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TC Res. No. 1998-08RESOLUTION NO. 98-08 SERIES OF 1998 A RESOLUTION ADOPTING AN EMPLOYEES' CAFETERIA PLAN WHEREAS, the Town has full-time, part-time, temporary and seasonal employees rendering valuable services; and WHEREAS, the establishment of a Cafeteria Plan for such employees serves the interests of the Town by enabling it to provide increased flexibility in its personnel management system and by assisting in the attraction and retention of competent personnel; and WHEREAS the Town has determined that the establishment of a Cafeteria Plan to be administered by Intercare Health Plans serves the above objectives; NOW THEREFORE BE IT RESOLVED that the Town of Avon hereby adopts a Cafeteria Plan in the form of the Plan Document, attached hereto as Appendix A. BE IT FURTHER RESOLVED that the Director of Finance shall be the Plan Administrator for this program; shall receive necessary reports, notices, etc. from Intercare Health Plans; administrative duties to carry out the plan may be assigned to. the appropriate departments, and is authorized to execute all necessary agreements with Intercare Health Plans incidental to the:administration of this ,plan. ADOPTED this 10'h day of February, 1998. TOWN OF AVON, COLORADO Jac Fawcett, Mayor . A Pafty Lambert; Town Clerk APPENDIX A CAFETERIA PLAN PLAN DOCUMENT TOWN OF AVON TABLE OF CONTENTS 1. INTRODUCTION I 1.1 PURPOSE OF PLAN. I 1.2 INTENTION OF PLAN. I 2. DEFINITIONS I 2.1 ADMINISTRATOR. I 2.2 ADOPTION AGREEMENT. I 2.3 AFFILIATED EMPLOYER. I 2.4 ANNIVERSARY DATE. I 2.5 BENEFIT CREDITS. I 2.6 BENEFIT OPTIONS. I 2.7 BOARD OF DIRECTORS. I 2.8 CLASS OF EMPLOYEE. I 2.9 CLOSING PERIOD. I 2.10 CODE. I 2.11 COMPANY. I 2.12 COMPENSATION. I 2.13 CONTRIBUTIONS. I 2.14 CORE HEALTH PLANS. I 2.15 DEPENDENT. I 2.16 EFFECTIVE DATE. I 2.17 ELECTION PERIOD. I S E C T I O N 1 2 5 - C A F E T E R I A P L A N DEC 1996, V. 4.0 2.18 ELIGIBILITY REQUIREMENTS. 11 2.19 EMPLOYEE. II 2.20 EMPLOYER. It 2.21 ENTRY DATE. it 2.22 EXCLUDED EMPLOYEE. Id 2.23 HIGHLY COMPENSATED INDIVIDUAL. Id 2.24 INSURANCE BENEFITS. II 2.25 INSURER. II 2.26 KEY EMPLOYEE. II 2.27 MAXIMUM CONTRIBUTION AMOUNT. I.I 2.28 PARTICIPANT. I.I 2.29 PLAN. IS 2.30 PLAN YEAR. is 2.31 POLICY. II 2.32 QUALIFIED BENEFITS. II 2.33 QUALIFYING EVENT. EI 2.34 REIMBURSABLE ExPENSE. s 2.35 SALARY REDUCTION AGREEMF-\T. >S 2.36 SERVICE PERIOD REQUIREMENT. H 2.37 VACATION CONVERSION 11 2.38 VACATION PURCHASE PROGRAM II 3. ELIGIBILITY AND PARTICIPATION 11 3.1 ELIGIBILITY REQUIREMENTS. 11 S E C T I O N 1 2 5 - C A F E T E R I A P L A N DEC 1996, V. 4.0 3.2 PARTICIPATION TERMINATION. III 3.3 LEAVE OF ABSENCE. 3.4 QUALIFIED LEAVE UNDER FAMILY LEAVE ACT. 3.5 REINSTATEMENT OF FORMER PARTICIPANT. III 3.6 EMPLOYEE MUST WAIT UNTIL SUBSEQUENT YEAR. III 3.7 CONTINUATION OF COVERAGE. Ill 4. ELECTION OF BENEFITS III 4.1 ELECTION OF BENEFITS. III 4.2 CONTRIBUTIONS FOR ELECTED QUALIFIED BENEFITS. III 4.3 CONTRIBUTIONS FOR ELECTED CASH BENEFITS. III 4.4 CONTRIBUTION ADJUSTMENTS. III 4.5 ELECTION PROCEDURES FOR RENEWALS. III 4.6 ELECTION PROCEDURES FOR NEW HIRES. III 4.7 FAILURE TO ELECT. III 4.8 NONDISCRIMINATION. III 4.9 CHANGES BY ADMINISTRATORS. III 4.10 REVOCATION OF ELECTIONS. III 4.11 AUTOMATIC TERM [NATION OF ELECTIONS. III 4.12 MAXIMUM EMPLOYER CONTRIBUTIONS. III 5. PLAN BENEFITS III 5.1 CORE HEALTH BENEFITS. III 5.2 NON-CORE SUPPLEMENTAL HEALTH BENEFITS. III 5.3 GROUP TERM LIFE BENEFITS. III S E C T I O N 1 2 5 - C A F E T E R I A P L A N DEC 1996, V. 4.0 5.4 SHORT-TERM DISABILITY BENEFITS. IV 5.5 LONG-TERM DISABILITY BENEFITS. IV 5.6 CASH BENEFITS. IV 5.7 MEDICAL EXPENSE REIMBURSEMENT BENEFIT. IV 5.8 DEPENDENT CARE ASSISTANCE BENEFIT. IV 5.9 VACATION PURCHASE PROGRAMS. IV 5.10 INDIVIDUALLY OWNED MEDICAL INSURANCE BENEFITS. IV 5.11 VISION OR DENTAL EXPENSE REIMBURSEMENT BENEFIT. IV 6. PARTICIPANT BENEFIT ACCOUNTS IV 6.1 PROVISION FOR PARTICIPANT ACCOUNTS. IV 6.2 CREDITING PARTICIPANT ACCOUNTS. IV 6.3 DEBITING PARTICIPANT ACCOUNTS. IV 6.4 NATURE OF PARTICIPANT ACCOUNTS. IV 7. BENEFTf FUNDING AND CREDITS/DEBITS TO ACCOUNTS IV 7.1 SOURCE OF CREDITS TO PARTICIPANT ACCOUNTS. IV 7.2 ALLOCATIONS TO PARTICIPANTS SUB-ACCOUNTS. IV 7.3 ALLOCATIONS IRREVOCABLE DURING PLAN YEAR. IV 7.4 FORFEITURE OF UNUSED ACCOUNT BALANCES. IV 7.5 ADJUST ELECTIONS TO PREVENT DISCRUMINATION. IV 7.6 ADJUST ELECTIONS DUE TO PREMIUM CHANGES. IV 7.7 ADJUST ELECTION DUE TO CERTAIN EVENTS. IV 8. PLAN ADMINISTRATION IV S E C T I O N 1 2 5 - C A F E T E R I A P L A N DEC 1996, V. 4.0 8.1 APPOINTMENT OF ADMINISTRATORS. V 8.2 ALLOCATION OF RESPONSIBILITY FOR ADMINISTRATION. V 8.3 SCOPE OF ADMINISTRATOR. V 8.4 PLAN PUBLICATION AND EXAMINATION OF RECORDS. v 8.5 FUNDING. V 8.6 SOURCE OF PAYMENTS. V 8.7 DISBURSEMENT REPORTS. V 8.8 TIMELINESS OF PAYMENTS. V 8.9 REQUIREMENT THAT PARTICIPANTS SUBSTANTIATE REIMBURSABLE EXPENSES. y 8.10 RECORDS AND REPORTS. y 8.11 LuArr ON COVERAGE. V 8.12 RELIANCE ON TABLES, ETC. V 8.13 NONDISCRIMINATORY EXERCISE OF AUTHORITY. y 8.14 PAYMENT OF ADMINISTRATIVE EXPENSES. y 8.15 INDEMNIFICATION OF ADMINISTRATOR. . V 8.16 OTHER POWERS AND DUTIES OF THE ADMINISTRATORS. v 9. INSURERS V 9.1 PROVISIONS RELATING INSURERS. V 9.2 DEFINITION OF INSURER. V 9.3 CONFLICTING PROVISIONS. V 10. CLAIMS PROCEDURES V 10.1 DENIED CLAIMS PROCEDURE UNDER THE PLAN. V 10.2 REQUIREMENT FOR WRITTEN NOTICE OF CLAIM DENIAL. V S E C T I O N 1 2 5 - C A F E T E R I A P L A N DEC 1996, V. 4.0 10.3 RIGHT TO REQUEST HEARING ON BENEFIT DENIAL. VI 10.4 DISPOSITION OF DISPUTED CLAMIS. VI 10.5 PRESERVATION OF REMEDIES. VI 11. PLAN AMENDMENT AND TERMINATION VI 11.1 PERMANENCY. VI 11.2 EMPLOYERS RIGHT TO AMEND. Vi 11.3 EMPLOYERS RIGHT TO TERMINATE. VI 11.4 DETERMINATION OF EFFECTIVE DATE OF AMENDMENT OR TERMINATION. VI 12. MISCELLANEOUS PROVISIONS VI 12.1 DISCLOSURES. VI 12.2 INFORMATION TO BE FURNISHED- vi 12.3 LIMITATION OF RIGHTS. VI 12.4 NOT AN EMPLOYMENT CONTRACT. vi 12.5 GOVERNING LAW. Vi 12.6 POSTMORTEM PAYMENTS. VI 12.7 NON-ALIENATION OF BENEFITS. VI 12.8 MENTAL OR PHYSICAL INCOMPETENCY. VI 12.9 INABILITY TO LOCATE PAYEE. VI 12.10 REQUIREMENT FOR PROPER FORMS. VI 12.11 SOURCE OF PAYMENTS. VI 12.12 MULTIPLE FUNCTIONS. VI 12.13 TAx EFFECTS. vi 12.14 GENDER, NUMBER AND HEADLNGS. VI S E C T I O N 1 2 5 - C A F E T E R I A P L A N DEC 1996, V. 4.0 12.15 INCORPORATION BY REFERENCE. VII 12.16 SEVERABQ.ITY. VII S E C T I O N 1 2 5 - C A F E T E R I A P L A N DEC 1996, V. 4.0 PAGE 1 Section 125 PLAN DOCUMENT Cafeteria Plan LINTRODUCTION 1.1 Purpose of Plan. The purpose of this Plan (as defined in Section 2.29) is to provide employees of Town of Avon a choice between cash and non-taxable benefits under the benefits referenced herein under Section 4. 1.2 Intention of Plan. The program is intended to qualify as a Cafeteria Plan under Section 125 of the Internal Revenue Code, as amended from time to time. This Plan is intended to be maintained for the exclusive benefit of the Company's common-law employees, their dependents and beneficiaries. The Employer further intends that the terms of this Plan, including those relating to the underlying insurance premium benefits, medical expense reimbursement benefit, and the dependent care expense reimbursement benefit be legally enforceable by employees within the Class of Employee designated in the Plan as eligible for participation. 2.DEFINITIONS The following words and phrases are used in this Plan and will have the meanings set forth unless a different meaning is clearly required by the context. 2.1 Administrator. Employer and/or other person or committee who has been so designated by the Employer in the Adoption Agreement. 2.2 Adoption Agreement. Agreement to be executed by the Employer adopting this Plan and which designates the Employer's options under the Plan. 2.3 Affiliated Employer. Any Employer within the context of Code Section 414(b),(c), or (m) of the Code which will be treated as single employer for purposes of Code Section 125. 2.4 Anniversary Date. The first day of any subsequent Plan Year. SECTION 125 - CAFETERIA PLAN DEC 1996, V. 4.0 PAGE 2 2.5 Benefit Credits. PLAN DOCUMENT Any amount which the Employer in its sole discretion may contribute on behalf of each Employee to provide benefits for such Employee and his/her Dependents, if applicable under the Plan. The amount of Benefit Credits for each Employee is set forth in the attachment to the Adoption Agreement and/or enrollment materials. They may be adjusted upward or downward at the contributing Employer's discretion. The amount shall be calculated for each Plan Year in a uniform and nondiscriminatory manner based on the Employee's dependent status, commencement or termination date of the Employee's employment during the Plan Year, and such other factors as the Employer shall prescribe. The Benefit Credits available may either be limited to purchase of a particular Benefit Plan or Policy, or may be unrestricted as designated in the Adoption Agreement or the enrollment materials. Except as otherwise provided in the Adoption Agreement and enrollment materials, any Benefit Credits will not be disbursed to the Employee if the cost of benefit(s) elected is less than the Benefit Credits allocable thereto. Any excess shall be retained by the Employer. 2.6 Benefit Options. Those benefits or coverages available for election by a Participant under Section 5 below. 2.7 Board of Directors. The duly elected Board of Directors of the Employer, as constituted from time to time. 2.8 Class of Employee. That category of employees eligible to participate before any of the exclusionary factors are considered. 2.9 Closing Period. The number of days after the end of the Plan Year that the Administrator holds the books and records open in order to allow Participants time to submit claims arising from services rendered during the Plan Year while the supporting documents and receipts become available after the end of the Plan Year. The Closing Period is as specified in the Adoption Agreement. 2.10Code. The Internal Revenue Code as amended from time to time. 2.11 Company. The Organization named in the Adoption Agreement as the "Employer." 2.12Compensation. The salary paid to an Employee by the Employer, including: SECTION 125 - CAFETERIA PLAN DEC 1996, N'. 4.0 PAGE 3 PLAN DOCUMENT 0.0.0.1 any elective contribution made to any Flexible Benefit Plan maintained by the Employer as the result of a salary reduction agreement entered into by the Participant under Code Sec. 401(k) (if any), 0.0.0.2 any Employer contributions made to the Plan as the result of a salary reduction agreement pursuant to Section 5 of this Plan, and 0.0.0.3 any Employer contribution to a tax-deferred annuity plan under Section 403(b) of the Code, sponsored by the Employer (if any), as a result of a salary reduction agreement entered into by the Participant for such purpose. 2.13 Contributions. Amounts specified under the Participants' Salary Reduction Agreements. 2.14 Core Health Plans. Core health coverage generally means comprehensive major medical and hospitalization coverage. Dental, vision and cancer are examples of health plans that are typically referred to as "non-core" health plans. 2.15Dependent. A Participant's spouse or any person defined as a Dependent by Section 152 of the Code. 2.16Effective Date. Date specified in the Adoption Agreement on which the Plan is applicable to the Participating Employees. 2.17Election Period. The 30-day period immediately preceding the Effective Date of the Plan. If it is the first time the Plan has been offered, then this period is known as the "Initial Election Period". 2.180igibility Requirements. Those requirements setting forth the minimum conditions necessary to be able to participate in the Plan as set forth in the Adoption Agreement. 2.19Employee. Any individual who is considered to be in a legal employer-employee relationship with the Employer for federal withholding tax purposes. Such term includes "former employees" for the limited purpose of allowing continued eligibility for benefits hereunder for the remainder of the Plan Year in which an employee ceases to be employed by the Employer provided the component Benefit Plan or Policy allows for such continuation and any required contributions are made. The term "Employee" shall not include any leased employee (as that term is defined in Code Section 414(n) or any self-employed individual who SECTION 125 - CAFETERIA PLAN DEC 1996, V. 4.0 PAGE 4 PLAN DOCUMENT receives from the Employer "net earnings from self employment" within the meaning of Code Section 401(c)(2) unless such individual is also an Employee. The term "Employee" shall also not include individuals covered under a collective bargaining agreement unless the collective bargaining agreement specifically provides for participation herein. 2.20Employer. The Company and any Affiliated Employer authorized by the Company that adopts the Plan, provided, however, that when the Plan provides that the Employer has a certain power (e.g., the appointment of a Plan Administrator, entering into a contract with a third party insurer, or amendment or termination of the Plan), the term "Employer" shall mean only the Company. Affiliated Employers who adopt the Plan shall be bound by the Plan as adopted and subsequently amended unless they clearly withdraw from participation herein. 2.21Entry Date. Date the Employee actually commences participation in the Plan after the Eligibility Requirements have been met. This date is set forth in the Adoption Agreement. 2.22Excluded Employee. Those categories of employees excluded from the otherwise eligible classification of employees. 2.23Highly Compensated Individual. As defined in Section 125(e)(2) of the Code, an individual who is described as: (a) an officer; (b) a shareholder owning more than 5 percent of the voting power or value of all classes of stock of the employer, (c) highly compensated, or (d) a spouse or dependent (within the meaning of section 152) of an individual described above in (a), (b), or (c) above. 2.24Insurance Benefits. Employer-sponsored insurance plans, policies, and/or programs within general categories listed and those specifically referenced in Section 5 below. These general categories include but are not limited to: Group Hospital and Health Maintenance Organizations (HMOs); Non-Core Health Plans such as Dental, Vision, and Cancer, Accidental Dismemberment and Disability; Group Term Life; Short-term Disability; Long- term Disability; and Individually Owned Health Plans. 2.25Insurer. Any insurance Company that has issued a Policy in accordance with the terms of this Plan. 2.26 Key Employee. As defined in Section 416(1)(1) of the Code, any Employee who is, at any time during the current Plan Year or any of the four preceding Plan Years: SECTION 125 - CAFETERIA PLAN DEC 1996, V. 4.0 PAGE 5 PLAN DOCUMENT 0.0.0.1 An officer of the Company that earned more than $45,000 (as indexed, $60,000 in 1996); 0.0.0.2 One of ten employees owning the largest interests (greater than V2%) in the Company and having annual compensation from the Company of more than $30,000; 0.0.0.3 A five percent owner of the Company; or 0.0.0.4 A one percent owner of the Company having an annual compensation from the Company of more than S 150,000. 2.27Maximum Contribution Amount. Maximum total amount of Qualified Benefits that any one Participant may elect as specified in the Adoption Agreement. 2.28Participant. Any Eligible Employee participating in the Plan in accordance with Section 3 below. 2.29PIan. This document as set forth herein, together with any and all documents incorporated by reference including amendments and supplements hereto, will be known by the name and number set forth in the Adoption Agreement. 2.30P1an Year. Twelve-month period commencing and ending on the dates indicated in the Adoption Agreement and each anniversary thereof. The first Plan Year will commence on the Effective Date of the Plan and may be for less than twelve months. However a period of less than twelve months may be a Plan Year for the initial or final Plan Years, and a transition period to a different Plan Year. 2.31Policy. Insurance Policy issued pursuant to this Plan. 2.32Qualified Benefits. Any benefit not included in the gross income of the Employee by reason of an express provision of Chapter 1 of the Code (other than Sections 106(b), 117, 124, 127, or 132), including (a) any group-term life insurance coverage that is includible in gross income only by virtue of exceeding the dollar limitation on nontaxable coverage under Code Sec. 79; and (b) any other benefit permitted by the Income Tax Regulations. Long-Term Care insurance shall not be a qualified benefit hereunder. 2.33Qualifying Event. Any of the following is considered a "Qualifying Event" (as defined in Section 4980B(f)(3) of the Code): SECTION 125 - CAFETERIA PLAN DEC 1996, V. 4.0 PAGE 6 0.0.0.1 Death of a Covered Employee; PLAN DOCUMENT 0.0.0.2 Termination (other than by reason of gross misconduct) of the covered employee's employment or reduction of hours of employment below any minimum level of hours required for participation herein; 0.0.0.3 Divorce or legal separation of a Covered Employee from the employee's spouse; 0.0.0.4 Covered Employees becoming entitled to receive Medicare benefits under Title XVIII of the Social Security Act; 0.0.0.5 Dependent child of a covered employee ceasing to be a dependent. 2.34Reimbursable Expense. Any out-of-pocket expense of a Participant that qualifies for reimbursement under either the Unreimbursed Medical Expense Benefit or Dependent Care Assistance Benefit. 2.35Salary Reduction Agreement. Agreement whereby the Eligible Employee participates by electing to reduce and/or deduct from the Employee's compensation so as to receive selected benefits under Section 5 below. 2.36Service Period Requirement. Period of time a newly hired Employee must wait as a probationary period before becoming eligible to participate. 2.37Vacation Conversion An arrangement (if adopted by Employer as set forth in enrollment materials) by which Participants may increase their Flexible Benefit Credit Dollars hereunder by electing fewer vacation days. 2.38Vacation Purchase Program An arrangement (if adopted by Employer as set forth in enrollment materials) by which Participants elect additional vacation days in lieu of taxable compensation. 3.ELIGIBILITY AND PARTICIPATION 3.1 Eligibility Requirements. Except as otherwise provided in the Adoption Agreement, each Employee who has satisfied the Eligibility Requirements is eligible to participate in the Plan on the Employee Entry Date or the Effective Date of the Plan, whichever is later. An Eligible Employee will become a Participant by electing at least one Qualified Benefit each Plan Year under either Section 4.5 or 4.6 below, as applicable. Eligibility for benefits are subject to the additional requirements, if any, specified in the applicable Benefit Plan or SECTION 125 - CAFETERIA PLAN DEC 1996, V. 4.0 PAGE 7 PLAN DOCUMENT Policy. The provisions of this Plan are not intended to override any exclusion, eligibility requirement(s), or waiting period(s) specified in the applicable Benefit Plans or Policies. 3.2 Participation Termination. A Participant will cease to be a Participant as of the earlier of- 0.0.0. 1 The date the Plan terminates, 0.0.0.2 The date the'Participant ceases to be an Eligible Employee under Section 3.1 above (except to the extent provided in Section 3.7 for COBRA continuees). 0.0.0.3 The first day of the subsequent Plan Year if the Participant elects not to participate under Section 4.5 below, 0.0.0.4 The date of Participant's separation from service, or 0.0.0.5 The first day the Participant voluntarily fails to make'the required contributions for the respective benefits. 3.3 Leave of Absence. Subject to any specific limitations for any particular benefit which the Employee has elected: 0.0.0.1 Participation will be continued during a leave of absence for-which the Employee continues to receive a, salary from his/her Employer, and 0.0.0.2 Participation will be suspended during an unpaid leave of absence. 3.4 Qualified Leave under Family Leave Act. Notwithstanding any provision to the contrary in this Plan, if an Employee goes on a qualifying unpaid leave under the Family and Medical Leave Act of 1993 (FMLA), to the extent required by the FMLA, the Employer will continue to maintain the Employee's Health Insurance Plan Benefits on the same terms and conditions as though he were still an active Employee (i.e., the Employer will continue to pay its share of the premium to the extent the Employee opts to continue his coverage). If the Employee opts to continue his coverage, the Employee may pay his share of the premium with after-tax dollars while on leave (or pre-tax dollars to the extent he receives compensation during the leave), or the Employee may be given the option to pre-pay all or a portion of his share of the premium for the expected duration of the leave on a pre-tax salary reduction basis out of his pre-leave Compensation by making a special election to that effect prior to the date such Compensation would normally be made available to him (provided, however, that pre-tax dollars may not be utilized to fund coverage during the next Plan Year), or via other arrangements agreed upon between the Employee and the Administrator (e.g., the Administrator may fund coverage during the leave and withhold amounts upon the Employee's return). Upon return from such leave, the Employee will be permitted to reenter the Plan on the same basis the Employee was participating in the Plan prior to his leave, or as otherwise required by the FMLA. 3.5 Reinstatement of Former Participant. SECTION 125 - CAFETERIA PLAN DEC 1996, V. 4.0 PAGE 8 PLAN DOCUMENT A former Participant may become a Participant again if and when the Eligibility Requirements of Section 3.1 above are met. However, those individuals who ceased to participate because of separation from service or willful failure to make required premium payments (under Sections 3.2(e) and (f) above) can not be reinstated until the subsequent Plan Year as stated in Section 3.6 below. 3.6 Employee Must Wait Until Subsequent Year. If an Eligible Employee fails to comply with the election procedure cited in either Section 4.5 or 4.6 below, as applicable, Employee may become a Participant in any subsequent Plan Year in which Employee continues to be an Eligible Employee, but not before that time. 3.7 Continuation of Coverage. Pursuant to Section 4980B of the Code, any qualified beneficiary (as defined in Section 4980B(g)(1) of the Code), who would lose health coverage under the Plan as a result of a qualifying event (Section 2.33) can elect, within a stated election period, continuation coverage of benefits previously received under the Plan. If a qualified beneficiary timely elects continuation coverage, the health benefits elected will be available outside the Plan for the time period prescribed by law. 4.ELECTION OF BENEFITS 4.1 Election of Benefits. To become a Participant, an Eligible Employee will elect under this Plan to receive one or more of the benefits referenced in Section 5 below, and will sign any applications or agreements as may be required by the Administrators in accordance with the procedure described in Sections 4.5 and 4.6 below. 4.2 Contributions for Elected Qualified Benefits. The Participant will agree to reduce the participant's cash Compensation by such amounts as are necessary to provide for the elected Qualified Benefits. These amounts will then be contributed by the Employer on the Employee's behalf as Employer contributions. 4.3 Contributions for Elected Cash Benefits. The Participant will agree to pay for the Cash Benefits chosen by the Participant through after-tax payroll deductions. 4.4 Contribution Adjustments. If the premium costs for any of the Insurance Benefit Options change during the Plan Year, the Employer will make corresponding adjustments in the payroll reductions and/or deductions in accordance with the Salary Reduction Agreement signed by the Participant. 4.5 Election Procedures for Renewals. SECTION 125 - CAFETERIA PLAN DEC 1996, V. 4.0 PAGE 9 PLAN DOCUMENT Approximately thirty (30) days before the beginning of each Plan Year, the Administrator will supply each Participant and Eligible Employee a Salary Reduction Agreement with which the Eligible Employee can elect to participate or the Participant can terminate participation in the Plan or change Benefit Options. If the Employee chooses to take one of these actions, the Salary Reduction Agreement must be completed and returned to the Administrator on or before such date as the Administrator will specify. This date will be no later than the Anniversary Date. 4.6 Election Procedures for New Hires. Newly hired Employees may complete the Salary Reduction Agreement with the Effective Date as the date on which the Employee has satisfied the Eligibility Requirements. 4.7 Failure to Elect. An Eligible Employee, who is not a current Participant in the Plan and who fails to return a Salary Reduction Agreement to the Administrator on or before the specified due date, will be deemed to have elected to receive his full compensation in cash. An Employee who is currently participating and who fails to return a completed Salary Reduction Agreement to the Administrator changing the Employee's benefit elections on or before the specified due date will be deemed to have made the same election of Benefit Options and mode of contribution in the subsequent Plan Year as was in effect in the current year. The Participant will also be deemed to have agreed to a reduction in his compensation for the subsequent Plan Year equal to the Participant's share of the cost of each such benefit. Notwithstanding the foregoing, annual elections for participation in the Health and/or Dependent Care Reimbursement Plans must be made by submitting a Salary Reduction Agreement electing such benefits during the election period. 4.8 Nondiscrimination. Notwithstanding any provisions of insurance coverage provided for under this Plan and any other provisions of this Plan, this Plan will not discriminate as to eligibility, contributions, or benefits in favor of Highly Compensated Participants or Key Employees as defined in the Code. 4.9 Changes by Administrators. If the Administrator determines, before or during any Plan Year, that the Plan may fail to satisfy any nondiscrimination requirement imposed by the Code or any limitation on benefits provided to Key Employees, the Administrator will take such action as the Administrator deems appropriate, under rules uniformly applicable to similarly situated Participants, to assure compliance with such requirement or limitation. Such action may include, with limitation, a modification of elections by Highly Compensated and/or Key Employees with or without the consent of such Employees. 4.10Revocation of Elections. A Participant may not revoke an election of any Qualified Benefit after the start of the Plan Year or make a new election with respect to the remainder of the Plan Year unless one of the following conditions prevails: SECTION 125 - CAFETERIA PLAN DEC 1996, V. 4.0 PAGE 10 PLAN DOCUMENT 0.0.0.1 Significant Cost Changes to a Employee's Health Plan. If the health insurance benefit provided by an independent third-party Insurer experiences a significant increase in premiums, the participants' individual Contributions will be adjusted as stated in Section 4.4 above. As an alternative, the Participant may choose to revoke the current election and to elect to receive, on a prospective basis, coverage under another health plan with similar coverage. This alternative presumes that the Plan offers another health plan with similar coverages. If no other such health plan is offered, this alternative is not available. 0.0.0.2 Significant Coverage Changes to a Employee's Health Plan. If the coverage under a health plan benefit provided by an independent, third-party Insurer is significantly curtailed or ceases during a period of coverage, all participants may revoke their elections of the health plan and, in lieu thereof, elect to receive prospectively coverage under another health plan with similar coverage. 0.0.0.3 Changes in Family Status. Participants may revoke a benefit election during the Plan Year in order to make a new election for the remaining portion of the Plan Year if the revocation and new election are both based on a change in family status and are consistent with such change in family status. Elections made pursuant to this paragraph must be submitted within 30 days of the date of change in family status and will be effective for the balance of the Plan Year in which the election is made and begin on the first day of the pay period following the date that the Salary Reduction Agreement is properly filed with the Administrator. Changes in family status include: 0.0.0.3.0.0.1 Marriage or divorce of the Employee, 0.0.0.3.0.0.2 Death of the Employee's spouse or Dependent, 0.0.0.3.0.0.3 Birth or adoption of a child by the Employee, 0.0.0.3.0.0.4 Commencement or termination of employment by the Employee's spouse, 0.0.0.3.0.0.5 Changes between part-time and full-time status by the Employee or by the Employee s spouse, 0.0.0.3.0.0.6 Taking of unpaid leave of absence by the Employee or by the Employee's spouse, or 0.0.0.3.0.0.7 Significant change in health coverage of either the Employee or the Employee's spouse that is attributable to the spouse's employment. Benefit election changes are consistent only if the election changes are necessary or appropriate as a result of the family status changes. 4.11 Automatic Termination of Elections. SECTION 125 - CAFETERIA PLAN DEC 1996, V. 4.0 PAGE 11 PLAN DOCUMENT Election made under this Plan (or deemed to be made under Section 4.7 above) will automatically terminate on the day the Participant ceases to be a Participant in the Plan although any coverage provided by the underlying Benefit Plans may continue if and to the extent provided under such Benefit Plans. 4.12Maximum Employer Contributions. The maximum amount of Company Contributions that may be applied for the benefit of any individual Participant hereunder toward the purchase of Qualified Benefits provided herein during any Plan Year will not exceed the amount specified in the Adoption Agreement. S.PLAN BENEFITS Payment will be made to the appropriate Insurer of amounts equal to the premiums otherwise payable by (or on behalf of) the Participant during the Plan Year, for coverage of the Participant or the Participant's spouse or dependents, under insurance programs maintained by the Employer pursuant to this Plan, as set out below. Each Participant will have the right to select that portion of the Participant's available benefit funds to be used to provide such benefit. The maximum benefit under these paragraphs will be the amount of premiums due during the Plan Year or the prorated portion thereof for any short Plan Year. In the event of premium changes or certain other permissible events that become effective during a Plan Year, a Participant's existing election as to a salary reduction will automatically be adjusted to reflect the increases or decreases, as provided in Section 7.5 and 7.6, below. 5.1 Core Health Benefits. If offered under the Adoption Agreement, this benefit provides medical and hospitalization benefits to Participants. The terms, conditions, and limitations of the Core Health Benefits offered will be as specifically described in the Policy or Policies identified in the Adoption Agreement. Contributions for this benefit will be provided by the Employer on behalf of a Participant through the Participant's individual Salary Reduction Agreement. 5.2 Non-Core Supplemental Health Benefits. If offered under the Adoption Agreement, this benefit provides supplemental Health Insurance Plans such as dental, vision, and other medical insurance benefits not generally considered to be Core Health Benefits. The terms, conditions, and limitations of the non-Core Health Benefits offered will be as specifically described in the Policy or Policies identified in the Adoption Agreement. Contributions for this benefit will be provided by the Employer on behalf of a Participant through the Participant's individual Salary Reduction Agreement. 5.3 Group Term Life Benefits. If offered under the Adoption Agreement, this benefit provides group term life insurance benefits to the Participants. The terms, conditions, and limitations of the Group Term Life Benefits offered will be as SECTION 125 - CAFETERIA PLAN DEC 1996, V. 4.0 PAGE 12 PLAN DOCUMENT specifically described in the Policy or Policies identified in the Adoption Agreement. Contributions for this benefit will be provided by the Employer on behalf of a Participant through the Participant's individual Salary Reduction Agreement. 5.4 Short-Term Disability Benefits. If offered under the Adoption Agreement, this benefit provides short-term disability insurance designed to provide income to Participants during short-term periods of absence from employment because of personal injury or sickness. The terms, conditions, and limitations of the Short-Term Disabilities Benefits offered will be as specifically described in the Policy or Policies identified in the Adoption Agreement. Contributions for this benefit will be provided by the Employer on behalf of a Participant through the Participant's individual Salary Reduction Agreement. 5.5 Long-Term Disability Benefits. If offered under the Adoption Agreement, this benefit provides long-term disability insurance designed to provide income to Participants during absence from employment because of permanent and total disability. The terms, conditions, and limitations of the Long-Term Disability Benefits offered will be as specifically described in the Policy or Policies identified in the Adoption Agreement. Contributions for this benefit will be provided by the Employer on behalf of a Participant through the Participant's individual Salary Reduction Agreement. 5.6 Cash Benefits. To the extent that a Participant does not elect to have the maximum amount of his Compensation contributed as a Pre-tax Contribution or After-tax Contribution hereunder, such amount not elected shall be paid to the Participant in the form of normal Compensation payments, provided however, that Flexible Benefit Credit Dollars (other than Vacation Conversion) may not be received in the form of cash compensation unless otherwise provided in the enrollment materials. 5.7 Medical Expense Reimbursement Benefit. This benefit provides payment to the Participant in cash as reimbursement for health-related expenses (medical, dental or vision care) incurred, during the Plan Year for which the Participant's election is effective, by either the Participant or his dependents (as defined in Section 152 of the Code as amended and the regulation thereunder), which: 0.0.0.1 Are not covered, paid or reimbursed from any other source, 0.0.0.2 Meet the tax deductible criteria as a medical expense under Section 213 of the Code, as amended and the regulations thereunder, 0.0.0.3 Have not been taken as a deduction from income on the Participant's Federal income tax return in any tax year, SECTION 125 - CAFETERIA PLAN DEC 1996, V. 4.0 PAGE 13 PLAN DOCUMENT 0.0.0.4 Have been requested through a written claim for benefits with the Plan Administrator which includes substantiation of any such claim, and 0.0.0.5 Are not more than the amount specified for this Benefit in the Participant's Salary Reduction Agreement during any Plan Year (not to exceed the maximum amount specified in the Adoption Agreement) or the prorated portion thereof for any short Plan Year. The terms, conditions, and limitations of the Unreimbursed Medical Expenses Benefit offered are specifically described in a separate written document, whereby the Employer maintains a self-funded Unreimbursed Medical Expense Plan which is incorporated hereinby referenced through the Adoption Agreement. 5.8 Dependent Care Assistance Benefit. This benefit provides payment to the Participant in the form of an Employer-provided amount through, and in accordance with provisions of the Employer's Dependent Care Assistance Plan, established and maintained under Code Section 129. 0.0.0.1 The maximum amount provided under this form of benefit may not exceed the amount specified for this Benefit in the Participant's Salary Reduction Agreement which may not exceed the maximum amounts specified in the Adoption Agreement which may not exceed the maximum amounts allowable under Section 129 of the Code for any Plan Year or the prorated portion thereof for any short Plan Year. 0.0.0.2 To receive benefits under this Section, the Participant must file a written claim for benefits with the Plan Administrator which includes substantiation of any such claim prior to being eligible to receive reimbursement for eligible dependent care expenses under this part. 0.0.0.3 The Plan Administrator will be entitled to rely on any written statements made by the Participant or any of his dependents concerning compliance with Code Sections 21 and 129, and will be under no duty to make investigations of the accuracy of such statements. The terms, conditions, and limitations of the Dependent Care Assistance Benefit offered are specifically described in a separate written document, whereby the Employer maintains a self-funded Dependent Care Assistance Plan which is incorporated herein by reference through the Adoption Agreement. 5.9 Vacation Purchase Programs. To the extent described in the enrollment materials, this benefit shall be made available to Participants. 0.0.0.1 The Vacation Purchase Plan permits Participants to receive paid vacation days in addition to their regular vacation days ("Basic Entitlement") by reducing their taxable compensation. SECTION 125 - CAFETERIA PLAN DEC 1996, V. 4.0 PAGE 14 PLAN DOCUMENT 0.0.0.2 For each Plan Year, each Participant may elect to purchase additional vacation days (up to the maximum described in the enrollment materials). The purchase or purchases shall occur at such time(s) and in such manner as is determined by the Administrator in accordance with a uniform and non-discriminatory procedure. All purchases must be completed prior to enrollment, and no additional purchases will be permitted on account of a Change in Family Status. 0.0.0.3 The actual use and scheduling of purchased vacation days is subject to staffing requirements and the approval of the Participant's supervisor in accordance with applicable personnel practices and procedures of the Employer. Any vacation days purchased will be considered used only after the Participant has completely used his Basic Entitlement. A Participant may not use his purchased vacation days to provide credits by vacation conversion. 0.0.0.4 Vacation Days may be purchased at the Participant's per diem rate of Compensation. The Administrator shall notify the Participant of the cost of purchasing additional vacation days prior to the beginning of each Plan Year, and maintain a record of those costs. 0.0.0.5 The Vacation Purchase Program is not intended to be a separate welfare benefit plan, but is merely a payroll practice. 5.10Individually Owned Medical Insurance Benefits. This benefit class provides for those Individually Owned Health Insurance Policies such as dental, vision, and other medical insurance to be subordinated to and adopted by the employer in order for policies to be incorporated into the plan (under this paragraph) as any other Employer sponsored health benefits (see paragraphs 5.1. and 5.2 above). The terms, conditions, and limitations of these Benefits will be as specifically described in the Policy or Policies identified in memorandum to the Adoption Agreement. Contributions for this benefit class will be provided by the Employer on behalf of a Participant through the Participant's individual Salary Reduction Agreement. 5.11 Vision or Dental Expense Reimbursement Benefit. This benefit provides payment to the Participant in cash as reimbursement for vision or dental care expenses incurred, during the Plan Year for which the Participant's election is effective, by either the Participant or his dependents (as defined in Section 152 of the Code as amended and the regulation thereunder), which: 0.0.0.1 Are not covered, paid or reimbursed from any other source, 0.0.0.2 Meet the tax deductible criteria as a medical (vision or dental) expense under Section 213 of the Code, as amended and the regulations thereunder, SECTION 125 - CAFETERIA PLAN DEC 1996, V. 4.0 PAGE 15 PLAN DOCUMENT 0.0.0.3 Have not been taken as a deduction from income on the Participant's Federal income tax return in any tax year, 0.0.6.4 Have been -r uested through a written claim for benefits with the Plan Administrator which includes substantiation of any such claim, and. 0.0.0.5 Are not more than the amount specified for this Benefit in the Participant's Salary Reduction Agreement during any Plan Year (not to exceed the maximum amount specified in the Adoption Agreement) or the prorated portion thereof for any short Plan Year. The terms, conditions, and limitations of the Vision or Dental Expenses Benefit offered are specifically described in a separate written document, whereby the Employer maintains a self-funded Vision or Dental Expense Plan which is incorporated hereinby referenced through the Adoption Agreement. 6.PARTICIPANT BENEFIT ACCOUNTS 6A Provision for Participant Accounts. The Administrator will maintain a Participant Account for each Participant. The Participant Account will have assigned a different sub-account (hereinafter referred to as "Individual Coverages Accounts") for each of the benefit options elected by the Participant. If the options are for Insurance Benefits, the sub accounts will be debited as insurance premiums are paid and credited as Salary Reductions are withheld. If the options are for either, the Unreimbursed Medical Expenses Benefit, the Individually Owned Health Benefit, or the Dependent Care Assistance Benefit, the sub-accounts will be credited consistent with the pay cycles of the Employer and debited as claims are paid. 6.2 Crediting Participant Accounts. Amounts will be credited to the Participant Account in accordance with Section 7.1 and allocated to the 'Individual Coverage Accounts in accordance with Section 7.2. 6.3 Debiting Participant Accounts. Amounts will be debited in accordance with Section 7. 6.4 Nature of Participant Accounts. No money will actually be allocated to any Participant Account or Individual Coverage Accounts; any, such Account will be of a memorandum nature, maintained by the Plan Service Provider for accounting purposes, and will not be representative of any identifiable trust assets. No interest will be credited to or paid on amounts credited to the Participant Account or any Coverage Accounts. SECTION 125 - CAFETERIA PLAN DEC 1996, V. 4.0 PAGE 16 PLAN Dou %iENT 7.BENEFIT.FUNDING AND CREDITS/DEBITs TO ACCOUNTS 7.1 Source of Credits to Participant Accounts. The cost of coverage under the component Benefit Plans or Policies shall be funded by the Participant Salary Reduction/Deduction, Flexible Benefit Credit Dollars from the Employer, and (if made available by the Employer) Vacation Conversion. The Employer will apply all such amounts, without regard to their source, to pay for the welfare benefits provided herein as soon as administratively feasible and shall comply with all applicable regulations promulgated by the Department of Labor ("D.O.L.") taking into consideration any enforcement procedures adopted by the D.O.L. The component Benefit Plans or Policies; and required contributions thereunder, shall be made known to employees in enrollment materials and set forth on an annual schedule set forth in the enrollment materials. A.0.0:1 The Employer shall withhold from a Participant's Compensation on a Pre=tax or,After-tax basis (as elected by the Employee) an amount equal to the contributions required from the Participant (less any applicable Flexible Benefit Credit Dollars) for coverage of the Participant or the Participant's spouse or dependents. under the Benefit Plans or Policies elected by the Participant under this Plan. Amounts withheld from a Participant's Compensation as Pre-tax Contributions or After-tax contributions shall be applied to fund benefits as soon as administratively feasible. The maximum amount of Pre-tax Contributions plus any Flexible Benefit Credit Dollars made available by the Employer for the benefit of each Plan Participant shall not exceed the aggregate cost of the benefits elected. . . 0.0.0.2 The Employer may, but is not required to, make available Flexible Benefit Credit Dollars on behalf of Participants. The amount of such contributions (if any) is set forth in the enrollment materials. 0.0.0.3 The Employer may, but is not required to, allow- Participants (or certain classes or Participants) to convert elective vacation days to provide additional Flexible Benefit Credit Dollars hereunder. Vacation Conversion (if available) shall be described in and subject to the terms and conditions set forth in the enrollment materials. Contributions provided by Vacation Conversion shall be credited when the converted vacation is considered accrued under the Employer's :Vacation Accrual Policy. Once a vacation day is converted in this manner, it cannot be bought back (even if the Participant experiences a Change in Family Status). 7.2 Allocations to Participants' Sub-Accounts. Amounts credited to a Participant's Account will be allocated, on the date credited, to the'respective Individual -Coverage Accounts of the Participant pursuant to the elections made by the Participant in accordance with Section 5. All payments of benefits amounts under the, Plan will be debited against the appropriate Individual Coverage Account. 7.3 Allocations Irrevocable During Plan Year. SECTION 125 - CAFETERIA PLAN DEC 1996. V. 4.0 PAGE 17 PLAN DOCUMENT Except as provided in Section 4. 10, neither (a) the amounts to be credited to a Participant Account during a Plan Year pursuant to Section 7.1 and 7.2, nor (b) the allocation of such amounts to the appropriated Individual Coverage Accounts of a Participant pursuant to Section 7.2 can be changed during the Plan Year. 7.4 Forfeiture of Unused Account Balances. Any amount allocated to an Individual Coverage Account will be forfeited by the Participant and restored to the Employer if it has not been applied to provide the elected Benefit before the Plan's books are closed following the end of the Plan Year for which the election was effective. The Closing Date for the Plan's books is specified in the Adoption Agreement. 7.5 Adjust Elections to Prevent Discrimination. The Plan Administrator will have the power to reduce or revoke any Employee's Salary Reduction, nontaxable benefits hereunder at any point before or during the Plan Year if such reduction or revocation is necessary to prevent the Plan from becoming discriminatory. 7.6 Adjust Elections due to Premium Changes. The Plan Administrator may automatically increase or decrease the amount of a Participant's Salary Reduction during the Plan Year in response to an appropriate change in the premiums charged by an insurer for any of the insured benefits elected hereunder, commensurate with the time that the insurer has made such premium change effective. Unless the Participant is entitled to a change of election under Section 4.10(c)vii above, the adjusted salary reduction amount will be in effect until the end of the Plan Year coverage period, or earlier change in premiums required by the insurer, or by another insurer providing substituted coverage during the Plan Year. 7.7 Adjust Election due to Certain Events. The Plan Administrator may increase or decrease the Participant's Salary Reduction Agreement for those benefits that anticipate and incorporate automatically, within the permissible limits of Code Section 125, certain events occurring subsequent to this election. For example, but not by way of limitation, certain elections shall be permitted for benefits which are calculated as a percentage of pay. To the extent such elections are made, a Participant's compensation changes during a Plan Year, and coverage under a component Benefit Plan or Policy changes. Participant contribution amounts will automatically be adjusted hereunder as required under the component Benefit Plan or Policy. 8.PLAN ADMINISTRATION 8.1 Appointment of Administrators. SECTION 125 - CAFETERIA PLAN DEC 1996, V. 4.0 PAGE 18 PLAN DOCUMENT The Plan will be administered by the Employer and the Administrator as named in the Adoption Agreement. 8.2 Allocation of Responsibility for Administration. The Administrator will have the sole responsibility for the administration of this Plan as specifically described herein. The designated representatives of the Administrator will have only those specific powers, duties, responsibilities, and obligations set forth under this Plan. 8.3 Scope of Administrator. Any directions given, information furnished, or action taken by the Administrator will be in accordance with the provisions of the Plan authorizing or providing for such direction, information, or action. It is intended under this Plan that the Administrator will be responsible for the proper exercise of such powers, duties, responsibilities, and obligations as assigned under this Plan and will not be responsible for any act or failure to act of any Employee or of the Employer. The Administrator will exercise such authority and responsibility as the Administrator deems necessary to comply with the terms of the Plan pertaining to the Participants' Benefit Accounts and the Benefits payable under the Plan. The Administrator will not have the power to add to, subtract from; or modify any of the terms of the Plan; to change or add any benefits provided by the Plan; or to waive or fail to apply any requirements of eligibility for a benefit under the Plan. Neither the Administrator nor the Employer makes any guarantee to any Participant in any manner for any loss or other event because of the Participant's participation in this Plan. 8.4 Plan Publication and Examination of Records. A summary description of the Plan will be given to all Participants. The Administrator will make available to each Participant any records pertinent to the Plan and the individual Participant for examination at reasonable times during normal business hours. Participant questions concerning the operation of the Plan can be answered either orally or written by the Employer, the Employer's designated representative, or the Agent of Record. 8.5 Funding. The Employer maintains the right to enter into a contract with one or more insurance companies for the purposes of providing any benefits under the Plan and to replace any of such insurance companies or contracts. Any dividends, retroactive rate adjustments or other refunds of any type which may become payable under any such insurance contract will not be assets of the Plan but will be the property of, and be retained by the Employer. 8.6 Source of Payments. The Employer will contribute the amount required to pay benefits for the Participants under this Plan out of the general assets of the Employer to the extent such benefits are not payable from an insurance company contract. SECTION 125 - CAFETERIA PLAN DEC 1996, V. 4.0 PAGE 19 8.7 Disbursement Reports. PLAN DOCUMENT The Plan Administrator will issue directions to the Employer concerning all benefits which are to be paid from the Employees general assets pursuant to the provisions of the Plan. 8.8 Timeliness of Payments. Payments will be made as soon as administratively feasible after the required forms and documentation have been received by the Plan Administrator. 8.9 Requirement that Participants Substantiate Reimbursable Expenses. Each Participant must submit a written claim Voucher to the Plan Administrator to receive reimbursement from the Participant's Medical & Dental Expense Reimbursement Benefit or Dependent Care Assistance Benefit, on a form provided by the Plan Administrator, along with such evidence as the Plan Administrator reasonably deems necessary as to substantiate the nature, the amount, and timeliness of any expenses that may be reimbursed. Such request must be submitted according to the instructions provided by the Employer in order to receive a reimbursement for Reimbursable Expenses in the next following payment processing cycle. Any expenses incurred within the Plan Year for which the election was effective must be submitted on a claim Voucher prior to the end of the Plan's Closing Period (as specified in the Adoption Agreement) in order to be eligible for reimbursement. Likewise, if a Participant terminates participation in the Plan with credit available in any Benefit Coverage Account, such Participant is entitled to submit to the Plan Administrator any claims for reimbursement for Qualified Reimbursable Expenses incurred for: 0.0.0.1 Dependent Care Assistance coverage during the Plan Year in which the Participant ternrninated employment (up to the amount of such credit available) at any time prior to the end of the Plan's Closing Period. 0.0.0.2 Unreimbursed Medical coverage during the period of time that the employee participated in the plan (up to the amount of such credit available) at any time prior to the end of the Plan's Closing Period. If the individual elects Coverage Continuation under COBRA, then participation will continue for the remainder of the Plan Year so long as the individual continues to submit benefit premiums on a timely basis. 0.0.0.3 Individually Owned Health coverage during the period of time that the employee participated in the Plan (up to the amount of such credit available) at any time prior to the end of the Plan's Closing Period. 8.10Records and Reports. The Administrator will also provide the Employer with monthly, quarterly, and/or annual reports. Also, within 270 days following the close of the Plan Year, the Administrator will submit to the Employer a SECTION 125 - CAFETERIA PLAN DEC 1996, V. 4.0 PAGE 20 PLAN DOCUMENT detailed, written report of all financial activities of the Participants' Coverage Accounts for the most recent Plan Year. Upon the expiration of sixty (60) days from the filing of the annual report with the Employer as required by this Section, the Administrator will be forever absolved from responsibility to the Employer for the propriety or accuracy of such report, or the transactions reflected therein, except with respect to acts of commission or omission for which the Employer files a written exception within said sixty (60) day period. 8.11Limit On Coverage. Any coverage elected by a Participant under this Plan will cease if the Participant fails to make any required contributions toward such coverage. 8.12Reliance on Tables, etc. In administering the Plan, the Administrators will be entitled to the extent permitted by law to rely conclusively on all tables, valuations, certificates, opinions, and reports which are furnished by or in accordance with the instructions of the administrators of the underlying benefit plans or by accountants, counsel, or other experts employed or engaged by the Administrators. 8.13Nondiscriminatory Exercise of Authority. Whenever any discretionary action by the Administrator is required in the administration of the Plan, the Administrator will act in a nondiscriminatory manner to insure that all persons similarly situated will receive substantially the same treatment. 8.14Payment of Administrative Expenses. All reasonable expenses incurred in administering the Plan, including but not limited to administrative fees and expenses owing to any Administrator or third party administrative service provider, actuary, consultant, accountant, attorney, specialist, or other person or organization that may be employed by the Plan Administrator in connection with the Administration thereof, will be paid by the Employer, provided, however, that each Participant is to bear the monthly cost (if any) charged by a third party administrator for maintenance of Participant's Benefit Account and/or Coverage Accounts unless otherwise paid by the Employer. 8.15 Indemnification of Administrator. The Company agrees to indemnify and to defend to the fullest extent permitted by law any person serving as an Administrator or as an Employee of the Administrators (including any person who has, but is not presently serving as Administrator or as an Employee of Administrators) against all liabilities, damages, costs, and expenses (including attorneys' fees and amounts paid in settlement of any claims approved by the Company) occasioned by any act or omission to act in connection with the Plan if such act or omission is in good faith. SECTION 125 - CAFETERIA PLAN DEC 1996, V. 4.0 PAGE 21 PLAN DOCUMENT 8.160ther Powers and Duties of the Administrators. The administration of the Plan will be under the supervision of the Administrator. It will be the principal duty of the Administrator to see that the Plan is carried out, in accordance with its terms, for the exclusive benefit of persons entitled to participate in the Plan without discrimination between them. The Administrator will have full power to administer the Plan in all of its details, subject to applicable requirements of law. For this purpose, the Administrator's powers will, include, but will not be limited to, the following authority in addition to all other powers provided by this Plan: 0.0.0.1 To make and enforce such rules and regulations as it deems necessary or proper for the efficient administration of the Plan, including the establishment of any procedures that may be required by applicable provisions of the law; 0.0.0.2 To interpret the Plan, its interpretation thereof in good faith to be final and conclusive on all persons claiming benefits under the Plan; 0.0.0.3 To decide all questions concerning the Plan and the eligibility of any Employee to participate in the Plan; 0.0.0.4 To appoint such agents, counsel, accountants, consultants, and other persons as may be required to assist in the administration of the Plan; and 0.0.0.5 To provide written allocation and delegation of its responsibilities under the Plan and written designation of any other persons who may carry out any of its responsibilities under the Plan. Notwithstanding the foregoing, any claim which arises from any underlying ancillary benefit plans will not be subject to review under this Plan. In no way should the authority of this Plan's Administrator be construed to infringe on the authority of an Ancillary Plan Administrator. 9.INSURERS 9.1 Provisions Relating Insurers. No insurer will be required or permitted to issue an insurance policy or contract that is inconsistent with the purpose of this Plan, nor be bound to take any action not in accordance with the terms' of any policy or contract issued in connection with this Plan. The insurer will not be deemed to be a party to this Agreement, nor will it be bound to interpret the construction or validity of the Plan. The insurer will be protected from its good faith reliance on the written representations and instructions of the Plan Administrator, and not be responsible for the initial or continued qualified status of the Plan. 9.2 Definition of Insurer. SECTION 125 - CAFETERIA PLAN DEC 1996, V. 4.0 PAGE 22 PLAN DOCUMENT "Insurer" means any legal reserve independent third party insurance company authorized.to transact business in the domicile state of the Employer. 9.3 Conflicting Provisions. If any provision of any insurance policy or contract conflicts with the provisions of this Plan, the provisions of the Plan will prevail. 10.CLAIMS PROCEDURES 10.1Denied Claims Procedure Under the Plan. Any Employee, beneficiary, or duly authorized representative may file a claim for a plan benefit to which the claimant believes'that he is entitled, but that has been previously denied by the Plan Administrator. Such a claim must be in writing and delivered to the Plan Administrator in person or by mail, postage paid. Within ninety (90) days after receipt of such claim, the Plan Administrator will send to the claimant, by mail, postage prepaid, notice of the granting or denying, in whole or in part, of such claim, unless special circumstances require an extension of time for processing the claim. In no event may the extension exceed ninety (90) days from the end of the initial period. If such extension is necessary, the claimant will be given a written notice to this effect prior to the expiration of the initial 90-day period. The Plan Administrator will have full discretion to deny or grant a claim in whole or in part. If notice of the denial of a claim is not furnished in accordance with this Section 10.2, the claim will be deemed denied and the claimant will be permitted to exercise Claimant's right to review pursuant to Sections 10.3. and 10.4. 10.2Requirement for Written Notice of Claim Denial. The Plan Administrator will provide to every claimant who is denied a claim for benefits a written notice, setting forth in a manner calculated to be understood by the claimant, the following information: 0.0.0.1 Specific reason or reasons for the denial; 0.0.0.2 Specific reference to pertinent Plan provisions on which the denial is based; 0.0.0:3 Description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material is necessary, and 0.0.0.4 Explanation of the Plan's claim review procedure. 10:3Right to Request Hearing on Benefit Denial. SECTION 125 - CAFETERIA PLAN DEC 1996, V. 4.0 PAGE 23 PLAN DOCUMENT Within sixty (60) days after the receipt by the claimant of written notification of the denial (in whole or in part) of the claim, the claimant or Claimant's duly authorized representative may make a written application to the Plan Administrator, in person or by certified mail, postage prepaid, to be afforded a review of such denial; may review pertinent documents; and may submit issues and comments in writing. 10ADisposition of Disputed Claims. Upon receipt of a request for review, the Plan Administrator will make a prompt decision on the review matter. The decision on such review shall be written in a manner calculated to be understood by the claimant and shall include specific reasons for the decision and specific references to the pertinent plan or insurance policy provision on which the decision was based. The decision upon review will be made not later than sixty (60) days after the Plan Administrator's receipt of a request for a review, unless special circumstance require an extension of time for processing, in which case a decision will be rendered not later than one hundred twenty (120) days after receipt of a request for review. If an extension is necessary, the claimant will be given written notice of the extension prior to the expiration of the initial sixty (60) day period. If notice of the decision on the review is not furnished in accordance with this Section 11.4, the claim will be deemed denied, and the Claimant will be permitted to exercise Claimant's right to legal remedy pursuant to Section 10.5. lOSPreservation of Remedies. After exhaustion of the claims procedure as provided under this Plan, nothing is to prevent any person from pursing any other legal or equitable remedy. 11.PLAN AMENDMENT AND TERIMIINATION 11.1 Permanency. While the Employer fully expects that this Plan will continue indefinitely, permanency of the Plan will be subject to the Employer's right to amend or terminate the Plan, as provided in Sections 11.2 and 11.3 below. 11.2Employer's Right to Amend. The Employer reserves the right to: 0.0.0.1 Amend the Plan at any time and from time-to-time, and retroactively, if deemed necessary or appropriate for any reason whatsoever, 0.0.0.2 Modify or amend in whole; or in part any or all of the provisions of the Plan; provided, however, that, subject to Section 7.4, no such modification or amendment shall make it possible for any Accrued Benefit Account Balance to be used for, or diverted to, SECTION 125 - CAFETERIA PLAN DEC 1996, V. 4.0 PAGE 24 PLAN DOCUMENT purposes other than for the exclusive benefit of the Participants and their beneficiaries under the Plan. . 11.3Employer's Right to Terminate. The Employer reserves the right to discontinue or terminate the Plan without prejudice at any time without prior notice. HADetermination of Effective Date of Amendment or Termination. Any such amendment, discontinuance or termination shall be effective as of such date as the Board of Directors shall determine. Subject to Section 7.4, no amendment discontinuance or termination shall allow the return to any Employer of any Account Balance nor its use for any purpose other than for the exclusive benefit of the Participants and their beneficiaries. 12.MISCELLANEOUS PROVISIONS 12.1 Disclosures. All Participants are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974 (ERISA). ERISA provides that all Plan participants will be entitled to the following: 0.0.0.1 Examine without charge, at Plan Administrator's office or at other specified locations, all Plan documents (including insurance contracts) and copies of all documents filed by the Plan with the United States Department of Labor, such as detailed annual reports and Plan descriptions. 0.0.0.2 Obtain copies of all Plan documents and other Plan information on written request to the Plan Administrator. The Administrator may make reasonable charges for the copies. 12.2Information to be Furnished. As may reasonably be requested from time to time for the purpose of administration of the Plan, participants will sign documents and provide the Company and Administrators with pertinent information and evidence. 12.3Limitation of Rights. Neither the establishment of the Plan nor any amendment thereof nor the payment of any benefits will be construed as giving to any Participant or other person any legal or equitable right against the Company or Administrator except as provided herein. - SECTION 125 - CAFETERIA PLAN DEC 1996, V. 4.0 PAGE 25 PLAN DOCUMENT 12ANot an Employment Contract. Neither this Plan nor any action taken with respect to it confers upon any person the right of employment or continued employment with any Employer. 12.5Governing Law. This Plan will be construed, administered, and enforced according to applicable Federal law and the laws of the state named in the Adoption Agreement. 12APostmortem Payments. Any Benefit payable under the Plan after the death of a Participant will be paid to the surviving spouse (if any), otherwise, to the Participant's estate. If there is doubt as to the right of any beneficiary to receive any amount, the Plan Administrator may retain such amount until the rights thereto are determined, without liability for any interest thereon, or it may pay such amount into any court of appropriate jurisdiction, in either of which events neither the Plan Administrator, nor any Employer, shall be under any further liability to any person. 12.7Non-alienation of Benefits. No benefit under the Plan will be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or charge; and any attempt to do so will be void. 12.8Mental or Physical Incompetency. If the Plan Administrator determines that any person entitled to payments under the Plan is incompetent by reason of physical or mental disability, the Plan Administrator may cause all payments thereafter becoming due to such person to be made to any other person for the Participant's benefit, without responsibility to follow the application of amounts so paid. Payments made pursuant to this Section will completely discharge the Plan Administrator and Employer from further liability hereunder. 12.9Inability to Locate Payee. If the Plan Administrator is unable to make payment to any Participant or other person to whom a payment is due under the Plan because the identity or whereabouts of such Participant or other person cannot be ascertained after reasonable efforts have been made to identify or locate such person (including a notice of the payment so due) mailed to the last known address of each Participant or other person as shown on the records of the Employer), such payment and all subsequent payments otherwise due to such Participant or other person will be forfeited seven (7) years after the date any such payment first became due. 12.10Requirement for Proper Forms. SECTION 125 - CAFETERIA PLAN DEC 1996, V. 4.0 PAGE 26 PLAN DOCUMENT All communications in connection with the Plan made by a Participant will become effective only when duly executed on any forms as may be required and furnished by, and filed with, the Plan Administrator. 12.11Source of Payments. The Employer and any insurance company contracts purchased or held by the Employer will be the sole sources of benefits under the Plan. No Employee or beneficiary will have any right to, or interest in, any assets of the Employer upon termination of employment or otherwise, except as provided from time to time under the Plan, and then only to the extent of the benefits payable under the Plan to such Employee or beneficiary. 12.12Multiple Functions. Any person or group of persons may serve in more than one fiduciary capacity with respect to the Plan. 12.13Tax Effects. Neither the Employer nor the Plan Administrator makes any warranty or other representation as to whether any payments made to or behalf of any Participant hereunder will be treated as excludable from gross income for State or Federal income tax purposes. 12.14Gender, Number and Headings. Masculine pronouns include the feminine as well as the neuter genders, and the singular shall include the plural, unless indicated otherwise by the context. The Section headings contained herein are for convenience of reference only, and are not to be construed as defining or limiting the matter contained thereunder. 12.15Incorporation by Reference. The actual terms and conditions of the separate benefits offered under this Plan are contained in separate, written documents governing each receptive benefit, and will govern in the event of a conflict between the individual plan document and this Agreement as to substantive content. To that end, each such separate document, as amended or subsequently replaced, is hereby incorporated by reference as if fully recited herein. 12.16Severability. Should any part of this Plan subsequently be invalidated by a court of competent jurisdiction, the remainder thereof shall be given effect to the maximum extent possible. SECTION 125 - CAFETERIA PLAN DEC 1996, V. 4.0 I certify that the foregoing is a true and exact copy of EMPLOYEES' CAFETERIA COMPENSATION BENEFITS PLAN of Town of Avon as adopted by the employer on January 1, 1998. By: 4-<Z~ - T-TO Mayor Title. Date: 2/11/98