Exhibit 10.7
DYNEX CAPITAL, INC.
401(K) OVERFLOW PLAN
Nonqualified
Retirement Plan 7.5A
Effective:
July 1, 1997
TABLE OF CONTENTS
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INTRODUCTION
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1
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ARTICLE I FORMAT AND DEFINITIONS
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2
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SECTION
1.01 --FORMAT.
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2
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SECTION
1.02 --DEFINITIONS.
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2
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ARTICLE II PARTICIPATION
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7
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SECTION 2.01 --ACTIVE P A
RTICIPANT.
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7
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SECTION 2.02 --INACTIVE
PARTICIPANT.
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7
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SECTION 2.03 --CESSATION OF
PARTICIPATION.
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7
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ARTICLE III CONTRIBUTIONS
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8
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SECTION 3.01 --SALARY SAVINGS
CONTRIBUTIONS.
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8
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SECTION 3.02 --EMPLOYER
CONTRIBUTIONS.
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8
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SECTION 3.03 --NONFORFEITABILITY OF
CONTRIBUTIONS.
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9
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SECTION
3.04 --ALLOCATION.
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9
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ARTICLE IV INVESTMENT OF CONTRIBUTIONS
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10
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SECTION 4.01 --INVESTMENT OF
CONTRIBUTIONS.
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10
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SECTION 4.01A-- AGREEMENT OF
AGENCY.
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10
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ARTICLE V BENEFITS
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12
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SECTION 5.01 --RETIREMENT
BENEFITS.
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12
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SECTION 5.02 --DEATH
BENEFITS.
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12
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SECTION 5.03 --TERMINATION
BENEFITS.
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12
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SECTION 5.04 --WHEN BENEFITS
START.
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12
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SECTION 5.05 --WITHDRAWAL
PRIVILEGES.
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13
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ARTICLE VI DISTRIBUTION OF BENEFITS
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14
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SECTION 6.01 --AUTOMATIC FORMS OF
DISTRIBUTION.
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14
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SECTION 6.02 --OPTIONAL FORMS OF
DISTRIBUTION.
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14
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SECTION 6.03 --ELECTION
PROCEDURES.
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15
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SECTION 6.04 --NOTICE
REQUIREMENTS.
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17
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ARTICLE VII TERMINATION OF PLAN
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20
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ARTICLE VIII ADMINISTRATION OF PLAN
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21
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SECTION
8.01 --ADMINISTRATION.
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21
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SECTION
8.02 --RECORDS.
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21
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SECTION 8.03 --INFORMATION
AVAILABLE.
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21
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SECTION 8.04 --CLAIM AND APPEAL
PROCEDURES.
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22
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SECTION 8.05 --DELEGATION OF
AUTHORITY.
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22
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ARTICLE IX GENERAL PROVISIONS
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23
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SECTION
9.01 --AMENDMENTS.
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23
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SECTION
9.02 -- MERGERS
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23
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SECTION 9.03 --PROVISIONS RELATING
TO THE INSURER AND OTHER PARTIES.
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24
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SECTION 9.04 --EMPLOYMENT
STATUS.
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24
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SECTION 9.05 --RIGHTS TO PLAN
ASSETS.
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24
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SECTION
9.06 --BENEFICIARY.
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24
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SECTION 9.07 --NONALIENATION OF
BENEFITS.
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25
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SECTION
9.08 --CONSTRUCTION.
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25
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SECTION 9.09 --LEGAL
ACTIONS.
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25
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SECTION 9.10 --SMALL
AMOUNTS.
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26
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SECTION 9.11 --WORD
USAGE.
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26
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PLAN EXECUTION
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INTRODUCTION
The
Employer is establishing a nonqualified, defined contribution
employees’ retirement plan which has been designed as,
and is intended to be, a funded plan for purposes of the
Employee Retirement Income Security Act of 1974, as amended,
and a nonqualified plan under the Internal Revenue Code of
1986, including any later amendments to the
Code. The Employer agrees to operate the plan
according to the terms, provisions and conditions set forth in
this document.
The
purpose of the Plan is to provide a vehicle to overcome the
limitations regarding the contributions which can be made by
or on the behalf of some highly compensated employees to the
Qualified Plan. This Plan, working in combination
with the Qualified Plan, will permit Participants and the
Employer to contribute the full amount of Salary Savings
Contributions and Employer contributions desired without
regard to the limitations of the Qualified Plan.
ARTICLE I
FORMAT AND DEFINITIONS
SECTION
1.01 --
FORMAT.
Words
and phrases defined in the DEFINITIONS SECTION of Article I
shall have that defined meaning when used in this Plan, unless
the context clearly indicates otherwise.
These
words and phrases have an initial capital letter to aid in
identifying them as defined terms.
SECTION
1.02 --
DEFINITIONS.
ACCOUNT
means, for a Participant, his share of the Investment
Fund. Separate accounting records are kept for
those parts of his Account that result from:
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(a)
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Salary
Savings Contributions.
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(b)
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Matching
Contributions.
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(c)
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Excess
Contributions.
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A
Participant’s Account shall be reduced by any
distribution of his Account. A Participant’s
Account will participate in the earnings credited, expenses
charged and any appreciation or depreciation of the Investment
Fund. His Account is subject to any minimum
guarantees applicable under the Group Contract or other
investment arrangement.
ACTIVE
PARTICIPANT means an Eligible Employee who is actively
participating in the Plan according to the provisions in the
ACTIVE PARTICIPANT SECTION of Article II.
ANNUITY
STARTING DATE means, for a Participant, the first day of the
first period for which an amount is payable as an annuity or
any other form.
BENEFICIARY
means the person or persons named by a Participant to receive
any benefits under this Plan upon the Participant’s
death. See the BENEFICIARY SECTION of Article
IX.
CLAIMANT
means any person who has made a claim for benefits under this
Plan. See the CLAIM AND APPEAL PROCEDURES SECTION
of Article VIII.
CODE
means the Internal Revenue Code of 1986, as
amended.
COMPENSATION
means the total earnings paid or made available to an Employee
by the Employer during any specified
period. Compensation shall exclude Employer
Contributions made under this Plan.
“Earnings”
in this definition means an Employee’s W-2
earnings.
Compensation
shall also include employer contributions made pursuant to a
salary reduction agreement which are not includible in the
gross income of the Employee under Code Sections 125,
402(a)(8), 402(h), 403(b) or 457.
CONTINGENT
ANNUITANT means an individual named by the Participant to
receive a lifetime benefit after the Participant’s death
in accordance with a survivorship life annuity.
CONTRIBUTIONS
means
Salary
Savings Contributions
Matching
Contributions
Excess
Contributions
as
set out in Article III, unless the context clearly indicates
otherwise.
ELIGIBLE
EMPLOYEE means any Employee of the Employer as determined from
Plan Year to Plan Year by the Employer, and for whom
contributions to the Qualified Plan are limited by more than
$500 due to the restrictions imposed by the Qualified Plan to
meet qualification requirements of the Internal Revenue
Code.
EMPLOYEE
means an individual who is employed by the
Employer.
EMPLOYER
means Dynex Capital, Inc. or any adopting employer of the
Dynex Capital 401(k) Plan. The Employer will act as
Agent for its Employees participating in this
Plan. See the AGREEMENT OF AGENCY SECTION of
Article IV. This will also include any successor
corporation or firm of the Employer which shall, by written
agreement, assume the obligations of this Plan or any
predecessor corporation or firm of the Employer (absorbed by
the Employer, or of which the Employer was once a part) which
became a predecessor because of a change of name, merger,
purchase of stock or purchase of assets and which maintained
this Plan.
EMPLOYER
CONTRIBUTIONS means
Matching
Contributions
Excess
Contributions
as
set out in Article III, unless the context clearly indicates
otherwise.
ENTRY
DATE means the date an Employee first enters the Plan as an
Active Participant. See the ACTIVE PARTICIPANT
SECTION of Article II.
ERISA
means the Employee Retirement Income Security Act of 1974, as
amended.
EXCESS
CONTRIBUTIONS means excess contributions made by the Employer
to fund this Plan. See the EMPLOYER CONTRIBUTIONS
SECTION of Article III.
FISCAL
YEAR means the Employer’s taxable year. The
last day of the Fiscal Year is December 31.
GROUP
CONTRACT means the group annuity contract or contracts into
which the Employer enters with the Insurer for the investment
of Contributions and the payment of benefits under this
Plan. The term Group Contract as it is used in this
Plan is deemed to include the plural unless the context
clearly indicates otherwise.
INACTIVE
PARTICIPANT means a former Active Participant who has an
Account. See the INACTIVE PARTICIPANT SECTION of
Article II.
INSURER
means Principal Mutual Life Insurance Company and any other
insurance company or companies named by the
Employer.
INVESTMENT
FUND means the total assets held for the purpose of providing
benefits for Participants. These funds result from
Contributions made under the Plan.
INVESTMENT
MANAGER means any fiduciary (other than a trustee or Named
Fiduciary)
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(a)
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who
has the power to manage, acquire, or dispose of any assets of the
Plan; and
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(b)
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who
(1) is registered as an investment adviser under the Investment
Advisers Act of 1940, or (2) is a bank, as defined in the
Investment Advisers Act of 1940, or (3) is an insurance company
qualified to perform services described in subparagraph (a) above
under the laws of more than one state; and
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(c)
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who
has acknowledged in writing being a fiduciary with respect to the
Plan.
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LATE
RETIREMENT DATE means the first day of any month which is
after a Participant’s Normal Retirement Date and on
which retirement benefits begin. If a Participant
continues to work for the Employer after his Normal Retirement
Date, his Late Retirement Date shall be the earliest first day
of the month on or after he ceases to be an
Employee. A later Retirement Date may apply if the
Participant so elects. See the WHEN BENEFITS START
SECTION of Article V.
MATCHING
CONTRIBUTIONS means matching contributions made by the
Employer to fund this Plan. See the EMPLOYER
CONTRIBUTIONS SECTION of Article III.
MONTHLY
DATE means each Yearly Date and the same day of each following
month during the Plan Year beginning on such Yearly
Date.
NAMED
FIDUCIARY means the person or persons who have authority to
control and manage the operation and administration of the
Plan.
The
Named Fiduciary is the Employer.
NORMAL
FORM means a single life annuity with installment
refund.
NORMAL
RETIREMENT AGE means the older of age 60 or his age on the
date five years after the first day of the Plan Year in which
his Entry Date occurred.
NORMAL
RETIREMENT DATE means the first day of the month on or after
the date the Participant reaches his Normal Retirement
Age. Unless otherwise provided in this Plan, a
Participant’s retirement benefits shall begin on a
Participant’s Normal Retirement Date if he has ceased to
be an Employee on such date and has an
Account. Even if the Participant is an Employee on
his Normal Retirement Date, he may choose to have his
retirement benefit begin on such date. See the WHEN
BENEFITS START SECTION of Article V.
PARENTAL
ABSENCE means an Employee’s absence from work which
begins on or after the first Yearly Date after December 31,
1984,
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(a)
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by
reason of pregnancy of the Employee,
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(b)
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by
reason of birth of a child of the Employee,
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(c)
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by
reason of the placement of a child with the Employee in connection
with adoption of such child by such Employee, or
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(d)
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for
purposes of caring for such child for a period beginning
immediately following such birth or placement.
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PARTICIPANT
means either an Active Participant or an Inactive
Participant.
PERIOD
OF SERVICE means a period of time beginning on an
Employee’s Employment Commencement Date or Reemployment
Commencement Date (whichever applies) and ending on his
Severance from Service Date.
PLAN
means the nonqualified retirement plan of the Employer set
forth in this document, including any later amendments to
it.
PLAN
ADMINISTRATOR means the person or persons who administer the
Plan.
The
Plan Administrator is the Employer.
PLAN
YEAR means a period beginning on a Yearly Date and ending on
the day before the next Yearly Date.
QUALIFIED
JOINT AND SURVIVOR FORM means, for a Participant who has a
spouse, a survivorship life annuity with installment refund,
where the survivorship percentage is 50% and the Contingent
Annuitant is the Participant’s spouse. A
former spouse will be treated as the spouse to the extent
provided under a qualified domestic relations order as
described in ERISA Act Section 206(d). If a
Participant does not have a spouse, the Qualified Joint and
Survivor Form means the Normal Form.
The
amount of benefit payable under the Qualified Joint and
Survivor Form shall be the amount of benefit which may be
provided by the Participant’s Account.
QUALIFIED
PLAN means Dynex Capital, Inc. 401(k) Plan.
QUALIFIED
PRERETIREMENT SURVIVOR ANNUITY means a single life annuity
with installment refund payable to the surviving spouse of a
Participant who dies before his Annuity Starting
Date. A former spouse will be treated as the
surviving spouse to the extent provided under a qualified
domestic relations order as described in ERISA Act Section
206(d).
REEMPLOYMENT
COMMENCEMENT DATE means the date an Employee first performs an
Hour-of-Service following a Period of Severance.
REENTRY
DATE means the date a former Active Participant reenters the
Plan. See the ACTIVE PARTICIPANT SECTION of Article
II.
RETIREMENT
DATE means the date a retirement benefit will begin and is a
Participant’s Normal or Late Retirement Date, as the
case may be.
SALARY
SAVINGS CONTRIBUTIONS means salary deferral contributions made
by the Employer to fund this Plan. See the SALARY
SAVINGS CONTRIBUTIONS SECTION of Article III.
SEVERANCE
FROM SERVICE DATE means the earlier of
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(a)
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the
date on which an Employee quits, retires, dies or is discharged,
or
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(b)
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the
first anniversary of the date an Employee begins a one-year absence
from service (with or without pay). This absence may be
the result of any combination of vacation, holiday, sickness,
disability, leave of absence or layoff.
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Solely
to determine whether a one-year Period of Severance has
occurred for eligibility or vesting purposes for an Employee
who is absent from service beyond the first anniversary of the
first day of a Parental Absence, Severance from Service Date
is the second anniversary of the first day of the Parental
Absence. The period between the first and second
anniversaries of the first day of the Parental Absence is not
a Period of Service and is not a Period of
Severance.
YEARLY
DATE means July 1, 1997, and each following January
1.
ARTICLE II
PARTICIPATION
SECTION
2.01 --
ACTIVE
PARTICIPANT.
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(a)
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An
Employee shall first become an Active Participant (begin active
participation in the Plan) on the earliest Monthly Date on which he
is an Eligible Employee.
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The
date is his Entry Date.
If
a person has been an Eligible Employee who has met all the
eligibility requirements stated above,
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(b)
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An
Inactive Participant shall again become an Active Participant
(resume active participation in the Plan) on the date he again
performs an Hour of Service as an Eligible
Employee. This date is his Reentry Date.
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Upon
again becoming an Active Participant, he shall cease to be an
Inactive Participant.
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(c)
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A
former Participant shall again become an Active Participant (resume
active participation in the Plan) on the date he again performs an
Hour of Service as an Eligible Employee. This date is
his Reentry Date.
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There
shall be no duplication of benefits for a Participant under
this Plan because of more than one period as an Active
Participant.
SECTION
2.02 --
INACTIVE
PARTICIPANT.
An
Active Participant shall become an Inactive Participant on the
earlier of the following:
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(a)
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The
date on which he ceases to be an Eligible Employee (on his
Retirement Date if the date he ceases to be an Eligible Employee
occurs within one month of his Retirement Date).
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(b)
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The
effective date of complete termination of the Plan.
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SECTION
2.03 --
CESSATION
OF PARTICIPATION.
A
Participant shall cease to be a Participant on the date he is
no longer an Eligible Employee and the value of his Account is
zero.
ARTICLE III
CONTRIBUTIONS
SECTION
3.01 --
SALARY
SAVINGS CONTRIBUTIONS
Salary
Savings Contributions shall be equal to any percentage of the
Participant’s Compensation for the pay period as elected
by the Participant, and are as described below.
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(a)
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Contributions of amounts refunded or not accepted by the Qualified
Plan due to requirements under Code Sections 401(a)(17), 401(k),
401(m) and 415. Participants may elect to
contribute amounts refunded or not accepted by the Qualified Plan
due to the requirements of Code Sections 401(a)(17), 401(k), 401(m)
and 415 to the Plan by designation on an election form provided by
the Employer.
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(b)
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Contributions in excess of the Qualified Plan specified maximum
deferral percentage . Participants who have
current elections on file to contribute the maximum percentage of
compensation permitted under the Qualified Plan (12% in 1997) may
elect to make Salary Savings Contributions to the Plan by
designation on an election form provided by the
Employer.
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Elections
to start or change Salary Savings Contributions may be
effective on a Participant’s Entry Date (Reentry Date,
if applicable) or any following date. The
Participant may start, make any change or terminate an
election by completing a new election form provided by the
Employer.
SECTION
3.02 --
EMPLOYER
CONTRIBUTIONS
Employer
Contributions for each Plan Year are as described
below:
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(a)
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Matching Contributions . For Participants who are
100% vested under the Qualified Plan, the amount of each Matching
Contribution made by the Employer for a Participant shall be equal
to the amount the Employer would have made under the Qualified Plan
in the absence of limitations imposed by Code Sections 401(a)(17),
401(k), 401(m) and 415, if the Participant had made all
contributions contributed to this Plan to the Qualified Plan,
reduced by the Employer’s matching contributions to the
Qualified Plan.
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For
Participants who are less than 100% vested under the Qualified
Plan, the Matching Contribution to the Plan is determined as
described in the above paragraph, but only to the extent these
contributions would be vested according to the vesting
provisions of the Qualified Plan. Amounts not
initially contributed to the Plan will be contributed by the
Employer to the Plan in subsequent years as the
Participant’s vesting status under the Qualified Plan
increases.
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(b)
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Excess Contributions. For Participants who are
100% vested under the Qualified Plan, the amount of each Excess
Contribution made by the Employer
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for
the Participant shall be equal to the amount the Employer
would have contributed to the Qualified Plan if the limits of
Section 415 and 401(a)(17) of the Code were not operative,
reduced by the Employer’s Discretionary Contributions
(as defined in the Qualified Plan) to the Qualified
Plan.
For
Participants who are less than 100% vested under the Qualified
Plan, the amount of each Excess Contribution made by the
Employer for the Participant is as described in the above
paragraph, but only to the extent these contributions would be
vested according to the vesting provisions of the Qualified
Plan. Amounts not initially contributed to the Plan
will be contributed by the Employer to the Plan in subsequent
years as the Participant’s vesting status under the
Qualified Plan increases.
SECTION
3.03 --
NONFORFEITABILITY
OF CONTRIBUTIONS.
All
Contributions are fully vested and nonforfeitable when
made.
SECTION
3.04 --
ALLOCATION.
The
following Contributions for each Plan Year shall be allocated
to each Participant for whom such Contributions were made
under the SALARY SAVINGS CONTRIBUTIONS and EMPLOYER
CONTRIBUTIONS SECTIONS of Article III.
Salary
Savings Contributions
Matching
Contributions
Excess
Contributions
These
Contributions shall be allocated when made and credited to the
Participant’s Account.
ARTICLE IV
INVESTMENT OF CONTRIBUTIONS
SECTION
4.01 --
INVESTMENT
OF CONTRIBUTIONS.
All
Contributions are forwarded by the Employer to the appropriate
funding arrangement for deposit in the Investment
Fund.
Investment
of Contributions is governed by the provisions of the Plan,
the Group Contract and any other funding arrangement in which
the Investment Fund is or may be invested. To the
extent permitted by the Plan, Group Contract or other funding
arrangement, the Participant shall direct the Contributions to
any of the accounts available under the Plan or Group Contract
and may request the transfer of assets resulting from those
Contributions between such accounts. A Participant
may not direct the Employer to invest the Participant’s
Account in collectibles. To the extent that a
Participant does not direct the investment of his Account,
such Account shall be invested ratably in the accounts
available under the Investment Fund or Group Contract in the
same manner as the undirected Accounts of all other
Participants. The Accounts of all Inactive
Participants may be segregated and invested separately from
the Accounts of all other Participants.
The
Investment Fund shall be valued at current fair market value
as of the last day of the last calendar month ending in the
Plan Year and, at the discretion of the Employer, may be
valued more frequently. The valuation shall take
into consideration investment earnings credited, expenses
charged, payments made and changes in the value of the assets
held in the Investment Fund. The Account of a
Participant shall be credited with its share of the gains and
losses of the Investment Fund. That part of a
Participant’s Account invested in a funding arrangement
which establishes an account or accounts for such Participant
thereunder shall be credited with the gain or loss from such
account or accounts. That part of a
Participant’s Account which is invested in other funding
arrangements shall be credited with a proportionate share of
the gain or loss of such investments. The share
shall be determined by multiplying the gain or loss of the
investment by the ratio of the part of the Participant’s
Account invested in such funding arrangement to the total of
the Investment Fund invested in such funding
arrangement.
At
least annually, the Named Fiduciary shall review all pertinent
Employee information and Plan data in order to establish the
funding policy of the Plan and to determine appropriate
methods of carrying out the Plan’s
objectives. The Named Fiduciary shall inform any
Investment Manager of the Plan’s short-term and
long-term financial needs so the investment policy can be
coordinated with the Plan’s financial
requirements.
SECTION
4.01A--
AGREEMENT OF AGENCY.
The
Employer agrees that it will act as Agent of its employees who
are Participants under this Plan for purposes of entering into
a Group Contract and collecting salary deferral amounts, if
any, and any Employer deposits to the Plan, and transmitting
said amounts to the Insurer for deposit under the Group
Contract.
As
Agent, the Employer has the right to:
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(i)
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agree
to any amendments to such contract, as long as any such amendment
does not adversely affect the amounts accumulated for a Participant
or beneficiary before the effective date of said
amendment;
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(ii)
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terminate
the Group Contract; and
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(iii)
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direct
benefit payments and exercise any other rights, duties and
privileges of the Contractholder.
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The
Insurer may rely on information given by the Agent and on
Contractholder decisions made by the Agent. Nothing
in this agency agreement, however, gives the Agent the right
to direct payments from the Group Contract to other than
Participants or their beneficiaries without the express
consent of the Participant. In no event will the
Agent convert ass
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