OF THE CUSTODIAL
ACCOUNT
The Custodian, in consideration of its services under the Plan and this
Custodial Agreement, shall receive the fees specified on the applicable fee
schedule. The fee schedule originally applicable shall be the same one
identified on the Adoption Agreement. The Custodian may substitute a different
fee schedule at any time upon thirty (30) days' written notice to the Employer.
The Custodian shall also receive reasonable fees for any services not
contemplated by any applicable fee schedule and either deemed by it to be
necessary or desirable, or requested by the Employer or Plan Administrator.
The Custodian shall also receive reasonable fees for the broker-dealer services
which it renders on behalf of a Participant's Account, which shall be charged to
that Account.
To the extent incurred by the Custodian and not reimbursed by the Employer, any
income, gift, estate and inheritance taxes and other taxes of any kind
whatsoever, including transfer taxes incurred in connection with the investment
or reinvestment of the assets of the Custodial Account, that may be levied or
assessed in respect to such assets shall, if allocable to specific Participants,
be charged to the Accounts of such Participants, and if not so allocable they
shall be charged proportionately to all such Participants' Accounts. Similarly,
to the extent not reimbursed by the Employer, all other administrative expenses
incurred by the Custodian in the performance of its duties (including fees for
legal services rendered to it)
34
shall, if allocable to specific Participants, be charged to the Accounts of such
Participants, and if not so allocable, be charged proportionately to such
Accounts.
All such fees and taxes and other administrative expenses charged to a
Participant's Account will be collected either from the amount of any
contribution or distribution to be credited to such Account, or (at the option
of the Custodian) by the conversion into cash of sufficient assets of the
Account; but the Employer shall be responsible for any deficiency.
SECTION 9. CONCERNING THE CUSTODIAN
The Custodian shall not be responsible in any way for the collection of
contributions provided for under the Plan; the purpose or propriety of any
distribution or withdrawal made pursuant to Section 5 hereof; any other action
or nonaction taken pursuant to the request of the Employer, the Plan
Administrator, or a Participant; the validity or effect of the Plan or Custodial
Agreement; the qualification of the Plan or this Agreement under the Code or
ERISA: or examination of the Plan.
The Employer and the legal representative or successor of the Employer, as
appropriate, and (with respect to directions from the Participant) the
Participant and his legal representative, shall at all times fully indemnify and
save harmless the Custodian, its successors and assigns, from any liability
arising from distributions so made or actions so taken, and from any and all
other liability whatsoever which may arise in connection with this Agreement,
except liability arising from the negligence or willful misconduct of the
indemnified person.
The Custodian shall not he under any duty to take any action other than as
herein specified with respect to the Custodial Account unless the Employer, Plan
Administrator, or Participant (whichever is appropriate) shall furnish the
Custodian with instructions in proper form and such instructions shall have been
specifically agreed to by the Custodian in writing, or to defend or engage in
any suit with respect to the Custodial Account unless the Custodian shall have
first agreed in writing to do so and shall have been fully indemnified to its
satisfaction. The Custodian may conclusively rely upon and shall be protected in
acting upon any written order from the Employer, the Plan Administrator or a
Participant, or any other notice, request, consent, certificate of other
instrument or paper believed by it to be genuine and to have been properly
executed, or upon any opinion of counsel and, so long as it acts in good faith,
in taking or omitting to take any action. The Custodian shall not be liable for
interest on any cash balances maintained in the Custodial Account in accordance
with the provisions of this Custodial Agreement.
35
The Custodian shall not be obligated to receive a contribution, instruction or
request from a Participant unless the same is forwarded by the Employer or Plan
Administrator, but it may do no in its discretion.
The Employer and the executor, administrator or successors of the Employer,
shall have the sole authority to enforce this agreement on behalf of any and all
persons having or claiming any interest in the Custodial Account. In order to
save the Custodial Account from the expenses which might otherwise be incurred,
it is imposed as a condition to the acquisition of any interest in the Custodial
Account, and it is hereby agreed, that no person other than the Employer and
such other persons as appropriate, may institute or maintain any action or
proceeding against the Custodian in the absence of written authority from the
Employer or a determination of a court of competent jurisdiction that, in
refusing such authority, the Employer or such other persons have acted
fraudulently or in bad faith.
SECTION 10. AMENDMENT
Amendment and termination of this Agreement shall be governed by the provisions
of Article VII of the Plan. They shall not be construed to reduce the freedom of
the Custodian to substitute fee schedules within the limits of Section 8, and no
such substitution shall be deemed to be an amendment of the Plan or of this
Agreement.
SECTION 11. RESIGNATION OR REMOVAL OF CUSTODIAN
Upon thirty (30) days' prior written notice to the Custodian, the Employer may
remove the Custodian from its office hereunder. Such notice, to be effective,
shall designate a successor Xxxxxxxxx and shall be accompanied by the
successor's written acceptance. The Custodian also may at any time resign
unilaterally upon thirty (30) days' prior written notice to the Employer,
whereupon the Employer shall appoint a successor Custodian.
The successor Custodian shall be a bank, insured credit union, or other person
satisfactory to the Secretary of the Treasury pursuant to Section 401(d)(1) of
the Code, and (while serving hereunder) a broker-dealer registered under the
Securities Exchange Act of 1934, as now in effect and hereafter amended. Upon
receipt by the Custodian of written acceptance by its successor of such
successor's appointment, the Custodian shall transfer and pay over to such
successor the assets of the Custodial Account and all records (or copies
thereof) of the Custodian pertaining thereto provided that the successor
Custodian agrees not to dispose of any such records without the Custodian's
consent. The Custodian is authorized, however, to
36
reserve such sum of money or property as it may deem advisable for payment of
all its fees, compensation, costs, and expenses, or for payment of any other
liabilities constituting a charge on or against the assets of the Custodial
Account or on or against the Custodian, with any balance of such reserve
remaining after the payment of all such items to be paid over to the successor
Custodian.
The Employer shall substitute another Custodian in place of the Custodian
specified in the Plan upon receipt of notice from the Commissioner of the
Internal Revenue Service or his delegate that such substitution is required
because the specified Custodian has failed to comply with the requirements of
Temporary Income Tax Regulations Section 11.401(d)(1)-1, or is not keeping such
records, making such returns or rendering such statements as are required by
applicable law, regulations or other rulings.
The Custodian shall not be liable for the acts or omissions of its successor.
SECTION 12. TERMINATION OF ACCOUNT
The Custodian shall terminate the Custodial Account if this Agreement is
terminated, or if within thirty (30) days (or such longer time as the Custodian
may agree to) after resignation or removal of the Custodian pursuant to Section
11, the Employer has not appointed a successor Custodian which has accepted such
appointment. Except in a case where the last paragraph of Section 5 applies with
respect to a termination of this Agreement, termination of the Custodial Account
shall be effected by distributing all assets thereof to the Participants in
accordance with the provisions of the Plan and pursuant to the direction of the
Employer (or in the absence of such direction as determined by the Custodian),
as on the termination of the Plan subject to the Custodian's right to reserve
funds as provided in Section 11.
Upon termination of the Custodial Account as provided for in this Section, the
Agreement shall be considered to be rescinded and of no force and effect, and
the Custodian shall be relieved from all further liability with respect to this
Agreement, the Custodial Account and all assets thereof so distributed, and any
determinations by the Custodian of the mode of distributing the assets of the
Custodial Account.
SECTION 13. MISCELLANEOUS
At no time shall it be possible for any part of the assets of the Custodial
Account to be used for or diverted to purposes other than for the exclusive
benefit of Participants or their beneficiaries.
37
Any notice from the Custodian to the Employer provided for in this Agreement
shall be effective if sent by first-class mail to it at its last address on the
sender's records.
In the event of any conflict between the provisions of the Plan and those of
this Agreement, the provisions of this Agreement shall prevail, except over
those Plan provisions necessary to retain qualified status under Code Section
401.
The assets of the Custodial Account shall not be subject to alienation,
assignment, trustee process, garnishment, attachment, execution or levy of any
kind except by the Custodian for its fees and expenses, and no attempt to cause
such assets to be so subjected shall be recognized except to such extent as may
be required by law or provided for herein.
This Agreement shall be construed and administered in accordance with the laws
of the Commonwealth of Massachusetts, to the extent not pre-empted by the laws
of the United States of America (including ERISA); any provision of this
Agreement in conflict with applicable federal law shall survive to the extent
permitted by that law.
The Custodian shall be responsible solely for performance of those duties
expressly assigned to it in the Plan and this Agreement; it assumes no
responsibility as to duties assigned to anyone else thereunder or by operation
of law.
38
SUMMARY OF XXXXX FEATURES AND PROVISIONS
PROTOTYPE SELF-EMPLOYED PROFIT-SHARING RETIREMENT PLAN
This Summary describes the general terms of the Xxxxxx, Xxxxxxx Xxxx-Employed
Profit-Sharing Retirement Plan which has been adopted by your employer to help
provide financial security for your retirement and to protect you and your
family if disability keeps you from working, or in the event of your death.
ELIGIBILITY
You may participate in the Plan on the first day of the year following that in
which you complete ( ) years of service with the employer.
A year of service is a 12-month period, measured from your date of hire or
anniversaries of it, during which you complete 1,000 hours of service with the
employer. Once you have joined the Plan, you will continue to be a participant
for as long as you are an employee of your employer.
An owner-employee - someone who owns more than 10% interest in the employer's
business - must agree to participate before he becomes a participant.
EMPLOYER CONTRIBUTIONS
Each year the employer shall make cash contributions under the Plan for each
employee who is then a Participant.
Cash contributions shall be equal to __________% of employees' compensation or
earned income with a maximum of $15,000 per year. The percentage contributed for
non-owner-employees must be at least as high as that contributed for
owner-employees.
Contributions are made out of the employer's net business income (net profit) in
excess of $_______________. For any year in which the employer has no net
profit, no contribution may be made. If net profit is insufficient in any year
to make a full contribution, contributions to all participant accounts will be
reduced on a pro rata basis.
DEDUCTIBLE EMPLOYEE CONTRIBUTIONS
Effective January 1, 1982, you may make contributions to this Plan from your own
earnings, and deduct the contributions on your federal income tax return. The
maximum you may contribute and deduct is 100% of your compensation (not
including employer paid contributions under this Plan), up to a maximum of
$2,000
39
for each calendar year. You may make contributions on account of a calendar year
at any time up to April 15 of the next year.
If you also maintain an individual retirement account for yourself, you may not
contribute and deduct more than the maximum (100% of compensation up to $2,000)
to the IRA and this plan combined.
You may contribute additional amounts to this Plan as voluntary nondeductible
contributions, as described in the next section. You may also wish to contribute
to both an IRA and this Plan, and designate any or all of your contributions
under this Plan as nondeductible. The Custodian will automatically allocate the
first $2,000 of each Participant's employee-paid contributions as deductible
contributions. It you wish any portion of the first $2,000 of your contribution
to be nondeductible, you must notify the Custodian by certified mail, return
receipt requested, on or before April 15 of the following year.
VOLUNTARY NONDEDUCTIBLE CONTRIBUTIONS
For any Plan Year in which there are Employer contributions made on behalf of
participants other than owner-employees, you may make voluntary nondeductible
contributions. The limit on owner-employee voluntary nondeductible contributions
is 10% of Earned Income or $2,500, whichever is less. The limit on voluntary
nondeductible contributions for other participants is applied in the aggregate
to such contributions for all Plan Years you were a participant; the total of
all your voluntary nondeductible contributions may not exceed 10% of your total
Compensation or Earned Income for those years.
These voluntary contributions are not tax deductible, but earnings on them will
not be taxed until your benefits are eventually distributed.
You may withdraw your voluntary nondeductible or deductible contributions upon
written notice to the Plan Administrator up to their current value. If you
withdraw accumulated deductible contributions prior to age 59 1/2, you may be
subject to significant tax penalties.
INVESTMENTS
As a participant, your portion of the annual employer contribution is credited
to an account in your name at the Plan Custodian, Xxxxxx, Xxxxxxx & X.X. Day,
Inc.
Under the Plan, you have a wide choice of productive investments, and
flexibility to control and direct how your funds are put to work. To invest your
funds in bond, stocks, mutual funds, or other alternatives available under the
Plan, give your instructions to the Plan Administrator.
40
ADMINISTRATION OF PLAN
The Plan is administered by your employer unless otherwise stated. The Plan
Administrator is responsible for all matters relating to participation in the
Plan, and performs such duties as enrolling participants, keeping records,
sending contributions to the Custodian, and executing the investment
instructions of Participants.
The Administrator shall also provide adequate notice in writing to any employee
whose claim for benefits under the Plan has been denied in any respect, setting
forth the specific reasons for denial, written in a manner calculated to be
understood by such employee, and shall also afford a reasonable opportunity to
any such employee for a full and fair review of such denial.
Questions concerning the Plan should be directed to the Plan Administrator.
DISTRIBUTION OF BENEFITS
When you reach the Normal Retirement age under the Plan (age 65 or the 10th
anniversary of the day you became a participant, whichever is later) you will be
entitled to receive a distribution of your account in one of the following ways;
as designated by the Plan Administrator.
LUMP SUM
All securities (if any) in your accounts are redeemed and a check for the value
will be given to you for the entire balance of your interest in the Plan.
Alternatively, such securities may be transferred to you or your beneficiary as
payment in kind.
INSTALLMENTS
Benefits may be distributed in installments over a fixed period of years not to
exceed your life expectancy or the joint and last survivor expectancy of you and
your spouse. If, for example, a period of 10 years was selected, 1/10 of the
value of the account would be distributed the first year, the next year, 1/9,
etc. until the entire account was depleted.
If your employer approves, you may elect to work beyond your normal retirement
date and receive your retirement benefits after you actually retire. (An
owner-employee, however, may not begin receiving benefit payments except in case
of death or disability before age 59 1/2 and must begin receiving payments by
age 70 1/2.)
41
SINGLE-LIFE ANNUITY
This form of benefit would provide you with an annuity for life with no payments
after your death to a spouse or beneficiary.
JOINT AND SURVIVOR ANNUITY
If you are married, your benefit will automatically be paid in the form of a 50%
joint and survivor annuity, unless you elect in writing not to have your benefit
paid in this form. If you do not want your retirement benefit paid in the joint
and survivor annuity form, you must so elect in writing during the election
period and the Plan Administrator will designate one of the other forms of
payments.
The election period will begin upon the furnishing to you of notice of the
election by the Plan Administrator or following the furnishing of any additional
information concerning the election which you request. The election period will
last at least 90 days and ends on the day before benefits are to commence. The
election may be revoked in writing and another election may be made anytime
prior to the end of the election period.
The 50% joint and survivor annuity form will provide you with monthly benefits
as long as you live. Upon your death, payments to your spouse will continue but
will be reduced by 50% of the amount of your monthly payment. You may, however,
elect to receive (or the Plan Administrator may specify) a smaller joint and
survivor annuity benefit with continuation of payments to your spouse at the
rate of 100% of the rate payable to you during your lifetime.
DEATH BENEFITS
If you should die before your account has been distributed, whatever
undistributed interest remains will be distributed to your beneficiary, or will
be immediately applied to purchase an annuity for such beneficiary.
DISABILITY
If you become "disabled"--that is, you are unable to engage in any gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or be of long-continued or indefinite
duration--then the Plan Administrator has the discretion to have your benefit
distribution commence at once. In determining your disability and exercising
this discretion, the Administrator must follow uniform rules among participants.
42
TERMINATION OF EMPLOYMENT
If you terminate your employment prior to reaching Normal Retirement Age, other
than by death or disability, your account(s) will normally remain with the
Custodian until you reach Normal Retirement Age. However, at the discretion of
the Plan Administrator, who must use rules applied uniformly in a
nondiscriminatory manner, distribution may commence earlier; but owner-employees
may not receive any benefits prior to reaching age 59 1/2, unless the Plan
itself is terminated or the owner-employee becomes disabled.
PLAN TERMINATION INSURANCE
Because this Plan is of the "defined contribution" type, it is not insured under
Title IV of the Employee Retirement Income Security Act of 1974 by the Pension
Benefit Guaranty Corporation.
STATEMENT OF ERISA RIGHTS
As a Particicant in the Plan, you are entitled to certain rights and protections
under the Employee Retirement Income Security Act of 1974 (ERISA). ERISA
provides that all Plan Participants shall be entitled to:
Examine, without charge, at the Plan Administrator's office al1 plan documents,
and copies of all documents filed by the Plan Administrator with the United
States Department of Labor, such as annual reports and plan descriptions.
Examination at the Plan Administrator's office shall take place by prearranged
appointment during normal business hours.
Obtain copies of all plan documents and other plan information upon written
request to the Plan Administrator. The Plan Administrator may make a reasonable
charge for the copies. Receive a summary of the Plan's annual financial report.
The Plan Administrator is required by law to furnish each Participant with a
copy of this summarized annual report.
Obtain a statement telling you whether you have a right to receive a benefit at
normal retirement age and, if so, what your Benefits would be at normal
retirement age if you stop working under the plan now. If you do not have a
right to a benefit, the statement will tell you how many more years you have to
work to get a right to a benefit. This statement must be requested in writing
and is not required to be given more than once a year. The Plan must provide the
statement free of charge.
In addition to creating rights for Plan Participants, ERISA imposes duties upon
the people who are responsible for the operation of the Plan. The people who
operate your plan, called
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"fiduciaries" of the Plan, have a duty to do so prudently and in the interest of
you and other plan Participants and beneficiaries. No one, including the
Company, may fire you or otherwise discriminate against you in any way to
prevent you from obtaining a pension benefit or exercising your rights under
ERISA. If your claim for benefits is denied in whole or in part, you must
receive a written explanation of the reason for the denial. You have the right
to have the Plan Administrator review and reconsider your claim. Under ERISA,
there are steps you can take to enforce the above rights. For instance, if you
request materials from the Plan and do not receive them within thirty (30) days,
you may file suit in a federal court. In such a case, the court may require the
Plan Administrator to provide the materials and pay you up to $100 a day until
you receive the materials, unless the materials were not sent because of reasons
beyond the control of the Plan Administrator. If you have a claim for benefits
which is denied or ignored, in whole or in part, you may file suit in a state or
federal court. If it should happen that plan fiduciaries misuse the plan's
money, or if you are discriminated against for asserting your rights, you may
seek assistance from the U.S. Department of Labor, or you may file suit in a
federal court. The court will decide who should pay court costs and legal fees.
If you are successful, the court may order the person you has sued to pay these
costs and fees. If you lose, the court may order you to pay these costs and
fees, for example, if it finds your claim is frivolous. If you have any
questions about your Plan, you should contact the Plan Administrator. If you
have any questions about this statement or about your rights under ERISA, you
should contact the nearest Area Office of U.S. Labor-Management Services
Administration, Department of Labor.
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The purpose of this Summary is to describe the key features and provisions
clearly and concisely for the benefit of participants and their beneficiaries.
Should any of the text appear to contradict or conflict with that of the Plan
and Adoption Agreement executed by the employer, the terms of these Plan
documents shall control.
W-0122H/
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