As filed with the Securities and Exchange Commission on June ____ , 2000
Registration No. 33-____
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
FREQUENCY ELECTRONICS, INC.
(Exact name of registrant as specified in its charter)
Delaware 11-1986657
(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
55 Charles Lindbergh Boulevard
Mitchel Field, N.Y. 11553
(Address of principal executive offices)
Frequency Electronics, Inc. 401(k) Savings Plan
(Full title of plan)
Joseph P. Franklin, Chairman of the Board
Frequency Electronics, Inc.
55 Charles Lindbergh Boulevard
Mitchel Field, N.Y. 11553
(Name and address of agent for service)
(516) 794-4500
(Telephone number, including area code, of agent for service)
-------------
Copies to:
Charles A. Bilich, Esq.
Meltzer, Lippe, Goldstein & Schlissel, P.C.
190 Willis Avenue
Mineola, New York 11501
(516) 747-0300
Fax (516) 747-0653
CALCULATION OF REGISTRATION FEE
- ---------------------------------------------------------------------------------------------
Proposed Proposed
Title of Amount maximum maximum Amount of
securities to be offering price aggregate registration
to be registered(1) registered(1) per share(2) offering price(2) fee
- ---------------------------------------------------------------------------------------------
Common Stock, $1.00 250,000 $27.125 $6,781,250 $1,356.25
par value per share, ------- ------- ---------- --------
- ---------------------------------------------------------------------------------------------
(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this
Registration Statement also covers an indeterminate amount of interests to
be offered or sold pursuant to the employee benefit plan described herein.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933 and based upon the
average of the high and low sales price of the Common Stock of the
Registrant on June 26, 2000 as reported on the American Stock Exchange.
2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed by the Registrant with the Commission are
incorporated herein by reference:
(a) The Registrant's latest annual report filed pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act");
(b) All other reports and definitive proxy or information statements filed
pursuant to Section 13(a) or 15(d) of the Exchange Act since April 30,
1999;
(c) The description of the Registrant's Common Stock, par value $1.00 per
share, contained in the Registrant's Registration Statement on Form
8-A, filed under the Exchange Act on August 27, 1969, including any
amendments or reports filed for the purpose of updating such
description.
In addition, all documents subsequently filed by the Registrant or the Plan
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, on or after
the date of this Registration Statement and prior to the filing of a
post-effective amendment which indicates that all securities offered hereby have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of the filing of such documents.
Any statement contained herein or in a document, all or a portion of which
is incorporated or deemed to be incorporated by reference herein, shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any other subsequently
filed document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Registration Statement.
Item 4. Description of Securities.
3
Not applicable because the class of securities to be offered is registered
under Section 12 of the Securities Exchange Act of 1934.
Item 5. Interests of Named Experts and Counsel.
Not applicable. The 250,000 shares of Common Stock registered hereby
constitute "treasury shares" and accordingly no opinion regarding the legality
of the issuance thereof is required.
Item 6. Indemnification of Directors and Officers.
The Registrant's Certificate of Incorporation provides for indemnification
to the fullest extent permitted by Section 145 of the Delaware General
Corporation Law ("Section 145"). Pursuant thereto, Registrant indemnifies its
officers, directors, employees and agents to the fullest extent permitted for
losses and expenses incurred by them in connection with actions in which they
are involved by reason of their having been directors, officers, employees or
agents of Registrant. Section 145 permits a corporation to indemnify any person
who is or has been a director, officer, employee or agent of the corporation or
who is or has been serving as a director, officer, employee or agent of another
corporation, organization or enterprise at the request of the corporation,
against all liability and expenses (including, but not limited to, attorney's
fees and disbursements and amounts paid in settlement or in satisfaction of
judgments or as fines or penalties) incurred or paid in connection with any
action, suit or proceeding, whether civil, criminal, administrative,
investigative or otherwise, in which he/she may be involved by reason of the
fact that he/she serves or is serving in these capacities, if he/she acted in
good faith and in a manner he/she reasonably believed to be in or not opposed to
the best interests of the corporation and, with respect to any criminal action
or proceeding, had no cause to believe his/her conduct was unlawful. In the case
of a claim, action, suit or proceeding made or brought by or in the right of the
corporation to procure a recovery or judgment in its favor, the corporation
shall not indemnify such person in respect of any claim, issue or matter as to
which such person has been adjudged to be liable to the corporation for
negligence or misconduct in the performance of his or her duty to the
corporation, except for such expenses as the Court may allow. Any such person
who has been wholly successful on the merits or otherwise with respect to any
such claim, action, suit or proceeding or with respect to any claim, issue or
matter therein, shall be indemnified as of right against all expenses in
connection therewith or resulting therefrom.
4
The Registrant's By-Laws provide for indemnification of the Registrant's
officers and directors against all liabilities (including reasonable costs,
expenses, attorney's fees, obligations for payment in settlement and final
judgment) incurred by or imposed upon them in the preparation, conduct or
compromise of any actual or threatened action, suit, or proceeding, whether
civil, criminal or administrative, including any appeals therefrom and any
collateral proceedings in which they shall be involved by reason of any action
or omission by them in their capacity as a director or officer of the
Registrant, or of any other corporation which they serve as a director or
officer at the request of the Registrant, whether or not such person is a
director or officer at the time such liabilities are incurred or any such
action, suit or proceeding is commenced against them. The indemnification
provided by the By-Laws does not extend, however, to certain situations
involving misconduct, willful misfeasance, bad faith or gross negligence.
The Registrant maintains an insurance policy insuring its directors and
officers against liability for certain acts and omissions while acting in their
official capacities.
Item 7. Exemption From Registration Claimed.
Not applicable.
Item 8. Exhibits.
4.1 Certificate of Incorporation of Registrant filed with the Secretary of
State of Delaware on May 23, 1968 (filed as Exhibit 3.1 of
Registrant's registration statement on Form S-1 (File No. 2-29609),
and incorporated herein by reference).
4.2 Amendment to Certificate of Incorporation of Registrant filed with the
Secretary of State of Delaware on March 27, 1981 (filed as Exhibit 3.2
of Registrant's registration statement on Form S-1 (File No. 2-71727),
and incorporated herein by reference).
4.3 Amendment to Certificate of Incorporation of Registrant filed with the
Secretary of State of Delaware on October 26, 1984 (filed as Exhibit
27 of Registrant's Form 10-K for the year ended April 30, 1985 and
incorporated herein by reference).
4.4 Amendment to Certificate of Incorporation of Registrant filed with the
Secretary of State of Delaware on October 22, 1986 (filed as
5
Exhibit 42 of Registrant's Form 10-K for the year ended April 30, 1987
and incorporated herein by reference).
4.5 Amended and Restated Certificate of Incorporation of Registrant filed
with the Secretary of State of Delaware on October 26, 1987 (filed as
Exhibit 45 of Registrant's Form 10-K for the year ended April 30, 1990
and incorporated herein by reference).
4.6 Amendment to Certificate of Incorporation of Registrant filed with the
Secretary of State of Delaware on November 2, 1989 (filed as Exhibit
59 of Registrant's Form 10-K for the year ended April 30, 1990 and
incorporated herein by reference).4.7 By-Laws of Registrant (filed as
Exhibit 3.3 to Registrant's Form 10-K for the year ended April 30,
1981, and incorporated herein by reference).
4.8 Registrant's 401(k) Savings Plan, as amended and restated on July 22,
1999.
4.9 First Amendment to Registrants 401(k) Savings Plan, dated as of June
12, 2000, to be effective as of January 1, 2000.
23.1 Consent of PricewaterhouseCoopers LLP
24.1 Power of Attorney
The Registrant will submit in a timely manner the 401(k) Savings Plan, as
amended effective January 1, 2000, to the Internal Revenue Service for a
determination letter that the Plan remains qualified under Section 401 of the
Internal Revenue Code and will make all changes required by the Internal Revenue
Service in order to qualify the Plan.
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which it offers or sells securities,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
6
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-affective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
Provided, However, that paragraphs A(1)(i) and A(1)(ii) above do not apply
if the information required to be included in a post-effective amendment by
those paragraph is contained in periodic reports filed by the Registrant or
the Plan pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in this registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d)of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
the Registrant, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
7
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payments by the issuer of expenses incurred or paid by a director,
officer or controlling person of the issuer in the successful defense of any
action, suit or proceeding) is assented by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Mitchel Field, county of Nassau, Town of Hempstead, State of New
York, on the 29th day of June, 2000.
FREQUENCY ELECTRONICS, INC.
By: /s/ Martin B. Bloch
-------------------------------------------
MARTIN B. BLOCH, President and
Chief Executive Officer
By: /s/ Alan L. Miller
-------------------------------------------
ALAN L. MILLER, Chief Financial
Officer and Controller
Pursuant to the requirements of the Securities Act of 1933, this
registration has been signed below by the following persons on behalf of the
Company and in the capacities and as of the date indicated above.
By: /s/ Joseph P. Franklin
------------------------------
JOSEPH P. FRANKLIN, Chairman
of the Board and Director
By: /s/ Martin B. Bloch
------------------------------
MARTIN B. BLOCH, President,
Chief Executive Officer
and Director
By: /s/ John C. Ho
------------------------------
JOHN C. HO, Director
By: /s/ Joel Girsky
------------------------------
JOEL GIRSKY, Director
By: /s/ Marvin Meirs
------------------------------
MARVIN MEIRS, Director
By: /s/ E. Donald Shapiro
------------------------------
E. DONALD SHAPIRO, Director
By: /s/ S. Robert Foley, Jr.
------------------------------
S. ROBERT FOLEY, JR.,
Director
9
EXHIBIT INDEX
Exhibit Number Description
- -------------- -----------
4.8 Registrant's 401(k) Savings Plan, as amended and
restated on July 22, 1999
4.9 First Amendment to Registrant's 401(k) Savings
Plan, dated as of June 12, 2000,
to be effective as of January 1, 2000
23.1 Consent of PricewaterhouseCoopers LLP
24.1 Powers of Attorney
10
EXHIBIT 4.8
FREQUENCY ELECTRONICS, INC.
401(K) SAVINGS PLAN
TABLE OF CONTENTS
ARTICLE 1...................................................................-2-
DEFINITIONS.................................................................-2-
1.1 ACP or ACP TEST...........................................-2-
1.2 ACTUAL DEFERRAL PERCENTAGE TEST...........................-2-
1.3 ADP or ADP TEST...........................................-3-
1.4 ADMINISTRATOR.............................................-3-
1.5 ADOPTING EMPLOYER.........................................-3-
1.6 AFFILIATED EMPLOYER.......................................-3-
1.7 AGE.......................................................-3-
1.8 ANNIVERSARY DATE..........................................-3-
1.9 ANNUITY STARTING DATE.....................................-3-
1.10 AVERAGE CONTRIBUTION PERCENTAGE TEST......................-3-
1.11 BENEFICIARY...............................................-5-
1.12 BREAK IN SERVICE..........................................-5-
1.13 CODE......................................................-6-
1.14 COMPENSATION..............................................-6-
1.15 DISABILITY................................................-6-
1.16 EARLY RETIREMENT AGE......................................-6-
1.17 EARNED INCOME.............................................-6-
1.18 ELECTIVE DEFERRAL.........................................-6-
1.19 ELIGIBLE PARTICIPANT......................................-7-
1.20 EMPLOYEE..................................................-7-
1.21 EMPLOYER..................................................-7-
1.22 FIDUCIARY.................................................-7-
1.23 FISCAL YEAR...............................................-7-
1.24 FORFEITURE................................................-8-
1.25 HCE.......................................................-8-
1.26 HIGHLY COMPENSATED EMPLOYEE...............................-8-
1.27 HOUR OF SERVICE...........................................-8-
1.28 KEY EMPLOYEE..............................................-8-
1.29 LEASED EMPLOYEE...........................................-9-
1.30 LIMITATION YEAR...........................................-9-
1.31 MATCHING CONTRIBUTION.....................................-9-
1.32 MATERNITY OR PATERNITY LEAVE..............................-9-
1.33 NHCE......................................................-9-
1.34 NON-ELECTIVE CONTRIBUTIONS................................-9-
1.35 NON-HIGHLY COMPENSATED EMPLOYEE...........................-9-
1.36 NON-KEY EMPLOYEE..........................................-9-
1.37 NORMAL RETIREMENT AGE....................................-10-
1.38 NORMAL RETIREMENT DATE...................................-10-
1.39 OWNER-EMPLOYEE...........................................-10-
1.40 PARTICIPANT..............................................-10-
1.41 PARTICIPANT'S ACCOUNT....................................-10-
1.42 PERMISSIVE AGGREGATION GROUP.............................-10-
1.43 PLAN.....................................................-10-
1.44 PLAN YEAR................................................-10-
1.45 POLICY...................................................-10-
1.46 QMAC.....................................................-10-
1.47 QNEC.....................................................-10-
1.48 QUALIFIED JOINT AND SURVIVOR ANNUITY.....................-10-
1.49 QUALIFIED MATCHING CONTRIBUTION..........................-11-
1.50 QUALIFIED NON-ELECTIVE CONTRIBUTIONS.....................-11-
12
1.51 QUALIFIED PRERETIREMENT SURVIVOR ANNUITY.................-11-
1.52 REQUIRED AGGREGATION GROUP...............................-11-
1.53 REQUIRED BEGINNING DATE..................................-11-
1.54 SECTION 415 COMPENSATION.................................-12-
1.55 SELF-EMPLOYED INDIVIDUAL.................................-12-
1.56 SHAREHOLDER-EMPLOYEE.....................................-12-
1.57 SUPER TOP HEAVY..........................................-12-
1.58 TERMINATION OF EMPLOYMENT................................-12-
1.59 TERMINATED PARTICIPANT...................................-12-
1.60 TOP HEAVY................................................-12-
1.61 TOP HEAVY MINIMUM ALLOCATION.............................-13-
1.62 TOP HEAVY RATIO..........................................-13-
1.63 TRUSTEE..................................................-14-
1.64 TRUST FUND...............................................-14-
1.65 VALUATION DATE...........................................-14-
1.66 VESTED AGGREGATE ACCOUNT.................................-14-
1.67 VESTED INTEREST..........................................-14-
1.68 YEAR OF SERVICE..........................................-14-
ARTICLE 2..................................................................-16-
PLAN PARTICIPATION.........................................................-16-
2.1 ELIGIBILITY REQUIREMENTS.................................-16-
2.2 ENTRY DATE...............................................-17-
2.3 WAIVER OF PARTICIPATION..................................-17-
2.4 CESSATION OF PARTICIPATION...............................-17-
2.5 RESTRICTIONS ON OWNER-EMPLOYEES..........................-17-
ARTICLE 3..................................................................-18-
CONTRIBUTIONS AND ALLOCATIONS..............................................-18-
3.1 EMPLOYER CONTRIBUTIONS...................................-18-
3.2 ALLOCATION OF EMPLOYER CONTRIBUTIONS.....................-19-
3.3 ALLOCATION OF EARNINGS AND LOSSES........................-20-
3.4 ALLOCATION OF FORFEITURES................................-20-
3.5 TOP HEAVY MINIMUM ALLOCATION.............................-20-
3.6 FAILSAFE ALLOCATION......................................-21-
3.7 ROLLOVERS................................................-21-
ARTICLE 4..................................................................-23-
PLAN BENEFITS..............................................................-23-
4.1 BENEFIT UPON NORMAL OR EARLY RETIREMENT..................-23-
4.2 BENEFIT UPON LATE RETIREMENT.............................-23-
4.3 BENEFIT UPON DEATH.......................................-23-
4.4 BENEFIT UPON DISABILITY..................................-23-
4.5 BENEFIT UPON TERMINATION.................................-23-
4.6 DETERMINATION OF VESTED INTEREST.........................-23-
ARTICLE 5..................................................................-25-
DISTRIBUTION OF BENEFITS...................................................-25-
5.1 BENEFIT UPON RETIREMENT..................................-25-
5.2 BENEFIT UPON DEATH.......................................-25-
5.3 DISABILITY BENEFITS......................................-26-
5.4 BENEFIT UPON TERMINATION.................................-27-
5.5 CASH-OUT OF BENEFITS.....................................-27-
5.6 RESTRICTIONS ON IMMEDIATE DISTRIBUTIONS..................-28-
5.7 RESTORATION OF FORFEITED ACCOUNT BALANCE.................-28-
5.8 SPOUSAL CONSENT REQUIREMENTS.............................-29-
5.9 APPLICATION OF CODE SECTION 401(a)(9)....................-30-
5.10 STATUTORY COMMENCEMENT OF BENEFITS.......................-31-
5.11 DETERMINATION OF LIFE EXPECTANCIES.......................-31-
5.12 SEGREGATION OF BENEFIT BEFORE DISTRIBUTION...............-31-
5.13 DISTRIBUTION IN EVENT OF LEGAL INCAPACITY................-31-
5.14 DIRECT ROLLOVERS.........................................-31-
5.15 DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS................-32-
5.16 DISTRIBUTION OF EXCESS CONTRIBUTIONS.....................-33-
5.17 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS...........-34-
5.18 FINANCIAL HARDSHIP DISTRIBUTIONS.........................-36-
ARTICLE 6..................................................................-38-
CODE SECTION 415 LIMITATIONS...............................................-38-
6.1 MAXIMUM ANNUAL ADDITION..................................-38-
6.2 ADJUSTMENTS TO MAXIMUM ANNUAL ADDITION...................-38-
6.3 MULTIPLE PLANS AND MULTIPLE EMPLOYERS....................-39-
6.4 MULTIPLE PLAN REDUCTION..................................-39-
6.5 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS................-41-
ARTICLE 7..................................................................-42-
DUTIES OF THE TRUSTEE......................................................-42-
7.1 APPOINTMENT, RESIGNATION, REMOVAL AND SUCCESSION.........-42-
7.2 INVESTMENT ALTERNATIVES OF THE TRUSTEE...................-42-
7.3 VALUATION OF THE TRUST FUND..............................-44-
7.4 COMPENSATION AND EXPENSES................................-44-
7.5 PAYMENTS FROM THE TRUST FUND.............................-44-
7.6 PAYMENT OF TAXES.........................................-45-
7.7 ACCOUNTS, RECORDS AND REPORTS............................-45-
7.8 EMPLOYMENT OF AGENTS AND COUNSEL.........................-45-
7.9 DIVISION OF DUTIES AND INDEMNIFICATION...................-45-
7.10 APPOINTMENT OF INVESTMENT MANAGER........................-47-
7.11 ASSIGNMENT AND ALIENATION OF BENEFITS....................-47-
7.12 EXCLUSIVE BENEFIT RULE...................................-47-
7.13 PURCHASE OF INSURANCE....................................-47-
7.14 LOANS TO PARTICIPANTS....................................-47-
7.15 DIRECTED INVESTMENT ACCOUNTS.............................-49-
ARTICLE 8..................................................................-51-
DUTIES OF THE ADMINISTRATOR................................................-51-
8.1 APPOINTMENT, RESIGNATION, REMOVAL AND SUCCESSION.........-51-
8.2 POWERS AND DUTIES OF THE ADMINISTRATOR...................-51-
8.3 EMPLOYMENT OF AGENTS AND COUNSEL.........................-51-
8.4 COMPENSATION AND EXPENSES................................-51-
8.5 CLAIMS PROCEDURES........................................-51-
8.6 QUALIFIED DOMESTIC RELATIONS ORDERS......................-52-
ARTICLE 9..................................................................-54-
AMENDMENT, TERMINATION AND MERGER..........................................-54-
9.1 AMENDMENT................................................-54-
9.2 TERMINATION..............................................-54-
9.3 MERGER OR CONSOLIDATION..................................-54-
ARTICLE 10.................................................................-55-
MISCELLANEOUS PROVISIONS...................................................-55-
10.1 NO CONTRACT OF EMPLOYMENT................................-55-
10.2 TITLE TO ASSETS..........................................-55-
10.3 QUALIFIED MILITARY SERVICE...............................-55-
10.4 FIDUCIARIES AND BONDING..................................-55-
10.5 SEVERABILITY OF PROVISIONS...............................-55-
10.6 GENDER AND NUMBER........................................-55-
10.7 HEADINGS AND SUBHEADINGS.................................-55-
10.8 LEGAL ACTION.............................................-55-
FREQUENCY ELECTRONICS, INC.
401(K) SAVINGS PLAN
THIS AGREEMENT is made and entered into this day of , 1999, between
FREQUENCY ELECTRONICS, INC. (hereafter called the Employer) and ROBERT KLOMP,
MARVIN P. MEIRS and MARKUS HECHLER (hereafter called the Trustee).
W I T N E S S E T H:
WHEREAS, the Employer originally established a 401(k) profit sharing plan
and trust (hereafter called the Plan), effective January 1, 1985, to provide
retirement and other incidental benefits to Employees who are eligible to
participate in the plan; and
WHEREAS, the Employer believes that continued contributions to the Plan
will help to strengthen the bonds of loyalty and mutual understanding that have
existed between the Employer and its employees, thereby making possible the
continued growth of its business; and
WHEREAS, in accordance with the terms of the Plan, the Employer has the
ability at any time, and from time to time, to amend the Plan;
NOW, THEREFORE, effective January 1, 1999 (except for those sections of the
Plan that have an alternative effective date), the Employer and the Trustee
hereby amend and restate the Plan as follows to comply with all applicable
statutes, including the Employee Retirement Income Security Act of 1974 (ERISA)
and the Internal Revenue Code of 1986, as amended by the Uruguay Round
Agreements Act, the Small Business Job Protection Act of 1996, the Taxpayer
Relief Act of 1997, the Uniform Services Employment and Reemployment Rights Act,
and all applicable rulings and regulations issued thereunder:
1
ARTICLE 1
DEFINITIONS
1.1 ACP or ACP TEST: The term ACP means the Average Contribution Percentage as
defined in Section 1.10(e). The term ACP Test means the Average
Contribution Percentage Test.
1.2 ACTUAL DEFERRAL PERCENTAGE TEST: The term Actual Deferral Percentage Test
means one of the following tests for Elective Deferrals: (a) the ADP for
Participants who are HCEs in the current Plan Year will not exceed the
prior Plan Year's ADP for Participants who were NHCEs in the prior Plan
Year multiplied by 1.25; or (b) the ADP for Participants who are HCEs for
the current Plan Year will not exceed the prior Plan Year's ADP for
Participants who were NHCEs in the prior Plan Year multiplied by 2.0,
provided that the ADP for Participants who are HCEs in the current Plan
Year does not exceed the ADP for Participants who were NHCEs in the prior
Plan Year by more than 2 percentage points. However, the Administrator may
elect to use 1997 Plan Year data in determining the ADP Test for the 1997
Plan Year. The ADP Test will be determined as follows:
(a) Actual Deferral Percentage: The term Actual Deferral Percentage (ADP)
means, for a specified group of Participants for a Plan Year, the
average of the ratios calculated separately for each Participant in
such group of (1) the amount of Employer contributions actually paid
on behalf of such Participant for the Plan Year to (2) the
Participant's Compensation for such Plan Year. Employer contributions
made on behalf of any Participant will include a Participant's
Elective Deferrals, including Excess Elective Deferrals of HCEs, but
excluding Excess Elective Deferrals of NHCEs that arise solely from
Elective Deferrals made to this Plan or any other plans maintained by
this Employer and Elective Deferrals used in the ACP Test if the ADP
Test is satisfied both with and without exclusion of these Elective
Deferrals. In computing ADPs, an Employee who would be a Participant
but for the failure to make Elective Deferrals will be treated as a
Participant on whose behalf no Elective Deferrals are made.
(b) Highly Compensated Employees: A Participant is a HCE for a particular
Plan Year if he or she meets the definition of a HCE in effect for
that Plan Year. A Participant is a NHCE for a particular Plan Year if
he or she does not meet the definition of a HCE in effect for that
Plan Year. The ADP for any Participant who is a HCE for the Plan Year
and who is eligible to have Elective Deferrals allocated to his or her
accounts under two or more arrangements described in Code ss.401(k)
that are maintained by this Employer will be determined as if such
Elective Deferrals were made under a single arrangement. If a HCE
participates in two or more cash or deferred arrangements that have
different Plan Years, all cash or deferred arrangements ending with or
within the same calendar year will be treated as a single arrangement.
Notwithstanding the foregoing, certain plans will be treated as
separate if mandatorily disaggregated under regulations under Code
ss.401(k).
(c) Other Rules: In determining the ADP Test, (1) if this Plan satisfies
the requirements of Code ss ss.401(k), 401(a)(4), or 410(b) only if
aggregated with one or more other plans,
2
or if one or more other plans satisfy such requirements only if
aggregated with this Plan, then this section will be applied by
determining the ADP of Employees as if all such plans were a single
plan. Any adjustments to the Non-Highly Compensated Employee ADP for
the prior Plan Year will be made in accordance with Notice 98-1 and
any superseding guidance. Plans may be aggregated in order to satisfy
Code ss.401(k) only if they have the same Plan Year and use the same
ADP testing method; (2) Elective Deferrals, QNECs and QMACs must be
made before the last day of the twelve-month period immediately
following the Plan Year to which contributions relate; (3) the
Employer will maintain records sufficient to demonstrate satisfaction
of the ADP Test and the amount of QNECs and/or QMACs used in such
test; and (4) the determination and treatment of the ADP amounts of
any Participant will satisfy such other requirements as may be
prescribed by the Secretary of the Treasury.
1.3 ADP or ADP TEST: The term ADP means the Actual Deferral Percentage as
defined in Section 1.2(a). The term ADP Test means the Actual Deferral
Percentage Test.
1.4 ADMINISTRATOR: The term Administrator means the Employer unless another
Administrator is appointed by the Employer.
1.5 ADOPTING EMPLOYER: The term Adopting Employer means any business entity
which adopts this Plan with the consent of the Employer. An Employee's
transfer to or from any Employer or Adopting Employer will not affect his
or her Participant's Account balance, total Years of Service and Years of
Plan Participation. If the Adopting Employer is not an Affiliated Employer,
the Employees of the Adopting Employer will be treated separately for
purposes of allocating contributions and Forfeitures and for testing under
Code ss.401(a)(4), ss.401(k), ss.401(m), ss.410 and, if the Employer and
Adopting Employer do not share Employees, ss.416. An Adopting Employer may
terminate participation by delivering written notice to the Trustee. If
Plan assets which have been allocated to the Employees of the terminating
Adopting Employer are not transferred within a reasonable time to a
successor Trustee, they will be distributed to the Employees of the
terminating Adopting Employer as if the Plan had been terminated under
Section 9.2.
1.6 AFFILIATED EMPLOYER: The term Affiliated Employer means any of the
following of which the Employer is a part: (1) a controlled group of
corporations as defined in Code ss.414(b); (2) a trade or business (whether
or not incorporated) under common control under Code ss.414(c); (3) any
organization (whether or not incorporated) which is a member of an
affiliated service group under Code ss.414(m); and (4) any other entity
required to be aggregated under Code ss.414(o).
1.7 AGE: The term Age means actual attained age.
1.8 ANNIVERSARY DATE: The term Anniversary Date means December 31st.
1.9 ANNUITY STARTING DATE: The term Annuity Starting Date means the first day
of the first period for which an amount is paid as an annuity, or, in the
case of a benefit not payable as an annuity, the first day all events have
occurred which entitle the Participant to such benefit. The first day of
the first period for which a benefit is to be received by reason of
Disability will be treated as the Annuity Starting Date only if such
benefit is not an auxiliary benefit.
3
1.10 AVERAGE CONTRIBUTION PERCENTAGE TEST: The term Average Contribution
Percentage Test (or ACP Test) means one of the following tests for Matching
Contributions and Employee contributions: (a) the ACP for Participants who
are HCEs in the current Plan Year will not exceed the prior Plan Year's ACP
for Participants who were NHCEs in the prior Plan Year multiplied by 1.25;
or (b) the ACP for Participants who are HCEs in the current Plan Year will
not exceed the prior Plan Year's ACP for Participants who were NHCEs in the
prior Plan Year multiplied by 2.0, provided that the ACP for Participants
who are HCEs in the current Plan Year does not exceed the ACP for
Participants who were NHCEs in prior Plan Year by more than 2 percentage
points. However, the Administrator may elect to use 1997 Plan Year data in
determining the ACP Test for the 1997 Plan Year. The ACP Test will be
determined as follows:
(a) Multiple Use: If one or more HCEs participate in both a cash or
deferred arrangement and in a plan subject to the ACP Test maintained
by the Employer, and if the sum of the ADP and ACP of those HCEs
subject to either or both tests exceeds the Aggregate Limit, then the
ACP of those HCEs who also participate in a cash or deferred
arrangement will be reduced in the manner described in Section 5.17 of
the Plan so that the limit is not exceeded. The amount by which each
HCE's Contribution Percentage Amount is reduced will be treated as an
Excess Aggregate Contribution as defined in Section 5.17. The ADP and
the ACP of HCEs are determined after any corrections required to meet
the ADP Test and the ACP Test and are deemed to be the maximum
permitted under such tests for the Plan Year. Multiple use does not
occur if either the ADP or the ACP of the HCEs does not exceed 1.25
multiplied by the ADP and the ACP of the NHCEs.
(b) Highly Compensated Employees: A Participant is a HCE for a particular
Plan Year if he or she meets the definition of a HCE in effect for
that Plan Year; and a Participant is a NHCE for a particular Plan Year
if he or she does not meet the definition of a HCE in effect for that
Plan Year. The Contribution Percentage for any Participant who is a
HCE and who is eligible to have Contribution Percentage Amounts
allocated to his or her account under two or more plans described in
Code ss.401(a), or arrangements described in Code ss.401(k) that are
maintained by the Employer, will be determined as if the total of such
Contribution Percentage Amounts was made under each plan. If a HCE
participates in two or more cash or deferred arrangements that have
different plan years, all cash or deferred arrangements ending with or
within the same calendar year will be treated as a single arrangement.
Notwithstanding the foregoing, certain plans will be treated as
separate if mandatorily disaggregated under regulations under Code
ss.401(m).
4
(c) Other Rules: In determining the ACP Test, (1) if this Plan satisfies
the requirements of Code ss.401(m), Code ss.401(a)(4) or Code
ss.410(b) only if aggregated with one or more other plans, or if one
or more other plans satisfy such requirements only if aggregated with
this Plan, then this section will be applied by determining the
Contribution Percentage of Employees as if all such plans were a
single plan. Any adjustments to the Non-Highly Compensated Employee
ACP for the prior Plan Year will be made in accordance with Notice
98-1 and any superseding guidance. Plans may be aggregated in order to
satisfy Code ss.401(m) only if they have the same Plan Year; (2) in
determining the Contribution Percentage test, Employee contributions
are considered to have been made in the Plan Year in which contributed
to the Plan, and Matching Contributions and QNECs will be considered
made for a Plan Year if made no later than the end of the twelve-month
period beginning on the day after the close of the Plan Year; (3) the
Employer will maintain records sufficient to demonstrate satisfaction
of the ACP Test and the amount of QNECs or QMACs, or both, used in
such test; and (4) the determination and treatment of the Contribution
Percentage of any Participant will satisfy such other requirements as
may be prescribed by the Secretary of the Treasury.
(d) Aggregate Limit: The term Aggregate Limit means the sum of (1) 125% of
the greater of the ADP of Participants who are the NHCEs for the prior
Plan Year or the ACP of Participants who are NHCEs subject to Code
ss.401(m) for the Plan Year beginning with or within the prior Plan
Year of the CODA, and (2) the lesser of 200% or two plus the lesser of
such ADP or ACP. "Lesser" is substituted for "greater" in (1) and
"greater" is substituted for "lesser" after "two plus the" in (2) if a
larger Aggregate Limit would result.
(e) Definitions: The term Average Contribution Percentage means the
average of the Contribution Percentages of the "eligible" Participants
in a group; the term Contribution Percentage means the ratio
(expressed as a percentage) of the Participant's Contribution
Percentage Amounts to the Participant's Compensation for the Plan
Year; and the term Contribution Percentage Amounts means the sum of
Employee Contributions, Matching Contributions, and QMACs (to the
extent not taken into account in the ADP Test) made on behalf of the
Participant for the Plan Year. Contribution Percentage Amounts will
not include Matching Contributions that are forfeited either to
correct Excess Aggregate Contributions or because the contributions to
which they relate are Excess Deferrals, Excess Contributions, or
Excess Aggregate Contributions.
(f) "Eligible" Participant: For purposes of this Section, an "eligible"
Participant is any Employee who is eligible to make an Employee
Contribution, or an Elective Deferral (if the Employer takes such
contributions into account in the calculation of the Contribution
Percentage), or to receive a Matching Contribution (including
forfeitures) or a QMAC. If an Employee Contribution is required as a
condition of Plan participation, any Employee who would be a
Participant if such Employee made such a contribution will be treated
as an "eligible" Participant on behalf of whom no Employee
Contributions are made. An Employee Contribution means any
contribution made to the Plan by or on behalf of a Participant that is
included in the Participant's gross income in the year in which made
and that is maintained under a separate account to which earnings and
losses are allocated.
5
1.11 BENEFICIARY: The term Beneficiary means the recipient designated by the
Participant to receive the Plan benefits payable upon the Participant's
death. Subject to the provisions of Section 5.8 regarding the rights of a
Participant's spouse, each Participant may designate a Beneficiary on a
form supplied by the Administrator, and may change or revoke that
designation by filing written notice with the Administrator. In the absence
of a designation, the Participant will be deemed to have designated the
following Beneficiaries (if then living) in the following order: (1) his or
her spouse, (2) his or her children; and (3) his or her estate.
1.12 BREAK IN SERVICE: The term Break in Service means for purposes of
determining a Participant's Vested Interest, a Plan Year during which an
Employee does not complete more than 500 Hours of Service for reasons other
than an authorized leave of absence, which is any period in which an
Employee ceases active employment because of illness, military service, or
any other reason approved by the Employer. If a Plan Year is less than 12
months, the 500 Hours of Service requirement will be proportionately
reduced. For purposes of determining an Employee's eligibility to
participate in this Plan, the term Break in Service means the 12-month
period beginning on the date an Employee first completes and Hour of
Service and each anniversary thereof during which an Employee fails to
complete more than 500 Hours of Service for reasons other than an
authorized leave of absence as described above.
1.13 CODE: The term Code means the Internal Revenue Code of 1986, as amended,
and the regulations and rulings promulgated thereunder by the Internal
Revenue Service.
1.14 COMPENSATION: The term Compensation means wages within the meaning of Code
ss.3401(a) and all other payments of compensation that are actually paid or
made available in gross income during the calendar year ending on or within
the Plan Year to an Employee by the Employer (in the course of the
Employer's trade or business) for which the Employer is required to furnish
the Employee a written statement (Form W-2) under Code ss.6041(d),
ss.6051(a)(3) and ss.6052. Compensation must be determined without regard
to any rules under Code ss.3401(a) that limit the remuneration included in
wages based on the nature or location of the employment or the services
performed (such as the exception for agricultural labor in Code
ss.3401(a)(2). Compensation will also include amounts not currently
includible in gross income by reason of Code ss.125, ss.402(e)(3),
ss.402(h), or ss.403(b). Compensation used to determine Plan benefits will
not exceed $160,000, as adjusted under Code ss.401(a)(17). A cost of living
adjustment in effect for a calendar year applies to any period not
exceeding 12 months over which Compensation is determined (determination
period) beginning in such calendar year. If a determination period is less
than 12 months, the adjusted $160,000 limitation will be multiplied by a
fraction, the numerator of which is the number of months in the
determination period, and the denominator of which is 12. Compensation of
an Owner-Employee or a Self-Employed Individual will equal Earned Income up
to the adjusted $160,000 limitation.
1.15 DISABILITY: The term Disability means a physical or mental condition
arising after an Employee has become a Participant which totally and
permanently prevents the Participant from performing his or her specified
duties for the Employer. The determination as to whether a Participant has
suffered a Disability will be made by a physician appointed by the
Administrator. If a difference of opinion arises between the Participant
and the Administrator as to whether the Participant has suffered a
Disability, it will be settled by a majority decision of
6
three physicians, one to be appointed by the Administrator, one to be
appointed by the Participant, and the third to be appointed by the two
physicians first appointed herein. However, notwithstanding the foregoing,
the term Disability will not include any disability arising from (1)
chronic or excessive use of intoxicants or other substances; (2)
intentionally self-inflicted injury or sickness; (3) an unlawful act or
enterprise by the Participant; or (4) military service where the
Participant is eligible to receive a government sponsored military
disability pension.
1.16 EARLY RETIREMENT AGE: Early Retirement Age means any Anniversary Date
coinciding with or following the date a Participant reaches Age 59 1/2.
1.17 EARNED INCOME: The term Earned Income means the net earnings from
self-employment in the trade or business with respect to which the Plan is
established, for which personal services of the individual are a material
income-producing factor. Net earnings will be determined without regard to
items not included in gross income and the deductions allocable thereto.
Net earnings will be reduced by deductible contributions by the Employer to
a qualified retirement plan. Net earnings will be determined with regard to
the deduction allowed to the Employer by Code ss.164(f) for taxable years
beginning after December 31, 1989.
1.18 ELECTIVE DEFERRAL: The term Elective Deferrals means Employer contributions
made to the Plan at the election of the Participant in lieu of cash
compensation, and will include contributions made pursuant to a salary
reduction agreement or other deferral mechanism. In any taxable year, a
Participant's Elective Deferral is the sum of all Employer contributions
made on behalf of such Participant pursuant to an election to defer under
any qualified cash or deferred arrangement under Code ss.401(k), any
simplified employee pension cash or deferred arrangement under Code
ss.402(h)(1)(B), any eligible deferred compensation plan under Code ss.457,
any plan under Code ss.501(c)(18), and any Employer contributions made for
the purchase of an annuity contract under Code ss.403(b) pursuant to a
salary reduction agreement. Elective Deferrals will not include any
deferrals properly distributed as excess Annual Additions under Section
6.5.
1.19 ELIGIBLE PARTICIPANT: The term Eligible Participant means a Participant
eligible to receive an allocation of Employer contributions (other than
Matching Contributions) allocable for a Plan Year. Any Participant who is
an Employee on the last day of the Plan Year will be an Eligible
Participant if he or she also completes at least 1,000 Hours of Service
during the Plan Year. Any Participant who terminates employment with the
Employer before the last day of the Plan Year will only be an Eligible
Participant for that Plan Year in accordance with the following provisions:
(a) Retiring Participants: A Participant who terminates employment before
the last day of the Plan Year because of retirement after Normal or
Early Retirement Age will be an Eligible Participant regardless of the
number of Hours of Service the Participant completes during that Plan
Year.
(b) Deceased Participants: A Participant who terminates employment before
the last day of the Plan Year because of death will not be an Eligible
Participant for that Plan Year.
7
(c) Disabled Participants: A Participant who terminates employment before
the last day of the Plan Year because of Disability will not be an
Eligible Participant for that Plan Year.
(d) Terminated Participants: A Participant who terminates before the last
day of the Plan Year for reasons other than retirement, death or
Disability will not be an Eligible Participant for that Plan Year.
1.20 EMPLOYEE: The term Employee means (1) any person employed by the Employer
as an employee; (2) except for purposes of determining eligibility to
participate in this Plan, any employee of an Affiliated Employer; (3) any
Self-Employed Individual who derives Earned Income from the Employer; (4)
any Owner-Employee; and (5) any Leased Employee who is not covered by a
plan described in Code ss.414(n)(5) provided Leased Employees constitute
more than 20% of the Employer's non-highly compensated workforce.
1.21 EMPLOYER: The term Employer means Frequency Electronics, Inc. (or any
successor thereto that sponsors this Plan) and any Adopting Employer.
1.22 FIDUCIARY: The term Fiduciary means any individual or entity which
exercises any discretionary authority or control over the management of the
Plan or over the disposition of the assets of the Plan; renders investment
advice for a fee or other compensation (direct or indirect); or has any
discretionary authority or responsibility over Plan administration.
1.23 FISCAL YEAR: The term Fiscal Year means the Employer's accounting year
beginning May 1st and ending April 30th.
1.24 FORFEITURE: The term Forfeiture means the amount by which a Participant's
Account balance exceeds his or her Vested Interest upon the earlier to
occur of (1) the date the Participant receives a distribution of his or her
Vested Interest pursuant to Sections 5.4, 5.5, or 5.6; or (2) the date the
Participant incurs 5 consecutive Breaks in Service after Termination of
Employment. No Forfeitures will occur solely as a result of the withdrawal
of a Participant's own contributions to the Plan, or a Participant's
transfer to an Affiliated Employer or Adopting Employer. All Forfeitures
will be allocated to the Forfeiture Account pending allocation pursuant to
Section 3.4.
1.25 HCE: The term HCE means a Highly Compensated Employee.
8
1.26 HIGHLY COMPENSATED EMPLOYEE: The term Highly Compensated Employee (or HCE)
means, for Plan Years beginning after December 31, 1996, any Employee (1)
who during the Plan Year or the look-back year was a 5% owner as defined in
Code ss.416(i)(1); or (2) who for the look-back year had Section 415
Compensation in excess of $80,000 as adjusted under Code ss.415(d) (except
that the base year will be the calendar quarter ending September 30, 1996).
The look-back year will be the 12 month period immediately preceding the
Plan Year for which the determination is being made. The determination of
who is a highly compensated former Employee is based on the rules for
determining HCE status as in effect for the Plan Year or the look-back year
for which the determination is being made, in accordance with temporary
regulation ss.1.414(q)-1T, A-4 and Notice 97-45. In determining if an
Employee is a Highly Compensated Employee for Plan Years beginning in 1997,
amendments to Code ss.414(q) are treated as having been in effect for Plan
Years beginning in 1996.
1.27 HOUR OF SERVICE: The term Hour of Service means (a) each hour for which an
Employee is paid, or entitled to payment, for the performance of duties for
the Employer or an Affiliated Employer. These hours will be credited to the
Employee for the computation period in which the duties are performed; and
(b) each hour for which an Employee is paid, or entitled to payment, by the
Employer or an Affiliated 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 will be credited under this Section for any
single continuous period (whether or not such period occurs in a single
computation period). Hours under this paragraph will be calculated and
credited pursuant to ss.2530.200b-2 of the Department of Labor Regulations
which are incorporated herein by this reference; and (c) each hour for
which back pay, irrespective of mitigation of damages, is either awarded or
agreed to by the Employer or an Affiliated Employer. The same hours will
not be credited both under section (a) or section (b) above and under this
section (c). These hours will be credited 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. In
determining whether a Break in Service for participation and vesting has
occurred in a computation period, an individual on Maternity or Paternity
Leave will receive credit for up to 501 hours which would otherwise have
been credited to such individual but for such absence, or in any case in
which such hours cannot be determined, 8 hours per day of such absence.
Hours credited for Maternity of Paternity Leave will be credited in the
computation period in which the absence begins if the crediting is
necessary to prevent a Break in Service in that period, or in all other
cases, in the following computation period.
9
1.28 KEY EMPLOYEE: The term Key Employee means any Employee, Former Employee,
deceased Employee, or Beneficiary who at any time during the Plan Year
containing the Determination Date for the Plan Year in question or any of
the prior 4 Plan Years was (1) an officer of the Employer whose Section 415
Compensation exceeds 50% of the amount in effect under Code
ss.415(b)(1)(A), except that no more than fifty Employees (or, if lesser,
the greater of three or 10% of the Employees) will be treated as officers;
(2) an owner (or was considered an owner under Code ss.318) of one of the
ten largest interests in the Employer whose Section 415 Compensation
exceeds 100% of the dollar limitation in effect under Code ss.415(c)(1)(A),
but if two Employees own the same interest in the Employer, the Employee
with the greater annual Compensation will be treated as owning a larger
interest; (3) a 5% owner of the Employer as defined in Code
ss.416(i)(1)(B)(i); or (4) a 1% owner of the Employer as defined in Code
ss.416(i)(1)(B)(ii) whose annual Section 415 Compensation is more than
$150,000. For purposes of this Section, Section 415 Compensation will
include amounts contributed by the Employer on behalf of an Employee
pursuant to a salary reduction agreement which are excludible from the
Employee's gross income under Code ss.125, Code ss.402(e)(3), Code
ss.402(h), or Code ss.403(b).
1.29 LEASED EMPLOYEE: The term Leased Employee means any person within the
meaning of Code ss.414(n)(2) and Code ss.414(o) who is not an Employee of
the Employer and who, pursuant to an agreement between the Employer and a
leasing organization, has performed services for the Employer or for the
Employer and related persons as determined in accordance with Code
ss.414(n)(6) on a substantially full time basis for a period of at least
one year, and such services are performed under the primary direction and
control of the Employer. Contributions or benefits provided to a Leased
Employee by the leasing organization which are attributable to services
performed for the Employer will be treated as provided by Employer.
1.30 LIMITATION YEAR: The term Limitation Year means the Plan Year.
1.31 MATCHING CONTRIBUTION: The term Matching Contribution means an Employer
contribution made to this or any other defined contribution plan on behalf
of a Participant on account of Voluntary Employee Contributions made by
such Participant, or on account of a Participant's Elective Deferral, under
a Plan maintained by the Employer.
1.32 MATERNITY OR PATERNITY LEAVE: The term Maternity or Paternity Leave means
that an Employee is absent from work because of the Employee's pregnancy;
the birth of the Employee's child; the placement of a child with the
Employee in connection with the adoption of such child by the Employee; or
the need to care for such child for a period beginning immediately
following the child's birth or placement as set forth above.
1.33 NHCE: The term NHCE means a Non-Highly Compensated Employee.
1.34 NON-ELECTIVE CONTRIBUTIONS: The term Non-Elective Contribution means a
contribution other than a Matching Contribution or a Qualified Matching
Contribution (1) that is made by the Employer, (2) that is allocated to
Participants' Accounts, and (3) that the Participant may not elect to
receive in cash until such contributions are distributed from the Plan.
10
1.35 NON-HIGHLY COMPENSATED EMPLOYEE: The term Non-Highly Compensated Employee
means any Employee who is not a Highly Compensated Employee.
1.36 NON-KEY EMPLOYEE: The term Non-Key Employee means any Employee who is not a
Key Employee, including former Key Employees. For purposes of making the
allocations in Section 3.5, Non-Key Employee means a Non-Key Employee who
either is a Participant or would be a Participant but for the reasons set
forth in Section 3.5(a).
1.37 NORMAL RETIREMENT AGE: The term Normal Retirement Age means the date a
Participant reaches Age 65. There is no mandatory retirement age.
1.38 NORMAL RETIREMENT DATE: The term Normal Retirement Date means the
Anniversary Date occurring nearest Normal Retirement Age.
1.39 OWNER-EMPLOYEE: The term Owner-Employee means (1) in the case of an
Employer or Affiliated Employer which is an unincorporated trade or
business, an individual who owns the entire interest in such Employer or
Affiliated Employer; and (2) in the case of an Employer or Affiliated
Employer which is a partnership, an individual who owns more than 10% of
either the capital interest or the profit interest in such Employer of
Affiliated Employer.
1.40 PARTICIPANT: The term Participant means any Employee who has met the
eligibility and participation requirements of the Plan. However, an
individual who is no longer an Employee will not be deemed a Participant if
his or her entire Plan benefit (1) is fully guaranteed by an insurance
company and is legally enforceable at the sole choice of such individual
against such insurance company, provided that a contract, policy, or
certificate describing the benefits to which such individual is entitled
under the Plan has been issued to such individual; or (2) is paid in a lump
sum distribution which represents such individual's entire interest in the
Plan.
1.41 PARTICIPANT'S ACCOUNT: The term Participant's Account means the account to
which is credited a Participant's share of Employer contributions,
Forfeitures which are not used to pay administrative expenses or to reduce
Employer contributions, and earnings and losses. Each account will be
divided into the following Employer contribution sub-accounts: the Elective
Deferral Account; the Matching Contribution Account; the Qualified Matching
Contribution Account; the Non-Elective Contribution Account; and the
Qualified Non-Elective Contribution Account.
1.42 PERMISSIVE AGGREGATION GROUP: The term Permissive Aggregation Group means a
Required Aggregation Group plus any Employer plan(s) which when considered
as a group with the Required Aggregation Group would continue to satisfy
Code ss.401(a)(4) and ss.410.
1.43 PLAN: The term Plan means this 401(k) profit sharing plan and trust
agreement, which is named the Frequency Electronics, Inc. 401(k) Savings
Plan.
1.44 PLAN YEAR: The term Plan Year means the Plan's accounting year beginning
January 1st and ending December 31st.
1.45 POLICY: The term Policy means an insurance policy or annuity contract
purchased by the Plan.
11
1.46 QMAC: The term QMAC means a Qualified Matching Contribution.
1.47 QNEC: The term QNEC means a Qualified Non-Elective Contribution.
1.48 QUALIFIED JOINT AND SURVIVOR ANNUITY: The term Qualified Joint and Survivor
Annuity means an immediate annuity for the life of the Participant with a
survivor benefit for the life of the Participant's spouse which is not less
than 50% nor more than 100% of the annuity payable during the joint lives
of the Participant and his spouse and which is the amount of benefit which
can be purchased with the Participant's Vested Aggregate Account. The
survivor benefit will be 50% unless a higher percentage is elected by the
Participant.
1.49 QUALIFIED MATCHING CONTRIBUTION: The term Qualified Matching Contribution
means a Matching Contribution that (1) is used for the purpose of
satisfying the ADP Test or the ACP Test; (2) a Participant may not elect to
receive it in cash until distributed from the Plan; and (3) is subject to
the distribution and nonforfeitability requirements of Code ss.401(k) when
made to the Plan.
1.50 QUALIFIED NON-ELECTIVE CONTRIBUTIONS: The term Qualified Non-Elective
Contribution means a contribution (other than a Matching Contribution or a
QMAC) made by the Employer and allocated to a Participant's Account and
that (1) is used for the purpose of satisfying the ADP Test or the ACP
Test; (2) a Participant may not elect to receive in cash until distributed
from the Plan; and (3) is subject to the distribution and nonforfeitability
requirements of Code ss.401(k) when made to the Plan. Qualified
Non-Elective Contributions may be considered in determining the Top Heavy
Minimum Contribution under Section 3.5.
1.51 QUALIFIED PRERETIREMENT SURVIVOR ANNUITY: The term Qualified Preretirement
Survivor Annuity means a survivor annuity for the life of a deceased
Participant's surviving spouse which is equal to the amount of benefit
which can be purchased by 50% of the deceased Participant's Vested
Aggregate Account determined at the date of death. In determining a
Participant's Vested Aggregate Account for purposes of this Section, any
security interest held by the Plan because of a loan outstanding to the
Participant will be taken into consideration.
1.52 REQUIRED AGGREGATION GROUP: The term Required Aggregation Group means (1)
each qualified deferred compensation Plan of the Employer in which at least
one Key Employee participates or participated at any time during the
determination period (regardless of whether the plan has terminated); and
(2) any other qualified deferred compensation plan of the Employer which
enables a plan described in (1) to satisfy Code ss.401(a)(4) or ss.410.
1.53 REQUIRED BEGINNING DATE: The term Required Beginning Date means, for a
Participant who is not a 5% owner, April 1st of the calendar year following
the later of the calendar year in which he or she reaches Age 70 1/2 or the
calendar year in which he or she actually retires; and for a Participant
who is a 5% owner, April 1st of the calendar year following the calendar
year in which he or she reaches Age 70 1/2.
12
(a) Definition Of 5% Owner: A Participant will be treated as a 5% owner
hereunder if such Participant is a 5% owner as defined in Code ss.416
at any time during the Plan Year ending with or within the calendar
year in which such owner reaches Age 70 1/2. Once distributions have
begun to a 5% owner under this Section, they must continue even if the
Participant ceases to be a 5% owner in a subsequent year.
(b) Pre-retirement Age 70 1/2 Distributions: The pre-retirement Age 70 1/2
distribution option is only eliminated with respect to Employees who
reach Age 70 1/2 in or after a calendar year that begins after the
later of December 31, 1998, or the adoption date of this amended Plan.
The pre-retirement Age 70 1/2 distribution option is an optional form
of benefit under which benefits payable in a particular distribution
form (including any modifications that may be elected after benefit
commencement) commence at a time during the period that begins on or
after January 1st of the calendar year in which an Employee attains
age 70 1/2 and ends April 1st of the immediately following calendar
year.
1.54 SECTION 415 COMPENSATION: The term Section 415 Compensation means a
Participant's Earned Income, wages, salaries, fees for professional
services and other amounts received for personal services actually rendered
in the course of employment with the Employer maintaining the Plan
(including, but not limited to, commissions paid salesmen, compensation for
services based on a percentage of profits, commissions on insurance
premiums, tips and bonuses). However, Section 415 Compensation does not
include (a) Employer contributions to a deferred compensation plan which
are not includible in the Employee's gross income for the taxable year in
which contributed, or Employer contributions under a simplified employee
pension plan to the extent such contributions are deductible by the
Employee, or any distributions from a plan of deferred compensation; (b)
amounts realized from a non-qualified stock option, or when restricted
stock (or property) held by the Employee either becomes freely transferable
or is no longer subject to a substantial risk of forfeiture; (c) amounts
realized from the sale, exchange or other disposition of stock acquired
under a qualified stock option; and (d) other amounts which receive special
tax benefits, or contributions made by an Employer (whether or not under a
salary reduction agreement) towards the purchase of an annuity described in
Code ss.403(b) (whether or not the amounts are excludible from the gross
income of the Employee). For Limitation Years beginning after December 31,
1997, a Participant's Section 415 Compensation will include any elective
deferrals as defined in Code ss.402(g)(3), and any amounts which are
contributed or deferred by the Participant at the election of the
Participant and which are not includible in the gross income of the
Participant by reason of Code ss.125 or Code ss.457.
1.55 SELF-EMPLOYED INDIVIDUAL: The term Self-Employed Individual means anyone
who owns an interest (other than stock) in the Employer and has Earned
Income for the Plan Year or who would have had Earned Income but for the
fact the Employer had no net profits for the Plan Year.
1.56 SHAREHOLDER-EMPLOYEE: The term Shareholder-Employee means, in the case of
an Employer or Affiliated Employer which is an electing small business
corporation, an individual who is an employee or officer of such electing
small business corporation and owns, or is considered as owning within the
meaning of Code ss.318(a)(1), on any day during the taxable year of such
corporation, more than 5% of the outstanding stock of the corporation.
1.57 SUPER TOP HEAVY: The term Super Top Heavy means the Top Heavy Ratio exceeds
90%.
1.58 TERMINATION OF EMPLOYMENT: The term Termination of Employment means that a
Participant has ceased to be an Employee for reasons other than retirement,
death, or Disability.
1.59 TERMINATED PARTICIPANT: The term Terminated Participant means a Participant
who has ceased to be an Employee for reasons other than retirement, death
or Disability.
1.60 TOP HEAVY: The term Top Heavy means for any Plan Year beginning after
December 31, 1983 (a) that the Top Heavy Ratio exceeds 60% and the Plan is
not part of a Required Aggregation Group or Permissive Aggregation Group;
or (b) that the Plan is a part of a Required Aggregation Group but not a
Permissive Aggregation Group and the Top Heavy Ratio for the group exceeds
60%; or (c) that the Plan is a part of a Required Aggregation Group and a
Permissive Aggregation Group and the Top Heavy Ratio for the Permissive
Aggregation Group exceeds 60%.
1.61 TOP HEAVY MINIMUM ALLOCATION: The term Top Heavy Minimum Allocation means
an amount equal to 3% of the Section 415 Compensation of a Non-Key Employee
for the applicable Plan Year. The term Top Heavy Extra Minimum Allocation
means an amount equal to 4% of the Section 415 Compensation of a Non-Key
Employee for the applicable Plan Year.
1.62 TOP HEAVY RATIO: In determining if this Plan is Top Heavy or Super Top
Heavy, the Top Heavy Ratio will be determined in accordance with the
following provisions:
(a) Rule 1: If the Employer maintains one or more defined contribution
plans (including SEPs) and has not maintained any defined benefit plan
which during the 5-year period ending on the Determination Date had
accrued benefits, the Top Heavy Ratio for this Plan alone or for the
Required or Permissive Aggregation Group is a fraction, the numerator
of which is the sum of the account balances of all Key Employees as of
the Determination Date (including any part of any account balance
distributed in the 5-year period ending on the Determination Date),
and the denominator of which is the sum of the account balances
(including any part of any account balance distributed in the 5-year
period ending on the Determination Date) determined under Code ss.416
and the regulations thereunder. Both the numerator and the denominator
of the Top Heavy Ratio will be increased to reflect any contribution
not actually made as of the Determination Date but which is required
to be taken into account under Code Section ss.416 and the regulations
thereunder.
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(b) Rule 2: If the Employer maintains one or more defined contribution
plans (including SEPs) and maintains or has maintained one or more
defined benefit plans which during the 5-year period ending on the
Determination Date has had any accrued benefits, the Top Heavy Ratio
for any Required or Permissive Aggregation Group is a fraction, the
numerator of which is the sum of account balances under the aggregated
defined contribution plans for all Key Employees determined in
accordance with paragraph (a) above, and the present value of accrued
benefits under the aggregated defined benefit plans for all Key
Employees as of the Determination Date, and the denominator of which
is the sum of the account balances under the aggregated defined
contribution plans for all Participants, determined in accordance with
paragraph (a), and the present value of accrued benefits under the
aggregated defined benefit plans for all Participants as of the
Determination Date, all determined under Code ss.416 and the
regulations thereunder. The accrued benefits under a defined benefit
plan in both the numerator and denominator of the Top Heavy Ratio are
increased for any distribution made in the 5-year period ending on the
Determination Date.
(c) Rule 3: For purposes of paragraphs (a) and (b), the value of account
balances and the present value of accrued benefits will be determined
as of the most recent Valuation Date that falls within or ends with
the 12-month period ending on the Determination Date, except as
provided in Code ss.416 and the regulations thereunder for the first
and second Plan Years of a defined benefit plan. The account balances
and accrued benefits will be disregarded for a Participant (1) who is
not a Key Employee but who was a Key Employee in a prior year or (2)
who has not been credited with at least one Hour of Service with any
Employer maintaining the Plan at any time during the 5-year period
ending on the Determination Date. The calculation of the Top Heavy
Ratio and the extent to which distributions, rollovers, and transfers
are taken into account will be made in accordance with Code ss.416 and
the regulations thereunder. When aggregating plans, the value of the
account balances and accrued benefits will be calculated with
reference to the Determination Date that falls within the same
calendar year. The accrued benefit of a Participant other than a Key
Employee will be determined under (1) the method, if any, that
uniformly applies for accrual purposes under all defined benefit plans
maintained by the Employer, or (2) effective as of the first Plan Year
beginning after December 31, 1986, if there is no such method, as if
such benefit accrued not more rapidly than the slowest accrual rate
permitted under the fractional rule of Code ss.411(b)(1)(C).
Deductible employee contributions will not be taken into account in
determining the Top Heavy Ratio.
(d) Definition Of Determination Date: In determining the Top Heavy Ratio,
the term Determination Date means the last day of the preceding Plan
Year except for the first Plan Year when the Determination Date means
the last day of such first Plan Year.
1.63 TRUSTEE: The term Trustee means the persons or entity named as trustee or
trustees in this Plan and any successor to such Trustee or Trustees.
1.64 TRUST FUND: The term Trust Fund or Trust means the assets of the Plan.
1.65 VALUATION DATE: Except as otherwise provided in Section 1.62(c) regarding
the Top Heavy Ratio, the term Valuation Date means the date on which the
Trustee determines the value of the
15
Trust Fund, which must occur at the end of each business day of the Plan
Year except for Plan assets which are not normally valued on a daily basis.
Any such assets will be valued at least annually on the last day of each
Plan Year, and on such other dates deemed necessary by the Administrator in
a manner that does not discriminate in favor of HCEs.
1.66 VESTED AGGREGATE ACCOUNT: The term Vested Aggregate Account means a
Participant's Vested Interest in the aggregate value of his or her
Participant's Account and any accounts attributable to the Participant's
own Plan contributions (including rollovers).
1.67 VESTED INTEREST: The term Vested Interest means a Participant's
nonforfeitable percentage in any account maintained on his or her behalf by
the Plan. A Participant's Vested Interest in his or her Participant's
Account will be determined in accordance with Section 4.6 of the Plan.
1.68 YEAR OF SERVICE: The term Year of Service means a 12-consecutive month
computation period in which an Employee completes for the Employer, an
Affiliated Employer or an Adopting Employer (a) at least 1,000 Hours of
Service for eligibility purposes under Section 2.1; and (b) at least 1,000
Hours of Service for vesting purposes under Section 4.6. A Year of Service
will be determined in accordance with the following provisions:
(a) Eligibility Computation Period: For eligibility purposes under Section
2.1, an Employee's initial 12-consecutive month computation period
will begin on the date an Employee first completes an Hour of Service
(hereafter called the Employment Commencement Date), and each 12-month
computation period thereafter will begin on the anniversary of the
Employee's Employment Commencement Date. If a Plan Year is less than
12 months, the 1,000 Hours of Service requirement set forth herein
will be proportionately reduced.
(b) Reemployment Before A Break In Service: For eligibility purposes, if a
Participant terminates employment and is reemployed by the Employer
before incurring a Break in Service, such Participant will continue to
participate in the Plan and earn credit for Years of Service in the
same manner as if the termination of employment had not occurred.
16
(c) Reemployment After A Break In Service: For eligibility purposes, if a
Participant who does not have a Vested Interest in his or her
Participant's Account terminates employment but is reemployed by the
Employer after a Break in Service occurs, such former Participant's
Years of Service before the Break in Service will not be counted in
computing his or her Years of Service if the number of consecutive
Breaks in Service equals or exceeds the greater of five or the
aggregate number of Years of Service. The aggregate number of Years of
Service will not include any Years of Service previously disregarded
hereunder by reason of prior Breaks in Service. If a former
Participant's Years of Service are disregarded under this paragraph,
he or she will be treated as a new Employee for eligibility purposes.
If a former Participant's Years of Service may not be disregarded
under this paragraph, then he or she will continue to participate in
the Plan, or, if terminated, will participate immediately upon
reemployment. If a Participant who has a Vested Interest in his or her
Participant's Account terminates employment but is reemployed by the
Employer after a Break in Service occurs, such former Participant will
become a Participant in the Plan immediately upon being reemployed by
the Employer.
(d) Employees Under 2-Year Full And Immediate Vesting: If this Plan at any
time (1) provides in Section 2.1 that an Employee must complete 2
Years of Service for eligibility purposes, and (2) provides in Section
4.6 that an Employee will have a 100% Vested Interest in his or her
Participant's Account upon becoming a Participant, then the Years of
Service of an Employee who incurs a Break in Service before satisfying
such 2 Years of Service eligibility requirement will not be counted
for eligibility purposes.
(e) Vesting Computation Period: In determining a Participant's Vested
Interest in his or her Participant's Account under Section 4.6, the
12-consecutive month computation period will be the Plan Year. If a
former Participant is reemployed by the Employer after a Break in
Service occurs, such former Participant's Vested Interest in his or
her Participant's Account will be computed as follows: (1) Years of
Service prior to the Break in Service will not be counted for purposes
of computing his or her post-break Vested Interest until the former
Participant has completed a Year of Service from the date of
reemployment; (2) Years of Service after a former Participant has
incurred 5 consecutive Breaks in Service will not be taken into
account in determining the Vested Interest in his or her Participant's
Account which accrued before such 5 year period; and (3) if a former
Participant does not have a Vested Interest in his or her
Participant's Account, Years of Service before any period of
consecutive Breaks in Service will not be taken into account if the
number of consecutive Breaks in Service within such period equals or
exceeds the greater of 5 or the aggregate number of Years of Service
before such period.
17
ARTICLE 2
PLAN PARTICIPATION
2.1 ELIGIBILITY REQUIREMENTS: Any Employee who is not in an ineligible class of
Employees will be eligible to become a Participant in the Plan in
accordance with the following provisions:
(a0 Age And Service Requirement: Anyone who is a Participant on January 1,
1999 will continue to participate in the Plan. Any other Employee who
is not a member of an ineligible class of Employees will be eligible
to enter the Plan as a Participant, when he or she reaches Age 21 and
completes 6 months of service, which an Employee will be deemed to
have completed if he or she (1) is employed by the Employer 6 months
after the date he or she is first entitled to be credited with an Hour
of Service; and (2) has been credited with at least 83.33 Hours of
Service per month. However, in no event will an Employee who performs
at least 1,000 Hours of Service in an eligibility computation period
as set forth in Section 1.68(a) fail to enter the Plan as a
Participant on the earlier of the entry date set forth in Section 2.2
which follows the last day of said computation period, or the date
which is six months after the last day of said computation period.
(b0 Ineligible Classes Of Employees: All Employees are eligible to
participate in the Plan except for the following ineligible classes of
Employees: (1) Employees whose employment is governed by the terms of
a collective bargaining agreement between Employee representatives and
the Employer in which retirement benefits were the subject of good
faith bargaining, unless such collective bargaining agreement
expressly provides for the inclusion of such Employees as Participants
in the Plan; (2) Employees who are non-resident aliens who do not
receive any earned income from the Employer which constitutes income
from sources within the United States; (3) Leased Employees; and (4)
Employees who are deemed by the Employer to be independent contractors
on their employment commencement date and on the first day of each
subsequent Plan Year.
(c0 Participation By Ineligible Employees: If an Employee who is not a
member of the eligible class of Employees becomes a member of the
eligible class, such Employee will participate in the Plan immediately
if he or she has satisfied the minimum age and service requirements
and would have previously become a Participant had he or she been a
member of the eligible class. The participation of a Participant who
becomes a member of an ineligible class will be suspended, and such
Participant will be entitled to an allocation of Employer
contributions and Forfeitures for the Plan Year only to the extent of
Hours of Service completed while a member of an eligible class of
Employees. Upon returning to an eligible class of Employees, a
suspended Participant will immediately participate again in the Plan.
The Vested Interest of a Participant who ceases to be a member of an
eligible class will continue to increase in accordance with Section
4.6.
18
(d0 Participation By Former Participants: A former Participant will again
become a Participant immediately upon returning to the employ of the
Employer as a member of an eligible class of Employees unless such
former Participant's Years of Service may be disregarded by reason of
prior Breaks in Service as provided in Section 1.68(c).
2.2 ENTRY DATE: An Employee who has satisfied the eligibility requirements in
Section 2.1 will enter the Plan as a Participant on the January 1st, April
1st, July 1st, or October 1st which coincides or next follows the date on
which he or she satisfies such requirements.
2.3 WAIVER OF PARTICIPATION: A Participant may, with the written consent of
both the Employer and the Participant's spouse, elect in writing to waive
participation in the Plan for any Plan Year. A waiver will be permitted
only if it does not adversely affect the Plan's tax qualified status. An
election to waive participation in the Plan for a Plan Year will result in
no allocation of Employer contributions or Forfeitures for that Plan Year.
If an Employee who has waived his or her right to become a Participant
subsequently elects to become a Participant, the period of waiver will be
considered as Years of Service under the Plan for purposes of determining
the Employee's eligibility to participate, for determining the Employee's
Vested Interest in his or her Participant's Account, and for determining
eligibility for Normal or Early Retirement Age.
2.4 CESSATION OF PARTICIPATION: A Participant's active participation in the
Plan will cease if the Participant incurs a Break in Service or on account
of the Participant's death or Disability, or on account of retirement on or
after reaching Normal or Early Retirement Age. Upon the occurrence of any
such event, the benefits of such Participant, if any, will be computed by
the Administrator and distributed by the Trustee as hereinafter provided.
2.5 RESTRICTIONS ON OWNER-EMPLOYEES: If this Plan provides contributions or
benefits for Employees some or all of whom are Owner-Employees, such
contributions or benefits can only be provided with respect to the Earned
Income of such Owner-Employee which is derived from the trade or business
with respect to which the Plan is established.
19
ARTICLE 3
CONTRIBUTIONS AND ALLOCATIONS
3.1 EMPLOYER CONTRIBUTIONS: Each Plan Year, the Employer will contribute to the
Plan such amount as it may in its sole discretion determine, subject to the
following provisions:
(a0 Elective Deferrals: Each Participant may enter into a salary reduction
agreement as set forth below authorizing the Employer to withhold a
percentage of the Participant's Compensation. The amount withheld will
be deemed an Elective Deferral which the Employer will contribute to
the Plan on the Participant's behalf. Each Participant's Elective
Deferral for any Plan Year will be determined as follows:
(1 Deferral Percentage: Each Participant may elect that from 1% to
20% of his or her Compensation be withheld as an Elective
Deferral, but in no event may the dollar amount withheld be more
than $10,000 per calendar year as adjusted under Code
ss.402(g)(5). Elective Deferrals which exceed the adjusted
$10,000 limitation will be deemed Excess Elective Deferrals and
will be returned as set forth in Section 5.15. Elective Deferrals
must satisfy one of the ADP Tests, and Elective Deferrals which
do not satisfy one of the ADP Tests will be deemed Excess
Contributions and will be returned as set forth in Section 5.16.
(2 Withdrawal Of Elective Deferrals: Elective Deferrals (exclusive
of the earnings thereon) can only be withdrawn upon the earlier
to occur of (1) the date the Participant incurs a Termination of
Employment; (2) the date the Participant dies; (3) the date the
Participant suffers a Disability; (4) the date an event described
in Code ss.401(k)(10) occurs; (5) the date the Participant
retires; or (6) the date the Participant qualifies for a
financial hardship distribution under Section 5.18. Distribution
will be made in accordance with the provisions of Article 5.
(3 Salary Reduction Agreement: A Participant may, in accordance with
a written policy established by the Administrator, amend his or
her salary reduction agreement to change the percentage being
withheld. The Participant may also at any time suspend or cancel
his or her salary reduction agreement upon reasonable written
notice (not to exceed 30 days). If a Participant cancels or
suspends his or her salary reduction agreement, the Participant
will not be permitted to put a new salary reduction agreement
into effect until such time as set forth in the written policy
established by the Administrator. If necessary to insure that the
Plan satisfies the ADP Test, the Employer may also amend or
terminate a Participant's salary reduction agreement on written
notice to the Participant.
(b0 Matching Contributions: The Employer may contribute on behalf of each
Participant a Matching Contribution to be determined each year by the
Employer. Matching Contributions made for each Plan Year must satisfy the
ACP Test. Matching
20
Contributions which do not satisfy the ACP Test will be deemed Excess
Aggregate Contributions and will be returned as set forth in Section 5.17.
The Employer may elect to treat all or any portion of a Matching
Contribution as a Qualified Matching Contribution to the extent necessary
to satisfy the ADP Test.
(c0 Non-Elective Contributions: The Employer may make a Non-Elective
Contribution in such amount as determined by the Employer, and the Employer
will convey such amount to the Trustee in writing. The Employer's
determination of the amount of its Non-Elective Contribution will be
binding on the Trustee, the Administrator and all Participants and may not
be reviewed in any manner. However, (1) no Non-Elective Contribution may
exceed the maximum amount deductible under Code ss.404; (2) Non-Elective
Contributions will be limited as required by Code ss.415; and (3) no
Non-Elective Contribution will be made for any Participant who is not an
Eligible Participant unless required by Section 3.5.
(d0 Qualified Non-Elective Contributions: Subject to Notice 98-1, the Employer
may, in lieu of distributing Excess Contributions as set forth in Section
5.16 or Excess Aggregate Contributions as set forth in Section 5.17, elect
to treat all of any portion of a Non-Elective Contribution as a Qualified
Non-Elective Contribution sufficient to satisfy the ADP Test and/or the ACP
Test; or the Employer elect to make a Qualified Non-elective Contribution
in an amount sufficient to satisfy the ADP Test and/or the ACP Test.
(e0 Contribution For Mistakenly Excluded Employees: Notwithstanding paragraph
(c) to the contrary, if an Employee should have been included as a
Participant but is mistakenly excluded for any reason, the Employer will
make a Non-Elective Contribution equal to the sum of (1) the amount which
would have been contributed for such Employee, and (2) the amount of
earnings that would have been credited to the excluded Employee's
Participant's Account but for the fact that the Employee was mistakenly
excluded. Such contributions will be made regardless of whether such
amounts are ever deductible by the Employer.
(f0 Refund Of Contributions: If the Plan fails to initially satisfy the
qualification requirements of Code ss.401(a) and the Employer declines to
amend the Plan to satisfy such requirements, contributions made prior to
the date such qualification is denied must be returned to the Employer
within 1 year of the date of such denial, but only if the application for
the qualification is made by the time prescribed by law for filing the
Employer's tax return for the taxable year in which the Plan is adopted, or
by such later date as the Secretary of the Treasury may prescribe. If a
contribution is attributable in whole or in part to a good faith mistake of
fact, including a good faith mistake in determining its deductibility under
Code ss.404, then an amount may be returned to the Employer equal to the
excess of the amount contributed over the amount which would have been
contributed had the mistake not occurred. Earnings attributable to any such
excess contribution will not be returned, but losses attributable to the
excess contribution will reduce the amount so returned. Such amount will be
returned within 1 year of the date the contribution was made or the
deduction disallowed, as the case may be.
21
3.2 ALLOCATION OF EMPLOYER CONTRIBUTIONS: Each Eligible Participant's share of
the various types of Employer contributions made under the Plan will be
allocated to his or her Participant's Account in accordance with the
following provisions:
(a0 Elective Deferrals: Each Participant's Elective Deferrals contributed
under Section 3.1(a) will be allocated to the Participant's Elective
Deferral Account.
(b0 Matching And Qualified Matching Contributions: Matching Contributions
will be allocated to an Eligible Participant's Matching Contribution
Account; and any Matching Contributions that are treated as Qualified
Matching Contributions will be allocated to an Eligible Participant's
Qualified Matching Contribution Account. Any Participant who makes an
Elective Deferral during the Plan Year will receive an allocation of
Matching Contributions for the Plan Year regardless of any other
allocation rules to the contrary.
(c0 Non-Elective Contributions: Non-Elective Contributions will be
allocated on the annual Valuation Date to each Eligible Participant's
Non-Elective Contribution Account in the ratio that the Compensation
of each Eligible Participant bears to the total Compensation of all
Eligible Participants.
(d0 Qualified Non-Elective Contributions: QNECs, and Non-Elective
Contributions that are treated as QNECs, will be allocated to the
Qualified Non-Elective Contribution Account of each Eligible
Participant on a per capita basis.
3.3 ALLOCATION OF EARNINGS AND LOSSES: As of each Valuation Date, accounts
which have not been distributed since the prior Valuation Date will have
the net income of the Trust Fund earned since the prior Valuation Date
allocated thereto as hereinafter set forth in this Section. Net income is
the net of any interest, dividends, unrealized appreciation and
depreciation, capital gains and losses, and investment expenses of the
Trust Fund as determined on each Valuation Date.
(a0 Non-Segregated Accounts: Accounts which have not been segregated from
the general Trust Fund for investment purposes will have net income
allocated thereto in the ratio that the value of each non-segregated
account as of the preceding Valuation Date bears to the total value of
all non-segregated accounts as of the preceding Valuation Date. The
Forfeiture Account will share in the allocation made under this
paragraph.
(b0 Segregated Accounts And Policy Dividends: Accounts which have been
segregated from the general Trust Fund for investment purposes,
including Directed Investment Accounts established under Section 7.15
of the Plan, will only have the net income earned thereon allocated
thereto. Policy dividends or credits will be allocated to the
Participant's Account for whose benefit the Policy is held.
3.4 ALLOCATION OF FORFEITURES: On each annual Valuation Date, any portion of
the Forfeiture Account which has not been used to pay administrative
expenses of the Plan will be
22
allocated to each Eligible Participant's Account in the ratio that each
Eligible Participant's Compensation bears to the total Compensation of all
Eligible Participants.
3.5 TOP HEAVY MINIMUM ALLOCATION: In any Top Heavy Plan Year in which the
Employer makes a contribution to the Plan, each eligible Non-Key Employee
will receive the Top Heavy Minimum Allocation in accordance with the
following provisions:
(a0 Who Must Receive Minimum Allocation: Except as otherwise provided in
paragraph (b), the Top Heavy Minimum Allocation will be made for each
eligible Non-Key Employee who is employed by the Employer on the last
day of the Plan Year, including those who have failed to complete a
Year of Service and who have been excluded from becoming Participants
in the Plan because (1) their Compensation is less than a stated
amount; (2) they declined to make mandatory contributions (if
required) to the Plan during the time they were considered to be
Participants; or (3) they failed to make an elective contribution to a
Code ss.401(k) plan maintained by the Employer. However, the Top Heavy
Minimum Allocation will not be required for any Non-Key Employee who
also participates in an Employer sponsored money purchase pension plan
or target benefit pension plan which provides a Top Heavy Minimum
Allocation to such Non-Key Employee and which is included with this
Plan in a Required Aggregation Group.
(b0 Lesser Allocation Allowed: If the allocation made to the Participant's
Account of each Key Employee under Section 3.2 is less than 3% of his
or her Section 415 Compensation, and if this Plan is not required to
be included in an Aggregation Group to enable a defined benefit plan
to meet the requirements of Code ss.401(a)(4) or ss.410, the
Employer's contribution will be reallocated so the Top Heavy Minimum
Allocation made to the Participant's Account of each eligible Non-Key
Employee is equal to the largest percentage allocated to the
Participant's Account of a Key Employee. Such percentage will be equal
to the ratio of the sum of the Employer's contribution and Forfeitures
allocated on such Key Employee's behalf divided by his or her
Compensation.
3.6 FAILSAFE ALLOCATION: For any Plan Year in which the Plan fails to benefit
at least 70% of Non-Highly Compensated Employees who are eligible to
participate in the Plan, or in which the Plan fails to benefit a percentage
of Non-Highly Compensated Employees who are eligible to participate in the
Plan that is at least 70% of the percentage of Highly Compensated Employees
who benefit under the Plan, an additional Employer contribution may be made
and allocated first to that group of Employees who were Participants but
not Eligible Participants for the Plan Year; next to that group of
Employees who have not satisfied the eligibility requirements of Section
2.1(a) and are not members of an ineligible class of Employees as set forth
in Section 2.1(b); and then to that group of Employees who have not
satisfied the eligibility requirements of Section 2.1(a) and are members of
a non-statutory ineligible class of Employees as set forth in Section
2.1(b). Within each group, individuals will be ranked by Compensation, and
the individuals receiving an allocation will be those with the lowest
amount of Compensation during the Plan Year. Allocations will be made under
this Section only to the extent necessary to insure that the Plan satisfies
one of the ratio percentage tests set forth in Code ss.ss.410(b)(1)(A) or
(B) as described above.
23
3.7 ROLLOVERS: With the consent of the Administrator, any Employee who has
become a Participant in the Plan may transfer amounts to this Plan from
another qualified plan. Such transferred amounts are hereafter called
Rollovers. Rollovers will be allocated to a Rollover Account in which the
Employee will have a 100% Vested Interest. Except for the portion a
Participant self-directs under Section 7.15, the Administrator may choose
for investment purposes to either segregate Rollover Accounts into separate
interest bearing accounts or to invest them as part of the general Trust
Fund, in which case such accounts will share in the allocation of earnings
and losses under Section 3.3(a). Rollover Accounts will be administered as
follows:
(a0 Definition Of Rollover: The term Rollover means amounts transferred to
this Plan (1) in a trustee to trustee transfer from another qualified
plan; (2) from another qualified plan as a lump sum distribution
eligible for tax free rollover treatment and which is transferred by
the Participant to this Plan within 60 days following his receipt
thereof; (3) from a conduit individual retirement account if the only
assets therein were previously distributed to the Participant by
another qualified plan as a lump sum distribution which was eligible
for a tax free rollover within 60 days of receipt thereof and earnings
on said assets; or (4) from a conduit individual retirement account
meeting the requirements of subparagraph (3) and transferred to this
Plan within 60 days of receipt thereof.
(b0 Withdrawal Of Rollovers: An Employee may withdraw all or any portion
of his or her Rollover Account at such time as the Employee is
entitled to a distribution of his or her Participant's Account under
the provisions of Article 4. Any amount withdrawn cannot be
redeposited to the Rollover Account. However, amounts which constitute
or are treated as constituting elective contributions as defined in
regulation ss.1.401(k)-1(g)(3) and which were transferred to this Plan
in a trustee to trustee transfer from another qualified plan may only
be withdrawn in accordance with the limitations set forth in
regulation ss.1.401(k)-1(d). All withdrawal requests must contain the
Employee's address, social security number, birth date, and the amount
of the withdrawal. A Rollover withdrawal will not prevent an Employee
from accruing any future benefit attributable to Employer
contributions. An Employee's request to make a Rollover withdrawal
must satisfy the applicable spousal consent requirements set forth in
Section 5.8 of the Plan.
24
ARTICLE 4
PLAN BENEFITS
4.1 BENEFIT UPON NORMAL OR EARLY RETIREMENT: Every Participant who has reached
Normal or Early Retirement Age and retires will be entitled to receive his
or her Vested Aggregate Account balance determined as of the most recent
Valuation Date coinciding with or immediately preceding the date of
distribution. Distribution will made in accordance with Section 5.1.
4.2 BENEFIT UPON LATE RETIREMENT: A Participant who has reached Normal or Early
Retirement Age may elect to remain employed and retire at a later date.
Such Participant will continue to participate in the Plan and his or her
Participant's Account will continue to receive allocations under Article 3
until the Participant actually retires, at which time the Participant will
be entitled to his or her Vested Aggregate Account balance determined as of
the most recent Valuation Date coinciding with or immediately preceding the
date of distribution. Distribution will be made in accordance with Section
5.1.
4.3 BENEFIT UPON DEATH: Upon the death of a Participant prior to Termination of
Employment, or upon the death of a Terminated Participant prior to
distribution of his or her Vested Aggregate Account, his or her Beneficiary
will be entitled to the Participant's Vested Aggregate Account balance
determined as of the most recent Valuation Date coinciding with or
immediately preceding the date of distribution. If any Beneficiary who is
living on the date of the Participant's death dies prior to receiving his
or her the entire death benefit, the remaining portion of such death
benefit will be paid in a lump sum to the estate of such deceased
Beneficiary. The Administrator's determination that a Participant has died
and that a particular person has a right to receive a death benefit will be
final. Distribution will be made in accordance with Section 5.2.
4.4 BENEFIT UPON DISABILITY: If a Participant suffers a Disability prior to
Termination of Employment, or if a Terminated Participant suffers a
Disability prior to distribution of his or her Vested Aggregate Account, he
or she will be entitled to his or her Vested Aggregate Account balance
determined as of the most recent Valuation Date coinciding with or
immediately preceding the date of distribution. Distribution will be made
in accordance with Section 5.3.
4.5 BENEFIT UPON TERMINATION: A Participant who incurs a Termination of
Employment will be entitled to his or her Vested Aggregate Account balance
as of the most recent Valuation Date coinciding with or immediately
preceding the date of distribution. Distribution to a Terminated
Participant who does not die prior to such distribution or who does not
suffer a Disability prior to such distribution will be made in accordance
with Section 5.4.
4.6 DETERMINATION OF VESTED INTEREST: A Participant's Vested Interest in his or
her Participant's Account will be determined in accordance with the
following provisions:
25
(a0 100% Vesting Upon Retirement, Death Or Disability: A Participant will
have a 100% Vested Interest in his Participant's Account upon reaching
Normal or Early Retirement Age prior to Termination of Employment, or
upon death or Disability prior to that date.
(b0 Vesting Prior To Retirement, Death Or Disability: Except as otherwise
provided in paragraph (a) above, a Participant's Vested Interest in
his or her Participant's Account at any given time, including
Termination of Employment prior to Normal or Early Retirement Age,
death or Disability, will be determined in accordance with the
following: (1) a Participant's Vested Interest in all Elective
Deferrals, Qualified Matching Contributions and Qualified Non-Elective
Contributions that are allocated to his or her Participant's Account
will be 100% upon entry into the Plan and at all times thereafter; and
(2) a Participant's Vested Interest in all Matching Contributions and
Non-Elective Contributions that are allocated to his or her
Participant's Account will be determined by the vesting schedule which
immediately follows this paragraph based on the number of Years of
Service the Participant has completed on the date of determination.
Years Of Service Vested Interest
2 . . . . . . . . . . . . . 20%
3 . . . . . . . . . . . . . 40%
4 . . . . . . . . . . . . . 60%
5 . . . . . . . . . . . . . 80%
6 . . . . . . . . . . . . . 100%
(c0 Amendments To Vesting Schedule: No Plan amendment may directly or
indirectly reduce a Participant's Vested Interest. If the Plan's
vesting schedule is amended, any Participant with at least three Years
of Service may, by filing a written request with the Administrator 60
days after the latest of (1) the amendment's adoption date, (2) the
amendment's effective date, or (3) the date the Participant receives
written notice of the amendment, elect to have the Vested Interest in
his or her Participant's Account computed by the vesting schedule in
effect prior to the amendment. A Participant who fails to make such an
election will have his or her Vested Interest computed under the new
schedule. However, notwithstanding the foregoing, a Participant's
Vested Interest in his or her Participant's Account will not be less
than it was as of the later of January 1, 1999 or the date this
amended Plan is actually adopted by the Employer.
26
ARTICLE 5
DISTRIBUTION OF BENEFITS
5.1 BENEFIT UPON RETIREMENT: Unless a cash-out occurs under Section 5.5, the
retirement benefit a Participant is entitled to receive under Section 4.1
or 4.2 will be distributed as follows:
(a0 Form Of Distribution: Any Employee who became a Participant on or
after January 1, 1998, shall receive their retirement benefit in one
lump-sum in cash or property.
(b0 Optional Forms Of Distribution: Any Employee who became a Participant
prior to January 1, 1998, may elect to have his or her retirement
benefit distributed (1) as a Qualified Joint and Survivor Annuity if
the Participant is married on the Annuity Starting Date and has not
died before such date. If the Participant is unmarried on the Annuity
Starting Date and has not died before such date, the Participant's
retirement benefit will be distributed as a life annuity; (2) in
monthly, quarterly, semi-annual or annual cash installments over a
period certain that does not extend beyond the Participant's life, or
beyond the lives of the Participant and a designated Beneficiary (or
beyond the life expectancy of the Participant or the joint and last
survivor expectancy of the Participant and a designated Beneficiary,
in which event the lump sum value of the benefit will either be
segregated and separately invested by the Trustee, or it will be
invested in a nontransferable annuity providing for installment
payments; or (3) in one lump sum in cash or property.
(c0 Time Of Distribution: Distribution will be made under this Section
within a reasonable time after the Participant's actual retirement
date, or within a reasonable time after a Participant who elects late
retirement requests payment, but distribution must begin no later than
the Participant's Required Beginning Date.
5.2 BENEFIT UPON DEATH: Unless a cash-out occurs under Section 5.5, the death
benefit a deceased Participant's Beneficiary is entitled to receive under
Section 4.3 will be distributed as follows:
27
(a0 Non-Spouse Beneficiary: Any death benefit a non-spouse Beneficiary is
entitled to receive will be distributed in one lump sum in cash or
property. A non-spouse Beneficiary of a Employee who became a
Participant prior to January 1, 1998, may elect to have any death
benefit such Beneficiary is entitled to receive distributed by one of
the following methods unless a different method has been chosen by the
Participant: (1) in one lump sum in cash or property; or (2) in
monthly, quarterly, semi-annual or annual cash installments over a
period certain that does not extend beyond the life of the Beneficiary
(or beyond the life expectancy of the Beneficiary), in which event the
lump sum value of the benefit will either be segregated and separately
invested by the Trustee, or it will be invested in a nontransferable
annuity providing for installment payments. Distribution will be made
within a reasonable time after the death of the Participant; but
distribution of a lump sum must be made by December 31st of the
calendar year which contains the 5th anniversary of the date of the
Participant's death, or installments must begin no later than December
31st of the calendar year immediately following the calendar year in
which the Participant died.
(b0 Surviving Spouse: Notwithstanding any other Beneficiary designation
made by a Participant, if a Participant is married on the date of his
or her death, the deceased Participant's surviving spouse will be
entitled to receive 100% of the deceased Participant's death benefit
unless the surviving spouse has waived that right in accordance with
Section 5.8. The death benefit will be distributed in one lump sum in
cash or property.
For any Employee who became a Participant prior to January 1, 1998,
who is married on the date of his or her death and dies before the
Annuity Starting Date, the Participant's surviving spouse may elect to
receive a minimum death benefit to be distributed by one of the
following methods unless a different method has been chosen by the
Participant: (1) as a Qualified Preretirement Survivor Annuity; (2) in
monthly, quarterly, semi-annual or annual cash installments over a
period certain that does not extend beyond the life of the surviving
spouse or beyond the life expectancy of the surviving spouse, in which
event the lump sum value of the benefit will either be segregated and
separately invested by the Trustee, or it will be invested in a
nontransferable annuity providing for installment payments; or (3) in
one lump sum in cash or property.
(c0 Time Of Distribution To A Surviving Spouse: The surviving spouse may
(1) elect to have any death benefit to which he or she is entitled
distributed within a reasonable time after the death of the
Participant; or (2) elect to defer distribution of the death benefit,
but distribution may not be deferred beyond December 31st of the
calendar year in which the deceased Participant would have attained
Age 70 1/2.
28
(d0 Death Of Surviving Spouse Before Distribution Begins: If the surviving
spouse dies before distribution begins, then distribution will be made
as if the surviving spouse were the Participant. Distribution will be
considered as having commenced when the deceased Participant would
have reached Age 70 1/2 even if payments have been made to the
surviving spouse before that date. However, if distribution to the
surviving spouse commences in the form of an irrevocable annuity over
a period permitted under paragraph (b) before the deceased Participant
would have reached Age 70 1/2, distribution will be considered as
having begun on the actual annuity commencement date.
(e0 Participants In Pay Status: If a Participant who has started receiving
distribution of his or her retirement benefit dies before the entire
benefit has been distributed, the balance of the benefit will be
distributed to the Participant's Beneficiary at least as rapidly as
under the method of distribution being used on the date of the
Participant's death.
5.3 DISABILITY BENEFITS: Unless a cash-out occurs under Section 5.5, the
Disability benefit a Participant is entitled to receive under Section 4.4
will be distributed as follows:
(a0 Form Of Distribution: Any Employee who became a Participant on or
after January 1, 1998, shall receive his or her Disability benefit in
one lump-sum in cash or property.
(b0 Optional Forms Of Distribution: Any Employee who became a Participant
on or after January 1, 1998, may elect to have his or her Disability
benefit distributed (1) as a Qualified Joint and Survivor Annuity if
the Participant is married on the Annuity Starting Date and has not
died before such date. If the Participant is unmarried on the Annuity
Starting Date and has not died before such date, the Participant's
Disability benefit will be distributed as a life annuity; (2) in
monthly, quarterly, semi-annual or annual cash installments over a
period certain that does not extend beyond the Participant's life, or
beyond the lives of the Participant and a designated Beneficiary (or
beyond the life expectancy of the Participant or the joint and last
survivor expectancy of the Participant and a designated Beneficiary),
in which event the lump sum value of the benefit will either be
segregated and separately invested by the Trustee, or it will be
invested in a nontransferable annuity providing for installment
payments; or (3) in one lump sum in cash or property.
(c) Time Of Distribution: Distribution will be made under this Section
within a reasonable time after the date on which the Participant
suffers the Disability, but distribution must begin no later than the
Participant's Required Beginning Date.
5.4 BENEFIT UPON TERMINATION: Unless a cash-out occurs under Section 5.5 or a
prior distribution has been made under Section 5.2 or Section 5.3, the
benefit a Terminated Participant is entitled to receive under Section 4.5
will be distributed as follows:
(a) Form Of Distribution: Any Terminated Participant who became a
Participant on or after January 1, 1998, shall receive their benefit
in one lump-sum in cash or property.
29
(b) Optional Forms Of Distribution: Any Terminated Participant who became
a Participant prior to January 1, 1998, may elect to have his or her
benefit distributed (1) as a Qualified Joint and Survivor Annuity if
the Participant is married on the Annuity Starting Date and has not
died before such date. If the Participant is unmarried on the Annuity
Starting Date and has not died before such date, the Participant's
Disability benefit will be distributed as a life annuity; (2) in
monthly, quarterly, semi-annual or annual cash installments over a
period certain that does not extend beyond the Participant's life, or
beyond the lives of the Participant and a designated Beneficiary (or
beyond the life expectancy of the Participant or the joint and last
survivor expectancy of the Participant and a designated Beneficiary),
in which event the lump sum value of the benefit will either be
segregated and separately invested by the Trustee, or it will be
invested in a nontransferable annuity providing for installment
payments; or (3) in one lump sum in cash or property.
(c) Time Of Distribution: Distribution will be made under this Section
within a reasonable time after a Terminated Participant reaches Normal
or Early Retirement Age, but distribution must begin no later than the
Required Beginning Date.
5.5 CASH-OUT OF BENEFITS: If the lump sum value of a Participant's benefit does
not exceed $5,000, the Administrator may distribute the benefit in a lump
sum without a Participant's consent as soon as practicable after a
Participant becomes eligible for a distribution thereof, but distribution
must occur no later than the date the benefit would otherwise be
distributable under the terms of the Plan. That portion of a Participant's
Account which is not a Vested Interest will be treated as a Forfeiture, and
if such Vested Interest is zero on the date of distribution, a Participant
will be deemed to have received a distribution of such Vested Interest.
5.6 RESTRICTIONS ON IMMEDIATE DISTRIBUTIONS: If the lump sum value of a
Participant's benefit exceeds (or at the time of any prior distribution
exceeded) $5,000, and the benefit is immediately distributable, the benefit
may only be distributed with the consent of a Participant and a
Participant's spouse in accordance with this Section. That portion of a
Participant's Account which is not a Vested Interest will be treated as a
Forfeiture.
(a) Definition Of Immediately Distributable: A Participant's benefit is
immediately distributable if any part of the benefit could be
distributed to the Participant (or the Participant's surviving spouse)
before the Participant reaches (or would have reached if not deceased)
the later of his or her Normal Retirement Age or Age 62.
(b) Consent Requirements: The consent of the Participant and the
Participant's spouse (or where either the Participant or the
Participant's spouse has died, the survivor) to any benefit that is
immediately distributable must be obtained in writing within the
90-day period ending on the Annuity Starting Date. However, (1) only
the Participant need consent to the distribution of a Qualified Joint
and Survivor Annuity while the benefit is immediately distributable;
and (2) neither the Participant nor the Participant's spouse will be
required to consent to a distribution that is required by Code
ss.401(a)(9) or ss.415. If this Plan upon termination does not offer
an annuity option (purchased from a commercial provider) and if
neither the Employer nor an Affiliated Employer maintains
30
another defined contribution plan other than an employee stock
ownership plan (ESOP) as defined in Code ss.4975(e)(7), the
Participant's benefit will, without the Participant's consent, be
distributed to the Participant. If the Employer or an Affiliated
Employer does maintain another defined contribution plan other than an
ESOP, the Participant's benefit will, without the Participant's
consent, be transferred to the other plan if the Participant does not
consent to an immediate distribution under the terms of this Section.
(c) Notification Requirements: The Administrator must notify the
Participant and the Participant's spouse of the right to defer any
distribution until the benefit is no longer immediately distributable.
Notification will include a general explanation of the material
features and relative values of the optional forms of benefit
available under the Plan in a manner that would satisfy the notice
requirements of Code ss.417(a)(3); and will be provided no less than
30 days or more than 90 days prior to the Annuity Starting Date.
Distribution of the benefit may begin less than 30 days before the
Annuity Starting Date if (1) the Administrator clearly informs the
Participant that the Participant has a right to a period of at least
30 days after receiving the required notification to consider the
decision of whether to waive the Qualified Joint and Survivor Annuity
and to consent to another form of distribution; (2) the Participant is
permitted to revoke an affirmative distribution election at least
until the Annuity Starting Date, or, if later, at any time prior to
the expiration of the 7 day period that begins the day after the
explanation of the Qualified Joint and Survivor Annuity is provided to
the Participant; (3) the Annuity Starting Date is after the date that
the explanation of the Qualified Joint and Survivor Annuity is
provided to the Participant (but the Annuity Starting Date may be
before the date that any affirmative distribution elections are made
by the Participant and before the date).
5.7 RESTORATION OF FORFEITED ACCOUNT BALANCE: If a Participant with a partially
Vested Interest in his or her Participant's Account terminates employment
with the Employer and receives (or is deemed to have received) a
distribution of such Vested Interest, and such Participant is subsequently
reemployed by the Employer, then such Participant's Account balance will be
restored to the amount on the date of distribution if the Participant
repays to the Plan the full amount of the distribution which was
attributable to Employer contributions before the earlier of 5 years after
the first date on which the Participant is subsequently reemployed by the
Employer or the date on which the Participant incurs 5 consecutive Breaks
in Service following the date of distribution. If a Participant whose
Vested Interest in his or her Participant's Account is zero is deemed to
have received a distribution of such Vested Interest from the Plan before
the date on which the Participant incurs 5 consecutive Breaks in Service,
upon reemployment with the Employer, such Participant's Account balance
which is attributable to Employer contributions will be restored to the
amount on the date of the deemed distribution.
5.8 SPOUSAL CONSENT REQUIREMENTS: A married Participant's election not to
receive a Qualified Joint and Survivor Annuity (QJSA) under Section 5.1 or
a Qualified Preretirement Survivor Annuity (QPSA) under Section 5.2, or an
unmarried Participant's election not to receive a life annuity under
Section 5.1, must be made in accordance with the following provisions:
31
(a) Election Not To Receive A QJSA: A married Participant's election not
to receive a Qualified Joint and Survivor Annuity, or an unmarried
Participant's election not to receive a life annuity, must be in
writing and must be made during the 90-day period ending on the
Annuity Starting Date. Such election may be revoked in writing and a
new election made at any time and any number of times during the
election period.
(b) Election Not To Receive A QPSA: A married Participant's election not
to receive a Qualified Preretirement Survivor Annuity must be in
writing and must be made during an election period beginning on the
first day of the Plan Year in which the Participant reaches Age 35 and
ending on the date of his or her death. The election may be revoked in
writing and a new election made at any time and any number of times
during the election period. A Terminated Participant's election period
concerning his or her Vested Aggregate Account before his termination
will not begin later than such date.
(c) Special Pre-Age 35 QPSA Election: A Participant who has not yet
reached Age 35 as of the end of any current Plan Year may make a
special election not to receive a Qualified Preretirement Survivor
Annuity for the period beginning on the date of such election and
ending on the first day of the Plan Year in which such Participant
reaches Age 35. This election will not be valid unless the Participant
receives the same written explanation of the Qualified Preretirement
Survivor Annuity as described in paragraph (d) below. Qualified
Preretirement Survivor Annuity coverage will be automatically
reinstated as of the first day of the Plan Year in which the
Participant reaches Age 35. Any new election on or after such date
will be subject to the full requirements of this Section 5.8.
(d) Required Written Explanation Of QJSA Or QPSA: In connection with an
election not to receive a Qualified Joint and Survivor Annuity, the
Administrator will, no less than 30 days and no more than 90 days
prior to the Annuity Starting Date, provide the Participant with a
written explanation of the terms and conditions of the Qualified Joint
and Survivor Annuity; the Participant's right to make (and the effect
of) an election to waive the Qualified Joint and Survivor Annuity; the
rights of the Participant's spouse; and the right of the Participant
to revoke such election (and the effect thereof). In connection with
an election not to receive a Qualified Preretirement Survivor Annuity,
the Administrator will provide each Participant within the Applicable
Period as defined in paragraph (e) with a written explanation of the
Qualified Preretirement Survivor Annuity in such terms and in such
manner as would be comparable to the written explanation applicable to
a Qualified Joint and Survivor Annuity as set forth in this paragraph.
32
(e) Applicable Period: The Applicable Period for a Participant is
whichever of the following periods ends last: (1) the period beginning
with the first day of the Plan Year in which the Participant attains
Age 32 and ending with the close of the Plan Year preceding the Plan
Year in which the Participant attains Age 35; (2) a reasonable period
after the individual becomes a Participant; (3) a reasonable period
ending after Code ss.401(a)(11) ceases to apply to the Participant; or
(4) a reasonable period ending after Code ss.417(a)(5) ceases to apply
with respect to the Participant. For purposes of this paragraph, a
reasonable period means the end of the two year period beginning one
year prior to the date the applicable event occurs, and ending one
year after that date.
(f) Participants Who Terminate Before Age 35: In the case of a Participant
who separates from service before the Plan Year in which the
Participant reaches Age 35, the notice required under paragraph (d)
will be provided within the two year period beginning one year prior
to separation from service and ending one year after separation from
service. If such Participant thereafter returns to employment with the
Employer, the Applicable Period for such Participant will be
redetermined.
(g) Elections Must Have Spousal Consent: A Participant's election not to
receive a Qualified Joint and Survivor Annuity or a Participant's
election not to receive a Qualified Preretirement Survivor Annuity
will not be effective (1) unless the Participant's spouse consents in
writing to the election; (2) unless the election designates a specific
Beneficiary (or form of benefit) which may not be changed without
spousal consent (or the consent of the spouse expressly permits
designations by the Participant without any requirement of further
spousal consent); and (3) unless the spouse's consent acknowledges the
effect of the election and is witnessed by the Administrator or a
notary public.
(h) Additional Requirements For Spousal Consent: Notwithstanding paragraph
(g), a spouse's consent will not be required if there is no spouse or
if the spouse cannot be located, or if there are other circumstances
(as set forth in the Code) present which preclude the necessity of
such spouse's consent. Any consent by a Participant's spouse (or
establishment that consent cannot be obtained) will be effective only
with respect to such spouse. A consent that permits designations by
the Participant without any requirement of further consent by the
spouse must acknowledge that the spouse has the right to limit consent
to a specific Beneficiary, and a specific form of benefit where
applicable, and that the spouse voluntarily elects to relinquish
either or both of such rights. A revocation of a prior election may be
made by a Participant without the spouse's consent at any time before
the commencement of benefits. No consent obtained under paragraph (g)
will be valid unless the Participant has received notice as provided
in paragraph (d).
5.9 APPLICATION OF CODE SECTION 401(a)(9): All distributions made under the
terms of the Plan will be determined and made in accordance with the
regulations issued under Code ss.401(a)(9), including the minimum
distribution incidental benefit requirement of regulation ss.1.401(a)(9)-2,
and any provisions in this Plan which reflect Code ss.401(a)(9) will
override any distribution options which are inconsistent with such Code
section and regulations.
33
5.10 STATUTORY COMMENCEMENT OF BENEFITS: Unless the Participant otherwise
elects, distribution of a Participant's benefit must begin no later than
the 60th day after the latest of the close of the Plan Year in which the
Participant (1) reaches the earlier of Age 65 or Normal Retirement Age; (2)
reaches the 10th anniversary of the year the Participant commenced Plan
participation; or (3) terminates service with the Employer. However, the
failure of a Participant and the Participant's spouse to consent to a
distribution while a benefit is immediately distributable within the
meaning of Section 5.6 above will be deemed to be an election to defer
commencement of payment of any benefit sufficient to satisfy this Section.
In addition, if this Plan provides for early retirement, a Participant who
satisfied the service requirement for early retirement prior to Termination
of Employment will be entitled to receive his or her Vested Aggregate
Account balance, if any, upon satisfaction of the age requirement for early
retirement.
5.11 DETERMINATION OF LIFE EXPECTANCIES: If a Participant's Vested Aggregate
Account is distributed through other than the purchase of an immediate
annuity, the applicable calendar year will be the First Distribution
Calendar Year and, if life expectancy is being recalculated, each
succeeding calendar year. If annuity payments commence before the Required
Beginning Date, the applicable calendar year is the year such payments
commence. If distribution is in the form of an immediate annuity purchased
after the Participant's death with the Participant's remaining interest,
the applicable calendar year is the year of purchase. For purposes of
Section 5.2, payments will be calculated by use of the return multiples
specified in regulation ss.1.72-9. Life expectancy of a surviving spouse
may be recalculated annually, but in the case of any other Beneficiary,
life expectancy will be calculated at the time payment first commences and
payments for any 12-consecutive month period will be based on such life
expectancy minus the number of whole years that have passed since
distribution commenced. The First Distribution Calendar Year is, for
distributions beginning before the Participant's death, the calendar year
immediately preceding the calendar year containing the Participant's
Required Beginning Date. For distributions beginning after the death of a
Participant, the First Distribution Calendar Year is the calendar year in
which distributions are required to begin under Section 5.2.
5.12 SEGREGATION OF BENEFIT BEFORE DISTRIBUTION: As of the Valuation Date
coinciding with or next following the date a Participant terminates
employment with the Employer for any reason, the Administrator will, until
a distribution is made to the Participant or the Participant's Beneficiary
in accordance with Sections 5.1, 5.2, 5.3, 5.4 or 5.5, direct the Trustee
in a uniform nondiscriminatory manner to either (1) invest the
Participant's Vested Aggregate Account balance determined as of such
Valuation Date in a separate interest bearing account; or (2) leave the
Participant's Vested Aggregate Account balance as part of the general Trust
Fund, in which case such account will share in the allocation of earnings
and losses under Section 3.3(a).
34
5.13 DISTRIBUTION IN EVENT OF LEGAL INCAPACITY: If any person entitled to
benefits (the "Payee") suffers from a Disability or is under a legal
incapacity, payments may be made in one or more of the following ways as
directed by the Administrator: (a) to the Payee directly; (b) to the
guardian or legal representative of the Payee's person or estate; (c) to a
relative of the Payee, to be expended for the Payee's benefit; or (d) to
the custodian of the Payee under any Uniform Gifts to Minors Act. The
Administrator's determination of minority or incapacity will be final.
5.14 DIRECT ROLLOVERS: A distributee may elect to have any portion of an
eligible rollover distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover, which is a payment by
the Plan to the eligible retirement plan specified by the distributee.
(a) Eligible Rollover Distribution: An eligible rollover distribution is
any distribution of all or any portion of the balance to the credit of
the distributee, except that an eligible rollover distribution does
not include any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the distributee or for the joint
lives (or joint life expectancies) of the distributee and the
distributee's designated beneficiary, or for a specified period of ten
years or more; any distribution to the extent such distribution is
required under Code ss.401(a)(9); and the portion of any distribution
that is not includible in gross income (determined without regard to
the exclusion for net unrealized appreciation with respect to employer
securities).
(b) Eligible Retirement Plan: An eligible retirement plan is an individual
retirement account described in Code ss.408(a), an individual
retirement annuity described in Code ss.408(b), an annuity plan
described in Code ss.403(a), or a qualified trust described in Code
ss.401(a), that accepts the distributee's eligible rollover
distribution. However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible retirement plan is
an individual retirement account or individual retirement annuity.
(c) Definition Of Distributee: For purposes of this Section, a distributee
includes an Employee or former Employee. In addition, an Employee's or
former Employee's Surviving Spouse and an Employee's or former
Employee's spouse or former Spouse who is the alternate payee under a
qualified domestic relations order as defined in Code ss.414(p), are
distributees with regard to the interest of the Spouse or former
Spouse.
5.15 DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS: Excess Elective Deferrals, plus
any income and minus any loss allocable thereto, will be distributed no
later than April 15th to any Participant to whose account Excess Elective
Deferrals were allocated for the preceding year and who claims Excess
Elective Deferrals for such taxable year. Distribution of Excess Elective
Deferrals will made in accordance with the following provisions:
35
(a) Assignment Of Excess Elective Deferrals: A Participant may assign to
this Plan any Excess Elective Deferrals made during a taxable year of
the Participant by notifying the Administrator on or before April 15th
of the amount of the Excess Elective Deferrals to be assigned to the
Plan. A Participant will be deemed to notify the Administrator of any
Excess Elective Deferrals that arise by taking into account only those
Elective Deferrals made to this Plan and any other plans of the
Employer.
(b) Definition Of Excess Elective Deferrals: The term Excess Elective
Deferrals means Elective Deferrals that are includible in a
Participant's gross income under Code ss.402(g) to the extent such
Participant's Elective Deferrals for a taxable year exceed the dollar
limitation under such Code Section. Excess Elective Deferrals will be
treated as Annual Additions under Section 6.1 of the Plan, unless such
amounts are distributed no later than the first April 15th following
the close of the Participant's taxable year. Excess Elective Deferrals
that are distributed after April 15th are includible in the
Participant's gross income in the taxable year in which deferred and
the taxable year in which distributed.
(c) Determination Of Income Or Loss: Excess Elective Deferrals will be
adjusted for any income or loss up to the end of the Participant's
taxable year and, at the discretion of the Administrator, may be
adjusted for income or loss up to the date of distribution. The period
between the end of the Participant's taxable year and the date of
distribution will be referred to as the gap period, and any income
earned therein will be allocated at the discretion of the
Administrator applied consistently to all Participants and to all
corrective distributions for the taxable year. The income or loss
allocable to a Participant's Excess Elective Deferrals will be the
amount determined by either the method in subparagraph (1) or
subparagraph (2) plus, if applicable the amount determined in
subparagraph (3):
(1) The amount determined by multiplying the income or loss allocable
to his Elective Deferrals for the taxable year (and the gap
period) by a fraction, the numerator of which is the
Participant's Excess Elective Deferrals for the year and the
denominator of which is (A) the Participant's Account balance
attributable to Elective Deferrals as of the beginning of the
Participant's taxable year plus any Elective Deferrals allocated
to the Participant's Account during such taxable year and the gap
period, if applicable, or (B) solely with respect to taxable
years beginning before January 1, 1992, the Participant's Account
balance attributable to Elective Deferrals as of the end of the
Participant's taxable year, reduced by any gain and increased by
any loss allocable thereto during the taxable year; or
(2) The amount determined by any reasonable method of allocating
income or loss to Excess Elective Deferrals for the taxable year
and for the gap period provided the method used is the same
method used by this Plan for allocating income or losses to
Participant's Accounts; and
36
(3) 10% of the amount determined under (1) multiplied by the number
of whole months between the end of the Participant's taxable year
and the distribution date, counting the month of distribution if
it occurs after the 15th of such month.
5.16 DISTRIBUTION OF EXCESS CONTRIBUTIONS: Excess Contributions, plus any income
and minus any loss allocable thereto, will be distributed no later than the
last day of each Plan Year to Participants to whose accounts such Excess
Contributions were allocated for the preceding Plan Year. The amount of
Excess Contributions to be distributed under this Section will be reduced
by the amount of any Excess Elective Deferrals previously distributed to
the Participant under Section 5.15 for the Participant's taxable year
ending with or within the Plan Year. Distribution of Excess Contributions
will be made in accordance with the following provisions:
(a) Allocation To Highly Compensated Employees: Excess Contributions will
be allocated to the HCEs with the largest amounts of Employer
contributions taken into account in calculating the ADP Test for the
year in which the Excess Contributions arose, beginning with the HCE
with the largest amount of such Employer contributions and continuing
in descending order until all the Excess Contributions have been
allocated. For purposes of the preceding sentence, the "largest
amount" is determined after distribution of any Excess Contributions.
If excess amounts are distributed more than 2 1/2 months after the
last day of the Plan Year in which they arose, a 10% excise tax will
be imposed on the Employer. Excess Contributions will be treated as
Annual Additions under Section 6.1.
(b) Definition Of Excess Contributions: The term Excess Contributions
means with respect to any Plan Year the excess of (a) the aggregate
amount of Employer contributions actually taken into account in
computing the ADP Test of Participants who are HCEs for such Plan
Year, over (b) the maximum amount of such contributions permitted by
the ADP Test (determined by reducing contributions made on behalf of
Participants who are HCEs in order of their ADPs, beginning with the
highest of such percentages).
(c) Determination Of Income Or Loss: Excess Contributions will be adjusted
for any income or loss up to the end of the Plan Year and, at the
discretion of the Administrator, may be adjusted for income or loss up
to the date of distribution. The period, if any, between the end of
the Plan Year and the date of distribution will be referred to as gap
period, and any income earned therein will be allocated at the
Administrator's discretion applied consistently to all Participants
and to all corrective distributions made for the Plan Year. The income
or loss allocable to each Participant's Excess Contributions will be
the amount determined by either the method in subparagraph (1) or
subparagraph (2) plus, if applicable, the amount determined under
subparagraph (3), as follows:
37
(1) The amount determined by multiplying the income or loss allocable
to his or her Elective Deferrals (and if applicable, QNECs and/or
QMACs) for the Plan Year (and the gap period, if applicable) by a
fraction, the numerator of which is the Participant's Excess
Contributions for the year and the denominator of which is (A)
the Participant's Account balance attributable to Elective
Deferrals (and if applicable, QNECs and/or QMAC that are included
in the ADP test) as of the beginning of the Plan Year plus any
Elective Deferrals (and if applicable, QNECs and/or QMACs that
are included in the ADP test) allocated to the Participant during
such Plan Year and the gap period, if applicable, or (B) solely
with respect to Plan Years beginning before January 1, 1992, the
Participant's Account balance attributable to Elective Deferrals
(and if applicable, QNECs and/or QMACs that are included in the
ADP Test) as of the end of the Plan Year reduced by any gain and
increased by any loss allocable thereto during the Plan Year; or
(2) The amount determined by any reasonable method of allocating
income or loss to the Participant's Elective Deferrals (and if
applicable, QNECs and/or QMACS) for the Plan Year and for the gap
period provided the method used is the same method used for
allocating income or losses to Participants' Accounts; and
(3) 10% of the amount determined under (1) multiplied by the number
of whole months between the end of the Plan Year and the
distribution date, counting the month of distribution if it
occurs after the 15th of such month.
(d) Accounting For Excess Contributions: Excess Contributions will be
distributed from the Participant's Elective Deferral sub-account and
QMAC sub-account in proportion to the Participant's Elective Deferrals
and QMACs (to the extent used in the ADP Test) for the Plan Year.
Excess Contributions will be distributed from the Participant's QNEC
sub-account only to the extent the Excess Contributions exceed the
balance in the Participant's Elective Deferral sub-account and QMAC
sub-account.
5.17 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS: Excess Aggregate
Contributions, plus any income and minus any loss allocable thereto, will
be forfeited, if forfeitable, or if not forfeitable, distributed no later
than the last day of each Plan Year to Participants to whose Accounts such
contributions were allocated for the preceding Plan Year. Distribution of
Excess Aggregate Contributions will be made in accordance with the
following provisions:
38
(a) Allocation To Highly Compensated Employees: Excess Aggregate
Contributions will be allocated to the HCEs with the largest
Contribution Percentage Amounts taken into account in calculating the
ACP Test for the year in which the excess arose, beginning with the
HCE with the largest amount of such Contribution Percentage Amounts
and continuing in descending order until all the Excess Aggregate
Contributions have been allocated. For purposes of the preceding
sentence, the "largest amount" is determined after distribution of any
Excess Aggregate Contributions. If Excess Aggregate Contributions are
distributed more than 2 1/2months after the last day of the Plan Year
in which they arose, a 10% excise tax will be imposed on the Employer
with respect to those amounts. Excess Aggregate Contributions will be
treated as Annual Additions under Section 6.1.
(b) Forfeitures Of Excess Aggregate Contributions: Forfeitures of Excess
Aggregate Contributions will be allocated (after all other
Forfeitures) to the Matching Contribution sub-account of each
Participant who is a NHCE who made Elective Deferrals or Voluntary
Employee Contributions in the ratio which each such Participant's
Compensation for the Plan Year bears to the total Compensation of all
such Participants for such Plan Year.
(c) Excess Aggregate Contribution: The term Excess Aggregate Contribution
means, with respect to any Plan Year, the excess of (1) the aggregate
Contribution Percentage Amounts taken into account in computing the
numerator of the Contribution Percentage actually made on behalf of
Participants who are HCEs for such Plan Year, over (2) the maximum
Contribution Percentage Amounts permitted by the ACP Test (determined
by reducing contributions made on behalf of Participants who are HCEs
in order of their Contribution Percentage Amounts beginning with the
highest of such percentages). Such determination will be made after
first determining Excess Elective Deferrals and then determining
Excess Contributions. The terms Actual Contribution Percentage,
Contribution Percentage and Contribution Percentage Amount are defined
in Section 1.10 of the Plan.
(d) Determination Of Income: Excess Aggregate Contributions will be
adjusted for any income or loss up to the end of the Plan Year and, at
the discretion of the Administrator, may be adjusted for income or
loss up to the date of distribution. The period between the end of the
Plan Year and the date of distribution will be referred to as the gap
period, and any income earned during the gap period will be allocated
at the discretion of the Administrator applied consistently to all
Participants and to all corrective distributions for the Plan Year.
The income or loss allocable to a Participant's Excess Aggregate
Contributions will be the amount determined by either the method in
subparagraph (1) or subparagraph (2) plus, if applicable, the amount
determined under subparagraph (3):
39
(1) The amount determined by multiplying the income or loss allocable
to his Voluntary Employee Contributions, Matching Contributions
(if not used in the ADP Test), QNECs and, to the extent
applicable, Elective Deferrals for the Plan Year (and the gap
period, if applicable) by a fraction, the numerator of which is
such Participant's Excess Aggregate Contributions for the year
and the denominator of which is (A) the Participant's Account
balance(s) attributable to Contribution Percentage Amounts as of
the beginning of the Plan Year, plus any additional amounts
attributable to Contribution Percentage Amounts allocated to the
Participant during such Plan Year and the gap period, if
applicable, or (B) solely with respect to Plan Years beginning
before January 1, 1992, the Participant's Account balance
attributable to Contribution Percentage Amounts as of the end of
the Plan Year, reduced by any gain and increased by any loss
allocable thereto during the Plan Year; or
(2) The amount determined by any reasonable method of allocating
income or loss to the Participant's Voluntary Contributions,
Matching Contributions and QNECs for the Plan Year and for the
gap period, if applicable, provided the method used is the same
one used for allocating income or losses to Participants'
Accounts; and
(3) 10% of the amount determined under (1) multiplied by the number
of whole months between the end of the Plan Year and the
distribution date, counting the month of distribution if it
occurs after the 15th of such month.
(e) Accounting For Excess Aggregate Contributions: Excess Aggregate
Contributions will be forfeited if forfeitable, or will be distributed
on a pro-rata basis from the Participant's Voluntary Employee
Contribution Account, Matching Contribution sub-account and QMAC
sub-account, and if applicable, from the Participant's QNEC
sub-account or the Elective Deferral sub-account, or both.
5.18 FINANCIAL HARDSHIP DISTRIBUTIONS: A Participant who has attained age 59 1/2
may request in writing to the Administrator that up to 100% of the
Participant's Elective Deferral Account (including any earnings credited
thereto as of the end of the last Plan Year ending before July 1, 1989) as
of the Valuation Date immediately preceding such request be distributed
because of the Participant's financial hardship, subject to the following
provisions:
(a) Amount And Form Of Distribution: The maximum amount distributable
cannot exceed the amount required to relieve the financial hardship,
including amounts necessary to pay any federal, state or local income
taxes or penalties reasonably anticipated to result from the
distribution. A hardship distribution will only be made in a lump sum
provided the Participant's spouse, if any, consents to the
distribution in accordance with Section 5.8.
40
(b) Definition Of Financial Hardship: Financial hardship means an
immediate and heavy financial need that the Participant lacks
available resources to satisfy. For purposes of this Plan, the
following financial needs will be considered immediate and heavy: (1)
payment of medical expenses within the meaning of Code ss.213(d) that
are incurred by the Participant, his spouse or his children; (2) the
purchase (excluding mortgage payments) of a principal residence for
the Participant; (3) payment of tuition and related educational fees
for the next 12 months of post-secondary education for the
Participant, the Participant's spouse or the Participant's children;
(4) the need to prevent the eviction of the Participant from his or
her principal residence or foreclosure on the mortgage of the
Participant's principal residence; (5) payment of funeral expenses for
a member of the Participant's family; or (6) any other immediate and
heavy financial need as determined by the Administrator in a uniform
nondiscriminatory manner.
(c) Participant's Written Representations: Except as otherwise provided in
paragraph (d), a hardship distribution can only be made to the extent
a Participant's financial hardship cannot be satisfied from other
resources reasonably available to the Participant, as determined by
the Administrator on the basis of all relevant facts and
circumstances. However, the Administrator may treat a distribution as
necessary to satisfy a financial hardship if the Administrator, in the
absence of actual knowledge to the contrary, relies upon the
Participant's written representation that the financial hardship
cannot be relieved (1) through reimbursement or compensation by
insurance or otherwise; (2) by liquidation of the Participant's
assets, to the extent such liquidation would not itself cause a
financial hardship; (3) by cessation of the Participant's Elective
Deferrals or Voluntary Employee Contributions to the Plan; or (4) by
other distributions or nontaxable (at the time of the loan) loans from
any other Employer-maintained plans or from any other employer, or by
borrowing from commercial sources on reasonable commercial terms.
(d) Safe Harbor Deemed Distributions: If a Participant elects not to
comply with the written representation requirements set forth in
paragraph (c) with respect to a distribution made for one of the
reasons set forth in paragraphs (b)(1), (2), (3) or (4), then any such
distribution will be deemed to be necessary to satisfy a financial
hardship if the Participant has obtained all distributions (other than
financial hardship distributions) and all nontaxable loans currently
available under all plans maintained by the Employer. Furthermore, by
electing not to comply with the requirements of paragraph (c), the
Participant cannot make Elective Deferrals and Voluntary Employee
Contributions to this Plan or any other plan maintained by the
Employer for at least 12 months after receipt of the hardship
distribution; and for the Participant's taxable year immediately
following the taxable year of the hardship distribution, the
Participant cannot make Elective Deferrals to this Plan or any other
plan maintained by the Employer in excess of the applicable limit
under Code ss.402(g)(5) for such taxable year, minus the amount of
such Participant's Elective Deferrals made for the taxable year in
which the financial hardship distribution was made.
41
(e) Restriction On Certain Transferred Assets: Notwithstanding any
provision in this Section to the contrary, no hardship distribution
can be made under this Section with respect to benefits attributable
to assets (including post-transfer earnings thereon) and liabilities
that are transferred, within the meaning of Code ss.414(l), from a
money purchase pension plan qualified under Code ss.401(a) to this
Plan (other than any portion of those assets and liabilities
attributable to Voluntary Employee Contributions).
42
ARTICLE 6
CODE SECTION 415 LIMITATIONS
6.1 MAXIMUM ANNUAL ADDITION: The maximum Annual Addition (as defined in
paragraph (c) below) made to a Participant's various accounts maintained
under the Plan for any Limitation Year beginning after December 31, 1986
will not exceed the lesser of the Dollar Limitation set forth in Section
6.1(a) or the Compensation Limitation set forth in Section 6.1(b), as
follows:
(a) Dollar Limitation: The Dollar Limitation is $30,000, as annually
adjusted by the Secretary of the Treasury in accordance with
Code ss.415(d).
(b) Compensation Limitation: The Compensation Limitation is an amount
equal to 25% of the Participant's Section 415 Compensation for the
Limitation Year. However, this limitation will not apply to any
contribution made for medical benefits within the meaning of Code
ss.401(h) or Code ss.419A(f)(2) after separation from service which is
otherwise treated as an Annual Addition under Code ss.415(l)(1) or
Code ss.419A(d)(2).
(c) Annual Additions: The term Annual Additions means the sum of the
following amounts credited to a Participant's Account for the
Limitation Year: (1) Employer contributions; (2) Employee
contributions; (3) Forfeitures; (4) amounts allocated, after March 31,
1984, to an individual medical account, as defined in Code
ss.415(l)(2), which is part of a pension or annuity plan maintained by
the Employer; and (5) amounts derived from contributions paid or
accrued after December 31, 1985, in taxable years ending after such
date, which are attributable to post-retirement medical benefits,
allocated to the separate account of a key employee, as defined in
Code ss.419A(d)(3), under a welfare fund, as defined in Code
ss.419(e), maintained by the Employer. Notwithstanding the foregoing,
a Participant's Annual Additions do not include his or her rollovers,
loan repayments, repayments of prior Plan distributions or prior
distributions of mandatory contributions, direct transfers of
contributions from another plan to this Plan, deductible contributions
to a simplified employee pension plan, or voluntary deductible
contributions.
6.2 ADJUSTMENTS TO MAXIMUM ANNUAL ADDITION: In applying the limitation on
Annual Additions set forth in Section 6.1, the following adjustments must
be made:
(a) Short Limitation Year: In a Limitation Year of less than 12 months,
the Defined Contribution Dollar Limitation in Section 6.1(a) will be
adjusted by multiplying it by the ratio that the number of months in
the short Limitation Year bears to 12.
(b) Plans With Different Anniversary Dates: If a Participant participates
in multiple defined contribution plans sponsored by the Employer which
have different Anniversary Dates, the maximum Annual Addition in this
Plan for the Limitation Year will be reduced by the Annual Additions
credited to the Participant's accounts in the other defined
contribution plans for such Limitation Year.
43
(c) Plans With The Same Anniversary Date: If a Participant participates in
multiple defined contribution plans sponsored by the Employer which
have the same Anniversary Date, then (1) if only one of the plans is
subject to Code ss.412, Annual Additions will first be credited to the
Participant's accounts in the plan subject; and (2) if none of the
plans are
44
subject to Code ss.412, the maximum Annual Addition in this Plan for a
given Limitation Year will equal the product of (A) the maximum Annual
Addition for such Limitation Year minus any other Annual Additions
previously credited to the Participant's account, multiplied by the
ratio that the Annual Additions which would be credited to a
Participant's accounts hereunder without regard to the limitations in
Section 6.1 bears to the Annual Additions for all plans described in
this paragraph.
6.3 MULTIPLE PLANS AND MULTIPLE EMPLOYERS: All defined benefit plans (whether
terminated or not) of the Employer will be treated as one defined benefit
plan, and all defined contribution plans (whether terminated or not) of the
Employer will be treated as one defined contribution plan. In addition, all
Affiliated Employers will be considered a single employer.
6.4 MULTIPLE PLAN REDUCTION: For Plan Years beginning before January 1, 2000,
if an Employee is, or has been, a Participant in one or more
Employer-sponsored defined benefit plans and in one or more
Employer-sponsored defined contribution plans, the sum of the defined
benefit plan fraction and the defined contribution plan fraction for any
Limitation Year may not exceed 1.0, determined in accordance with the
following:
(a) Defined Benefit Fraction: The Defined Benefit Fraction is a fraction
which has as its numerator the Participant's Projected Annual Benefits
determined as of the close of the Limitation Year and which has as its
denominator the lesser of 125% of the dollar limitation for the
Limitation Year determined under Code ss.415(b) and ss.415(d), or 140%
of the amount which may be taken into account under Code
ss.415(b)(1)(B) for such Limitation Year. Notwithstanding the
foregoing, with respect to anyone who was a Participant as of the
first day of the first Limitation Year beginning after December 31,
1986, in one or more defined benefit plans maintained by the Employer
which were in existence on May 6, 1986, the denominator of the defined
benefit fraction will not be less than 125% of the Current Accrued
Benefit.
(b) Definitions: As used in paragraph (a) above, (1) the term Projected
Annual Benefits means the annual benefits payable to a Participant
under all defined benefit plans (whether terminated or not) of the
Employer as determined under regulationss.1.415-7(b)(3); and (2) the
term Current Accrued Benefit means a Participant's accrued benefit
under a defined benefit plan, determined as if the Participant had
separated from service as of the close of the last Limitation Year
beginning before January 1, 1987, when expressed as an annual benefit
within the meaning of Code ss.415(b)(2). In determining a
Participant's Current Accrued Benefit, the Administrator will
disregard any changes in the terms and conditions of the Plan after
May 5, 1986, and any cost of living adjustment occurring after May 5,
1986. The Current Accrued Benefit will only be used as set forth above
if the defined benefit plans individually and in the aggregate
satisfied the requirements of Code ss.415 for all Limitation Years
beginning before January 1, 1987.
(c) Defined Contribution Fraction: The Defined Contribution Fraction is a
fraction the numerator of which is the sum of the Annual Additions to
the Participant's Account under all the defined contribution plans
(whether terminated or not) maintained by the Employer for the current
Limitation Year and all prior Limitation Years (including the Annual
Additions attributable to the Participant's non-deductible
contributions to all
45
Employer maintained defined benefit plans, whether terminated or not,
and the Annual Additions
46
attributable to all welfare benefit funds, as defined in Code
ss.419(e), and individual medical accounts, as defined in Code
ss.415(l)(2) maintained by the Employer), and the denominator of which
is the sum of the maximum aggregate amounts for the current Limitation
Year and all prior Limitation Years the Employee was employed by the
Employer (regardless of whether a defined contribution plan was
maintained by the Employer). The maximum permissible aggregate amount
in any Limitation Year is the lesser of (1) 125% of the dollar
limitation in effect in Code ss.415(c)(1)(A) for such Limitation Year
determined without regard to Code ss.415(c)(6) and adjusted per
regulation ss.1.415-7(d)(1) and Notice 83-10, or (2) 35% of the
Participant's Section 415 Compensation.
(d) Transition Rule For Denominator: For defined contribution plans in
effect on or before July 1, 1982, the Administrator may elect for any
Limitation Year ending after December 31, 1982 that the denominator
will be the product of the denominator for the Limitation Year ending
in 1982 determined under the law in effect for such Limitation Year,
multiplied by the Transition Fraction, which is a fraction which has
as its numerator the lesser of $51,875 or 1.4 multiplied by 25% of the
Participant's Section 415 Compensation for the Plan Year ending in
1981, and which has as its denominator the lesser of $41,500 or 25% of
the Participant's Section 415 Compensation for the Plan Year ending in
1981. In any Top Heavy Limitation Year, $41,500 will be substituted
for $51,875 in determining the Transition Fraction unless the Extra
Minimum Allocation is being provided in Section 3.5. In a Super Top
Heavy Plan Year, $41,500 will always be substituted for $51,875.
(e) Adjustment Of Fraction: If an Employee was a Participant as of the end
of the first day of the first Limitation Year beginning after December
31, 1986 in one or more defined contribution plans maintained by the
Employer which were in existence on May 6, 1986, the numerator of the
defined contribution fraction will be adjusted if the sum of such
defined contribution fraction and the defined benefit fraction would
otherwise exceed 1.0 under the terms of this Plan. Under the
adjustment, an amount equal to the product of the excess of the sum of
the defined benefit fraction and the defined contribution fraction
over 1.0 multiplied by the denominator of the defined contribution
fraction will be permanently subtracted from the numerator of the
defined contribution fraction. The adjustment will be calculated using
the fractions as they would be computed as of the end of the last
Limitation Year beginning before January 1, 1987, disregarding any
changes in the terms and conditions of the Plan made after May 5,
1986, but using the Code ss.415 limitation applicable to the first
Limitation Year beginning on or after January 1, 1987.
(f) Top Heavy Adjustments To Multiple Plan Fraction: In any Top Heavy
Limitation Year, 100% will be substituted for 125% in paragraph (a)
and paragraph (c) above unless (1) a 7.5% allocation is being provided
to Non-Key Employees in Section 3.5, or (2) a Non-Key Employee is
being provided with a retirement benefit under a defined benefit plan
that is equal to 3% of his or her average monthly Section 415
Compensation. However, in any Super Top Heavy Limitation Year, 100%
will be substituted for 125% in any event. If the 100% limitation is
exceeded for any Participant in any Limitation Year, then (1) the
Participant's accrued benefit in the defined benefit plan will not be
increased; (2) no Annual Additions may be credited to
47
the Participant's accounts under this Plan; and (3) the Participant
may not make any contributions, whether voluntary or mandatory, to
this Plan or any other Employer sponsored qualified plan.
48
6.5 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS: If an allocation of Forfeitures
or an error in calculating a Participant's Compensation causes the Annual
Additions allocated to such Participant's Account to exceed the maximum set
forth in Section 6.1, such Participant's Account will be adjusted as
follows in order to reduce such excess:
(a) Return Of Elective Deferrals And Employee Contributions: The
Administrator will return any Elective Deferrals and/or Employee
contributions (whether such Employee contributions are voluntary or
mandatory), and will distribute the gains attributable to those
Elective Deferrals and/or Employee contributions, to the extent that
such return or distribution would reduce the excess amount in the
Participant's Account.
(b) Reallocation In The Current Year: After the return of contributions
and the distribution of gains specified in paragraph (a) have been
made, and prior to the creation of a Section 415 Suspense Account as
set forth in paragraph (c) below, any excess will be reallocated in
accordance with Section 3.2 to all Participants who have not yet
attained their maximum Annual Addition. If necessary, the
Administrator will repeat the reallocation until all Participants have
reached their maximum Annual Addition.
(c) Remaining Excess: If an excess amount still remains in a Participant's
Account, then (1) if the Participant is employed by the Employer at
the end of the Limitation Year, the Administrator will hold the excess
in the Section 415 Suspense Account and use it to reduce Employer
contributions (including any allocation of Forfeitures) for the next
Limitation Year (and each succeeding Limitation Year if necessary) for
the Participant; and (2) if the Participant is not employed by the
Employer at the end of a Limitation Year, the excess may not be
distributed to the Participant but will be held unallocated in the
Section 415 Suspense Account and will be used to reduce future
Employer contributions (including the allocation of Forfeitures) for
all remaining Participants in the next Limitation Year and each
succeeding Limitation Year if necessary.
(d) Earnings, Losses And Reallocation: If the Section 415 Suspense Account
is in existence at any time during a Limitation Year pursuant to this
Section, it will not share in the allocation of the earnings or losses
of the Trust Fund. If the Section 415 Suspense Account is in existence
at any time during a particular Limitation Year, all amounts in such
account must be allocated and reallocated to Participants' Accounts
before any Employer contributions or any Employee contributions may be
made to the Plan for that Limitation Year. Excess amounts in the
Section 415 Suspense Account may not be distributed to Participants or
former Participants.
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ARTICLE 7
DUTIES OF THE TRUSTEE
7.1 APPOINTMENT, RESIGNATION, REMOVAL AND SUCCESSION: This Plan will have one
or more individual Trustees, a corporate Trustee, or any combination
thereof, appointed as follows:
(a) Appointment Of Trustee: Each Trustee will be appointed by the Employer
and will serve until its successor has been named or until such
Trustee's resignation, death, incapacity, or removal, in which event
the Employer will name a successor Trustee. The term Trustee will
include the original and any successor Trustees.
(b) Resignation Of Trustee: A Trustee may resign at any time by giving 30
days written notice in advance to the Employer, unless such notice is
waived by the Employer. The Employer may remove a Trustee by giving
such Trustee 30 days written notice in advance. Such removal may be
with or without cause.
(c) Successor Trustee: Each successor Trustee will succeed to the title to
the Trust by accepting his appointment in writing and by filing such
written acceptance with the former Trustee and the Employer. The
former Trustee, upon receipt of such acceptance, will execute all
documents and perform all acts necessary to vest the Trust Fund's
title of record in any successor Trustee. No successor Trustee will be
personally liable for any act or failure to act of any predecessor
Trustee.
(d) Merger Of Corporate Trustee: If any corporate Trustee, before or after
qualification, changes its name, consolidates or merges with another
corporation, or otherwise reorganizes, any resulting corporation which
succeeds to the fiduciary business of such Trustee will become a
Trustee hereunder in lieu of such corporate Trustee.
7.2 INVESTMENT ALTERNATIVES OF THE TRUSTEE: The Trustees will implement an
investment program based on the Employer's investment objectives and the
Employee Retirement Income Security Act of 1974. In addition to powers
given by law, the Trustee may:
(a) Property: Invest the Trust Fund in any form of property, including
common and preferred stocks, exchange covered call options, bonds,
money market instruments, mutual funds, savings accounts, certificates
of deposit, Treasury bills, insurance policies and contracts, or in
any other property, real or personal, foreign or domestic, having a
ready market including securities issued by an institutional Trustee
and/or affiliate of the institutional Trustee. The Trustee may invest
on margin. An institutional Trustee may invest in its own deposits if
they bear a reasonable interest rate. The Trustee may retain, manage,
operate, repair, improve and mortgage or lease for any period on such
terms as it deems proper any real estate or personal property held by
the Trustee, including the power to demolish any building or other
improvements in whole or part. The Trustee may erect buildings or
other improvements, make leases that
50
extend beyond the term of this Trust, and foreclose, extend, renew,
assign, release or partially release and discharge mortgages or other
liens.
(b) Pooled Funds: The Trustee may transfer any assets of the Trust Fund to
a collective trust established to permit the pooling of funds of
separate pension and profit-sharing trusts provided the Internal
Revenue Service has ruled such collective trust to be qualified under
Code ss.401(a) and exempt under Code ss.501(a) (or the applicable
corresponding provision of any other Revenue Act) or to any other
common, collective, or commingled trust fund which has been or may
hereafter be established and maintained by the Trustee and/or
affiliates of an institutional Trustee. Such commingling of assets of
the Fund with assets of other qualified trusts is specifically
authorized, and to the extent of the investment of the Trust Fund in
such a group or collective trust, the terms of the instrument
establishing the group or collective trust will be a part hereof as
though set forth herein.
(c) Employer Stock: The Trustee may invest the Trust Fund in the common
stock, debt obligations, or any other security issued by the Employer
or by an affiliate of the Employer within the limitations provided
under Sections 406, 407, and 408 of ERISA provided that such
investment does not constitute a prohibited transaction under Code
Section 4975. Any such investment will only be made upon written
direction of the Employer who will be solely responsible for the
propriety of such investment.
(d) Cash Reserves: The Trustee may retain in cash as much of the Trust
Fund as the Trustee may deem advisable to satisfy the liquidity needs
of the Plan and to deposit any cash held in the Trust Fund in a bank
account without liability for the highest rate of interest available.
If a bank is acting as Trustee, such Trustee is specifically given
authority to invest in deposits of such Trustee. The Trustee may also
hold cash un-invested at any time and from time to time and in such
amount or to such extent as the Trustee deems prudent, and the Trustee
will not be liable for any losses which may be incurred as the result
of the failure to invest same, except to the extent provided herein or
in ERISA.
(e) Reorganizations Etc: The Trustee may join in or oppose the
reorganization, recapitalization, consolidation, sale or merger of
corporations or properties, upon such terms as the Trustee deems wise.
(f) Registration of Securities: The Trustee may cause any securities or
other property to be registered in the Trustee's own name or in the
name of the Trustee's nominee or nominees, and may hold any
investments in bearer form, but the records of the Trustee will at all
times show all such investments as part of the Trust Fund.
(g) Proxies: The Trustee may vote proxies and if appropriate pass them on
to any investment manager which may have directed the investment in
the equity giving rise to the proxy.
(h) Ownership Rights: The Trustee may exercise all ownership rights with
respect to any assets held in the Trust Fund.
51
(i) Other Investments: The Trustee may accept and retain for such time as
the Trustee deems advisable any securities or other property received
or acquired as Trustee, whether or not such securities or property
would normally be purchased as investments hereunder.
(j) Key Man Insurance: The Trustee, with the consent of the Administrator,
may purchase insurance Policies on the life of any Participant whose
employment is deemed to be key to the Employer's financial success.
Such key man Policies will be deemed to be an investment of the Trust
Fund and will be payable to the Trust Fund as the beneficiary thereof.
The Trustee may exercise any and all rights granted under such
Policies.
(k) Loans To The Trust: The Trustee may borrow or raise money for purposes
of the Plan in such amounts, and upon such terms and conditions, as
the Trustee deems advisable; and for any sum so borrowed, the Trustee
may issue a promissory note as Trustee, and secure repayment of the
loan by pledging all, or any part, of the Trust Fund as collateral. No
person lending money to the Trustee will be bound to see to the
application of the money lent or to inquire into the validity or
propriety of any borrowing.
(l) Agreements With Banks: The Trustee may with the consent of the
Employer and upon such terms as they in their discretion deem
necessary, enter into an agreement with a bank or trust company
providing for (a) the deposit of all or part of the funds and property
of the Trust with such bank or trust company, (b) the appointment of
such bank or trust company as the agent or custodian of the Trustees
for investment purposes, with such discretion in investing and
reinvesting the funds of the Trust as the Trustees deem it necessary
or desirable to delegate.
(m) Litigation: The Trustee may begin, maintain, or defend any litigation
necessary in connection with the administration of the Plan, except
that the Trustee will not be obliged or required to do so unless
indemnified to its satisfaction.
(n) Claims, Debts or Damages: The Trustee may settle, compromise, or
submit to arbitration any claims, debts, or damages due or owing to or
from the Plan.
(o) Miscellaneous: The Trustee may do all such acts and exercise all such
rights, although not specifically mentioned herein, as the Trustee
deems necessary to carry out the purposes of the Plan. The Trustee
will not be restricted to securities or other property of the
character expressly authorized by applicable law for trust
investments, subject to the requirement that the Trustee discharge his
duties with the care, skill, prudence, and diligence, under the
circumstances then prevailing, that a prudent man acting in a like
capacity and familiar with such matters would use in the conduct of an
enterprise of similar character and with similar aims by diversifying
the investments to minimize the risks of large losses unless under the
circumstances it is clearly prudent not to do so.
52
7.3 VALUATION OF THE TRUST FUND: On each Valuation Date, the Trustee will
determine the net worth of the Trust Fund. The value of marketable
investments will be determined using the most recent price quoted on a
national securities exchange or over-the-counter market. The value of
non-marketable investments will be determined periodically by an
independent third-party appraiser as required by law, and the Trustees will
have no responsibility for the valuation of such assets.
7.4 COMPENSATION AND EXPENSES: The Trustee, either from the Trust Fund or from
the Employer, will be reimbursed for all of its expenses and will be paid
reasonable compensation as agreed upon from time to time with the Employer;
but no person who receives full-time pay from the Employer will receive any
fees for services to the Plan as Trustee or in any other capacity. Expenses
will be paid by each Adopting Employer in the ratio that each Adopting
Employer's Participants' Accounts bears to the total of all the
Participants' Accounts maintained by this Plan.
7.5 PAYMENTS FROM THE TRUST FUND: The Trustee will pay Plan benefits and other
payments as the Administrator directs, and except as provided by ERISA, the
Trustee will not be responsible for the propriety of such payments. Any
payment made to a Participant, or a Participant's legal representative or
Beneficiary in accordance with the terms of the Plan will, to the extent of
such payment, be in full satisfaction of all claims arising against the
Trust, the Trustee, the Employer, and the Administrator. Any payment or
distribution made from the Trust is contingent on the recipient executing a
receipt and release acceptable to the Trustee, Administrator, or Employer.
7.6 PAYMENT OF TAXES: The Trustee will pay all taxes of the Trust Fund,
including property, income, transfer and other taxes which may be levied or
assessed upon or in respect of the Trust Fund or any money, property or
securities forming a part of the Trust Fund. The Trustee may withhold from
distributions to any payee such sum as the Trustee may reasonably estimate
as necessary to cover federal and state taxes for which the Trustee may be
liable, which are, or may be, assessed with regard to the amount
distributable to such payee. Prior to making any payment, the Trustee may
require such releases or other documents from any lawful taxing authority
and may require such indemnity from any payee or distributee as the Trustee
deems necessary.
7.7 ACCOUNTS, RECORDS AND REPORTS: The Trustee will keep accurate records
reflecting its administration of the Trust Fund and will make such records
available to the Employer for review and audit. Within 90 days after each
Plan Year, and within 90 days after its removal or resignation, the Trustee
will file with the Employer an accounting of its administration of the
Trust Fund during such year or from the end of the preceding Plan Year to
the date of removal or resignation. Such accounting will include a
statement of cash receipts and disbursements since the date of its last
accounting and will contain an asset list showing the fair market value of
investments held in the Trust Fund as of the end of the Plan Year as
determined under Section 7.3. The Employer will review the accounting and
will notify the Trustee in the event of its disapproval of the report
within 90 days, providing the Trustee with a written description of the
items in question. The Trustees will have 60 days to provide the Employer
with a written explanation of the items in question. If the Employer again
disapproves of the report, the Trustee will file its accounting in a court
of competent jurisdiction for audit and adjudication.
53
7.8 EMPLOYMENT OF AGENTS AND COUNSEL: The Trustee may employ such agents,
counsel, consultants, or service companies as it deems necessary and may
pay their reasonable expenses and compensation. The Trustee will not be
liable for any action taken or omitted by the Trustee in good faith
pursuant to the advice of such agents and counsel. Any agent, counsel,
consultant, service company and/or its successors will exercise no
discretionary authority over investments or the disposition of Trust
assets, and their services and duties will be ministerial only and will be
to provide the Plan with those things required by law or by the terms of
the Plan without in any way exercising any fiduciary authority or
responsibility under the Plan. The duties of a third party administrator
will be to safe-keep the individual records for all Participants and to
prepare all required actuarial services and disclosure forms under the
supervision of the Administrator and any Fiduciaries of the Plan. It is
expressly stated that the third party administrator's services are only
ministerial in nature and that under no circumstances will such third party
administrator exercise any discretionary authority whatsoever over Plan
Participants, Plan investments, or Plan benefits.
7.9 DIVISION OF DUTIES AND INDEMNIFICATION: The division of duties and the
indemnification of the Trustees of this Plan will be governed by the
following provisions:
(a) No Guarantee Against Loss: The Trustees will have the authority and
discretion to manage and control the Fund to the extent provided in
this instrument, but do not guarantee the Fund in any manner against
investment loss or depreciation in asset value, or guarantee the
adequacy of the Fund to meet and discharge all or any liabilities of
the Plan. Furthermore, the Trustees will not be liable for the making,
retention or sale of any investment or reinvestment made by it, as
herein provided, or for any loss to or diminution of the Fund, or for
any other loss or damage which may result from the discharge of its
duties hereunder, except to the extent it is judicially determined
that the Trustees have failed to exercise the care, skill, prudence
and diligence under the circumstances then prevailing that a prudent
person acting in a like capacity and familiar with such matters would
use in the conduct of an enterprise of a like character and like aims.
(b) Representations Of The Employer: The Employer warrants that all
directions issued to the Trustees by it or the Plan Administrator will
be in accordance with the terms of the Plan and not contrary to the
provisions of the Employee Retirement Income Security Act of 1974 and
the regulations issued thereunder.
(c) Directions By Others: The Trustees will not be answerable for any
action taken pursuant to any direction, consent, certificate, or other
paper or document on the belief that the same is genuine and signed by
the proper person. All directions by the Employer, a Participant or
the Plan Administrator will be in writing. The Plan Administrator will
deliver to the Trustees certificates evidencing the individual or
individuals authorized to act as the Administrator and will deliver to
the Trustees specimens of their signatures.
(d) Duties And Obligations Limited By The Plan: The duties and obligations
of the Trustees will be limited to those expressly imposed upon it by
this Plan or subsequently
54
agreed upon by the parties. Responsibility for administrative duties
required under the Plan or applicable law not expressly imposed upon
or agreed to by the Trustees, will rest solely with the Employer and
with the Administrator.
(e) Indemnification Of Trustees: The Trustees will be indemnified and
saved harmless by the Employer from and against any and all liability
to which the Trustees may be subjected, including all expenses
reasonably incurred in its defense, for any action or failure to act
resulting from compliance with the instructions of the Employer, the
employees or agents of the Employer, the Administrator, or any other
Fiduciary to the Plan, and for any liability arising from the actions
or non-actions of any predecessor Trustees or Fiduciary or other
Fiduciaries of the Plan.
(f) Trustees Not Responsible For Application Of Payments: The Trustees
will not be responsible in any way for the application of any payments
it is directed to make or for the adequacy of the Fund to meet and
discharge any and all liabilities under the Plan.
(g) Multiple Trustees: If more than one Trustee is appointed, all acts
and/or transactions taken on behalf of the Trust can only be taken
with the consent of a majority of the Trustees unless the Trustees
have agreed by a majority of their number that a particular act and/or
transaction can be taken or approved by a single Trustee.
(h) Limitation Of Liability: No Trustee will be liable for the act of any
other Trustee or Fiduciary unless the Trustee has knowledge of such
act.
(i) Trustees As Participants Or Beneficiaries: Trustees will not be
prevented from receiving any benefits to which they may be entitled as
Participants or Beneficiaries in the Plan, so long as the benefits are
computed and paid on a basis which is consistent with the terms of the
Plan as applied to all other Participants and Beneficiaries.
(j) No Self-Dealing: The Trustees will not (1) deal with the assets of the
Trust Fund in their own interest or for their own account; (2) in
their individual or in any other capacity, act in any transaction
involving the Trust Fund on behalf of a party (or represent a party)
whose interests are adverse to the interests of the Plan, or its
Participants or Beneficiaries; or (3) receive any consideration for
their own personal accounts from any party dealing with the Plan in
connection with a transaction involving assets of the Trust Fund.
7.10 APPOINTMENT OF INVESTMENT MANAGER: The Trustee may appoint an Investment
Manager to manage and control the investment of all or any portion of the
Trust Fund. Each Investment Manager will be either be an investment advisor
registered under the Investment Advisors Act of 1940; a bank as defined in
that Act; or an insurance company qualified to manage, acquire or dispose
of any asset of the Trust under the laws of more than one state. An
Investment Manager will acknowledge in writing that it is a Fiduciary of
the Plan. The Trustee will enter into an agreement with the Investment
Manager specifying the duties and compensation of the Investment Manager
and further specifying any other terms and conditions under which the
Investment Manager will be retained. The Trustee will not be liable for any
act or omission of an Investment Manager, and will not be liable for
following the advice of an Investment Manager with respect to any duties
delegated by the Trustee to the Investment Manager. The Trustee will have
the power to determine the portion of the Plan's assets to be
55
invested by a designated Investment Manager and to establish investment
objectives and guidelines for the Investment Manager to follow.
7.11 ASSIGNMENT AND ALIENATION OF BENEFITS: Except as may otherwise be permitted
under Code ss.401(a)(13)(C), or as may otherwise be permitted under a
Qualified Domestic Relations Order as provided in Section 8.6, or as may
otherwise be permitted under Section 7.14 relating to loans to
Participants, no right or claim to, or interest in, any part of the Trust
Fund, or any payment therefrom, will be assignable, transferable, or
subject to sale, mortgage, pledge, hypothecation, commutation,
anticipation, garnishment, attachment, execution, or levy of any kind, and
the Trustees will not recognize any attempt to assign, transfer, sell,
mortgage, pledge, hypothecate, commute, or anticipate the same, except to
the extent required by law.
7.12 EXCLUSIVE BENEFIT RULE: All contributions made by the Employer or an
Affiliated Employer to the Trust Fund will be used for the exclusive
benefit of the Participants who are Employees of the Employer or Affiliated
Employer and for their Beneficiaries and will not be used for nor diverted
to any other purpose except the payment of the costs of maintaining the
Plan. All contributions made by an Adopting Employer who is not an
Affiliated Employer will be used for the exclusive benefit of the
Participants who are Employees of the Adopting Employer and for their
Beneficiaries and will not be used for nor diverted to any other purpose
except the payment of the Adopting Employers' proportionate costs of
maintaining the Plan pursuant to Section 7.4.
7.13 PURCHASE OF INSURANCE: The purchase of insurance Policies on the life of a
Participant, other than key man insurance under Section 7.2(j), is not
currently permitted in this Plan.
7.14 LOANS TO PARTICIPANTS: The Employer, in accordance with a written loan
procedure established by the Employer, may permit loans to be made from the
Trust Fund to Participants and Beneficiaries on a non-discriminatory basis.
If made available, a Participant or Beneficiary may make application to the
Administrator requesting a loan. The Administrator will have the sole right
to approve or disapprove the application provided that loans will be made
available to all Participants on a reasonably equivalent basis. All loans
must be evidenced by a legally enforceable agreement (which may include
more than one document) set forth in writing or in such other form as may
be approved by the Internal Revenue Service, and the terms of such
agreement must specify the amount and term of the loan, and the repayment
schedule. Loans will not be made available to Highly Compensated Employees
in an amount greater than the amount made available to other Employees, and
no loan will be made to a Participant who is an Owner-Employee or a
Shareholder-Employee except to the extent such loan is treated as a
prohibited transaction under Code ss.4975. Subject to the loan procedure,
loans will be made in accordance with the following:
(a) Minimum Loan And Maximum Loan: No loan will be less than $500 or, when
added to the outstanding balance of all other loans to the
Participant, will exceed the lesser of (1) $50,000 reduced by the
excess, if any, of the Participant's highest outstanding balance of
loans during the 1-year period ending on the day before the loan was
made, over the Participant's outstanding balance of loans on the day
the loan was made; or (2) one-half of the Participant's Vested
Aggregate Account.
56
(b) Aggregation Of Loans: For purposes of the limitations in paragraph (a)
above, all loans from all plans of the Employer and Affiliated
Employers will be aggregated. An assignment or pledge of any portion
of the Participant's Vested Aggregate Account balance, and a loan,
pledge, or assignment with respect to any insurance contract purchased
under the Plan, will be treated as a loan under this Section.
(c) Loans Must Bear Reasonable Interest: Any loan granted hereunder must
bear interest at a rate reasonable at the time of application,
considering the purpose of the loan and the rate being charged by
representative commercial banks in the local area for a similar loan,
unless the Administrator sets forth a different method for determining
loan interest rates in its loan procedures such as using the prime
rate or some other rate based on the prime rate. The loan agreement
will also provide for the payment of principal and interest not less
than quarterly. The interest earned by the Trust on any loan granted
hereunder will be credited directly to the individual Participant's
Account.
(d) Loans Must Be Secured: If a Participant's loan application is approved
by the Administrator, such Participant will be required to execute a
note, a loan agreement and an assignment of his or her Vested
Aggregate Account as collateral for the loan. The Participant must
obtain the consent of his or her spouse, if any, within the 90 day
period before the Participant's Vested Aggregate Account is used as
security for the loan. A new consent is required if the Vested
Aggregate Account is used for any renegotiation, extension, renewal or
other revision of the loan, including any increase in the amount
thereof. The consent must be written, must acknowledge the effect of
the loan, and must be witnessed by a notary public or the
Administrator. Such consent will thereafter be binding with respect to
the consenting Spouse or any subsequent Spouse.
(e) Terms Of Repayment: The term of a loan will not exceed 5 years except
in the case of a loan for the purpose of acquiring any house,
apartment, condominium, or mobile home (not used on a transient basis)
which is used or is to be used within a reasonable time as the
principal residence of the Participant. The term of a loan will be
determined by the Administrator considering the maturity dates quoted
by representative commercial banks in the local area for a similar
loan. Notwithstanding the foregoing, however, loans made prior to
January 1, 1987 which are used to acquire, construct, reconstruct or
substantially rehabilitate any dwelling unit which, within a
reasonable period of time is to be used (determined at the time the
loan is made) as a principal residence of the Participant or a member
of his or her family within the meaning of Code ss.267(c)(4) may
provide for periodic repayment over a reasonable period of time that
may exceed 5 years. Additionally, loans made prior to January 1, 1987
may provide for periodic payments which are made less frequently than
quarterly and which do not necessarily result in level amortization.
The Administrator may allow a grace period for the making of any
required installment payment, but any such period cannot extend beyond
the last day of the calendar quarter following the calendar quarter in
which the required installment was due.
57
(f) Suspension Of Installment Payments: Loan installment payments may be
suspended for a period not longer than one year in which the
Participant is on a leave of absence, either without pay or at a rate
of pay (after income and employment tax withholding) that is less than
the amount of the installment payments required under the terms of the
loan. However, even if payments are suspended due to a leave of
absence, the loan must still be repaid by the latest date permitted
under the original terms of the loan and the payments due after the
leave ends (or, if earlier, after the first year of the leave) must
not be less than those required under the original terms of the loan.
(g) Repayment Of Loan Before Distribution Of Benefit: If a Participant has
received a loan from the Plan and the Participant or the Participant's
Beneficiary is entitled to a payment from the Trust Fund before the
loan is repaid in full, the Trustee will offset at the time of
distribution the unpaid loan balance (including accrued interest) from
the total amount otherwise due to the Participant or Beneficiary. If a
valid spousal consent has been obtained pursuant to paragraph (d)
above, then notwithstanding any other provision of this Plan, the
portion of the Participant's Vested Aggregate Account used as a
security interest for a loan will be taken into account in determining
the amount of the Vested Aggregate Account payable at the time of
death or distribution, but only if the reduction is used as a
repayment of the loan. If less than 100% of the Participant's Vested
Aggregate Account (determined without regard to the preceding
sentence) is payable to the Participant's surviving spouse, then such
Vested Aggregate Account will be adjusted by first reducing the Vested
Aggregate Account by the amount of the security used as repayment of
the loan, and then determining the benefit payable to the surviving
spouse.
(h) Immediate Repayment: A Participant's loan will become immediately due
and payable if the Participant fails to make principal and/or interest
payments for two successive calendar quarters. In such event, the
Administrator will reduce the Participant's Vested Aggregate Account
by the remaining principal and interest of the loan, and such
reduction will constitute a distributable event (to the extent of the
reduction) under the Plan. If the Participant's Vested Aggregate
Account is less than the amount due, the Administrator will take
whatever steps are necessary to collect the balance due from the
Participant.
7.15 DIRECTED INVESTMENT ACCOUNTS: If agreed to by the Trustees and approved by
the Employer, Participants will be given the option to direct the
investment of all or a portion of their Participant's Account (and any
Rollover Contributions and Voluntary Employee Contributions) into a
directed, or segregated investment selected by the Participant; or among
alternative investment funds established as part of the overall Fund. Such
alternative investment funds will be under the full control of the
management of the Trustees. Alternatively, if investments outside the
Trustees' control are allowed, Participants may not direct that investments
be made in collectibles, other than U.S. Government gold and silver coins.
In this connection, a Participant's right to direct the investment of his
or her own Rollover Contributions and Voluntary Employee Contributions will
apply only to the selection of the desired fund. The following rules will
apply to the administration of such funds and to the handling of
Participants' investment directions:
58
(a) Investment Form: Eligible Participants will complete an investment
designation form stating the percentage to be invested in or
transferred to or from the available funds. A Participant may change
his or her investment election by filing a new investment designation
form with the Employer or the Employer's designee. Such change will be
effective no later than the first day of the next Election Period.
Election Periods will be established at the discretion of the Employer
but in any event will occur no less frequently than once in every
12-month period or, at the discretion of the Employer and the Trustee,
once in every 3-month or 6-month period or at such other more frequent
time which is uniformly available as determined by the Employer and
the Trustee.
(b) Transfers Between Funds: A Participant may elect to transfer all or
part of his or her account balance in one or more of the investment
funds from one investment fund to another investment fund by filing an
investment designation form with the Employer or with the Employer's
designee within a reasonable administrative period prior to the next
Election Period. The funds will be transferred by the Trustee or the
Employer's designee as soon as practicable prior to, or by the start
of, the new Election Period. Telephone transfers will be permitted
under uniform procedures approved by the Trustee.
(c) Administrator Responsibility: The Plan Administrator or the Plan
Administrator's designee will be responsible when transmitting
Employer and Employee contributions to show the dollar amount to be
credited to each investment fund for each Participant.
(d) No Administrator Liability: Except as otherwise provided herein,
neither the Trustee, nor the Employer, nor any Plan fiduciary will be
liable to the Participant or his or her Beneficiaries for any loss
resulting from action taken at the direction of the Participant.
(e) Adoption Of Procedures: All investment designations by Plan
Participants are to be made in accordance with such procedures as the
Employer may adopt. At the discretion of the Employer and the
Trustees, such procedures will permit sufficient selection among
investment alternatives to satisfy the provisions of DOL regulation
ss.2550.404(c)-1.
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ARTICLE 8
DUTIES OF THE ADMINISTRATOR
8.1 APPOINTMENT, RESIGNATION, REMOVAL AND SUCCESSION: Each Administrator
appointed by the Employer will continue until his death, resignation, or
removal by the Employer, and any Administrator may resign by giving 30 days
written notice to the Employer. If an Administrator dies, resigns, or is
removed by the Employer, his successor will be appointed as promptly as
possible, and such appointment will become effective upon its acceptance in
writing by such successor. Pending the appointment and acceptance of any
successor Administrator, any then acting or remaining Administrator will
have full power to act.
8.2 POWERS AND DUTIES OF THE ADMINISTRATOR: The powers and duties of the
Administrator will include (a) appointing the Plan's attorney, accountant,
actuary, or any other party needed to administer the Plan; (b) directing
the Trustees with respect to payments from the Trust Fund; (c)
communicating with Employees regarding their participation and benefits
under the Plan, including the administration of all claims procedures; (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 under (a) above; (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 Administrator's
interpretation of Plan provisions, including eligibility and benefits under
the Plan, is final, and unless it can be shown to be arbitrary and
capricious will not be subject to "de novo" review. If there is more than
one Administrator, the Administrators may delegate specific
responsibilities among themselves, including the authority to execute
documents unless the Employer revokes such delegation. The Employer and
Trustee will be notified in writing of any such delegation of
responsibilities, and the Trustee thereafter may rely upon any documents
executed by the appropriate Administrator.
8.3 EMPLOYMENT OF AGENTS AND COUNSEL: The Administrator may appoint such
actuaries, accountants, custodians, counsel, agents, consultants, and other
persons deemed necessary or desirable in connection with the administration
and operation of the Plan. The actions of any such third parties will be
subject to the limitations described in Section 7.8 of the Plan; and no
such third parties will be given any authority or discretion concerning the
management and operation of the Plan that would cause them to become
Fiduciaries of the Plan.
8.4 COMPENSATION AND EXPENSES: The Administrator may receive such compensation
as agreed upon between the Employer and the Administrator, provided that
any person who already receives full-time pay from the Employer may not
receive any fees for services to the Plan as Administrator or in any other
capacity. In addition, the Employer will pay all reasonable expenses
incurred by the Administrator in the performance of its duties under this
Plan. If the Employer fails to pay such expenses, the Trustee will
reimburse the Administrator out of the Trust Fund. Expenses will be paid by
each Adopting Employer in the ratio that each
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Adopting Employer's Participants' Accounts bears to the total of all the
Participants' Accounts maintained by this Plan.
8.5 CLAIMS PROCEDURES: Upon retirement, death, Disability or Termination of
Employment, the Participant or representative of such Participant may make
application to the Administrator requesting payment of benefits due and the
manner of payment, in accordance with the following:
(a) Automatic Payment If No Application Is Made: If no application for
benefits is made and no cash-out of benefits occurs under Section 5.5,
the Administrator will automatically pay a Participant's Vested
Aggregate Account balance in the form that does not require spousal
consent no later than the time prescribed in Section 5.10.
(b) Denial Of Claim: If an application for benefits is made, the
Administrator will accept, reject, or modify such request and will
notify the Participant in writing setting forth the response of the
Administrator and in the case of a denial or modification the
Administrator will (1) state the specific reason or reasons for the
denial, (2) provide specific reference to pertinent Plan provisions on
which the denial is based, (3) provide a description of any additional
material or information necessary for the Participant or his
representative to perfect the claim and an explanation of why such
material or information is necessary, and (4) explain the Plan's claim
review procedure as contained herein.
(c) Review Procedure: In the event the request is rejected or modified,
the Participant or his representative may within 60 days following
receipt by the Participant or representative of such rejection or
modification, submit a written request for review by the Plan
Administrator of its initial decision. Within 60 days following such
request for review, the Plan Administrator will render its final
decision in writing to the Participant or representative stating
specific reasons for such decision. If the Participant or
representative is not satisfied with the Plan Administrator's final
decision, the Participant or representative can institute an action in
a federal court of competent jurisdiction; for this purpose, process
would be served on the Plan Administrator.
8.6 QUALIFIED DOMESTIC RELATIONS ORDERS: A Qualified Domestic Relations Order,
or QDRO, is a signed domestic relations order issued by a State Court which
creates, recognizes or assigns to an alternate payee(s) the right to
receive all or part of a Participant's Plan benefit. An alternate payee is
a Spouse, former Spouse, child, or other dependent of a Participant who is
treated as a Beneficiary under the Plan as a result of the QDRO. The
Administrator will determine if a domestic relations order is a Qualified
Domestic Relations Order as follows:
(a) Administrator's Determination: Promptly upon receipt of a domestic
relations order, the Administrator will notify the Participant and any
alternate payee(s) named in the order of such receipt, and will
include a copy of this Section 8.6. Within a reasonable time after
receipt of the order, not to exceed 60 days, the Administrator will
make a determination as to whether or not the order is a QDRO as
defined in Code ss.414(p) and will promptly notify the Participant and
any alternate payee(s) in writing of the determination.
61
(b) Specific Requirements Of QDRO: In order for a domestic relations order
to be a QDRO, it must specifically state all of the following: (1) the
name and last known mailing address (if any) of the Participant and of
each alternate payee covered by the order. However, if the QDRO does
not specify the current mailing address of the alternate payee, but
the Administrator has independent knowledge of that address, the QDRO
will still be valid; (2) the dollar amount or percentage of the
Participant's benefit to be paid by the Plan to each alternate payee,
or the manner in which the amount or percentage will be determined;
(3) the number of payments or period for which the order applies; and
(4) the specific plan (by name) to which the order applies. The
domestic relations order will not be deemed a
62
QDRO if it requires the Plan to provide any type or form of benefit,
or any option not already provided for in the Plan, or increased
benefits, or benefits in excess of the Participant's Vested Interest,
or payment of benefits to an alternate payee which are required to be
paid to another alternate payee under another QDRO.
(c) Disputed Orders: If there is a question as whether or not a domestic
relations order is a QDRO, there will be a delay in any payout to any
payee including the Participant, until the status is resolved. In such
event, the Administrator will segregate the amount that would have
been payable to the alternate payee(s) if the order had been deemed a
QDRO. If the order is not determined to be a QDRO, or the status is
not resolved (for example, it has been sent back to the Court for
clarification or modification) within 18 months beginning with the
date the first payment would have to be made under the order, the
Administrator will pay the segregated amounts plus interest to the
person(s) who would have been entitled to the benefits had there been
no order. If a determination as to the Qualified status of the order
is made after the 18-month period, then the order will only be applied
on a prospective basis. If the order is determined to be a QDRO, the
Participant and alternate payee(s) will again be notified promptly
after such determination. Once an order is deemed a QDRO, the
Administrator will pay to the alternate payee(s) all the amounts due
under the QDRO, including segregated amounts plus interest which may
have accrued during a dispute as to the order's qualification.
(d) Payment Prior To Termination Of Employment: A QDRO may provide for the
payment of benefits to an alternative payee prior to the time a
Participant has terminated employment. Further, such payment can be
made even if the affected Participant has not yet reached the Earliest
Retirement Age. For purposes of this paragraph, the term Earliest
Retirement Age means the earlier of (1) the date on which the
Participant is entitled to a distribution under this Plan, or (2) the
later of (i) the date the Participant attains age 50, or (ii) the
earliest date on which the Participant could receive benefits under
this Plan if the Participant terminated employment with the Employer.
(e) Effect Of QDRO On Survivor Annuity Requirements: Notwithstanding
Section 5.1 and 5.2 to the contrary, a Participant's benefits which
are payable from the Plan in the form of either a Qualified Joint and
Survivor Annuity or a Qualified Preretirement Survivor Annuity need
not be paid in such form if such payment is inconsistent with, or has
been modified by, the terms of a Qualified Domestic Relations Order.
63
ARTICLE 9
AMENDMENT, TERMINATION AND MERGER
9.1 AMENDMENT: The Employer, by action of its board of directors, will have the
right to amend the Plan at any time if the amendment complies with the
following requirements:
(a) General Requirements: Amendments must be in writing and cannot (1)
increase the responsibilities of the Trustee or Administrator without
written consent; (2) deprive any Participant or Beneficiary of Plan
benefits to which he or she is entitled; (3) decrease the amount of
any Participant's Account balance except as permitted under Code
ss.412(c)(8); (4) permit any part of the Trust Fund to be used for or
diverted to purposes other than the exclusive benefit of the
Participants or their Beneficiaries except as required to pay taxes
and administration expenses, or cause or permit any portion of the
Trust Fund to revert to or become the property of the Employer; or (5)
eliminate or reduce a retirement-type subsidy, or an early retirement
benefit, or an optional form of benefit with respect to benefits
attributable to service before the amendment. In the case of a
retirement-type subsidy, this provision will apply only with respect
to a Participant who satisfies the pre-amendment conditions for the
subsidy either before or after the amendment.
(b) Certain Corrective Amendments: For purposes of satisfying the minimum
coverage requirements of Code ss.410(b), the nondiscriminatory amount
requirement of regulation ss.1.401(a)(4)-1(b)(2), or the
nondiscriminatory plan amendment requirement of regulation
ss.1.401(a)(4)-1(b)(4), a corrective amendment may retroactively
increase allocations for Employees who benefited under the Plan during
the Plan Year being corrected, or may grant allocations to Employees
who did not benefit under the Plan during the Plan Year being
corrected. In addition, to satisfy the nondiscriminatory current
availability requirement of regulation ss.1.401(a)(4)-4(b) for
benefits, rights or features, a corrective amendment may make a
benefit, right or feature available to Employees to whom it was
previously not available. A corrective amendment will not be taken
into account prior to the date of its adoption unless it satisfies the
applicable requirements of regulation ss.1.401(a)(4)-11(g)(3)(ii)
through (vii), including the requirement that, in order to be
effective for the preceding Plan Year, such amendment must be adopted
by the 15th day of the 10th month after the close of the preceding
Plan Year.
9.2 TERMINATION: The Employer at any time can terminate the Plan and Trust in
whole or in part by filing written notice thereof with the Administrator
and Trustee or by completely discontinuing contributions to the Plan. Upon
termination of the Plan, the Trustee will continue to administer the Trust
until distribution has been made to the Participants, which distribution
must occur as soon as administratively feasible after the termination of
the Plan, and must be made in accordance with the provisions of Article 5
of the Plan. Upon termination of the Plan (whether partial or complete), or
upon a complete discontinuance of contributions to the Plan, any
Participant who is affected by such termination will have a 100% Vested
Interest in his Participant's Account.
64
9.3 MERGER OR CONSOLIDATION: This Plan and Trust may not be merged or
consolidated with, nor may any of its assets or liabilities be transferred
to, any other plan, unless the benefits payable to each Participant if the
Plan was terminated immediately after such action would be equal to or
greater than the benefits to which such Participant would have been
entitled if this Plan had been terminated immediately before such action.
65
ARTICLE 10
MISCELLANEOUS PROVISIONS
10.1 NO CONTRACT OF EMPLOYMENT: Except as otherwise provided by law, neither the
establishment of this Plan, any modification hereto, the creation of any
fund or account, nor the payment of any benefits, will be construed as
giving any Participant or other person any legal or equitable rights
against the Employer, any officer or Employee thereof, or the Trustee,
except as herein provided. Further, under no circumstances will the terms
of employment of any Participant be modified or otherwise affected by this
Plan.
10.2 TITLE TO ASSETS: No Participant or Beneficiary will have any right to, or
any interest in, any assets of the Trust upon separation from service with
the Employer, Affiliated Employer, or Adopting Employer, except as
otherwise provided by the terms of the Plan.
10.3 QUALIFIED MILITARY SERVICE: Notwithstanding any provision of this Plan to
the contrary, effective December 12, 1994, contributions, benefits and
service credit with respect to qualified military service will be provided
in accordance with Code ss.414(u).
10.4 FIDUCIARIES AND BONDING: The Fiduciaries of this Plan will have only those
powers and duties which are specifically given to the Fiduciaries under the
terms of this Plan. In addition, every Fiduciary other than a bank, an
insurance company, or a Fiduciary of an Employer which has no common-law
employees, will be bonded in an amount not less than 10% of the amount of
funds under such Fiduciary's supervision, but such bond will not be less
than $1,000 or more than $500,000. The bond will provide protection to the
Plan against any loss for acts of fraud or dishonesty by a Fiduciary acting
alone or in concert with others. The cost of such bond will be an expense
of either the Employer or the Trust, at the election of the Employer.
10.5 SEVERABILITY OF PROVISIONS: If any Plan provision is held invalid or
unenforceable, such invalidity or unenforceability will not affect any
other provision of this Plan, and this Plan will be construed and enforced
as if such provision had not been included.
10.6 GENDER AND NUMBER: Words used in the masculine gender will be construed as
though they were also used in the feminine or neuter gender where
applicable, and words used in the singular form will be construed as though
they were also used in the plural form where applicable.
10.7 HEADINGS AND SUBHEADINGS: Headings and subheadings are inserted for
convenience of reference. They constitute no part of this Plan and are not
to be considered in its construction.
10.8 LEGAL ACTION: In any claim, suit or proceeding concerning the Plan and/or
Trust which is brought against the Trustee or the Administrator, this Plan
and Trust will be construed and enforced according to the laws of the state
in which the Employer maintains its principal place of business, to the
extent that is not preempted by the provisions of ERISA. Furthermore,
unless otherwise prohibited by law, either the Employer or the Trust, in
the sole discretion of
66
the Employer, will reimburse the Trustee and/or the Administrator for all
costs, attorneys fees and other expenses associated with any such claim,
suit or proceeding.
67
IN WITNESS WHEREOF, this Plan and Trust have been executed by the Employer
and the Trustees on the day, month and year set forth on page 1 of this
Agreement.
FREQUENCY ELECTRONICS, INC.
By: _______________________
TRUSTEES
___________________________
Robert Klomp
___________________________
Marvin P. Meirs
___________________________
Markus Hechler
68
EXHIBIT 4.9
FIRST AMENDMENT
WHEREAS, FREQUENCY ELECTRONICS, INC., a Delaware corporation, adopted a
certain 401(k) Sharing Plan, effective January 1, 1985, which was thereafter
amended and restated, and which it is now deemed desirable to further amend said
Plan.
NOW, THEREFORE, it is agreed by the undersigned that the said Plan is
hereby amended in the following manner:
1. Section 1.19 ("ELIGIBLE PARTICIPANT") shall be amended by deleting the
entire Section and replacing it with the following:
1.19 ELIGIBLE PARTICIPANT: The term Eligible Participant means a Participant
eligible to receive an allocation of Employer contributions allocable for a
Plan Year. Any Participant who is an Employee will be an Eligible
Participant.
2. Paragraph (b) ("Matching Contributions") and Paragraph (c)
("Non-Elective Contributions") of Section 3.1 ("EMPLOYER CONTRIBUTIONS") shall
be amended by deleting the entire Paragraphs and replacing them with the
following:
(b) Matching Contributions: The Employer may contribute in cash or in
Employer Stock on behalf of each Participant a Matching Contribution
to be determined each year by the Employer. Matching Contributions
made for each Plan Year must satisfy the ACP Test. Matching
Contributions which do not satisfy the ACP Test will be deemed Excess
Aggregate Contributions and will be returned as set forth in Section
5.17. The Employer may elect to treat all or any portion of a Matching
Contribution as a Qualified Matching Contribution to the extent
necessary to satisfy the ACP Test.
(c) Non-Elective Contributions: The Employer may make a Non-Elective
Contribution in cash or in Employer Stock in such an amount as
determined by the Employer, and the Employer will convey such amount
to the Trustee in writing. The Employer's determination of the amount
of its Non-Elective Contribution will be binding on the Trustee, the
Administrator and all Participants and may not be reviewed in any
manner. However, (1) no Non-Elective Contribution may exceed the
maximum amount deductible under Code ss.404; (2) Non-Elective
Contributions will be limited as required by Code ss.415; and (3) no
Non-Elective Contribution will be made for any Participant who is not
an Eligible Participant unless required by Section 3.5.
3. Paragraph (c) ("Non-Elective Contributions") of Section 3.2 ("ALLOCATION
OF EMPLOYER CONTRIBUTIONS") shall be amended by deleting the entire Paragraph
and replacing it with the following:
(c) Non-Elective Contributions: Non-Elective Contributions will be
allocated on the annual Valuation Date to the Eligible Participant's
Non-Elective Contribution Account of each Eligible Participant on a
per capita basis.
4. Section 4.2 ("BENEFIT UPON LATE RETIREMENT") shall be amended by
deleting the entire Section and replacing it with the following:
4.2 BENEFIT UPON LATE RETIREMENT: A Participant who has reached Normal or Early
Retirement Age may elect to remain employed and retire at a later date.
Such Participant will continue to participate in the Plan and his or her
Participant's Account will continue to receive allocations under Article 3
until the Participant actually retires. A Participant who elects late
retirement may at any time (1) choose to have distributed prior to actual
retirement all or part of his or her Vested Aggregate Account balance
determined as of the most recent Valuation Date coinciding with or
immediately preceding the date of distribution; or (2) choose to have such
Vested Aggregate Account balance transferred to another qualified
retirement plan maintained by the Employer. Upon actual retirement, the
Participant will be entitled to his or her undistributed Vested Aggregate
Account balance determined as of the most recent Valuation Date coinciding
with or immediately preceding the date of distribution. Distribution will
be made in accordance with Section 5.1.
5. Article 5 ("DISTRIBUTION OF BENEFITS") shall be amended by adding the
following new Section:
5.19 PRE-RETIREMENT DISTRIBUTIONS: A Participant who has reached Age 59 1/2 may
request in writing that the Administrator distribute all or part of the
Participant's Elective Deferral Account within 60 days of such request. In
addition, a Participant may request in writing to the Administrator that
within 60 days of such request up to 100% of the Participant's Vested
Interest in his or her Non-Elective Contribution Account and Matching
Contribution Account be distributed, subject to the following provisions:
(a) Eligibility Requirements: On the date of distribution, the
Non-Elective Contributions and Matching Contributions being
distributed must have accumulated in the Participant's Account for at
least two consecutive Plan Years, or the Participant must have
completed at least 5 Years of Plan Participation. In addition to the
foregoing, the Participant must have reached Age 59 1/2 and must have
a 100% Vested Interest in his or her Participant's Account.
70
(b) Amount And Form Of Distribution: The maximum amount of Non-Elective
Contributions and Matching Contributions distributable under this
Section is the Participant's Vested Interest in his or her
Non-Elective Contribution Account and Matching Contribution Account as
of the Valuation Date which coincides with or immediately precedes the
date of distribution. Distribution will only be made in a lump sum
payment provided the Participant's spouse, if any, consents to the
distribution in accordance with the provisions of Section 5.8.
(c) Restriction On Certain Transferred Assets: Notwithstanding any
provision in this Section to the contrary, no pre-retirement
distribution can be made under this Section with respect to benefits
attributable to assets (including post-transfer earnings thereon) and
liabilities that are transferred, within the meaning of Code
ss.414(l), from a money purchase pension plan qualified under Code
ss.401(a) to this Plan (other than any portion of those assets and
liabilities attributable to Voluntary Employee Contributions).
6. The first Paragraph of Section 7.14 ("LOANS TO PARTICIPANTS") shall be
amended by deleting the entire Paragraph and replacing it with the
following:
7.14 LOANS TO PARTICIPANTS: The Employer, in accordance with a written loan
procedure established by the Employer, may permit loans to be made from the
Trust Fund to Participants and Beneficiaries on a non-discriminatory basis,
however Participants and Beneficiaries shall not have the option to borrow
from any portion of their Participant's Accounts invested in Employer
Stock. If made available, a Participant or Beneficiary may make application
to the Administrator requesting a loan. The Administrator will have the
sole right to approve or disapprove the application provided that loans
will be made available to all Participants on a reasonably equivalent
basis. All loans must be evidenced by a legally enforceable agreement
(which may include more than one document) set forth in writing or in such
other form as may be approved by the Internal Revenue Service, and the
terms of such agreement must specify the amount and term of the loan, and
the repayment schedule. Loans will not be made available to Highly
Compensated Employees in an amount greater than the amount made available
to other Employees, and no loan will be made to a Participant who is an
Owner-Employee or a Shareholder-Employee except to the extent such loan is
treated as a prohibited transaction under Code ss.4975. Subject to the loan
procedure, loans will be made in accordance with the following:
7. The first Paragraph of Section 7.15 ("DIRECTED INVESTMENT ACCOUNTS")
shall be amended by deleting the entire Paragraph and replacing it with the
following:
7.15 DIRECTED INVESTMENT ACCOUNTS: If agreed to by the Trustees and approved by
the Employer, Participants will be given the option to direct the
investment of all or a portion of their Participant's Account (and any
Rollover Contributions and Voluntary Employee Contributions) into a
directed, or segregated investment selected by the Participant; or among
alternative investment funds established as part of the overall Fund,
however Participants shall not have the option to direct the investment of
any portion of their Participant's Accounts invested in Employer Stock.
Such alternative investment funds will be under the full control of the
management of the Trustees. Alternatively, if investments outside the
Trustees' control are allowed, Participants may not direct that investments
be made in collectibles, other than U.S. Government gold and silver coins.
In this connection, a Participant's right to direct the investment of his
or her own Rollover Contributions and Voluntary Employee Contributions will
apply only to the selection of the desired fund. The following rules will
apply to the administration of such funds and to the handling of
Participants' investment directions:
8. In all other respects, except as hereinbefore modified, the said
Retirement Plan is hereby ratified and confirmed, the within amendment to be
effective as of January 1, 2000.
IN WITNESS WHEREOF, FREQUENCY ELECTRONICS, INC., has caused this instrument
to be duly executed as of the 12th day of June, 2000.
FREQUENCY ELECTRONICS, INC.
By_________________________
President
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EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated July 13, 1999 relating to the
financial statements and financial statement schedule of Frequency Electronics,
Inc., which appears in Frequency Electronics, Inc.'s Annual Report on Form 10-K
for the year ended April 30, 1999.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Melville, New York
June 27, 2000
EXHIBIT 24.1
POWER OF ATTORNEY
We, the undersigned, members of the Board of Directors of Frequency
Electronics, Inc. (the "Company"), hereby constitute and appoint Joseph P.
Franklin as our true and lawful attorney-in-fact and agent, with full power to
substitute Martin B. Bloch, on any specific occasion, as attorney-in-fact and
agent for the undersigned. Joseph P. Franklin, as attorney-in-fact and agent may
act for the undersigned, for and in our stead, in any and all capacities, to
sign on our behalf any and all Registration Statements on Form S-8 with respect
to common stock issued or to be issued under the Frequency Electronics, Inc.
401(k) Savings Plan, and to execute any amendments thereto (including
post-effective amendments) or certificates that may be required in connection
with such registration statements, and to file the same, with all exhibits
thereto, and all other documents in connection therewith, with the Securities
and Exchange Commission, with the full power and authority to do and perform
each and every act and thing necessary or advisable to be done in connection
therewith, as fully to all intents and purposes as the undersigned might or
could do in person. The undersigned hereby ratify and confirm all that Joseph P.
Franklin, as attorney-in-fact and agent, or his substitute, may lawfully do or
cause to be done by virtue hereof.
Dated: June ___, 2000
JOEL GIRSKY
/s/ John C. Ho
___________________________
JOHN C. HO
/s/ Marvin Meirs
___________________________
MARVIN MEIRS
/s/ E. Donald Shapiro
___________________________
E. DONALD SHAPIRO
/s/ S. Robert Foley, Jr.
___________________________
S. ROBERT FOLEY, JR.