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EXHIBIT 10.21
NONSTANDARDIZED
ADOPTION AGREEMENT
PROTOTYPE CASH OR DEFERRED PROFIT-SHARING
PLAN AND TRUST ACCOUNT
SPONSORED BY
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
The Employer named below hereby establishes a Cash or Deferred Profit-Sharing
Plan for eligible Employees as provided in this Adoption Agreement and the
accompanying Basic Prototype Plan and Trust Account Basic Plan Document #01.
1. EMPLOYER INFORMATION
NOTE: If multiple Employers are adopting the Plan, complete this
section based on the lead Employer. Additional Employers may
adopt this Plan by attaching executed signature pages to the
back of the Employer's Adoption Agreement.
EMPLOYER'S NAME: TELECOMMUNICATION SYSTEMS, INC.
ADDRESS: 000 XXXX XXXXXX XXXXX 000
XXXXXXXXX, XX 00000
TELEPHONE NUMBER: (000)000-0000
TAX I.D. NUMBER: 00-0000000
FORM OF BUSINESS:
[ ] Sole Proprietor [ ] Partnership [X] S Corporation
[ ] Corporation [ ] Other
NAME OF INDIVIDUAL AUTHORIZED TO ISSUE INSTRUCTIONS TO THE TRUSTEE:
XXXXX XXXXX DIRECTOR, CONTRACTS & ADMINISTRATION
Name of PLAN: TELECOMMUNICATION SYSTEMS, INC. 401(k) & PROFIT
SHARING PLAN
THREE DIGIT PLAN NUMBER FOR ANNUAL RETURN/REPORT: 001
2. EFFECTIVE DATE
(a) This is a new Plan having an effective date of
(b) This is an amended Plan.
The effective date of the original Plan was JANUARY 1, 1991
The effective date of the amended Plan is JANUARY 1, 1999
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(c) If different from above, the Effective Date for the Plan's
Elective Deferral provisions shall be ___________.
3. DEFINITIONS
(a) "COLLECTIVE OR COMMINGLED FUNDS" (Applicable to institutional
Trustees only.) Investment in collective or commingled funds
as permitted at paragraph )3.3(b) of the Basic Plan
Document #01 shall only be made to the following specifically
named fund(s):
Funds made available after the execution of this Adoption
Agreement will be listed on schedules attached to the end of
this Adoption Agreement.
(b) "COMPENSATION" Compensation shall be determined on the basis
of the:
[X] (i) Plan Year.
[ ] (ii) Employer's Taxable Year.
[ ] (iii) Calendar Year.
Compensation shall be determined on the basis of the following
definition:
[ ] (iv) Code Section 6041 and 6051 Compensation,
[X] (v) Code Section 3401(a) Compensation, or
[ ] (vi) Code Section 415 Compensation.
Compensation [X] shall [ ] shall not include Employer
contributions made pursuant to a Salary Savings Agreement
which are not includable in the gross income of the Employee
for the reasons indicated in the definition of Compensation at
1.12 of the Basic Plan Document #01.
For purposes of the Plan, Compensation shall be limited to
$________, the maximum amount which will be considered for
Plan purposes. [If an amount is specified, it will limit the
amount of contributions allowed on behalf of higher
compensated Employees. Completion of this section is not
intended to coordinate with the Code Section 401(a)(17)
definition of Compensation.]
Exclusions From Compensation:
(1) overtime.
(2) bonuses.
(3) commissions.
(4) _____________
Type of Contribution(s) Exclusion(s)
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Effective Deferrals [Section 7(b)] ____________
Matching Contributions [Section 7(c)] ____________
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QUALIFIED Non-Elective Contributions [Section 7(d)]
and Non-Elective Contributions [Section 7(e)] ___________
(c) "ENTRY DATE"
[ ] (i) The first day of the Plan Year nearest the date on
which an Employee meets the eligibility requirements.
[ ] (ii) The earlier of the first day of the Plan Year or the
first day of the seventh month of the Plan Year
coinciding with or following the date on which an
Employee meets the eligibility requirements.
[X] (iii) the first day of the Plan Year following the date on
which the Employee meets the eligibility
requirements. If this election is made, the Service
requirement at 4(a)(ii) may not exceed 1/2 year and
the age requirement at 4(b)(ii) may not exceed
20-1/2.
[ ] (iv) The first day of the month coinciding with or
following the date on which an Employee meets the
eligibility requirements.
[ ] (v) The first day of the Plan Year, or the first day of
the fourth month, or the first day of the seventh
month or the first day of the tenth month, of the
Plan Year coinciding with or following the date on
which an Employee meets the eligibility requirements.
(d) "HOURS OF SERVICE" Shall be determined on the basis of the method
selected below. Only one method may be selected. The method selected
shall be applied to all Employees covered under the Plan as follows:
[X] (i) On the basis of actual hours for which an Employee is
paid or entitled to payment.
[ ] (ii) On the basis of days worked.
An Employee shall be credited with ten (10) Hours of
Service if under paragraph 1.42 of the Basic Plan
Document #01 such Employee would be credited with at
least one (1) Hour of Service during the day.
[ ] (iii) On the basis of weeks worked.
An Employee shall be credited with forty-five (45)
Hours of Service if under paragraph 1.42 of the Basic
Plan Document #01 such Employee would be credited
with at least one (1) Hour of Service during the
week.
[ ] (iv) On the basis of semi-monthly payroll periods.
An Employee shall be credited with ninety-five (95)
Hours of Service if under paragraph 1.42 of the Basic
Plan Document #01 such Employee would be credited
with at least one (l) Hour of Service during the
semi-monthly payroll period.
[ ] (v) On the basis of months worked.
An Employee shall be credited with one-hundred-ninety
(190) Hours of Service if under paragraph 1.42 of the
Basic Plan Document #01 such Employee would be
credited with at least one (1) Hour of Service during
the month.
(e) "LIMITATION YEAR" The 12-consecutive month period commencing on JANUARY
1 and ending on DECEMBER 31.
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If applicable, the Limitation Year will be a short Limitation Year
commencing on _________ and ending on ______________. Thereafter, the
Limitation Year shall end on the date last specified above.
(f) "Net Profit"
[X] (i) Not applicable (profits will not be required for any
contributions to the Plan).
[ ] (ii) As defined in paragraph 1.49 of the Basic Plan
Document #01.
[ ] (iii) Shall be defined as:
(g) "PLAN YEAR" The 12-consecutive month period commencing on JANUARY 1 and
ending on DECEMBER 31. If applicable, the Plan Year will be a short
Plan Year commencing on _______ and ending on ________. Thereafter, the
Plan Year shall end on the date last specified above.
(h) "QUALIFIED EARLY RETIREMENT AGE" For purposes of making distributions
under the provisions of a Qualified Domestic Relations Order, the
Plan's Qualified Early Retirement Age with regard to the Participant
against whom the order is entered [X] shall [ ] shall not be the date
the order is determined to be qualified. If "shall" is elected, this
will only allow payout to the alternate payee(s).
(i) "QUALIFIED JOINT AND SURVIVOR ANNUITY" The safe-harbor provisions of
paragraph 8.7 of the Basic Plan Document #01 [X] are [ ] are not
applicable. If not applicable, the survivor annuity shall be __ % (50%,
66-2/3%, 75% or 100%) of the annuity payable during the lives of the
Participant and Spouse. If no answer is specified, 50% will be used.
(j) "TAXABLE WAGE BASE"
[ ] (i) Not Applicable - Plan is not integrated with Social
Security.
[ ] (ii) The maximum earnings considered wages for such Plan
Year under Code Section 3121(a).
[ ] (iii) __% (not more than 100%) of the amount considered
wages for such Plan Year under Code Section 3121(a).
[ ] (iv) $_____, provided that such amount is not in excess of
the amount determined under paragraph 3(j)(ii) above.
[ ] (v) For the 1989 Plan Year $10,000. For all subsequent
Plan Years, 20% of the maximum earnings considered
wages for such Plan Year under Code Section 3121(a).
NOTE: Using less than the maximum at (ii) may result in a change in
the allocation formula in Section 7.
(k) "VALUATION DATE(S)" Participant Accounts will be adjusted daily to
reflect all allocations at Article V of the Basic Plan Document.
(1) "YEAR OF SERVICE"
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(i) For Eligibility Purposes: The 12-consecutive month
period during which an Employee is credited with 1 (not
more than 1,000) Hours of Service.
(ii) For Allocation Accrual Purposes: The 12-consecutive
month period during which an Employee is credited with 1
(not more than 1,000) Hours of Service.
(iii) For Vesting Purposes: The 12-consecutive month period
during which an Employee is credited with 1000 (not more
than 1,000) Hours of Service.
4. ELIGIBILITY REQUIREMENTS
(a) SERVICE:
[X] (i) The Plan shall have no service requirement.
[ ] (ii) The Plan shall cover only Employees having
completed at least _ [not more than three (3)]
Years of Service. If more than one (1) is
specified, for Plan Years beginning in 1989 and
later, the answer will be deemed to be one (1).
NOTE: If the eligibility period selected is less than one
year, an Employee will not be required to complete any
specified number of Hours of Service to receive credit
for such period.
(b) AGE:
[ ] (i) The Plan shall have no minimum age requirement.
[ ] (ii) The Plan shall cover only Employees having
attained age___ (not more than age 21).
(c) CLASSIFICATION:
The Plan shall cover all Employees who have met the age and service
requirements with the following exceptions:
[ ] (i) No exceptions.
[X] (ii) The Plan shall exclude Employees included in a unit of
Employees covered by a collective bargaining agreement
between the Employer and Employee Representatives, if
retirement benefits were the subject of good faith
bargaining. For this purpose, the term "Employee
Representative" does not include any organization more
than half of whose members are Employees who are owners,
officers, or executives of the Employer.
[X] (iii) The Plan shall exclude Employees who are nonresident
aliens and who receive no earned income from the
Employer which constitutes income from sources within
the United States.
[ ] (iv) The Plan shall exclude from participation any
nondiscriminatory classification of Employees determined
as follows:
(d) EMPLOYEES ON EFFECTIVE DATE:
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[X] (i) Not Applicable. All Employees will be required
to satisfy both the age and Service
requirements specified above.
[ ] (ii) Employees employed on the Plan's Effective Date
do not have to satisfy the Service requirements
specified above.
[ ] (iii) Employees employed on the Plan's Effective Date
do not have to satisfy the age requirements
specified above.
5. RETIREMENT AGES
(a) NORMAL RETIREMENT AGE:
If the Employer imposes a requirement that Employees retire
upon reaching a specified age, the Normal Retirement Age
selected below may not exceed the Employer imposed mandatory
retirement age.
[ ] (i) Normal Retirement Age shall be ___ (not to
exceed age 65).
[X] (ii) Normal Retirement Age shall be the later of
attaining age 65 (not to exceed age 65) or the
5 (not to exceed the 5th) anniversary of the
first day of the first Plan Year in which the
Participant commenced participation in the
Plan.
(b) EARLY RETIREMENT AGE:
[X] (i) Not Applicable.
[ ] (ii) The Plan shall have an Early Retirement Age of
__ (not less than 55) and completion of Years
of Service.
6. EMPLOYEE CONTRIBUTIONS
[X] (a) Participants shall be permitted to make Elective
Deferrals in any amount from 1% up to 15% of their
Compensation.
[ ] (b) Participants shall be permitted to make after tax
Voluntary Contributions in any amount from __% up to __%
of their Compensation
[ ] (c) Participants shall be required to make after tax
Voluntary Contributions as follows (Thrift Savings
Plan):
[ ] (i) __% of Compensation.
[ ] (ii) A percentage determined by the Employee
on his or her enrollment form.
(d) Participants shall be permitted to amend their deferral
agreements to change the contribution percentage:
[ ] (i) On the first day of the next quarter.
[ ] (ii) Upon 30 days notice to the Employer.
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(e) Participants [ ] may [X] may not have Elective Deferrals
recharacterized as Voluntary Contributions to satisfy
the Average Deferral Percentage Test.
7. EMPLOYER CONTRIBUTIONS AND ALLOCATION THEREOF-
NOTE: The Employer shall make contributions to the Plan in
accordance with the formula or formulas selected below. The
Employer's contribution shall be subject to the limitations
contained in Articles III and X. For this purpose, a
contribution for a Plan Year shall be limited for the
Limitation Year which ends with or within such Plan Year.
Also, the integrated allocation formulas below are for Plan
Years beginning in 1989 and later. The Employer's allocation
for earlier years shall be as specified in its Plan prior to
amendment for the Tax Reform Act of 1986.
(a) Profits Requirement:
(i) Current or Accumulated Net Profits are required for:
Yes No
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[ ] [X] (A) Matching Contributions.
[ ] [X] (B) Qualified Non-Elective Contributions.
[ ] [X] (C) discretionary contributions.
NOTE. Elective Deferrals can always be contributed regardless of
profits.
[X] (b) SALARY SAVINGS AGREEMENT:
The Employer shall contribute and allocate to each
Participant's account an amount equal to the amount withheld
from the Compensation of such Participant pursuant to his or
her Salary Savings Agreement. If applicable, the maximum
percentage is specified in Section 6 above. An Employee who
has terminated his or her election under the Salary Savings
Agreement other than for hardship reasons may not make another
Elective Deferral:
[ ] (i) until the first day of the next Plan Year.
[ ] (ii) for a period of month(s) (not to exceed 12
months).
[X] (c) MATCHING EMPLOYER CONTRIBUTION [SEE PARAGRAPHS (h) and (i)]:
[ ] (i) PERCENTAGE MATCH: The Employer shall contribute
and allocate to each eligible Participant's
account an amount equal to % of the amount
contributed and allocated in accordance with
paragraph 7(b) above and (if checked) % of
[ ] the amount of Voluntary Contributions made
in accordance with paragraph 4.1 of the Basic
Plan Document #01. The Employer shall not match
Participant Elective Deferrals as provided above
in excess of $ or in excess of % of the
Participant's Compensation or if applicable,
Voluntary Contributions in excess of $ or
in excess of % of the Participant's
Compensation. In no event will the match on both
Elective Deferrals and Voluntary Contributions
exceed a combined amount of $ or %.
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[X] (ii) DISCRETIONARY MATCH: The Employer shall
contribute and allocate to each eligible
Participant's account a percentage of the
Participant's Elective Deferral contributed and
allocated in accordance with paragraph 7(b)
above. The Employer shall set such percentage
prior to the end of' the Plan Year. The Employer
shall not match Participant Elective Deferrals
in excess of' S or in excess of % of the
Participant's Compensation.
[ ] (iii) TIERED MATCH: The Employer shall contribute and
allocate to each Participant's account an amount
equal to ____% of the first ____% of the
Participant's Compensation, to the extent
deferred.
____% of the next ____% of the Participant's
Compensation, to the extent deferred.
____% of the next ____% of the Participant's
Compensation, to the extent deferred.
NOTE: Percentages specified in (iii) above may not increase as the
percentage of Participant's contribution increases.
[ ] (iv) FLAT DOLLAR MATCH: The Employer shall contribute
and allocate to each Participant's account
$______ if the Participant defers at least 1% of
Compensation.
[ ] (v) PERCENTAGE OF COMPENSATION MATCH: The Employer
shall contribute and allocate to each
Participant's account ____% of Compensation if
the Participant defers at least 1% of
Compensation.
[ ] (vi) PROPORTIONATE COMPENSATION MATCH: The Employer
shall contribute and allocate to each
Participant who defers at least 1% of
Compensation. an amount determined by
multiplying such Employer Matching Contribution
by a fraction the numerator of which is the
Participant's Compensation and the denominator
of which is the Compensation of all Participants
eligible to receive such an allocation. The
Employer shall set such discretionary
contribution prior to the end of the Plan Year.
[X] (vii) QUALIFIED MATCH: Employer Matching Contributions
will be treated as Qualified Matching
Contributions to the extent specified below:
[ ] (A) All Matching Contributions.
[X] (B) None.
[ ] (C) __% of the Employer's Matching
Contribution.
[ ] (D) Up to __% of each Participant's
Compensation.
[ ] (E) The amount necessary to meet the [ ]
Average Deferral Percentage (ADP)
Test, [ ] Average Contribution
Percentage (ACP) Test, [ ] Both the
ADP and ACP Tests.
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Qualified Matching Contributions are
fully vested and are subject to
withdrawal restrictions prior to the
earlier of age 59 1/2 or separation
from employment.
(viii) MATCHING CONTRIBUTION COMPUTATION PERIOD:
The time period upon which matching
contributions will be based shall be
[ ] (A) weekly
[ ] (B) bi-weekly
[ ] (C) semi-monthly
[ ] (D) monthly
[X] (E) quarterly
[ ] (F) semi-annually
[ ] (G) annually
(ix) ELIGIBILITY FOR MATCH: Employer Matching
Contributions, whether or not Qualified,
will only be made on Employee Contributions
not withdrawn prior to the end of the [X]
Matching Contribution Computation Period
Plan Year.
[X] (d) QUALIFIED NON-ELECTIVE EMPLOYER CONTRIBUTION - [See paragraphs
(h) and (i)] These contributions are fully vested when
contributed.
The Employer shall have the right to make an additional
discretionary contribution which shall I be allocated to each
eligible Employee in proportion to his or her Compensation as
a percentage of the Compensation of all eligible Employees.
This part of the Employer's contribution and the allocation
thereof shall be unrelated to any Employee contributions made
hereunder. Qualified non-Elective Contributions shall be taken
into account to the extent necessary to satisfy the ADP or ACP
test requirements. Qualified non-Elective Contributions will
be allocated to:
[ ] (i) All Employees eligible to participate.
[X] (ii) Only non-Highly Compensated Employees
eligible to participate.
[X] (E) ADDITIONAL EMPLOYER CONTRIBUTION OTHER THAN QUALIFIED
NON-ELECTIVE CONTRIBUTIONS - NON-INTEGRATED [SEE PARAGRAPHS
(h) AND (i)]
The Employer shall have the right to make an additional
discretionary contribution which shall be allocated to each
eligible Employee in proportion to his or her Compensation as
a percentage of the Compensation of all eligible Employees.
'This part of the Employer's contribution and the allocation
thereof shall be unrelated to any Employee contributions made
hereunder.
[ ] (f) ADDITIONAL EMPLOYER CONTRIBUTION - INTEGRATED ALLOCATION
FORMULA [SEE PARAGRAPHS (h) AND (i)]
The Employer shall have the right to make an additional
discretionary contribution. The Employer's contribution for
the Plan Year plus any forfeitures shall be allocated to the
accounts of eligible Participants as follows:
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(i) First, to the extent contributions and forfeitures
are sufficient, all Participants will receive an
allocation equal to 3% of their Compensation.
(ii) Next, any remaining Employer Contributions and
forfeitures will be allocated to Participants who
have Compensation in excess of the Taxable Wage Base
(excess Compensation). Each such Participant will
receive an allocation in the ratio that his or her
excess compensation bears to the excess Compensation
of all Participants. Participants may only receive an
allocation of 3% of excess Compensation.
(iii) Next, any remaining Employer contributions and
forfeitures will be allocated to all Participants in
the ratio that their Compensation plus excess
Compensation bears to the total Compensation plus
excess Compensation of all Participants. Participants
may only receive an allocation of up to 2.7% of their
Compensation plus excess Compensation, under this
allocation method. If the Taxable Wage Base defined
at Section 3(j) is less than or equal to the greater
of $10,000 or 20% of the maximum, the 2.7% need not
be reduced. If the amount specified is greater than
the greater of $10,000 or 20% of the maximum Taxable
Wage Base, but not more than 80%, 2.7% must be
reduced to 1.3%. If the amount specified is greater
than 80% but less than 100% of the maximum Taxable
Wage Base, the 2.7% must be reduced to 2.4%.
NOTE: If the Plan is not Top-Heavy or if the Top-Heavy
minimum contribution or benefit is provided under
another Plan [see Section 11(c)(ii)] covering the
same Employees, sub-paragraphs (i) and (ii) above may
be disregarded and 5.7%, 4.3% or 5.4% may be
substituted for 2.7%, 1.3% or 2.4% where it appears
in (iii) above.
(iv) Next, any remaining Employer contributions and
forfeitures will be allocated to all Participants
(whether or not they received an allocation under the
preceding paragraphs) in the ratio that each
Participant's Compensation bears to all Participants'
Compensation.
[ ] (g) ADDITIONAL EMPLOYER CONTRIBUTION-ALTERNATIVE INTEGRATED
ALLOCATION FORMULA. [SEE PARAGRAPH (h) AND (i)]
The Employer shall have the right to make an additional
discretionary contribution. To the extent that such
contributions are sufficient, they shall be allocated as
follows:
__% of each eligible Participant's Compensation plus __% of
Compensation in excess of the Taxable Wage Base defined at
Section 3(j) hereof. The percentage on excess compensation may
not exceed the lesser of (i) the amount first specified in
this paragraph or (ii) the greater of $.7% or the percentage
rate of tax under Code Section 3111(a) as in effect on the
first day of the Plan Year attributable to the Old Age (OA)
portion of the OASDI provisions of the Social Security Act. If
the Employer specifies a Taxable Wage Base in Section 3(j)
which is lower than the Taxable Wage Base for Social Security
purposes (SSTWB) in effect as of the first day of the Plan
Year, the percentage contributed with respect to excess
Compensation must be adjusted. If the Plan's Taxable Wage Base
is greater than the larger of $10,000 or 20% of the SSTWB but
not more than 80% of the SSTWB, the excess percentage is 4.3%.
If the Plan's Taxable Wage Base is greater than 80% of the
SSTWB but less than 100% of the SSTWB, the excess percentage
is 5.4%.
NOTE: Only one plan maintained by the Employer may be integrated
with Social Security.
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(h) ALLOCATION OF EXCESS AMOUNTS (ANNUAL ADDITIONS)
Excess Amounts shall be eliminated by first returning Employee
after tax contributions, then returning Employee required
after tax contributions, and then returning Employee Elective
Deferrals. In the case of a Highly Compensated Employee only
unmatched Elective Deferrals may be returned. If any excess
remains after completing the above refunds the excess will be:
[X] (i) unallocated until the next Limitation Year at which
time it will be allocated to the affected
Participant.
[ ] (ii) allocated to other eligible Participants in
proportion to Compensation.
(i) MINIMUM EMPLOYER CONTRIBUTION UNDER TOP-HEAVY PLANS:
For any Plan Year during which the Plan is Top-Heavy, the sum
of the contributions and forfeitures as allocated to eligible
Employees under paragraphs 7(d), 7(e), 7(f), 7(g) and 9 of
this Adoption Agreement shall not be less than the amount
required under paragraph 14.2 of the Basic Plan document #01.
Top-Heavy minimums will be allocated to:
[ ] (i) all eligible Participants.
[X] (ii) only eligible non-Key Employees who are
Participants.
(j) RETURN OF EXCESS CONTRIBUTIONS AND/OR EXCESS AGGREGATE
CONTRIBUTIONS:
In the event that one or more Highly Compensated Employees is
subject to both the ADP and ACP tests and the sum of such
tests exceeds the Aggregate Limit, the limit will be satisfied
by reducing the:
[ ] (i) the ACP of the affected Highly Compensated
Employees.
[X] (ii) a combination of the ADP and ACP of the
affected Highly Compensated Employees.
[ ] (iii) The ADP of the affected Highly Compensated
Employees.
8. ALLOCATIONS TO TERMINATED EMPLOYEES
[ ] (a) The Employer will not allocate Employer related
contributions to Employees who terminate during a Plan
Year, unless required to satisfy the requirements of Code
Section 401(a)(26) and 410(b). (These requirements are
effective for 1989 and subsequent Plan Years.)
[X] (b) The Employer will allocate Employer matching and other
related contributions as indicated below to Employees who
terminate during the Plan Year as a result of:
Matching Other
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[X] [X] (i) Retirement.
[X] [X] (ii) Disability.
[X] [X] (iii) Death.
[ ] [ ] (iv) Other termination of
employment provided that the
Participant has completed a
Year of Service as defined for
Allocation Accrual Purposes.
[ ] [ ] (v) Other termination of employment
even though the Participant has
not completed a Year of
Service.
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[ ] [ ] (vi) Termination of employment (for
any reason) provided that the
Participant had completed a
Year of Service for Allocation
Accrual Purposes.
9. ALLOCATION OF FORFEITURES
NOTE: Subsections (a), (b) and (c) below apply to forfeitures of
amounts other than Excess Aggregate Contributions.
(a) ALLOCATION ALTERNATIVES:
[ ] (i) Not Applicable. All contributions are always
fully vested.
[ ] (ii) Forfeitures shall be allocated to
Participants in the same manner as the
Employer's contribution.
[1] Forfeitures attributable to
Employer discretionary
contributions and Top-Heavy
minimums will be allocated to:
[ ] all eligible Participants under
the Plan.
[ ] only those Participants
eligible for an allocation of
matching contributions in the
current year.
[2] Forfeitures attributable to
Employer Matching contributions
will be allocated to:
[ ] all eligible Participants.
[ ] only those Participants
eligible for allocations of
matching contributions in the
current year.
[X] (iii) Forfeitures shall be applied to reduce the
Employer's contribution for such Plan Year.
[ ] (iv) Forfeitures shall be applied to offset
administrative expenses of the Plan. If
forfeitures exceed these expenses, (iii)
above shall apply.
(b) DATE FOR REALLOCATION:
Forfeitures shall be reallocated to eligible Employees on the
earlier of: (1) the end of the Plan Year during which the
Participant receives distribution of his or her benefit, or
(ii) the end of the Plan Year during which the Participant
incurs five consecutive one year Breaks in Service.
(c) RESTORATION OF FORFEITURES:
If amounts are forfeited prior to five consecutive 1-year
Breaks in Service, the Funds for restoration of account
balances will be obtained by means of an additional Employer
contribution.
(d) FORFEITURES OF EXCESS AGGREGATE CONTRIBUTIONS SHALL BE:
[X] (i) Applied to reduce Employer contributions.
[ ] (ii) Allocated, after all other forfeitures under
the Plan, to the Matching Contribution
account of each non-highly compensated
Participant who made Elective Deferrals or
Voluntary Contributions in the ratio which
each such Participant's Compensation for the
Plan Year bears to the total Compensation of
all Participants for such Plan Year. Such
forfeitures cannot be allocated to the
account of any Highly Compensated Employee.
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Forfeitures of Excess Aggregate Contributions will be so
applied at the end of the Plan Year in which they occur.
10. CASH OPTION
[ ] (a) The Employer may permit a Participant to elect to
defer to the Plan, an amount not to exceed __% of any
Employer paid cash bonus made for such Participant
for any year. A Participant must file an election to
defer such contribution at least fifteen (15) days
prior to the end of the Plan Year. If the Employee
fails to make such an election, the entire Employer
paid cash bonus to which the Participant would be
entitled shall be paid as cash and not to the Plan.
Amounts deferred under this section shall be treated
for all purposes as Elective Deferrals.
Notwithstanding the above, the election to defer must
be made before the bonus is made available to the
Participant.
[X] (b) Not Applicable.
11. LIMITATIONS ON ALLOCATIONS AND TOP HEAVY PROVISIONS
[X] This is the only Plan the Employer maintains or ever
maintained, therefore, this section is not applicable.
[ ] ANNUAL ADDITIONS - The Employer does maintain or has
maintained another Plan (including a Welfare Benefit Fund or
an individual medical account (as defined in Code Section
415(l)(2)), under which amounts are treated as Annual
Additions) and has completed the proper sections below.
Complete (a), (b) and (c) only if the Employer maintains or
ever maintained another qualified plan, including a Welfare
Benefit Fund or an individual medical account [as defined in
Code Section 415(l)(2)] in which any Participant in this Plan
is (or was) a participant or could possibly become a
participant.
(a) If the Participant is covered under another qualified Defined
Contribution Plan maintained by the Employer, other than a
Master or Prototype Plan:
[ ] (i) the provisions of Article X of the Basic
Plan Document #01 will apply, as if the
other plan were a Master or Prototype Plan.
[ ] (ii) Attach provisions stating the method under
which the plans will limit total Annual
Additions to the Maximum Permissible Amount,
and will properly reduce any Excess Amounts,
in a manner that precludes Employer
discretion.
(b) If a Participant is or ever has been a participant in a
Defined Benefit Plan maintained by the Employer:
Attach provisions which will satisfy the 1.0
limitation of Code Section 415(e). Such language must
preclude Employer discretion. The Employer must also
specify the interest and mortality assumptions used
in determining Present Value in the Defined Benefit
Plan.
13
14
PROTOTYPE CASH OR
DEFERRED PROFIT-
SHARING PLAN #002
(c) TOP HEAVY CONTRIBUTION - The minimum contribution or benefit
required under Code Section 416 relating to Top-Heavy Plans
shall be satisfied by:
[ ] (i) this Plan.
[ ] (ii) ____________________________________________
(Name of other qualified plan of the
Employer).
[ ] (iii) Attach provisions stating the method under
which the minimum contribution and benefit
provisions of Code Section 416 will be
satisfied. If a Defined Benefit Plan is or
was maintained, an attachment must be
provided showing interest and mortality
assumptions used in the Top-Heavy Ratio.
12. VESTING
Employees shall have a fully vested and nonforfeitable interest in any
Employer contribution and the investment earnings thereon made in
accordance with paragraphs (select one or more options) [ ] 7(c), [ ]
7(e), [ ] 7(f), [ ] 7(g) and [ ] 7(i) hereof. Contributions under
paragraph 7(b), 7(c)(vii) and 7(d) are always fully vested. If one or
more of the foregoing options are not selected, such Employer
contributions shall be subject to the vesting table selected by the
Employer.
Each Participant shall acquire a vested and nonforfeitable percentage
in his or her account balance attributable to Employer contributions
and the earnings thereon under the procedures selected below except
with respect to any Plan Year during which the Plan is Top-Heavy, in
which case the Two-twenty vesting schedule [Option (b)(iv)] shall
automatically apply unless the Employer has already elected a faster
vesting schedule. If the Plan is switched to option (b)(iv), because of
its Top-Heavy status, that vesting schedule will remain in effect even
if the Plan later becomes non-Top-Heavy until the Employer executes an
amendment of this Adoption Agreement indicating otherwise.
(a) COMPUTATION PERIOD:
The computation period for purposes of determining Years of
Service and Breaks in Service for purposes of computing a
Participant's nonforfeitable right to his or her account
balance derived from Employer contributions:
[ ] (i) shall not be applicable since Participants are
always fully vested,
[ ] (ii) shall commence on the date on which an
Employee first performs an Hour of Service for the
Employer and each subsequent 12-consecutive month
period shall commence on the anniversary thereof,
or
[X] (iii) shall commence on the first day of the Plan
Year during which an Employee first performs an
Hour of Service for the Employer and each
subsequent 12-consecutive month period shall
commence on the anniversary thereof.
A Participant shall receive credit for a Year of Service if he or she
completes at least 1,000 Hours of Service [or if lesser, the number of
hours specified at 3(l)(iii) of this Adoption Agreement] at any time
during the 12-consecutive month computation period. Consequently, a
Year of Service may be earned prior to the end of the 12-consecutive
month computation period and the Participant need not be employed at
the end of the 12-consecutive month computation period to receive
credit for a Year of Service.
14
15
PROTOTYPE CASH OR
DEFERRED PROFIT-
SHARING PLAN #002
(b) VESTING SCHEDULES:
NOTE: The vesting schedules below only apply to a Participant who
has at least one Hour of Service during or after the 1989 Plan
Year. If applicable, Participants who separated from Service
prior to the 1989 Plan Year will remain under the vesting
schedule as in effect in the Plan prior to amendment for the
Tax Reform Act of 1986.
(i) Full and immediate vesting.
Years of Service
----------------
1 2 3 4 5 6 7
--- ---- ---- --- ---- ---- ----
(ii) ___% 100%
(iii) ___% ___% 100%
(iv) 0% 20% 40% 60% 80% 100%
(v) ___% ___% 20% 40% 60% 80% 100%
(vi) 10% 20% 30% 40% 60% 80% 100%
(vii) ___% ___% ___% ___% 100%
(viii) ___% ___% ___% ___% ___% ___% 100%
NOTE: The percentages selected for schedule (viii) may not be less
for any year than the percentages shown at schedule (v).
[X] All contributions other than those which are fully
vested when contributed will vest under schedule iv
above.
[ ] Contributions other than those which are fully vested
when contributed will vest as provided below:
Vesting
Option Selected Type Of Employer Contribution
--------------- -----------------------------
7(c) Employer Match on Salary Savings
---------
7(c) Employer Match on
Employee Voluntary
---------
7(e) Employer Discretionary
---------
7(f) & (g) Employer Discretionary-Integrated
---------
15
16
PROTOTYPE CASH OR
DEFERRED PROFIT-
SHARING PLAN #002
(c) SERVICE DISREGARDED FOR VESTING:
[ ] (i) Not Applicable. All Service shall be considered.
[ ] (ii) Service prior to the Effective Date of this Plan or a
predecessor plan shall be disregarded when computing a
Participant's vested and nonforfeitable interest.
[X] (iii) Service prior to a Participant having attained age 18 shall
be disregarded when computing a Participant's vested and
nonforfeitable interest.
13. SERVICE WITH PREDECESSOR ORGANIZATION
For purposes of satisfying the Service requirements for eligibility, Hours
of Service shall include Service with the following predecessor
organization(s):
(These hours will also be used for vesting purposes.)
N/A
14. ROLLOVER/TRANSFER CONTRIBUTIONS
(a) Rollover Contributions, as described at paragraph 4.3 of the Basic
Plan Document #01, [X] shall [ ] shall not be permitted. If
permitted, Employees [X] may [ ] may not make Rollover Contributions
prior to meeting the eligibility requirements for participation in the
Plan.
(b) Transfer Contributions, as described at paragraph 4.4 of the Basic
Plan Document #01 [ ] shall [X] shall not be permitted. If permitted,
Employees [ ] may [ ] may not make Transfer Contributions prior to
meeting the eligibility requirements for participation in the Plan.
NOTE:Even if available, the Employer may refuse to accept such
contributions if its Plan meets the safe-harbor rules of
paragraph 8.7 of the Basic Plan Document #01.
15. HARDSHIP WITHDRAWALS
Hardship withdrawals, as provided for in paragraph 6.9 of the Basic Plan
Document #01, [X] are [ ] are not permitted.
16. PARTICIPANT LOANS
Participant loans, as provided for in paragraph 13.5 of the Basic Plan
Document #01, [X] are [ ] are not permitted. If permitted, repayments of
principal and interest shall be repaid to [X] the Participant's segregated
account or [ ] the general Fund.
17. EMPLOYER INVESTMENT DIRECTION
The Employer investment direction provisions, as set forth in paragraph 13.7
of the Basic Plan Document #01, [ ] shall [X] shall not be applicable.
16
17
PROTOTYPE CASH OR
DEFERRED PROFIT-
SHARING PLAN #002
18. EMPLOYEE INVESTMENT DIRECTION
Participants may direct the investment of Contributions specified below
among funds offered by the Sponsor in accordance with paragraph 13.8 of the
Basic Plan Document #01.
[X] Employee related contributions.
[X] Employer matching contributions.
[X] Employer discretionary contributions.
19. EARLY PAYMENT OPTION
(a) A Participant who separates from Service prior to retirement, death or
Disability [X] may [ ] may not make application to the Employer
requesting an early payment of his or her vested account balance.
(b) A Participant who has attained age 59-1/2 and who has not separated
from Service [X] may [ ] may not obtain a distribution of his or her
vested Employer contributions. Distribution can only be made if the
Participant is 100% vested.
(c) A Participant who has attained the Plan's Normal Retirement Age and
who has not separated from Service [X] may [ ] may not receive a
distribution of his or her vested account balance.
NOTE:If the Participant has had the right to withdraw his or her account
balance in the past, this right may not be taken away.
Notwithstanding the above, to the contrary, required minimum
distributions will be paid. For timing of distributions, see item
21(a) below.
20. DISTRIBUTION OPTIONS
(a) TIMING OF DISTRIBUTIONS:
[ ] (i) As soon as administratively feasible following the close of
the Plan Year during which a distribution is requested or is
otherwise payable.
[X] (ii) As soon as administratively feasible, following the date on
which a distribution is requested or is otherwise payable.
[ ] (iii) As soon as administratively feasible, after the close of the
Plan Year during which the Participant incurs ____
consecutive one-year Breaks in Service.
[ ] (iv) Only after the Participant has achieved the Plan's Normal
Retirement Age, or Early Retirement Age, if applicable.
(b) OPTIONAL FORMS OF PAYMENT:
[X] (i) Lump Sum.
[ ] (ii) Installment Payments.
[ ](iii) If applicable, other form(s) as previously offered
(c) RECALCULATION OF LIFE EXPECTANCY:
17
18
PROTOTYPE CASH OR
DEFERRED PROFIT-
SHARING PLAN #002
In determining required distributions under the Plan, Participants
and/or their Spouse (Surviving Spouse) [X] shall [ ] shall not have
the right to have their life expectancy recalculated annually. If life
expectancy is recalculated, it will follow the Employer's
administrative policy.
21. SPONSOR CONTACT
Employers should direct questions concerning the language contained in and
qualification of the Prototype to:
THE CASE MANAGER ASSIGNED TO YOUR PLAN
0-000-000-0000
In the event that the Sponsor amends, discontinues or abandons this
Prototype Plan, notification will be provided to the Employer's address
provided on the first page of this Agreement.
18
19
PROTOTYPE CASH OR
DEFERRED PROFIT-
SHARING PLAN #002
22. SIGNATURES:
THE SPONSOR RECOMMENDS THAT YOU CONTACT YOUR ATTORNEY OR TAX ADVISOR PRIOR
TO EXECUTING THIS ADOPTION AGREEMENT.
(a) EMPLOYER:
Name and address of Employer if different than specified in Section I
above.
This agreement and the corresponding provisions of the Plan and Trust
Account Basic Plan Document #01 were adopted by the Employer the ____ day
of _____________, 19___.
Signed for the Employer by: XXXXX XXXXX
Title: DIRECTOR, CONTRACTS & ADMINISTRATION
Signature: _________________________________________
THE EMPLOYER UNDERSTANDS THAT ITS FAILURE TO PROPERLY COMPLETE THE ADOPTION
AGREEMENT MAY RESULT IN DISQUALIFICATION OF ITS PLAN.
Employer's Reliance: The adopting Employer may not rely on an opinion
letter issued by the National Office of the Internal Revenue Service as
evidence that the Plan is qualified under Code Section 401. In order to
obtain reliance with respect to Plan qualification, the Employer must apply
to the appropriate Key District Office for a determination letter.
This Adoption Agreement can only be used in conjunction with Basic Plan
Document #01.
19
20
PROTOTYPE CASH OR
DEFERRED PROFIT-
SHARING PLAN #002
[X] (b) TRUSTEE
Name of Trustee:
NORWEST BANKS OF COLORADO, INC.
The assets of the Fund shall be invested in accordance with paragraph 13.3
of the Basic Plan Document #01 as a Trust. As such, the Employer's Plan as
contained herein was accepted by the Trustee the______ day of_____________,
19___.
Signed for the Trustee by: XX. XXXXX XXXXXXX
Title: TRUST OFFICER
Signature: ____________________________________________
(c) SPONSOR:
The Employer's Agreement and the corresponding provisions of the Plan and
Trust Account Basic Plan Document #01 were accepted by the Sponsor the 20th
day of October, 1999.
Signed for the Sponsor by: XXXX X. XXXXX
Title: VICE PRESIDENT
Signature: /s/ XXXX X. XXXXX
___________________________________________
20
21
TELECOMMUNICATION SYSTEMS, INC. 401(k) & PROFIT
SHARING PLAN
SUMMARY PLAN DESCRIPTION
JANUARY 1, 1999
22
SUMMARY PLAN DESCRIPTION
TABLE OF CONTENTS
PAGE
----
I INTRODUCTION
II PLAN DATA
Agent For Service Of Legal Process
Effective Date
Employer
Plan Administrator
Plan Year
Trustee
Type Of Administration
III DEFINITIONS
Break In Service
Compensation
Disability
Effective Date
Elective Deferral
Entry Date
Family Member
Highly Compensated Employee
Hour Of Service
Maternity/Paternity Leave
Normal Retirement Age
Spouse
Year Of Service
IV ELIGIBILITY REQUIREMENTS AND PARTICIPATION
V EMPLOYEE CONTRIBUTIONS
Elective Deferrals
Rollover And Transfer Contributions
VI EMPLOYER CONTRIBUTIONS
Contribution Formula
Eligibility For Allocation
VII GOVERNMENT REGULATIONS
VIII PARTICIPANT ACCOUNTS
IX VESTING
23
Determining Vested Benefit
Payment Of Vested Benefit
Loss Of Benefits
Reallocation of Forfeiture
Reemployment
X TOP-HEAVY RULES
XI RETIREMENT BENEFITS AND DISTRIBUTIONS
Retirement Benefits
Distributions During Employment
Hardship Withdrawals
Beneficiary
Death Benefits
Form Of Payment
Rollover of Payment
Time Of Payment
XII INVESTMENTS
Trust Fund
Investment Responsibility
Employee Investment Direction
Participant Loans
XIII ADMINISTRATION
Plan Administrator
Trustee
XIV AMENDMENT AND TERMINATION
XV LEGAL PROVISIONS
Rights Of Participants
Fiduciary Responsibility
Employment Rights
Benefit Insurance
Claims Procedure
Assignment
24
I INTRODUCTION
Your Employer has established a retirement plan to help supplement your
retirement income. Under the program, the Employer makes contributions
to a Trust Fund which will pay you a benefit at retirement. Details
about how the Plan works are contained in this summary. While the
summary describes the principal provisions of the Plan, it does not
include every limitation or detail. If there is a discrepancy between
this booklet and the official Plan document, the Plan document shall
govern. You may obtain a copy of the Plan document from the Plan
Administrator. The Plan Administrator may charge a reasonable fee for
providing you with the copy.
II PLAN DATA
A. AGENT FOR SERVICE OF LEGAL PROCESS: The Employer or Trustee.
B. EFFECTIVE DATE: The Effective Date of the original Plan was
January 1, 1991; the Effective Date of the
amended Plan is January 1, 1999.
C. EMPLOYER: TeleCommunication Systems, Inc.
Address: 000 Xxxx Xxxxxx Xxxxx 000
Xxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Tax I. D. No.: 00-0000000
Plan No.: 001
D. PLAN ADMINISTRATOR: The Employer has been designated to serve
as Plan Administrator.
E. PLAN YEAR: The 12-month period beginning on January 1 and
ending on December 31.
F. TRUSTEE(S): Norwest Banks of Colorado, Inc.
Address: 0000 Xxxxxxxx,
Xxxxxx, XX 00000-0000
Telephone No.: (000) 000-0000
G. TYPE OF ADMINISTRATION: Trust Fund
III DEFINITIONS
A. BREAK IN SERVICE. A Plan Year during which you are not
credited with or are not paid for more than 500 hours. If you
go into the military service of the United States, you are not
considered terminated as long as you return to work within the
time required by law. If you separate from employment and
incur a Break in Service, all contributions to your various
accounts are suspended. [See special rules relating to
maternity and paternity leave below. Also, see Section VI(B)
to determine your eligibility to share in the
1
25
Employer's Contribution if you separate from employment, but
do not incur a Break In Service.] If a Break in Service occurs
and you return to full time employment with the Employer, your
rights are explained in the section entitled "Vesting".
B. COMPENSATION. Your total salary, pay, or earned income from
the Employer, as reflected on tax Form W-2, which is subject
to withholding when earned. Compensation will include amounts
received by you during the Plan Year and earned while a
Participant. Compensation shall be limited to $200,000 as
adjusted for inflation. For Plan Years beginning in 1994,
Compensation shall be limited to $150,000 as adjusted for
inflation.
Compensation shall include amounts deferred under 401(k) plans
and Section 125 cafeteria plans.
C. DISABILITY. A potentially permanent illness or Injury, as
certified to by a physician who is approved by the Employer,
which prevents you] from engaging in work for which you are
qualified for a period of at least 12 months.
D. EFFECTIVE DATE. The date on which the Plan starts or an
amendment is effective.
E. ELECTIVE DEFERRAL. Employer contributions made to the Plan at
your election, instead of being given to you in cash as part
of your salary. You can elect to defer a portion of your
salary, instead of receiving it in cash, and your Employer
will contribute it to the Plan on your behalf.
F. ENTRY DATE. The date on which you enter the Plan. Your Entry
Date WILL be immediately after you meet the eligibility
requirements.
G. FAMILY MEMBER. The Spouse or lineal ascendant or descendant
(or Spouse thereof) of either a more than 5% owner of the
Employer or one of the ten highest compensated Highly
Compensated Employees of the Employer.
H. HIGHLY COMPENSATED EMPLOYEE. Any Employee who during the
current or prior Plan Year (1) was a more than 5% owner, (2)
received more than $75,000 in Compensation as adjusted for
inflation (3) received more than $50,000 in Compensation as
adjusted for inflation and was in the top 20% of Employees
when ranked by Compensation, or (4) was an officer receiving
more than $45,000 in Compensation as adjusted for inflation.
Family Members of any 5% owner, or Highly Compensated Employee
in the group of the ten Employees with the greatest
Compensation, will be combined as if they were one person for
purposes of Compensation and contributions. If you are not
currently or never
2
26
were Highly Compensated, or a Family Member of a Highly
Compensated Employee, you are a Non-highly Compensated
Employee.
I. Hour Of Service. You will receive credit for each hour you are
(1) paid for being on your job, (2) paid even if you are not
at work (vacation, sickness. leave of absence, or disability),
or (3) paid for back pay if hours were not already counted. A
maximum of 501 hours will be credited in any year for periods
during which you are not at work but are paid. Hours of
Service will be calculated based on actual hours you are
entitled to payment. Your Flours of Service with N/A are
included for eligibility and vesting in this Plan.
J. MATERNITY/PATERNITY LEAVE. You may be eligible for additional
Hours of Service if you leave employment, even if temporarily,
due to childbirth or adoption. If this is the case, you will
be credited with enough hours (up to 501 ) of service to
prevent a Break in Service, either in the year you leave
employment or the following year. For example, if you have
750 Hours of Service in the year that your child is born, you
would not get any more hours credited for that Plan Year
since you do not have a Break in Service. Therefore, if you do
not return to employment the following year, you will get 501
Hours of Service so you will not have a Break in Service in
that year. Alternatively, if you do return the following
year, but work only 300 hours, you will receive an additional
201 hours in order to prevent a break. These Hours of Service
for maternity or paternity leave must all be used in one Plan
Year. They are used only to prevent a Break in Service and not
for calculating your Years of Service for eligibility, vesting
or benefits.
K. NORMAL RETIREMENT AGE. The attainment of age 65, or, if later,
the 5 anniversary of the first day of the Plan Year during
which you entered the Plan.
L. SPOUSE. The person to whom you are or were legally married, or
your common law Spouse if common law marriage is recognized by
the state in which you live. In order for your Spouse to
receive a benefit under this Plan, he or she may not
predecease you. A former Spouse may be treated as a "Spouse"
under this definition if recognized as such under a Qualified
Domestic Relations Order as explained at Section XV(F) of this
Summary Plan Description.
3
27
M. YEAR OF SERVICE.
ELIGIBILITY
For purposes of determining your eligibility to participate in
the Plan, a Year of Service is a 12-consecutive month period
beginning on your date of hire during which you are credited
with at least 1 Hours of Service.
CONTRIBUTION
For purposes of determining whether or not you are entitled to
have a contribution allocated to your account, a Year of
Service is a 12-consecutive month period, which is the same as
the Plan Year. For Employer Matching Contributions you must be
credited with at least 1 Hours of Service in the Plan Year.
For Employer Contributions other than Matching Contributions
you must be credited with at least 1 Hours of Service in the
Plan Year.
VESTING
For purposes of determining the extent to which you are vested
in your account balance, a Year of Service is a 12-consecutive
month period, which is the same as the Plan Year, during which
you are credited with 1000 Hours of Service.
IV ELIGIBILITY REQUIREMENTS AND PARTICIPATION
For Elective Deferrals there is no eligibility requirement. For all
other contributions, you must satisfy the age and Service requirement
for each contribution listed below.
Type of Contribution Service Age
-------------------- ------- ---
Profit-Sharing 1 Year 21
The Plan will not cover Employees covered by a collective bargaining
agreement as well as Employees who are non-resident aliens who receive
no U.S. earned income from the Employer. Your participation in the Plan
will begin on the Entry Date defined at Section III.
V EMPLOYEE CONTRIBUTIONS
A. ELECTIVE DEFERRALS
You, as an eligible Employee, may authorize the Employer to
withhold from 1% up to 15% of your Compensation, not to exceed
$10,000 as adjusted for inflation, and to deposit such amount
in the Plan fund. If you participate in a similar plan of an
unrelated
4
28
employer and your Elective Deferrals under this Plan and the
other plan exceed the $10,000 limit, for a given year you
must designate one of the Plans as receiving an excess amount.
If you choose this Plan as the one receiving the excess, you
must notify the Plan Administrator by March 1 of the following
year so that the excess and any income thereon may be returned
to you by April 15. You may terminate Elective Deferrals at
any time. You may increase or decrease your Elective Deferral
percentage on the first day of the next Plan Quarter.
If you terminate contributions, you may not reinstate payroll
withholding until the next Plan Entry Date. The Employer may
also reduce or terminate your withholding if required to
maintain the Plan's qualified status.
B. ROLLOVER AND TRANSFER CONTRIBUTIONS
Rollover Contributions are permitted. Transfer contributions
are not permitted. In order to make a Rollover Contribution,
you do not have to be a Participant.
A rollover of your retirement benefits may originate from
another qualified retirement plan or special individual
retirement arrangement (known as a "conduit" XXX) to this
Plan. If you have already received a lump-sum payment from
another qualified retirement plan, or if you received payment
from another qualified plan and placed it in a separate
"conduit" XXX, you may be eligible to redeposit that payment
to this Plan. The last day you may make a Rollover
Contribution to this Plan is the 60th day after you receive
the distribution from the other plan or XXX. If you believe
you qualify for a rollover, see the Plan Administrator for
more details.
VI EMPLOYER CONTRIBUTIONS
A. CONTRIBUTION FORMULA
Elective Deferrals:
The Employer will contribute all Compensation which you elect
to defer to the Plan within the limits outlined in Section
V(A).
Matching Contributions:
The Employer may make a Matching Contribution to each
Participant based on his or her Elective Deferrals in a
percentage set by the Employer prior to the end of each Plan
Year.
5
29
The time period which will be used for determining the amount
of Matching Contributions owed ("Matching Computation
Period") shall be quarterly.
The Employer has the right to designate all or a portion of
the Matching Contributions as "Qualified". To the extent
Matching Contributions are so designated, they are
nonforfeitable and may not be withdrawn from the Plan prior to
separation from Service of attainment of age 59 1/2.
Employer Matching Contributions will only be made on Elective
Deferrals made to the Plan. Although, Elective Deferrals
withdrawn prior to the end of the Matching Computation Period
will not receive Matching Contributions.
Qualified Non-Elective Contributions:
The Employer may also contribute an additional amount
determined in its sole judgement. This additional
contribution, if any, will be allocated to only Non-highly
Compensated Participants, in proportion to each eligible
Employee's Compensation as a ratio of all eligible Employees'
Compensation. These Contributions will be nonforfeitable and
subject to withdrawal restrictions.
Discretionary:
The Employer may also contribute an additional amount
determined in its sole judgement. Such additional
contribution, if any, shall be allocated to each Participant
in proportion to his or her Compensation for the Plan Year
while a Participant.
B. ELIGIBILITY FOR ALLOCATION
The Employer's Contribution will be made to all Participants
who are employed at the end of the Plan Year provided that the
Participant has completed a Year of Service during the Plan
Year. The Employer shall also make matching and other related
contributions as indicated below to Employees who terminate
during the Plan Year as a result of:
Matching Other
-------- -----
X X (i) Retirement.
X X (ii) Disability.
X X (iii) Death.
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30
VII GOVERNMENT REGULATIONS
The federal government sets certain limitations on the level
of contributions which may be made to a Plan such as this.
There is also a "percentage" limitation which means that the
percentage of Compensation which you may contribute (Elective
Deferrals) depends on the average percentage of Compensation
that the other Participants are contributing. Simply stated,
all Participants are divided into 2 categories: Highly
Compensated and Non highly Compensated and the average for
each group is calculated. The average contribution that the
Highly Compensated may make is based on the average
contribution that the Non-highly Compensated make. If a
Highly Compensated Participant is contributing more than he or
she is allowed, the excess, plus or minus any gain or loss,
will be returned. Keep in mind that if you are a 5% owner of
the business or one of the ten highest paid Highly Compensated
employees, your Family Member's contribution percentages and
Compensations will be combined with yours for purposes of
determining your contributions under the Plan.
VIII PARTICIPANT ACCOUNTS
The Employer will set up a record keeping account in your name
to show the value of your retirement benefit. The Employer
will make the following additions to your account:
A. your allocated share of the Employer's Contribution
(including your Elective Deferrals),
B. the amount of your personal Employee Voluntary
Contributions, Transfer Contributions and Rollover
Contributions, if any, and
C. your share of investment earnings and appreciation
in the value of investments.
The Employer will make the following subtractions from your
account:
D. any withdrawals or distributions made to you, and
E. your share of investment losses and depreciation in
the value of investments.
F. your share of administrative fees and expenses paid
out of the Plan, if applicable.
The Employer will value your account daily and provide you
with a statement of account activity at least once annually.
IX VESTING.
A. DETERMINING VESTED BENEFIT
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31
Vesting refers to your earning or acquiring a nonforfeitable
right to the full amount Of Your account. Any Elective
Deferrals, Qualified Non-Elective Contributions, Qualified
Matching Contributions, Rollover Contributions, plus or minus
any earnings or losses, are always 100% vested and cannot be
forfeited for any reason. Any contribution not listed in the
previous sentence, and the earnings or losses thereon, will
vest in accordance with the following table:
Years of Service
-------------------------------------------------------------
1 2 3 4 5 6 7
--- --- --- --- --- --- ---
0% 20% 40% 60% 80% 100%
You are considered to have completed 1 Year of Service for
purposes of vesting upon the completion of 1000 Hours of
Service at any time during a Plan Year. Service prior to age
18 is not counted for purposes of vesting.
You automatically become fully vested, regardless of the
vesting table, upon attainment of Normal Retirement Age, upon
retirement due to Disability, upon death, and upon termination
of the Plan.
B. PAYMENT OF VESTED BENEFIT
If you separate from Service before Your retirement, death or
Disability, you may request early payment of your vested
benefit by submitting a written request to the Plan
Administrator. If your vested account balance at the time of
termination or at the time of any prior distributions exceeds
or exceeded $3,500, you may defer the payment of your benefit
until April 1 of the calendar year following the calendar year
during which you attain age 70-1/2. The portion of your
account balance to which you are not vested is called a
"forfeiture" and remains in the Plan to reduce the Employer's
Contribution for the year.
C. LOSS OF BENEFITS
There are only two events which can cause the loss of all or a
portion of your account. One is termination of employment
before you are 100% vested according to the vesting provisions
described at IX(A) and the other is a decrease in the value of
your account from investment losses or administrative expenses
and other costs of maintaining the Plan.
D. REALLOCATION OF FORFEITURE
You will forfeit and the Employer will reallocate the
nonvested portion of your account on the earlier of: (1) the
end of the Plan Year during which you incur your fifth
consecutive 1-year Break in Service, or (2) the end of the
Plan Year immediately following tile date of payment of your
Vested Account Balance.
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E. REEMPLOYMENT
If you terminate service with your Employer, then are later
reemployed, you will become a Participant as of the earlier
of the next Valuation Date or the next Entry Date [see
Section III] following your return to employment. If you are
not a member of a class of employees eligible to participate
in the Plan and later become a member of the eligible class,
you will participate upon reaching the next Entry Date if you
have satisfied the minimum age and service requirements.
Should you become ineligible to share in future Contributions
and forfeitures because you are no longer a member of an
eligible class, you shall again share upon your return to an
eligible class. All years of prior Service will be counted
when calculating your vested percentage in your new account
balance. The following rules apply in connection with
reemployed Participants.
(a) TERMINATED PARTIALLY VESTED PARTICIPANTS. If you
terminate employment and receive payment of the
vested portion of your account, the nonvested portion
of your account will be forfeited at the time you
receive your payment. If you are reemployed prior to
incurring five consecutive 1-year Breaks in Service
you may have the Plan restore your forfeiture by
repaying the amount of the distribution you received
attributable to Employer contributions. This
repayment right applies only if you do not incur five
consecutive 1-year Breaks in Service. You must make
this repayment within five years of your date of
reemployment. If you do not repay the amount you
received, the forfeited portion will not be restored
to your account. Whether you repay or not, your prior
Service will count toward vesting service for future
Employer contributions.
FOR EXAMPLE, assume that you terminate your job with
your current Employer. At the time of termination you
had accrued a total benefit of $10,000 under the
retirement Plan. Although this amount had been
allocated to your account, you were only 40% vested
in that amount when you left. You decided to take a
distribution of your vested account balance (40% of
$10,000, or $4,000) when you quit. The nonvested
balance of your account ($6,000) was forfeited. Three
years later, you became reemployed by the same
Employer. Since you were reemployed within 5 years,
you have the right to repay the $4,000 distribution
you received when you quit. you would have to repay
the $4,000 within 5 years of being rehired. If you
do so, the nonvested portion of your account ($6,000)
will be restored to your account. After restoration,
you will be vested in 40% of this account, but your
vested percentage will increase based on your Years
of Service after your reemployment. Your prior
Service will always count towards vesting of Employer
Contributions which you receive after
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reemployment, whether or not you decide to repay and
restore your prior account.
(b) TERMINATED NONVESTED PARTICIPANTS. If you were not
vested in any portion of your Employer Contribution
account prior to your separation from service and are
reemployed before incurring five consecutive one-year
Breaks in Service, you will be credited for vesting
with all pre-break and post-break service. Your prior
unpaid account balance will automatically be
restored and you will continue to vest in that
account. If you are reemployed after incurring five
consecutive one-year Breaks in Service, you will lose
your prior account balance, but your pre-break Years
of Service will count towards vesting, in your new
account balance.
X TOP-HEAVY RULES
A "top-heavy" plan is one in which more than 60% of the
contributions or benefits are attributable to certain "key
employees", such as owners, officers and stockholders. The
Plan Administrator is responsible for determining each year if
the Plan is "top-heavy". If the Plan becomes top-heavy special
rules apply to the allocation of the Employer's contribution.
These special rules require that only Participants who are not
key employees will generally receive an allocation of the
Employer's contribution equal to 3% of Compensation, or
if less, the greatest percentage allocated to the account of
any key employee. All participants are entitled to receive a
minimum allocation upon completing at least one Hour of
Service in the top-heavy Plan Year provided they are employed
on the last day of the Plan Year. The Employer's minimum
contribution can be satisfied by another Employer sponsored
retirement plan, if so elected by the Employer.
XI RETIREMENT BENEFITS AND DISTRIBUTIONS
A. RETIREMENT BENEFITS
The full value of your account balance is payable at
your Normal Retirement Age, even if you continue to
work, or you may defer payment until April 1
following the year you reach age 70-1/2. If you
work beyond your Normal Retirement Age, you will
continue to fully participate in the Plan.
B. DISTRIBUTIONS DURING EMPLOYMENT
Upon attainment of age 59-1/2, benefits attributable
to Employer contributions, allocated to your
account(s) in excess of two years, are available for
withdrawal if you are 100% vested in those benefits.
If applicable, benefits attributable to your
Voluntary Contributions under the Plan plus any
rollovers are available for withdrawal upon request
to the Plan Administrator. Transfers Contributions
may be
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withdrawn only if they originate from plans meeting
certain safe harbor provisions.
C. HARDSHIP WITHDRAWALS
You may file a written request for a hardship withdrawal of
the portion of your account balance attributable to Elective
Deferrals and certain Employer Contributions to the extent
vested. Earnings on Elective Deferrals up to the last day of
the Plan Year prior to July 1, 1989 may be included in any
hardship withdrawal, but earnings on Elective Deferrals after
that date may not be included. You must generally have your
Spouse's written consent for a hardship withdrawal unless you
are advised otherwise by the Plan Administrator. Prior to
receiving a hardship distribution, you must take any other
distribution and borrow the maximum non-taxable loan amount
allowed under this and other plans of the Employer. Note,
however, that if the effect of the loan would be to increase
the amount of your financial need, you are not required to
take the loan. For example, if you need funds to purchase a
principal residence, and a plan loan would disqualify you from
obtaining other necessary financing, you do not have to take
the loan. Hardship withdrawals may be authorized by the
Employer for the following reasons:
(a) to assist you in purchasing a personal residence
which is your primary place of residence (not
including mortgage payments),
(b) to assist you in paying tuition expenses for you,
your Spouse, or your dependents, for the next twelve
months of post-secondary education,
(c) to assist you in paying expenses incurred or
necessary on behalf of you, your Spouse, or your
dependents for hospitalization, doctor or surgery
expenses which are not covered by insurance, or
(d) to prevent your eviction from or foreclosure on your
principal residence.
Any hardship distribution is limited to the amount
needed to meet the financial need. Hardship
withdrawals must be approved by the Employer and will
be administered in a non-discriminatory manner. Such
withdrawals will not affect your eligibility to
continue to participate in Employer Contributions to
the Plan. Although, your right to make Voluntary
Contributions and Elective Deferrals will be
suspended for twelve months. Any withdrawals you
receive under these rules may not be recontributed to
the Plan and may be subject to taxation, as well as
an additional 10% penalty tax if the withdrawal is
received before you reach age 59-1/2. These payments
shall also be subject to a mandatory 20% withholding
for income tax purposes.
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D. BENEFICIARY
Every Participant or former Participant with Plan benefits may
designate a person or persons who are to receive benefits
under the Plan in the event of his or her death. The
designation must be made on a form provided by and returned
to the Plan Administrator. You may change your designation at
any time. If you are married, your beneficiary will
automatically be your Spouse. If you and your Spouse wish to
waive this automatic designation, you must complete a
beneficiary designation form. The form must be signed by you
and, if applicable, your Spouse in front of a Plan
representative or a Notary Public.
E. DEATH BENEFITS
In the event of your death, the full value of your account is
payable to your beneficiary in a lump Sum.
F. FORM OF PAYMENT
When benefits become due, you or your representative should
apply to the Employer requesting payment of your account and
specifying the manner of payment. The normal or automatic form
of payment is generally a lump sum unless the Plan
Administrator notifies you otherwise. If you do not wish to
receive the normal form of payment when your payments are due
to start, you may request to receive your benefit in any of
the optional forms indicated:
- lump sum.
In some cases, election of one of the optional forms of
payment will require the written consent of your Spouse. Also,
payments may not be made over a period which exceeds the life
expectancy of you and your beneficiary. The Plan Administrator
will advise you if any special rules apply in connection with
the payments of your benefits.
G. ROLLOVER OF PAYMENT
If your benefits qualify as eligible rollovers, you have the
option of having them paid directly to you, when they become
due, or having them directly rolled over to another qualified
plan or an XXX. If you do not choose to have the benefits
directly rolled over, the Plan is required to automatically
withhold 20% of your payment for tax purposes. If you do
choose to have the payment made to you, you still have the
option of rolling over the payment yourself to a qualified
plan or an XXX within sixty days (first check with a tax
advisor to make sure it is an eligible rollover). However, 20%
of your payment will still be withheld. The following example
illustrates how this works:
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For example, if you have $100,000 in your vested account
balance and choose to have the payment of your benefits made
directly to an XXX or another qualified plan, the entire
$100,000 will be transferred to the trustee of the other plan
or the XXX, and you will treat the entire amount as a rollover
on your tax return so that you will not pay taxes on the
entire amount. If you choose NOT to have the account
transferred directly to an XXX or qualified plan, 20% or
$20,000 will automatically be withheld from your payment.
Thus, you will receive only $80,000 as a distribution of your
benefits. In order to roll the entire amount over into your
XXX, you would have to come up with $20,000 out of your own
pocket to make up the difference. If this is done, the $20,000
which was withheld may be returned when you file your taxes at
the end of the year. However, if you are unable to produce
the extra cash, the rollover amount will only be $80,000, and
the other $20,000 which was withheld will be treated as
taxable income to you. If you are under age 59 1/2 when you
receive your benefit payment, the withheld amount will also
be subject to the 10% early distribution penalty.
Certain benefit payments are not eligible for rollover and
therefore will also not be subject to the 20% mandatory
withholding. They are as follows:
1. annuities paid over life;
2. installments for a period of at least 10
years; and
3. minimum required distributions at age
70 1/2.
There are also several operational exceptions and a "de
minimis" exception for payments of less than $200. Also
Employee Voluntary contributions are not eligible for
rollover.
H. TIME OF PAYMENT
If you request a distribution, payments will start as soon as
administratively feasible following the date on which a
distribution is requested by you or is otherwise payable.
XII INVESTMENTS
A. TRUST FUND
The monies contributed to the Plan may be invested in any
security or form of property considered prudent for a
retirement plan. Such investments include, but are not limited
to, common and preferred stocks, exchange traded put and call
options, bonds, money market instruments, mutual funds,
savings accounts, certificates of deposit, Treasury bills, or
insurance contracts. An institutional Trustee may invest in
its own deposits or those of affiliates which bear a
reasonable interest rate, or in a group or collective trust
maintained by such Trustee.
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B. INVESTMENT RESPONSIBILITY
The Plan's assets are held by the Trustee who is identified in
Section II of this Summary. The Trustee is responsible for the
safekeeping of Plan assets and for the investment management
of such assets unless the Employer elects to direct
investments, appoints an outside investment manager or permits
Participants to direct the investment of their individual
accounts.
C. EMPLOYEE INVESTMENT DIRECTION
Participants may direct the investments of their accounts
among alternative investment funds provided under the Plan.
The investment funds available to you and the procedures for
making an election are shown in a separate Investment Election
Form which can be obtained from the Plan Administrator. You
may change your investment selection and move monies from one
fund to another in accordance with the rules established by
the Plan Administrator.
D. PARTICIPANT LOANS
Participant loans are permitted under the Plan. In order to
get a loan from the Plan, you must make application to the
Plan Administrator. Loans must be approved by the Plan
Administrator and are subject to a strict set of rules
established by law. The rules are covered in a separate Loan
Application Form and Promissory Note Form. These Forms are
available from the Plan Administrator.
XIII ADMINISTRATION
The Plan will be administered by the following parties:
A. PLAN ADMINISTRATOR
The Employer is the party who has established the Plan and who
has overall control and authority over administration of the
Plan. The Employer's duties as Plan Administrator include:
(a) appointing the Plan's professional advisors needed to
administer the Plan including, but not limited to, an
accountant, attorney, actuary, or administrator,
(b) directing the Trustee with respect to payments from
the Fund,
(c) communicating with Employees regarding their
participation and benefits under the Plan, including
the administration of all claims procedures and
domestic relations orders,
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(d) filing any returns and reports with the Internal
Revenue Service, Department of Labor, or any other
governmental agency,
(e) reviewing and approving any financial reports,
investment reviews, or other reports prepared by any
party appointed by the Employer,
(f) establishing a funding policy and investment
objectives consistent with the purposes of the Plan
and the Employee Retirement Income Security Act of
1974, and
(g) construing and resolving any question of Plan
interpretation. The Plan Administrator's
interpretation and application thereof is final.
B. TRUSTEE
The Trustee shall be responsible for the administration of
investments held in the Fund. These duties shall include:
(a) receiving contributions under the terms of the Plan,
(b) investing Plan assets unless investment
responsibility is delegated to another party by the
Employer,
(c) making distributions from the Fund in accordance
with written instructions received from the Plan
Administrator,
(d) keeping accounts and records of the financial
transactions of the Fund, and
(e) rendering an annual report of the Fund showing the
financial transactions for the Plan Year.
XIV AMENDMENT AND TERMINATION
The Employer may amend the Plan at any time, provided that no amendment
will divert any part of the Plan's assets to any purpose other than for
the exclusive benefit of you and the other Participants in the Plan or
eliminate an optional form of distribution. The Employer may also
terminate the Plan. In the event of an actual Plan termination, all
amounts credited to your account will be fully vested and will be paid
to you. Depending on the facts and circumstances, a partial termination
may be found to occur where a significant number of Employees are
terminated by the Employer or excluded from Plan participation. In case
of a partial termination, only those affected will become 100% vested.
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XV LEGAL PROVISIONS
A. RIGHTS OF PARTICIPANTS
As a Plan Participant, you have certain rights and protection
under the Employee Retirement Income Security Act of 1974
(ERISA). The law says that you are entitled to:
(a) Examine, without charge, all documents relating to
the operation of the Plan and any documents filed
with the U.S. Department of Labor. These documents
are available for review in the Employer's offices
during regular business hours.
(b) Obtain copies of all Plan documents and other Plan
information upon written request to the Employer. The
Employer may impose a reasonable charge for producing
the copies.
(c) Receive from the Employer at least once each year a
summary of the Plan's annual financial report.
(d) Obtain, at least once a year, a statement of the
total benefits accrued for you, and your
nonforfeitable (vested) benefits, if any. The Plan
provides that you will receive this statement
automatically. If you are not vested, you may request
a statement showing the date when your account will
begin to become nonforfeitable.
(e) File suit in a federal court, if any materials
requested are not received within 30 days of your
request, unless the materials were not sent because
of matters beyond the control of the Employer. If you
are improperly denied access to information you are
entitled to receive, the Employer may be required to
pay up to $100 for each day's delay until the
information is provided to you.
B. FIDUCIARY RESPONSIBILITY
ERISA imposes obligations upon the persons who are responsible
for the administration of the Plan. These persons are referred
to as "fiduciaries." Fiduciaries must act solely in your
interest as a Plan Participant and they must exercise prudence
in the performance of their duties. Fiduciaries who violate
ERISA may be removed and required to reimburse any losses they
have caused you or other Participants in the Plan.
C. EMPLOYMENT RIGHTS
Participation in the Plan is not a guarantee of employment.
However, the Employer may not fire you or discriminate against
you to prevent
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you from becoming eligible for the Plan or from obtaining a
benefit or exercising your rights under ERISA.
D. BENEFIT INSURANCE
Your benefits under this Plan are not insured by the Pension
Benefit Guaranty Corporation since the law does not provide
plan termination insurance for this type of Plan.
E. CLAIMS PROCEDURE
If you feel you are entitled to a benefit under the Plan, mail
or deliver your written claim to the Plan Administrator. The
Plan administrator will notify you, your beneficiary, or
authorized representative of the action taken within 60 days
of receipt of the claim. If you believe that you are being
improperly denied a benefit in full or in part, the
Administrator must give you a written explanation of the
reason for the denial. If the Administrator denies your claim,
you may, within 60 days after receiving the denial, submit a
written request asking the Administrator to review your claim
for benefits. Any such request should be accompanied by
documents or records in support of your appeal. You, your
beneficiary, or your authorized representative may review
pertinent documents and submit issues and comments in
writing. If you get no satisfaction from the Administrator,
you have the right to request assistance from the U.S.
Department of Labor or you can file suit in a state or
federal court. Service of legal process may be made on the
Plan Administrator at the address of the Employer. If you are
successful in your lawsuit, the court may require the Employer
to pay your legal costs, including your attorney's fees. If
you lose, and the court finds that your claim is frivolous,
you may be required to pay the Employer's legal fees.
F. ASSIGNMENT
Your rights and benefits under this Plan cannot be assigned,
sold, transferred or pledged by you or reached by your
creditors or anyone else except under a qualified domestic
relations order or as provided by state law. A qualified
domestic relations order (QDRO) is a court order issued under
state domestic relations law relating to divorce, legal
separation, custody, or support proceedings. The QDRO
recognizes the right of someone other than you to receive
your Plan benefits. You will be notified if a QDRO relating to
your Plan benefits is received. Receipt of a qualified
domestic relations order shall allow for an earlier than
normal distribution to the person(s) other than the
Participant listed in the order.
G. QUESTIONS
If you have any questions about this statement of your rights
under ERISA, please contact the Employer or the nearest
Area Office of the
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U.S. Labor-Management Service Administration, Department
of Labor.
H. CONFLICTS WITH PLAN
This booklet is not the Plan document, but only a Summary Plan
Description of its principal provisions and not every
limitation or detail of the Plan is included. Every attempt
has been made to provide concise and accurate information.
However, if there is a discrepancy between this booklet and
the official Plan document, the Plan document shall prevail.
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