Exhibit 10.221
THE SCHWABPLAN
RETIREMENT SAVINGS AND INVESTMENT PLAN
Restated and Amended as of April 1, 2001
THE SCHWABPLAN
RETIREMENT SAVINGS AND INVESTMENT PLAN
Table of Contents
Section Page Number
1 Introduction and Purpose............................. 1
2 Definitions.......................................... 2
3 Participation........................................ 14
3.1 Commencement of Participation.
3.2 Cessation of Participation
3.3 Readmission After Cessation of Participation
3.4 Waiver of Participation
4 Employer Contributions............................... 16
4.1 Elective Contributions
4.2 Employer Contributions
4.3 Allocation of Matching Contributions, Profit
Sharing Contributions and ESOP Contributions
4.4 Timing of Employer Contributions.
4.5 Forfeitures
4.6 Contribution Percentage Test.
4.7 Distribution of Excess Aggregate Contributions
4.8 Aggregate Limit for Contribution Percentage and
Actual Deferral Percentage.
4.9 Profit Sharing Contributions.
5 Salary Reduction Agreements and Rollover Contributions 23
5.1 Salary Reduction Agreements.
5.2 Change or Suspension of Salary Reduction Agreements
5.3 Actual Deferral Percentage Test.
5.4 Amendment or Revocation of Salary Reduction Agreement
by Committee.
5.5 Distribution of Excess Contributions.
5.6 Rollover Contributions.
5.7 Trustee-to-Trustee Transfer of Assets
6 Allocation of Contributions.......................... 29
6.1 Establishment of Cash Contribution Account.
6.2 Establishment of Subaccounts
7 Special ESOP Provisions.............................. 30
7.1 Investment of ESOP Accounts
7.2 Allocation to ESOP Accounts.
7.3 Suspense Subfund for ESOP Accounts
7.4 Disposition of Shares Released from Suspense Subfund.
7.5 Limitations on Allocations to ESOP Accounts
7.6 Acquisition of Shares.
7.7 Effect of Change in Plan Sponsor's Capitalization.
7.8 Trustee and Committee Discretion to Engage in
Transactions in Shares.
7.9 Valuation of ESOP Accounts.
7.10 Role of Purchasing Agent
8 Investment of Contributions, Valuations and Participants' Cash
Contribution Accounts................................ 38
8.1 Delivery of Contributions to Trust Fund
8.2 Participants' Right to Select Investments
8.3 Participant Investment Election
8.4 Change in Investment Election for Future Contributions
8.5 Change in Investment Election for Prior Contributions
8.6 Valuation of Cash Contribution Accounts.
9 Retirement Dates..................................... 40
9.1 Normal Retirement Date
9.2 Deferred Retirement Date.
10 Eligibility for Payment of Accounts and Vested Interests 41
10.1 Participants' Right to Account Upon Termination
Due to Retirement, Death or Disability.
10.2 Participants' Right to Account Upon Other Termination
of Service
10.3 Vesting Schedule for Determining Vested Interests.
10.4 Breaks in Service.
10.5 Participant's Right to Restoration of Account Upon
Return to Service.
10.6 Participant's Right to Account Upon Death After
Termination of Service
10.7 Amendment of Vesting Schedule.
10.8 Distribution Following Attainment of Age 59-1/2
to Former Participants of The Hampton Pension
Services, Inc. 401(k) Retirement Savings Plan
11 Method of Payment of Accounts and Withdrawals........ 45
11.1 Methods of Payment.
11.2 Commencement of Payment
11.3 Special Rules For Distribution of Shares.
11.4 Payments to Surviving Spouse or Beneficiary
11.5 Latest Date for Commencement of Benefits.
11.6 Redirection of Investment of ESOP Account.
11.7 Hardship Withdrawals.
11.8 Direct Rollovers to Another Qualified Plan or IRA.
11.9 Certain Securities Law Restrictions
11.10 Participant Loans.
12 Maximum Amount of Allocation......................... 58
12.1 Section 415 Limitations
12.2 Refund or Forfeiture of Amounts in Excess of
Section 415 Limits.
13 Voting Rights........................................ 61
13.1 Voting and Tender or Exchange of Shares in General.
13.2 Voting of Allocated Shares.
13.3 Mechanics of Voting Allocated Shares
13.4 Voting of Unallocated Shares
13.5 Tender or Exchange of Allocated Shares
13.6 Tender or Exchange of Unallocated Shares.
13.7 Voting of Deceased Participant's Shares
14 Designation of Beneficiaries......................... 65
14.1 Designation of Beneficiary
14.2 Failure to Designate Beneficiary
15 Administration of the Plan........................... 66
15.1 The Committee.
15.2 The Trustee.
15.3 Committee's Responsibility for Entering into
Exempt Loans and Valuation of Shares
15.4 Committee's Power to Engage Outside Experts.
15.5 Composition of Committee.
15.6 Actions of Committee.
15.7 Disbursement of Plan Funds.
15.8 Application for Benefits.
15.9 Denied Claims for Benefits
15.10 Indemnification.
15.11 Agent for Service of Process.
16 Expenses............................................. 71
16.1 Payment of Plan Expenses
16.2 Expenses Attributable to Investment of Plan Assets and Taxes.
17 Employer Participation............................... 72
17.1 Adoption of Plan by Affiliated Employer
17.2 Termination of Participation by Participating Employer
17.3 Effect of Termination of Participation by Participating
Employer.
17.4 Limitations on Transfer of Plan Assets to Successor Plan
17.5 Shares Allocated to Suspense Fund Excluded from Transfer
of Plan Assets to Successor Plan.
18 Amendment or Termination of the Plan................. 75
18.1 Amendment, Suspension or Termination of Plan
18.2 Power to Retroactively Amend, Suspend or Terminate
Plan Provisions
18.3 Notice of Amendment, Suspension or Termination
18.4 Effect of Termination of Plan.
18.5 Partial Termination of Plan
18.6 Trust for Exclusive Benefit of Participant
19 Top-Heavy Plan Requirements.......................... 78
19.1 Top-Heavy Plan - In General
19.2 Effect of Top-Heavy Status
19.3 Top-Heavy Vesting Schedule.
19.4 Definitions.
19.5 Maintenance of Defined Benefit Plan in Addition to Plan.
20 General Limitations and Provisions................... 84
20.1 Exclusive Benefit of Participants and Beneficiaries
20.2 No Rights to Continued Employment
20.3 Trust Sole Source of Benefits.
20.3 Trust Sole Source of Benefits.
20.4 Risk of Decrease in Assets
20.5 Incapacity of Participant or Beneficiary.
20.6 Antialienation; Qualified Domestic Relations Orders
20.7 Inability to Locate Participant or Beneficiary.
20.8 Failure to Receive IRS Approval.
20.9 Contributions Conditioned on Deductibility.
20.10 Mistake of Fact
20.11 Communications with Committee.
20.12 Communications with Participants and Beneficiaries.
20.13 Prior Service Credit
20.14 Gender and Number
20.15 Headings
20.16 Governing Law.
20.17 Severability of Provisions
20.18 Heirs, Assigns and Personal Representatives
20.19 Reliance on Data and Consents.
20.20 Qualified Military Service.
21 Application to Puerto Rico Employees................. 93
21.1 Modifications Applicable to Puerto Rico.
THE SCHWABPLAN
RETIREMENT SAVINGS AND INVESTMENT PLAN
as Amended through June 24, 1999
SECTION 1. INTRODUCTION AND PURPOSE
1.1 The Plan Sponsor established and maintains the Plan to enable each
Participant to benefit, in accordance with the terms of the Plan, from
contributions made by the Employer and from any increases in the value of the
Plan assets through investment of such assets. The Plan is comprised of three
parts: (i) a Section 401(k) plan, (ii) a profit sharing plan and (iii) an
employee stock ownership plan. The purpose of the employee stock ownership plan
portion of the Plan is to align Employees' interests with the interests of
shareholders. It is anticipated that any Employer contributions to the employee
stock ownership plan will be invested primarily or entirely in Shares of The
Charles Schwab Corporation, that the employee stock ownership plan may acquire
such Shares of The Charles Schwab Corporation from time to time with the
proceeds of one or more Exempt Loans, the repayment of which may be secured in
part by a pledge of the Shares of The Charles Schwab Corporation acquired with
those loan proceeds, and that any Employer contributions to the employee stock
ownership plan may be used in full or in substantial part to the payment of
interest on, and retirement of principal of, such Exempt Loans.
This Plan is a restatement of the SchwabPlan Retirement Savings and
Investment Plan, which was initially effective as of October 1, 1983. The
effective date of this restatement is January 1, 2001. The rights of any person
who terminated employment or who retired on or before the effective date of this
restated Plan or any provision hereof, including his or her eligibility for
benefits and the time and form in which benefits, if any, will be paid, shall be
determined solely under the terms of the Plan provisions as in effect on the
date of his or her termination of employment or retirement, unless such person
is thereafter reemployed and again becomes a Participant. The rights of any
other person shall be determined solely under the terms of this restated Plan,
except as may otherwise be required by law.
The Plan and Trust are intended to qualify as a plan and trust which are
qualified and exempt from taxation under Sections 401(a) and 501(a) of the Code.
The Plan is intended to qualify in part as a profit sharing plan (as defined in
Section 401(a)(27) of the Code) and in part as a stock bonus plan and an
employee stock ownership plan (as defined by Section 4975(e)(7) of the Code and
Section 407(d)(6) of the Act) designed to invest primarily in shares of stock of
the Employer which meet the requirements for "qualifying employer securities"
under Section 4975(e)(8) of the Code and Section 407(d)(5) of the Act. All
provisions of the Plan and Trust shall be construed accordingly.
All Trust Fund assets acquired under the Plan as a result of debt incurred
to purchase Shares, Employer contributions, income and other additions to the
Trust Fund shall be administered, distributed, forfeited and otherwise governed
by the provisions of the Plan. It is intended that the Trust associated with the
Plan be exempt from federal income taxation pursuant to the provisions of
Section 501(a) of the Code. Subject to the provisions of Section 16 of the Plan,
the assets of the Plan shall be applied exclusively for the purposes of
providing benefits to Participants and Beneficiaries under the Plan and for
defraying expenses incurred in the administration of the Plan and its
corresponding Trust.
SECTION 2. DEFINITIONS
When used herein the following terms shall have the following meanings:
2.1 "Account" means the account or accounts established and maintained on
behalf of a Participant pursuant to (i) Section 6.1 with respect to the
Participant's Cash Contribution Account and (ii) Section 7.1 with respect to the
Participant's ESOP Account.
2.2 "Act" means the Employee Retirement Income Security Act of 1974, as
now in effect or as hereafter amended.
2.3 "Actual Deferral Percentage" means the average of the ratios
(calculated separately for each Employee) for each Plan Year of (a) the amount
of Elective Contributions and Matching Contributions or Qualified Nonelective
Contributions (if the Committee determines to take such Matching Contributions
or such Qualified Nonelective Contributions into account when calculating Actual
Deferral Percentage) on behalf of each Employee for the relevant Plan Year to
(b) the Employee's compensation (as defined in Treasury Regulation
1.415-2(d)(10) or in such other manner as is prescribed under Section 414(s) of
the Code) while a Participant for the relevant Plan Year.
2.4 "Affiliated Employer" means any corporation which is included in a
controlled group of corporations (within the meaning of Section 414(b) of the
Code) which includes the Plan Sponsor, any trade or business (whether or not
incorporated) which is under common control with the Plan Sponsor (within the
meaning of Section 414(c) of the Code), any organization included in the same
affiliated service group (within the meaning of Section 414(m) of the Code) as
the Plan Sponsor and any other entity required to be aggregated with the Plan
Sponsor pursuant to the Regulations under Section 414(o) of the Code; except
that for purposes of applying the provisions of Sections 12 and 19 with respect
to the limitations on contributions, Section 415(h) of the Code shall apply.
2.5 "Beneficiary" means the beneficiary or beneficiaries designated by a
Participant pursuant to Section 14 to receive the amount, if any, payable under
the Plan upon the death of such Participant.
2.6 "Board of Directors" means the board of directors of Charles Schwab &
Co., Inc.
2.7 "Break in Service" means a Plan Year (or for purposes of determining
membership in the Plan pursuant to Section 3, the Computation Period) during
which an individual has not completed more than 500 Hours of Service, as
determined by the Committee in accordance with the Regulations. A Break in
Service shall be deemed to have commenced on the first day of the Plan Year in
which it occurs. Solely for purposes of determining whether a Break in Service
has occurred, an individual shall be credited with the Hours of Service which
such individual would have completed but for a maternity or paternity absence,
as determined by the Committee in accordance with this Section 2.7 and the Code
and Regulations; provided, however, that the total Hours of Service so credited
shall not exceed 501 Hours of Service and that the individual shall timely
provide the Committee with such information as it shall require. Hours of
Service credited for a maternity or paternity absence shall be credited at eight
Hours of Service per day and shall be credited entirely (i) in the Plan Year or
Computation Period in which the absence began if such Hours of Service are
necessary to prevent a Break in Service in such Plan Year, or (ii) in the
following Plan Year or Computation Period. For purposes of this Section 2.7,
maternity or paternity absence shall mean an absence from work by reason of the
individual's pregnancy, the birth of the individual's child or the placement of
a child with the individual in connection with adoption of the child by such
individual, or for purposes of caring for a child for the period immediately
following such birth or adoption.
2.8 "Cash Contribution Account" means the account or accounts established
and maintained on behalf of a Participant pursuant to Section 6.1 with respect
to the Participant's Elective Contributions, Matching Contributions, Profit
Sharing Contributions, Qualified Nonelective Contributions or Rollover
Contributions.
2.9 "Code" means the Internal Revenue Code of 1986, as now in effect or as
hereafter amended. All citations to sections of the Code are to such sections as
they may from time to time be amended or renumbered.
2.10 "Committee" means the Administrative Committee of the Employer
provided for in Section 15. For purposes of the Act, the Employer shall be the
"named fiduciary" (with respect to the matters for which it is hereby
responsible under the Plan) of the Plan, and the Employer shall be the "plan
administrator" of the Plan within the meaning of Section 3(16)(A) of the Act.
2.11 "Compensation" means a Participant's W-2 compensation related to
services rendered to the Employer, excluding (i) living allowances, (ii) travel
or commuting allowances, (iii) reimbursements for financial planning, (iv)
amounts that are paid as a result of participation in the Employer's Long-Term
Incentive Plan, (v) employee referral awards, (vi) special incentive awards
(other than regular bonus programs), (vii) reimbursements for relocation
expenses, (viii) commissions (other than "dual commissions", commissions based
on trading results that are paid to traders who are also salaried and
commissions where the Participant's only form of remuneration is commissions),
(ix) income items attributable to the taxable portion of employee benefits and
any cash payments made as a result of an Employee's election not to receive
insured benefits pursuant to the Company's Pre-Tax Contribution Plan, (x)
amounts paid as short term disability benefits, (xi) any income items reflecting
grants in aid, (xii) amounts paid to a Participant pursuant to the Charles
Schwab Severance Pay Plan (other than any amounts paid with respect to the
Notice Period, as defined in Section 2(K) of such plan), and (xiii) compensation
in excess of $150,000 (adjusted for cost of living to the extent permitted by
Section 401(a)(17) of the Code and Regulations). For purposes of determining the
whole percentage of Compensation for which a Participant may make a Salary
Reduction Agreement, and not for any other purposes, subparagraph (ix) hereof
shall be disregarded. Compensation shall be determined prior to reduction for
(i) any contributions pursuant to such Participant's election under Section 5.1,
(ii) any contributions made by an Employer on behalf of the Participant in the
Plan Year pursuant to a Participant salary reduction election that are not
includable in the Participant's income under Section 125 of the Code, and (iii)
any contributions made by an Employer on behalf of the Participant in the Plan
Year pursuant to a Participant salary reduction election that are not includable
in the Participant's income under Section 132(a)(5) of the Code.
2.12 "Computation Period" means a 12 consecutive month period beginning on
the day an individual first performs an Hour of Service or first performs an
Hour of Service following a Break in Service. Thereafter, the Computation Period
shall be the Plan Year, commencing with the Plan Year that includes the day
immediately following the last day of the Computation Period determined pursuant
to the first sentence hereof.
2.13 "Contribution Percentage" means the average of the ratios (calculated
separately for each Participant for each Plan Year) of (a)(i) Matching
Contributions, if any, made by the Employer on behalf of a Participant and (ii)
Elective Contributions, (if the Committee elects to take into account Elective
Contributions when calculating the Contribution Percentage) to (b) the
Employee's compensation (as defined in Section 1.415-2(d)(10) of the Regulations
or in such other manner as is prescribed under Section 414(s) of the Code) while
a Participant for the relevant Plan Year.
2.14 "Deferred Retirement Date" shall have the meaning set forth in Section
9.2.
2.15 "Disability" means the inability to engage in any substantial gainful
activity considering the Participant's age, education and work experience by
reason of any medically determined physical or mental impairment that has
continued without interruption for a period of at least six months and that can
be expected to be of long, continued and indefinite duration. The determination
of the Committee as to whether a Participant has a Disability shall be final,
binding and conclusive.
2.16 "Effective Date" means October 1, 1983.
2.17 "Elective Contributions" means contributions made to the Trust Fund
pursuant to a Participant's Salary Reduction Agreement entered into pursuant to
Section 5.1, and which are considered tax deferred under Section 401(k) of the
Code.
2.18 "Elective Contribution Subaccount" means the account established and
maintained on behalf of a Participant pursuant to Section 6.2(a) with respect to
his or her Elective Contributions and Qualified Nonelective Contributions.
2.19 "Employee" means any "regular employee" of the Employer who is paid
through United States payroll and for whom the Employer is required to withhold
United States Federal employment taxes excluding (i) any person covered by any
other pension, profit sharing or retirement plan to which any Employer or
Affiliated Employer is required to contribute either directly or indirectly,
(ii) any nonresident alien individual who received no earned income (within the
meaning of Section 911(d)(2)) from the Employer which constitutes income from
sources within the United States, (iii) any employee who is included in a unit
of employees covered by a negotiated collective bargaining agreement which does
not provide for his or her membership in the Plan, (iv) any individual who
provides services to the Employer pursuant to an independent contractor
agreement, irrespective of whether such individual is subsequently retroactively
reclassified as a common law employee for periods during which the Employer
originally classified such individual as an independent contractor, and (v) any
individual who provides services to the Employer pursuant to an agreement
between the Employer and a temporary agency or other leasing organization. A
director of the Employer is not eligible for membership in the Plan unless such
director is also an Employee. A leased employee (within the meaning of Section
414(n) of the Code) is not eligible for membership in the Plan unless the
Employer designates such individual as eligible for membership in the Plan.
2.20 "Employer" means Charles Schwab & Co., Inc. and any Participating
Employer which adopts this Plan subject to the approval of the Board of
Directors.
2.21 "ESOP Account" means the account established and maintained on behalf
of a Participant pursuant to Section 7.1 with respect to his or her ESOP
Contributions.
2.22 "ESOP Contributions" means the Employer contributions, if any, made to
the Plan on behalf of a Participant pursuant to Section 4.2(c).
2.23 "Entry Date" means the first day of each calendar month.
2.24 "Exempt Loan" means any loan to the Plan or Trust not prohibited by
Section 4975(c) of the Code and Section 406 of the Act because the loan meets
the requirements set forth in Section 4975(d)(3) of the Code, Section 408(b)(3)
of the Act and the Regulations promulgated thereunder, the proceeds of which
loan are used within a reasonable time after receipt by the Trust Fund only for
any or all of the following purposes: (a) to acquire Shares; (b) to repay the
same Exempt Loan; or (c) to repay any previous Exempt Loan.
2.25 "Highly Compensated Participant" means any Participant who, during the
relevant period, is treated as a highly compensated employee under Section
414(q) of the Code. For purposes of determining which Employee is a Highly
Compensated Participant, the look-back determination shall be made on the basis
of the calendar year. The Plan shall comply with the procedures of Treasury
Regulation 1.401(k)-1(f) to the extent applicable. For purposes of determining
which Employee is a Highly Compensated Participant:
(a) Highly Compensated Participant means a Participant who performs
Services during the determination year and is described in one or more of the
following groups:
(1) An Employee who is a five percent (5%) owner, as defined in
Section 416(i)(1) of the Code, at any time during the determination year or the
look-back year.
(2) An Employee who: (a) had compensation from the Employer
in excess of $80,000 (indexed as referenced in Section 414(q)(1) of the Code)
during the look-back year and (b) if the Employer elects the application of this
Subsection 2.25(A)(2) for such look-back year, such Employee was in the
"top-paid group" for the look-back year.
(b) For purposes of this Section:
(1) The determination year is the Plan Year for which the
determination of who is a Highly Compensated Participant is being made.
(2) The look-back year is the calendar year ending with or
within the determination year.
(3) The "top-paid group" consists of the top twenty percent
(20%) of Employees ranked on the basis of compensation received during the
look-back year. For purposes of determining the number of Employees in the
top-paid group, Employees described in Section 414(q)(5) of the Code and the
Regulations promulgated thereunder are excluded.
(4) For purposes of this Section 2.25, the term "compensation"
means compensation as defined in Section 414(q)(4) of the Code.
(5) Employers aggregated under Section 414(b), (c), (m), or
(o) of the Code are treated as a single employer.
(6) Highly Compensated Participants include a former Employee
who had a separation year prior to the determination year and who was a Highly
Compensated Participant for either (A) the determination year in which the
Employee separated from Service or (B) any determination year ending on or after
the Employee's 55th birthday. With respect to an Employee who separated from
Service before January 1, 1987, an Employee will be included as a Highly
Compensated Participant only if the Employee was a five percent (5%) owner or
received Compensation in excess of $50,000 during (1) the determination year in
which the Employee separated from Service (or the year preceding such separation
year) or (2) any year ending on or after such Employee's 55th birthday (or the
last year ending before such Employee's 55th birthday).
2.26 "Hours of Service" means hours during the applicable Computation
Period in which an individual performs Service or is treated as performing
Service and, except in the case of military service or as otherwise determined
by the Committee, for which the Participant is directly or indirectly entitled
to payment. Hours of Service shall be credited for the applicable period in
which such Hours of Service accrue in accordance with Labor Department
Regulation 29 CFR ss. 2530.200b-2(c), which regulation is incorporated herein by
reference; provided that Hours of Service for reasons other than the performance
of duties shall be credited in accordance with Labor Department Regulation 29
CFR ss. 2530.200b-2(b), which regulation is incorporated herein by reference.
The term "Service" includes performance of duties (or periods which
are treated as the performance of duties) for the Employer or for any Affiliated
Employer (under rules determined by the Committee, uniformly applicable to all
individuals similarly situated and in accordance with the Regulations) for which
an individual is entitled to receive credit for "Service", including (i)
vacation, (ii) holiday, (iii) absence authorized by the Employer for sickness or
incapacity (including disability or leave of absence), (iv) layoff, (v) jury
duty, (vi) if and to the extent required by the Military Selective Service Act,
as amended or any other federal law, service in the Armed Forces of the United
States and (vii) an approved leave of absence granted by the Employer to an
individual on or after August 5, 1993 pursuant to the Family Medical Leave Act,
but only if such individual returns to work for the Employer at the end of such
approved leave. Service also includes periods of time for which back pay,
irrespective of mitigation of damages, is awarded or agreed to by the Employer
or any Affiliated Employer; provided that such award or agreement is not already
credited as Service under either of the preceding two sentences. Service shall
also include (i) Service with any entity formed under the laws of a foreign
jurisdiction if such entity would have constituted an Affiliated Employer had
such entity been formed under the laws of the United States, and (ii) any period
of a Participant's prior employment with any other organization upon such terms
and conditions as the Committee may approve and subject to any required IRS
approval. Notwithstanding the foregoing, (i) Hours of Service credited with
respect to an individual's service with BankAmerica Corporation or a related
corporation between January 11, 1983 and March 31, 1987 shall be considered
Service only if such individual was employed by the Employer prior to November
24, 1993, (ii) Hours of Service credited with respect to an individual's service
with BankAmerica Corporation or a related corporation prior to January 11, 1983
shall be considered Service, but only if such individual was employed by the
Employer prior to April 1, 1987, (iii) Hours of Service credited with respect to
service with Mayer & Schweitzer, Inc. prior to July 1, 1991 shall be considered
Service, and (iv) Service shall include service with The Rose Company prior to
April 1, 1989, with Performance Technologies, Inc. prior to August 31, 1994,
with TrustMark, Inc. prior to July 31, 1995, with Hampton Pension Services, Inc.
prior to November 6, 1995, with CyBerCorp., Inc. prior to March 1, 2000, with
U.S. Trust Corporation and its affiliates prior to May 31, 2000, with Chicago
Investment Analytics, Inc. prior to November 14, 2000, and, in the case of any
other companies that become affiliated with the Company, such service as may be
determined by the Committee from time to time.
2.27 "IRS" means the United States Internal Revenue Service.
2.28 "Labor Department" means the United States Department of Labor.
2.29 "Matching Contribution" means any Employer contribution, if any, made
to the Plan on behalf of a Participant pursuant to Section 4.2(a).
2.30 "Matching Contribution Subaccount" means the account established and
maintained on behalf of a Participant pursuant to Section 6.2(b) with respect to
the Participant's Matching Contributions.
2.31 "Non-Participating Affiliate" means an Affiliated Employer that is not
a Participating Employer.
2.32 "Normal Retirement Date" shall have the meaning set forth in Section
9.1.
2.33 "Participant" means any Employee who has satisfied the eligibility
requirements of Section 3 below.
2.34 "Participating Employer" means Charles Schwab & Co., Inc. or any other
Affiliated Employer, the board of directors or equivalent governing body of
which shall adopt the Plan and Trust Agreement by appropriate action with the
written consent of the Board of Directors. By its adoption of this Plan, a
Participating Employer shall be deemed to appoint Charles Schwab & Co., Inc.,
the Committee and the Trustee its exclusive agent to exercise on its behalf all
of the power and authority conferred by this Plan upon the Employer. The
authority of Charles Schwab & Co., Inc., the Committee and the Trustee to act as
such agent shall continue until the Plan is terminated as to the Participating
Employer and the relevant Trust Fund assets have been distributed by the Trustee
as provided in Section 17 of this Plan.
2.35 "Plan" means this SchwabPlan Retirement Savings and Investment Plan
as the same is stated herein and as it may be amended from time to time.
2.36 "Plan Sponsor" means The Charles Schwab Corporation.
2.37 "Plan Year" means the calendar year.
2.38 "Profit Sharing Contribution" means the Employer contribution, if any,
made to the Plan on behalf of a Participant pursuant to Section 4.2(b)(ii).
2.39 " Profit Sharing Subaccount " means the account established and
maintained on behalf of a Participant pursuant to Section 6.2(c) with respect to
the Participant's Profit Sharing Contributions.
2.40 "Purchasing Agent" means the agent designated by the Trustee to enter
into certain transactions with respect to Shares hereunder.
2.41 "Qualified Nonelective Contribution" means the Employer contribution,
if any, made to the Plan on behalf of a Participant pursuant to Section 4.2(b)
(i).
2.42 "Regulations" means the applicable regulations issued under the Code
or the Act by the IRS, the Labor Department or any other governmental authority
and any temporary rules or releases promulgated by such authorities pending the
issuance of such regulations.
2.43 "Restated Effective Date" shall mean January 1, 2001.
2.44 " Retirement Date " means the Participant's Normal or Deferred
Retirement Date which has become effective pursuant to Section 9 below.
2.45 "Rollover Subaccount" means the account established and maintained on
behalf of a Participant pursuant to Section 6.2(d) with respect to the
Participant's Rollover Contributions.
2.46 "Rollover Contribution" means any contribution made by an Employee
pursuant to Section 5.6.
2.47 "Salary Reduction Agreement" means an agreement between a Participant
and the Employer entered into pursuant to Section 5.1.
2.48 "Shares" means (i) with respect to Plan assets acquired with the
proceeds of an Exempt Loan, the common stock issued by The Charles Schwab
Corporation or any successor corporation thereto meeting the requirements of
both Section 4975(e)(8) of the Code and Section 407(d)(5) of the Act for
"qualifying employer securities," and (ii) with respect to Plan assets other
than those acquired with the proceeds of an Exempt Loan, stock issued by The
Charles Schwab Corporation or any successor corporation thereto, of any type,
kind or class meeting the requirements of Section 407(d)(5) of the Act for
"qualifying employer securities". All valuations of Shares, where such Shares
are not readily tradable on an established securities market and where such
valuations relate to activities carried on by the Plan, shall be made by one or
more independent appraisers retained by the Committee, who meet the
requirements, if any, of the Code and Regulations. To the extent and in the
manner required by the Code and Regulations, all independent appraisers, if any,
making appraisals pursuant to the foregoing sentence shall be registered with
the IRS.
2.49 "Surviving Spouse" means the survivor of a Participant to whom such
Participant was legally married on the date of the Participant's death.
2.50 "Suspense Subfund" means the subfund established under Section 7.3.
2.51 " Taxable Compensation " means the W-2 compensation paid to an
individual for Service during any period under consideration.
2.52 "Taxable Year" means the calendar year.
2.53 "Total Break in Service" means a period of five or more consecutive
Computation Periods in which a Participant incurs a Break in Service, with
respect to a Participant who did not have a nonforfeitable right to any portion
of his or her Profit Sharing Subaccount or ESOP Account prior to the beginning
of the first such Computation Period.
2.54 "Trustee" means the Trustee selected by the Employer to hold the funds
contributed by the Employer to provide benefits under the Plan or any successor
or substitute.
2.55 " Trust Agreement " means the SchwabPlan Retirement Savings and
Investment Plan Trust Agreement, as it may from time to time be amended, and
such additional and successor trust agreements as may be executed.
2.56 "Trust Fund" means the funds held by the Trustee from which payments
to the Trustee are made to provide benefits under the Plan.
2.57 "Valuation Date" means the last day of each Plan Year or such interim
periods as the Committee may designate from time to time.
2.58 "Vested Interest" means the portion of a Participant's Account which
has become nonforfeitable pursuant to Section 10.3 below.
2.59 "Year of Service " means a Computation Period during which an
individual completed at least 1,000 Hours of Service or satisfied any
alternative requirement, as determined by the Committee from time to time in
accordance with the Regulations.
SECTION 3. PARTICIPATION
3.1 Commencement of Participation.
(a) An Employee who is a Participant as of the date immediately
preceding the Restated Effective Date shall continue to be a Participant of the
Plan as of the Restated Effective Date.
(b) An Employee who is not a Participant on the Restated Effective
Date and who (A) is in Service on the Restated Effective Date or (B) commences
Service on or after the Restated Effective Date shall be eligible to become a
Participant of the Plan on the first day of the fourth calendar month following
his or her commencement of Service (or, in the case of an Employee whose service
commences on the first day of a month, the first day of the third calendar month
following his or her commencement of Service), provided that the Employee
completes at least one Hour of Service in each such month.
(c) An Employee who is eligible to become a Participant, but declines
to participate in the Plan, may become a Participant at any time, as soon as
administratively feasible following a request to participate.
(d) An Employee who satisfies the requirements of Section 3.1(b)(ii)
for participation but who terminates Service prior to becoming a Participant in
the Plan and subsequently becomes an Employee again prior to incurring a Break
in Service will become a Participant in the Plan for all purposes as of the
first day on which such individual again becomes an Employee.
3.2 Cessation of Participation. A Participant shall cease to be a
Participant upon the earliest to occur of (i) the Participant's retirement on
his or her Retirement Date, (ii) the Participant's death or Disability or (iii)
the Participant's termination of Service prior to his or her Retirement Date
followed by a Break in Service. A Participant who, without any Break in Service,
ceases to be an Employee for any reason, shall not cease to be a Participant,
provided that, notwithstanding any other provision of the Plan, and except as
provided in Section 4.3, no contribution shall be made for the benefit of such
Participant, no contributions under the Plan shall be allocated, added or
otherwise credited to the Account of such Participant, and no contributions,
forfeitures or Shares released from a Suspense Subfund shall be allocated, added
or otherwise credited to the Account of such Participant on or after the date on
which such Participant ceases to be an Employee and before the first day of the
Plan Year coincident with or preceding the date, if any, on which such
Participant again resumes Service as an Employee.
3.3 Readmission After Cessation of Participation. A Participant who has
incurred a Total Break in Service and subsequently returns to Service shall be
treated as a new Employee for all purposes of the Plan. In all other cases, a
former Participant who returns to Service following a Break in Service shall
again become a Participant as soon as administratively feasible following such
former Participant's return to Service, except that if such former Participant
is not then an Employee, such former Participant shall again become a
Participant as soon as administratively feasible following the first day on
which such former Participant again becomes an Employee.
3.4 Waiver of Participation. An individual who has satisfied the
requirements for participation set forth in Section 3.1 may permanently waive
participation in the Plan, but only if such individual is on temporary transfer
of employment to a Participating Employer from a Non-Participating Affiliate.
SECTION 4. EMPLOYER CONTRIBUTIONS
4.1 Elective Contributions. The Employer shall, subject to the limitations
of Sections 5 and 12, contribute to the Trust Fund for each Plan Year on behalf
of all Participants the total amount of Elective Contributions designated to be
contributed pursuant to Salary Reduction Agreements under Section 5.1. Such
contributions shall be paid in cash by the Employer to the Trustee as soon as
practicable, but in no event later than 15 days from the date on which such
amounts otherwise would have been payable to the Participant in cash.
4.2 Employer Contributions.
(a) Subject to the limitations of Section 12, the Employer shall
contribute Matching Contributions to the Trust Fund on behalf of all
Participants for whom Elective Contributions have been made equal to a
percentage of such Elective Contributions made for each such Participant. The
percentage (and, if desired, a maximum dollar amount) of Matching Contributions
shall be determined from time to time by the Board of Directors and communicated
to the Participants.
(b) Subject to the limitations of Section 12, for any Plan Year, the
Board of Directors may designate (i) a percentage of the aggregate Compensation
of all Participants or a fixed dollar amount to be contributed to the Plan as
Qualified Nonelective Contributions on behalf of certain Participants who are
not Highly Compensated Participants and may designate (ii) a percentage of the
aggregate Compensation of all Participants or a fixed dollar amount to be
contributed to the Plan as Profit Sharing Contributions on behalf of all
Employees who are or would be Participants but for their election not to make
Elective Contributions.
(c) Subject to the limitations of Section 12, and the provisions of
any applicable loan or contribution agreement, the Employer shall contribute to
the Trust Fund for each Plan Year as ESOP Contributions such sum as the Board of
Directors may, in its sole discretion, determine, which sum may be zero. All or
any part of the contributions made under this Section 4.2(c) may be applied to
repay any outstanding Exempt Loan. The Committee may, subject to any pledge or
similar agreement, direct or determine the proportions of such contributions
which are applied to repay each such Exempt Loan and, with respect to any
particular Exempt Loan, the proportion of such contribution to be applied to
repay principal and interest on such Exempt Loan.
4.3 Allocation of Matching Contributions, Profit Sharing Contributions and
ESOP Contributions. Matching Contributions shall only be allocated to those
Participants employed by the Employer on the last day of the Plan Year. Profit
Sharing Contributions and ESOP Contributions shall only be allocated to
Participants who are members of the Allocation Group for the Plan Year. For
purposes of Sections 4 and 7, the term "Allocation Group" means the group
consisting of (i) each Participant who is employed by the Employer as of the
last day of the Plan Year, and (ii) each Participant whose employment with the
Employer terminated during the Plan Year by reason of Disability, death or
retirement on or after the Participant's Retirement Date. Profit Sharing
Contributions and ESOP Contributions shall be allocated among the Accounts of
Participants who are members of the Allocation Group for the Plan Year in the
same proportion that a Participant's Compensation during the Plan Year bears to
the total Compensation during the Plan Year of all Participants who are members
of the Allocation Group for such Plan Year. For purposes of the preceding
sentence, Compensation earned by a Participant prior to the Participant's entry
into the Plan pursuant to Section 3.1(b)(ii) shall not be taken into account.
For purposes of this Section, a Participant who transfers employment during a
Plan Year from a Participating Employer to a Non-Participating Affiliate will be
considered employed by the Employer as of the last day of the Plan Year, but
such Participant's Compensation shall not include amounts paid by the
Non-Participating Affiliate. For purposes of becoming entitled to share in
Matching Contributions, Profit Sharing Contributions and/or ESOP Contributions
pursuant to this Section 4.3, a Participant who becomes entitled to payments
pursuant to the Charles Schwab Severance Pay Plan shall not be treated as
employed by the Employer on the last day of a Plan Year unless the last day of
the Participant's Notice Period (as defined in Section 2(K) of such plan) occurs
on or after the last day of the Plan Year.
Notwithstanding the foregoing, and subject to compliance with applicable
law, including the regulations issued pursuant to Code Section 401(a)(4), at the
election of the Board of Directors, a contribution may be made solely on behalf
of the employees of one or more Employers, to be allocated in accordance with
this section but solely among those Participants who are employees of such
Employer[s].
4.4 Timing of Employer Contributions.
(a) Any Profit Sharing Contributions, Qualified Nonelective
Contributions and ESOP Contributions shall be deemed made on account of a
Taxable Year if (i) the Board of Directors determines the amount of such
contribution by appropriate action, (ii) the Employer designates such amount in
writing as payment on account of such Taxable Year or (iii) the Employer claims
such amount as a deduction on its federal tax return for such Taxable Year.
(b) Profit Sharing Contributions, Matching Contributions, and,
subject to the provisions of any Exempt Loan, ESOP Contributions for any
particular Taxable Year may be paid to the Trustee in installments, but in any
event such contributions shall be paid no later than the due date for the
Employer's federal income tax return for such Taxable Year. The Employer may,
during any Taxable Year, make advance payments toward its contributions for such
Taxable Year. Any income, earnings or appreciation earned by any amount
contributed by the Employer prior to the end of the Plan Year shall be treated
as part of the Profit Sharing Contributions, Matching Contributions, or ESOP
Contributions, as the case may be, for such Plan Year. On or about the date of
such payment the Committee shall be advised of the amount of such payment upon
which its allocation pursuant to Section 4.3 is to be calculated.
4.5 Forfeitures. Forfeitures arising during the Plan Year pursuant to
Section 10 shall be used to reduce the amount of Matching Contributions made for
such Plan Year pursuant to Section 4.2(a). To the extent the amount of such
forfeitures exceeds the amount of Matching Contributions to be made for such
Plan Year, such excess shall be reallocated as Profit Sharing Contributions on
the last day of the Plan Year in which such forfeiture occurs to all
Participants entitled to receive Profit Sharing Contributions, in the same
proportion as contributions are allocated pursuant to Section 4.3. Provided, in
either case, that forfeitures shall first be used to fund adjustments to
Participants' Accounts required to correct operational errors, to the extent
directed by the Committee, or to fund any amounts to be recredited to a
Participant's Account pursuant to Section 10.5.
4.6 Contribution Percentage Test.
(a) Participant's Contribution Percentages must satisfy at least
one of the following tests:
(1) The Contribution Percentage for the Highly Compensated
Participants shall not exceed the Contribution Percentage of all other
Participants for the preceding Plan Year multiplied by 1.25; or
(2) (A) The excess of the Contribution Percentage for the Highly
Compensated Participants over the Contribution Percentage of all other
Participants for the preceding Plan Year shall not be more than two percentage
points and (B) the Contribution Percentage for Highly Compensated Participants
shall not be more than the Contribution Percentage for all other Participants
for the preceding Plan Year multiplied by 2.
(b) The Employer may elect to apply the foregoing tests by using
current Plan Year data rather than utilize data from the preceding Plan Year. If
such an election is made, it may not be changed except as provided by Secretary
of the Treasury. Notwithstanding the foregoing, for the 1997 Plan Year, the
Employer may rely on the transitional relief set forth in Internal Revenue
Service Notice 97-2 to use current Plan Year data to apply the foregoing tests.
(c) All Matching Contributions and Elective Contributions that are
made under two or more plans that are aggregated for purposes of Sections
401(a)(4) and 410(b) of the Code are to be treated as made under a single plan;
and if two or more plans are permissively aggregated such plans shall satisfy
Sections 401(a)(4) and 410(b) as though they were a single plan in accordance
with Section 410(m) of the Code and Section 1.401(m)-1 of the Regulations.
(d) For purposes of this Section 4.6, Matching Contributions are
taken into account for a Plan Year only if (i) made on account of the
Participant's Elective Contributions for the Plan Year, (ii) allocated to the
Participant's Account during the Plan Year and (iii) paid to the Trust Fund
prior to the end of the twelfth month following the close of the Plan Year.
(e) In applying the tests set forth in this Section 4.6, the
following rules shall apply:
(1) In the case of an Employee who receives no Matching
Contributions, the Matching Contributions that are to be included in determining
the Participant's Contribution Percentage are zero;
(2) The availability of Matching Contributions shall not
discriminate in favor of Highly Compensated Participants.
(3) The distribution of excess aggregate contributions will
include the income allocable thereto and shall be made on the basis of the
amount of Matching Contributions (and Elective Contributions, if the Regulations
permit and the Committee elects to take into account Elective Contributions when
calculating the Contribution Percentage) made on behalf of each such Highly
Compensated Participant. The income allocable to the excess aggregate
contributions includes income for the Plan Year for which the excess aggregate
contributions were made in accordance with Section 1.401(m)-1(e)(3)(ii) of the
Regulations.
(4) A Participant shall include any Employee who is directly or
indirectly eligible to receive an allocation of Matching Contributions and
includes (i) an Employee who would be a Participant but for the failure to make
required contributions and (ii) a Participant whose right to receive Matching
Contributions has been suspended because of an election (other than certain
one-time elections) not to participate.
(f) For Plan Years commencing after December 31, 1998 for which the
Employer uses Section 410(b)(4)(B) of the Code to test minimum coverage
compliance, the Employer may exclude from consideration all Participants (other
than Highly Compensated Participants) who have not met the minimum age and
service requirements of Section 410(a)(1)(A) of the Code in determining whether
the tests set forth in Subsection 4.6(a) are met.
4.7 Distribution of Excess Aggregate Contributions.
(a) The Committee shall determine as of the end of the Plan Year, and
at such other time or times in its discretion, whether one of the Contribution
Percentages of Section 4.6 is satisfied for such Plan Year. If neither of the
tests set forth in Section 4.6 is satisfied, the Committee shall distribute the
excess aggregate contributions in the manner described in this Section 4.7. For
purposes of this Section 4.7, "excess aggregate contributions" means, with
respect to any Plan Year and with respect to any Participant, the excess of the
aggregate amount of (i) Matching Contributions (and any earnings and losses
allocable thereto prior to distribution) and (ii) the Elective Contributions (if
the Regulations permit and the Committee elects to take into account Elective
Contributions when calculating the Participant's Contribution Percentage) of
Highly Compensated Participants for such Plan Year, over the maximum amount of
such contributions that could be made on behalf of Participants without
violating the requirements of Section 4.6. The amount of each Highly Compensated
Participant's excess aggregate contributions shall be determined by reducing the
Matching Contributions of all Highly Compensated Participants whose Contribution
Percentage as adjusted by this Section 4.7 are at the highest percentage rate
for the Plan Year on a pro rata basis by one hundredth of one percent (0.01%).
The Committee shall continue to utilize this procedure until one of the tests of
Section 4.6 is satisfied.
(b) If the Committee is required to distribute excess aggregate
contributions for any Highly Compensated Participant for a Plan Year in order to
satisfy the requirements of Section 4.6, then the Committee shall distribute
such excess aggregate contributions with respect to such Highly Compensated
Participants to the extent practicable before April 15th of the Plan Year next
following the Plan Year for which such excess aggregate contributions were made,
but in no event later than the end of the Plan Year following such Plan Year.
For each of such Participants, the amounts so distributed shall be made in the
following order of priority:
(i) by distributing Matching Contributions and earnings thereon,
to the extent necessary; and
(ii) by distributing Elective Contributions (to the extent such
amounts are included in the Contribution Percentage), and earnings thereon.
All such distributions shall be made to Highly Compensated
Participants on the basis of the respective portions of such amounts
attributable to each such Highly Compensated Participant. No spousal consent
shall be required of any married Participant who receives a refund of excess
aggregate contributions.
4.8 Aggregate Limit for Contribution Percentage and Actual Deferral
Percentage.
(a) The sum of the Contribution Percentage and the Actual Deferral
Percentage for Highly Compensated Participants for the Plan Year shall not
exceed the "aggregate limit" defined in this Section 4.8.
(b) The term "aggregate limit" means the greater of (1) or (2) below:
(1) The sum of (a) the greater of the Actual Deferral
Percentage for all Participants other than the Highly Compensated Participants
or the Contribution Percentage for all Participants other than the Highly
Compensated Participants, for the Plan Year multiplied by 1.25 and (b) the
lesser of such Actual Deferral Percentage or Contribution Percentage plus 2, but
not greater than 2 multiplied by the lesser of such Actual Deferral Percentage
or Contribution Percentage.
(2) The sum of (a) the lesser of the Actual Deferral
Percentage for all Participants other than the Highly Compensated Participants
or the Contribution Percentage for all Participants other than the Highly
Compensated Participants, for the Plan Year multiplied by 1.25 and (b) the
greater of such Actual Deferral Percentage or Contribution percentage plus 2,
but not greater than 2 multiplied by the greater of such Actual Deferral
Percentage or Contribution Percentage.
(c) If the aggregate limit is exceeded, the Committee shall determine
whether to: (i) make Qualified Nonelective Contributions to permit the
satisfaction of the test set forth in subsection (a) hereof; (ii) reduce the
Contribution Percentage of the Highly Compensated Participants as set forth in
Section 4.7; or (iii) reduce the Actual Deferral Percentage of the Highly
Compensated Participants as set forth in Section 5.5.
SECTION 5. SALARY REDUCTION AGREEMENTS
AND ROLLOVER CONTRIBUTIONS
5.1 Salary Reduction Agreements.
(a) A Participant may elect to make Elective Contributions in any
Plan Year by entering into a Salary Reduction Agreement with the Employer. Each
Salary Reduction Agreement shall provide that a portion of the Participant's
Compensation shall be paid through payroll deduction to the Trust Fund as an
Elective Contribution pursuant to Section 4.1 rather than paid currently to the
Participant. The Salary Reduction Agreement shall provide for Elective
Contributions equal to any whole percentage between one percent (1%) and fifteen
percent (15%) of a Participant's Compensation in any payroll period, not to
exceed the limitation set forth in Section 402(g) of the Code (adjusted
automatically for increases in accordance with the Regulations). Notwithstanding
the foregoing provisions of this Section 5.1, the Committee may, but need not,
adopt a procedure to enable Participants to make lump sum Elective Contributions
under the Plan through payroll deductions. No Salary Reduction Agreement shall
be effective unless the Participant has made an investment direction pursuant to
Section 8.3.
(b) A Salary Reduction Agreement will be taken into account for any
Plan Year only if it relates to Compensation that would have been received by
the Participant in the Plan Year (but for the deferral election).
(c) In the event that the aggregate amount of Elective Contributions
by a Participant exceeds the limitation described in subsection (a) of this
Section 5.1, the amount of such excess, increased by any income and decreased by
any losses attributable thereto, shall be refunded to the Participant no later
than the April 15th of the calendar year following the calendar year for which
the Elective Contributions were made. If a Participant also participates, in any
calendar year, in any other plans subject to the limitations set forth in
Section 402(g) of the Code and has made excess deferrals under this Plan when
combined with the other plans subject to such limits, to the extent the
Participant designates, in writing submitted to the Committee no later than the
March 1 of the calendar year next following the calendar year for which the
Elective Contributions were made, any Elective Contributions under this Plan as
excess deferrals, the amount of such designated excess, increased by any income
and decreased by any losses attributable thereto, shall be refunded to the
Participant no later than the April 15 of the calendar year next following the
calendar year for which the Elective Contributions were made.
5.2 Change or Suspension of Salary Reduction Agreements. Subject to
Section 5.1, a Participant may enter into or change his or her Salary Reduction
Agreement at any time, effective as soon as practicable, in accordance with
rules determined by the Committee. A Participant may also suspend his or her
Salary Reduction Agreement at any time, in accordance with rules determined by
the Committee. A Participant who suspends his or her Salary Reduction Agreement
in accordance with this Section 5.2 may enter into a new Salary Reduction
Agreement at any time, effective as soon as administratively feasible.
A Participant's most recent Salary Reduction Agreement shall continue
unchanged from year to year unless the Participant notifies the Committee in
writing of a change in such Salary Reduction Agreement in accordance with the
rules determined by the Committee.
5.3 Actual Deferral Percentage Test.
(a) Participants' Elective Contributions must satisfy at least one of
the following tests:
(1) The Actual Deferral Percentage for the Highly Compensated
Participants shall not exceed the Actual Deferral Percentage of all other
Participants for the preceding Plan Year multiplied by 1.25; or
(2) (A) The excess of the Actual Deferral Percentage
for the Highly Compensated Participants over the Actual Deferral Percentage of
all other Participants for the preceding Plan Year shall not be more than two
percentage points, and (B) the Actual Deferral Percentage for the Highly
Compensated Participants shall not be more than the Actual Deferral Percentage
for all other Participants for the preceding Plan Year multiplied by 2.
(b) The Employer may elect to apply the foregoing tests by using
current Plan Year data rather than utilize data from the preceding Plan Year. If
such an election is made, it may not be changed except as provided by Secretary
of the Treasury. Notwithstanding the foregoing, for the 1997 Plan Year, the
Employer may rely on the transitional relief set forth in Internal Revenue
Service Notice 97-2 to use current Plan Year data to apply the foregoing tests.
(c) All Elective Contributions that are made under two or more plans
that are aggregated for purposes of Sections 401(a)(4) and 410(b) of the Code
are to be treated as made under a single plan; and if two or more plans are
permissively aggregated, such plans shall satisfy Sections 401(a)(4) and 410(b)
as though they were a single plan in accordance with Section 410(k) of the Code
and Section 1.401(k)-1 of the Regulations. For purposes of calculating the
Actual Deferral Percentage of any Highly Compensated Participant all cash or
deferred arrangements of the Employer or any Affiliated Employer in which such
Highly Compensated Participant participates shall be treated as one cash or
deferred arrangement.
(d) In applying the tests set forth in this Section 5.3, the
following rules shall apply:
(1) In the case of a Participant who makes no Elective
Contributions, the Elective Contributions that are to be included in determining
the Participant's Actual Deferral Percentage are zero;
(2) The distribution of excess contributions will include the
income allocable thereto and shall be made on the basis of the amount of
Elective Contributions on behalf of each such Highly Compensated Participant.
The income allocable to the excess contributions includes income for the Plan
Year for which the excess contributions were made in accordance with Section
1.401(k)-1(f)(4)(ii) of the Regulations.
(e) For Plan Years commencing after December 31, 1998 for which the
Employer uses Section 410(b)(4)(B) of the Code to test minimum coverage
compliance, the Employer may exclude from consideration all Participants (other
than Highly Compensated Participants) who have not met the minimum age and
service requirements of Section 410(a)(1)(A) of the Code in determining whether
the tests set forth in Subsection 5.3(a) are met.
5.4 Amendment or Revocation of Salary Reduction Agreement by Committee.
The Committee shall determine as of the end of the Plan Year, and at such other
time or times in its discretion, whether one of the Actual Deferral Percentage
tests of Section 5.3 will be satisfied for such Plan Year. In the event that
neither of such Actual Deferral Percentage Tests is satisfied, the Committee may
amend or revoke the Salary Reduction Agreement of any Participant at any time if
it determines that such an amendment or revocation is necessary to ensure that
at least one of the Actual Deferral Percentage tests of Section 5.3 will be
satisfied for any Plan Year. The determination of whether it is necessary to
amend or revoke any Salary Reduction Agreement shall be made pursuant to Section
5.3 and the procedure for such amendment or revocation shall be determined
pursuant to Section 5.5(a).
5.5 Distribution of Excess Contributions.
(a) If neither of the tests set forth in Section 5.3 are satisfied,
the Committee shall in its discretion, to the extent permissible under the Code
and the Regulations, refund the excess contributions in the manner described in
Section 5.5(b). For purposes of this Section 5.5, "excess contributions" means,
with respect to any Plan Year, the excess of the aggregate amount of Elective
Contributions (and any earnings and losses allocable thereto prior to
distribution) made by Highly Compensated Participants for such Plan Year, over
the maximum amount of such Elective Contributions that could be made by such
Highly Compensated Participants without violating the requirements of Section
5.3.
(b) If required in order to comply with the provisions of Subsection
5.3 and the Code, the Committee shall refund excess contributions for a Plan
Year. The distribution of such excess contributions shall be made to Highly
Compensated Participants, to the extent practicable, before the March 15th of
the Plan Year next following the Plan Year for which such excess contributions
were made, but in no event later than the end of the Plan Year next following
such Plan Year. Any such distribution shall be made to each Highly Compensated
Participant whose Elective Contributions are the highest for the Plan Year,
until one of the tests of Section 5.3 is satisfied. Matching Contributions
attributable to Elective Contributions returned to a Highly Compensated
Participant shall be distributed as provided in Section 4.6.
5.6 Rollover Contributions.
(a) A Participant may make a Rollover Contribution to the Plan in
accordance with rules established by the Committee uniformly applied consisting
of an eligible rollover distribution, as defined in Section 11.8(b), from a plan
qualified under Section 401(a) of the Code or an individual retirement account
qualified under Section 408(a) of the Code (no part of which is attributable to
any source other than an eligible rollover distribution from a qualified plan
under Section 401(a) of the Code); provided such eligible rollover distribution
is in cash and contributed to the Plan on or before the 60th day after the day
in which such Participant received such eligible rollover distribution. If a
Participant elects to make a Rollover Contribution, the Committee may require
such evidence, assurances, opinions and certifications, including a statement
from the previous plan that such plan was a qualified plan, that the Committee
may deem necessary to establish to its satisfaction that the amounts to be
contributed qualify as an eligible rollover distribution and will not affect the
qualification of the Plan or the tax-exempt status of the Trust under Sections
401(a) and 501(a) of the Code, respectively. Except as otherwise permitted by
Section 5.7, in no event shall any assets be transferred to this Plan from any
profit sharing, pension or retirement plan that would cause this Plan to become
a "transferee" plan (within the meaning set forth in Section 401(a)(11)(B) of
the Code).
(b) Any Rollover Contribution shall be allocated to the appropriate
Participant's Rollover Contribution Subaccount which shall be established and
separately accounted for. A Participant shall have at all times a nonforfeitable
right in the amount credited to his or her Rollover Contribution Subaccount.
(c) Each request by a Participant to make a Rollover Contribution
shall be subject to review by the Committee which shall make a case by case
determination that each Rollover Contribution meets the requirements set forth
in Section 5.6(a), and such other requirements or conditions as the Committee
may, from time to time and in its sole discretion, impose; provided, however,
that any determination made by the Committee pursuant to this Section 5.6 shall
not have the effect of discriminating in favor of Participants who are officers,
shareholders or who are Highly Compensated Participants.
5.7 Trustee-to-Trustee Transfer of Assets. Notwithstanding anything in
Section 5.6 to the contrary, in the event of an acquisition by the Employer or
the Plan Sponsor of a company which maintains a plan and trust which are
qualified under Sections 401(a) and 501(a) of the Code, respectively, the Board
of Directors may (but shall not be required to) authorize a "trustee-to-trustee"
transfer of assets from such qualified plan into the Plan and Trust Fund. The
Trustee may require such evidence, assurances, opinions and certifications,
including a statement from the acquired company's plan that such plan and trust
are qualified under Sections 401(a) and 501(a) of the Code, which the Trustee
may deem necessary to establish to its satisfaction that the amounts to be
transferred will not affect the qualification of the Plan or the tax-exempt
status of the Trust under Sections 401(a) and 501(a) of the Code, respectively.
SECTION 6. ALLOCATION OF CONTRIBUTIONS
6.1 Establishment of Cash Contribution Account. The Committee shall
establish and maintain or cause to be established and maintained with respect to
each Participant a Cash Contribution Account showing his or her interest under
the Plan and in the Trust Fund and all relevant data pertaining thereto. Each
Participant shall be furnished with a written statement of his or her Cash
Contribution Account at least once annually and upon any distribution to him or
her. In maintaining the Cash Contribution Accounts under the Plan, the Committee
can conclusively rely on the valuations of the Trust Fund in accordance with the
Plan. The establishment and maintenance of, or allocations and credits to, the
Cash Contribution Account of any Participant shall not vest in any Participant
any right, title or interest in and to any Plan assets or benefits, except at
the time or times and upon the terms and conditions and to the extent expressly
set forth in the Plan and in accordance with the terms of the Trust Fund.
6.2 Establishment of Subaccounts. Each Participant's Cash Contribution
Account shall contain each of the following applicable subaccounts therein:
(a) All Elective Contributions on behalf of a Participant under
Section 4.1 and Qualified Nonelective Contributions on behalf of a Participant
under Section 4.2(b)(i) shall be credited to the Participant's Elective
Contribution Subaccount.
(b) All Matching Contributions on behalf of a Participant under
Section 4.2(a) shall be allocated and credited to the Participant's Matching
Contribution Subaccount.
(c) All Profit Sharing Contributions on behalf of a Participant under
Section 4.2(b)(ii) shall be allocated and credited to the Participant's Profit
Sharing Subaccount.
(d) All Rollover Contributions on behalf of a Participant under
Section 5.6 shall be allocated and credited to the Participant's Rollover
Contribution Subaccount.
(e) Any amounts that are transferred from a Participant's ESOP
Account pursuant to Section 7.11.
SECTION 7. SPECIAL ESOP PROVISIONS
7.1 Investment of ESOP Accounts. The ESOP Accounts of all Participants
shall be invested exclusively in Shares, except for cash or cash equivalent
investments held (a) for the limited purpose of making Plan distributions to
Participants and Beneficiaries, (b) pending the investment by the Purchasing
Agent of contributions or other cash receipts in Shares, (c) pending use to
repay an Exempt Loan, (d) for purposes of paying, under the terms described in
the Plan or Trust Agreement, fees and expenses incurred with respect to the Plan
or Trust and not paid for by the Participating Employers or (e) in the form of
de minimis cash balances. Neither any Participating Employer nor the Purchasing
Agent, the Committee or the Trustee shall have any responsibility or duty to
time any transaction involving Shares in order to anticipate market conditions
or changes in stock value, nor shall any such person have any responsibility or
duty to sell Shares held in the ESOP Accounts (or otherwise to provide
investment management for Shares held in the ESOP Accounts) in order to maximize
return or minimize loss. Participating Employer contributions made in cash, and
other cash received by the Trustee, may be used by the Purchasing Agent to
acquire Shares from shareholders of the Employer or directly from the Employer.
7.2 Allocation to ESOP Accounts.
(a) Subject to the provisions of Section 4, the ESOP Account
maintained for each Participant will be credited as of the last day of each Plan
Year with the Participant's allocable share of:
(i) Shares purchased using cash contributed by or on behalf of
the Participating Employer employing such Participant (and any earnings on any
cash contributions made prior to the last day of the Plan Year),
(ii) Shares contributed directly to the Trust Fund;
(iii)Dividends paid to the Trust Fund during the Plan Year on any
Shares that were purchased by the Purchasing Agent or contributed directly to
the Trust Fund prior to the last day of the Plan Year; and
(iv) Shares released from the Suspense Subfund pursuant to
Section 7.3 and allocable to the contribution made by or on behalf of such
Participating Employer pursuant to Section 7.4.
(b) Shares attributable to ESOP Contributions shall be allocated
among the Accounts of Participants who are members of the Allocation Group for
the Plan Year in the same proportion that a Participant's Compensation during
the Plan Year bears to the total Compensation during the Plan Year of all
Participants who are members of the Allocation Group for such Plan Year. For
purposes of the preceding sentence, Compensation earned by a Participant prior
to the Participant's entry into the Plan pursuant to Section 3.1(b)(ii) shall
not be taken into account.
(c) Shares contributed directly to the Trust Fund for a Plan Year
shall be allocated under Section 7.2(a)(i) in the same proportion as Shares
purchased by the Trust Fund and allocated under Section 7.2(b).
7.3 Suspense Subfund for ESOP Accounts. Shares acquired by the
Participants' ESOP Accounts through an Exempt Loan shall be added to and
maintained in the Suspense Subfund and shall thereafter be released from the
Suspense Subfund and allocated to Participants' ESOP Accounts as provided in
Sections 7.3 and 7.4. Shares acquired for the Trust Fund with the proceeds of an
Exempt Loan shall be released from the Suspense Subfund as the Exempt Loan is
repaid, in accordance with the provisions of this Section 7.3.
(a) For each Plan Year until the Exempt Loan is fully repaid, the
number of Shares released from the Suspense Subfund shall equal the number of
unreleased Shares immediately before such release for the current Plan Year
multiplied by the "Release Fraction." As used herein, the term "Release
Fraction" shall mean a fraction, the numerator of which is the amount of
principal and interest paid on the Exempt Loan for such current Plan Year and
the denominator of which is the sum of the numerator plus the principal and
interest to be paid on such Exempt Loan for all future years during the term of
such Exempt Loan (determined without reference to any possible extensions or
renewals thereof). For purposes of computing the denominator of the Release
Fraction, if the interest rate on the Exempt Loan is variable, the interest to
be paid in subsequent Plan Years shall be calculated by assuming that the
interest rate in effect as of the end of the applicable Plan Year will be the
interest rate in effect for the remainder of the term of the Exempt Loan.
Notwithstanding the foregoing, in the event such Exempt Loan shall be
repaid with the proceeds of a subsequent Exempt Loan (the "Substitute Loan"),
such repayment shall not operate to release all such Shares in the Suspense
Subfund, but, rather, such release shall be effected pursuant to the foregoing
provisions of this Section 7.3(a) on the basis of payments of principal and
interest on such Substitute Loan.
(b) If required by any pledge or similar agreement, or if permitted
by such pledge or agreement and required by the Committee pursuant to a
one-time, irrevocable designation (which shall be made, if at all, in connection
with the making of an Exempt Loan) by the Committee, then, in lieu of applying
the provisions of Section 7.3(a) hereof with respect to an Exempt Loan, Shares
shall be released from the Suspense Subfund as the principal amount of such
Exempt Loan is repaid (without regard to interest payments), provided the
following three conditions are satisfied:
(i) The Exempt Loan shall provide for annual payments of
principal and interest at a cumulative rate that is not less rapid at any time
than level annual payments of such amounts for ten years;
(ii) The interest portion of any payment shall be disregarded
only to the extent it would be treated as interest under standard loan
amortization tables; and
(iii)If the Exempt Loan is renewed, extended or refinanced, the
sum of the expired duration of the Exempt Loan and the renewal, extension or new
Exempt Loan period shall not exceed ten years.
(c) If at any time there is more than one Exempt Loan outstanding,
then separate accounts may be established under the Suspense Subfund for each
such Exempt Loan. Each Exempt Loan for which a separate account is maintained
may be treated separately for purposes of the provisions governing the release
of Shares from the Suspense Subfund under this Section 7.3 (including for
purposes of determining whether Section 7.3(a) or Section 7.3(b) governs the
release of Shares from any particular Suspense Subfund) and for purposes of the
provisions governing the application of Participating Employer contributions to
repay an Exempt Loan under Section 4.2.
(d) All Shares released from the Suspense Subfund during any Plan Year
shall be allocated among Participants as prescribed by Section 7.4.
7.4 Disposition of Shares Released from Suspense Subfund.
(a) Shares released from the Suspense Subfund for a Plan Year in
accordance with Section 7.3 shall be held in the Trust Fund on an unallocated
basis until allocated by the Committee as of last day of the Plan Year. Shares
released from the Suspense Subfund on account of a payment for a Plan Year of
principal or interest on an Exempt Loan, to the extent payment is made with
contributions for such Plan Year, shall be allocated under Section 7.2(a)(ii) in
the same proportion as Shares purchased with contributions under Section 7.2(b).
(b) (i) Shares released from the Suspense Subfund on account of the
payment for a Plan Year of principal or interest on an Exempt Loan to the extent
such payment is made with dividends paid on Shares allocated to ESOP Accounts,
shall be allocated in the same proportion as dividends used to pay principal or
interest on such Exempt Loan would have been allocated under Section 7.9(b) had
such dividends not been so used; and
(ii) Subject to Section 4.2, Shares released from the Suspense
Subfund on account of the payment of principal or interest on an Exempt Loan, to
the extent such payment is made with dividends on Shares not allocated to
Accounts, shall be allocated to those ESOP Accounts and in the same proportion
as Shares released pursuant to Section 7.4(b)(i); provided that Shares so
released shall be otherwise allocated if necessary to satisfy the requirements
of the Code (other than Section 404(k)) and any Regulations thereunder.
(c) All Shares in the Trust Fund, other than the Shares held in the
Suspense Subfund as of the last day of any Plan Year, must be allocated to ESOP
Accounts as of the last day of any Plan Year.
7.5 Limitations on Allocations to ESOP Accounts. Notwithstanding the
foregoing provisions of this Section 7:
(a) If more than one-third of all ESOP Contributions for a Plan Year
which are deductible only under Section 404(a)(9) of the Code would be
allocated, in the aggregate, to Participants described in Section 414(q) of the
Code, then the Committee may reduce such allocations pro rata in an amount
sufficient to ensure that such ESOP Contributions will be deductible with
respect to such Plan Year; and
(b) Any contributions which are prevented from being allocated due to
the restriction contained in Section 7.5(a) shall be allocated as of the last
day of the Plan Year pursuant to Sections 7.2 and 7.4 as though those
Participants described in Section 414(q) of the Code did not participate in the
Plan.
7.6 Acquisition of Shares.
(a) Notwithstanding the foregoing provisions of this Section 7, in
the event that Shares are acquired in a transaction to which Section 1042 of the
Code applies, then, in accordance with the Regulations, such Shares shall not be
allocated, directly or indirectly, to prohibited individuals as defined in
Section 409(n)(1) of the Code for the duration of the nonallocation period (as
defined in Section 409(n)(3)(C) of the Code).
(b) If Shares are prevented from being allocated due to the
prohibition contained in Section 7.6(a), the allocation of Shares attributable
to ESOP Contributions (or ESOP Contributions) otherwise provided under Section
7.2 shall be adjusted to reflect such result.
7.7 Effect of Change in Plan Sponsor's Capitalization. Any Shares received
by the Trustee as a result of a stock split, dividend, conversion, or as a
result of a reorganization or other recapitalization of the Plan Sponsor shall
be allocated as of the day on which the Shares are received by the Trustee in
the same manner as the Shares to which they are attributable are then allocated.
7.8 Trustee and Committee Discretion to Engage in Transactions in Shares.
Neither the Purchasing Agent, the Trustee nor the Committee shall be required to
engage in any transaction, including, without limitation, directing the purchase
or sale of Shares, which it determines in its sole discretion may subject
itself, its Participants, the Plan, any Participating Employer, or any
Participant to liability under federal or other state laws.
7.9 Valuation of ESOP Accounts.
(a) Subject to the requirements of Section 7.9(b), the fair market
value of the assets of the ESOP Accounts shall be determined as of each
Valuation Date, in accordance with generally accepted valuation methods and
practices including, but not limited to, in the case of Shares, the use of one
or more independent appraisers.
(b) The value of a Participant's ESOP Account as of any Valuation
Date shall equal the sum of:
(i) The aggregate value (as determined under Section 7.9(a))
of all Shares and dividends on Shares previously allocated to such Participant's
ESOP Account as of such Valuation Date; and
(ii) Subject to Section 7.9(c), the aggregate value ( as
determined under Section 7.10(a)) of dividends, if any, received during the Plan
Year on Shares allocated to such Participant's ESOP Account.
(iii)Such Participant's allocable portion ( determined in
accordance with the rules set forth in Section 7.4 for determining Participant's
allocable portion of Shares released from the Suspense Subfund) of the earnings,
if any, on all amounts contributed to the Trust Fund for purposes other than the
repayment of an Exempt Loan.
(c) Except as provided in Section 7.7, dividends payable, if any,
with respect to Shares held by the Participant's ESOP Account will be, in the
discretion of the Committee and in conformity with the terms of the Shares on
which such dividends are paid, (i) used for the purpose of repaying one or more
Exempt Loans, (ii) distributed from the Trust Fund to Participants or their
Beneficiaries not later than 90 days after the close of the Plan Year in which
they are paid to the Trust Fund, (iii) paid directly to such Participants or
their Beneficiaries, (iv) retained in the Trust Fund and allocated pursuant to
Section 7.9(b), or (v) paid or utilized in a combination of any or all of the
foregoing four options.
(d) The Committee shall establish accounting procedures for the
purpose of making the allocations, valuations and adjustments to Participant's
ESOP Accounts in accordance with the provisions of the Plan. From time to time,
the Committee may modify its accounting procedures for the purpose of achieving
equitable and nondiscriminatory allocations among the ESOP Accounts of
Participants in accordance with the provisions of the Plan.
7.10 Role of Purchasing Agent.
(a) All purchases of Shares made by the Trust Fund shall be made by
the Purchasing Agent. The Trustee shall forward to the Purchasing Agent all
amounts contributed to the employee stock ownership plan, and all amounts to be
invested in Shares pursuant to participant investment directions given pursuant
to Sections 8.3, 8.4 and 8.5. Amounts to be invested in Shares shall be invested
in Shares in the amount, in the manner and at the price determined by the
Purchasing Agent in its sole discretion, provided such price shall be the fair
market value of such Shares at the time of purchase. The Purchasing Agent shall
in its sole discretion select the broker-dealer through which the purchase of
such Shares shall be executed. The Purchasing Agent shall also invest any cash
dividends received on any Shares which are allocated to Participants' Accounts
and held as part of the Plan as provided in Section 5.05(c) of the Trust
Agreement.
(b) The Purchasing Agent shall sell Shares only at the direction of
the Trustee, which shall issue such instructions only at the direction of the
Committee; provided that such Committee direction shall not be required for any
of the following purposes: (i) any sales of Shares required pursuant to the
participant investment directions given pursuant to Sections 8.3, 8.4 or 8.5;
(ii) any sales of Shares required pursuant to the provisions of Section 13.5 or
13.6; (iii) any sales of Shares required to fund a participant loan or a
distribution to a Participant; or (iv) any sales of Shares required to maintain
the levels of investment of Shares and cash specified by the Committee for the
Company Stock Fund.
7.11 ESOP Contributions. Notwithstanding anything to the contrary contained
in the Plan, no ESOP contributions shall be made to the Plan for Plan Years
beginning after December 31, 2000. Effective as of January 1, 2001, all Exempt
Loans shall be fully paid off, and all Shares attributable to such Exempt Loans
shall be allocated among Plan Participants in accordance with the provisions of
this Section 7, and, effective as of April 1, 2001, all Participants' ESOP
accounts shall be transferred to such Participants' Cash Contribution Accounts.
The provisions of this Section 7 shall apply in the event any future Exempt
Loans are approved by the Board of Directors.
SECTION 8. INVESTMENT OF CONTRIBUTIONS, VALUATIONS
AND PARTICIPANTS' CASH CONTRIBUTION ACCOUNTS
8.1 Delivery of Contributions to Trust Fund. All monies, securities or
other property contributed to Participants' Cash Contribution Accounts shall be
delivered to the Trustee under the Trust Fund, to be managed, invested,
reinvested and distributed in accordance with the Plan and the Trust Fund.
8.2 Participants' Right to Select Investments. Each Participant shall have
the right to invest his or her Cash Contribution Account among one or more
investment funds selected by the Company, which may include a fund established
for investment in Shares.
8.3 Participant Investment Election. As of any date permitted by the
Committee, a Participant may, in accordance with the rules of the Committee
uniformly applied, specify the percentage (in minimum multiples as may be
determined from time to time by the Committee) of contributions which are made
to the Participant's Cash Contribution Account that shall be invested in
investment funds selected by the Committee. An investment election may be made
separately with respect to (i) the aggregate of the Participant's Elective
Contribution Subaccount, Matching Contribution Subaccount, and Rollover
Contribution Subaccount and (ii) the Participant's Profit Sharing Subaccount.
8.4 Change in Investment Election for Future Contributions. Any investment
direction specified by a Participant shall be deemed to be a continuing
direction until changed. A Participant may change an investment direction as to
future contributions made by such Participant or on his or her behalf to the
subaccounts of his or her Cash Contribution Account as of any day permitted by
the Committee in accordance with the rules of the Committee uniformly applied.
8.5 Change in Investment Election for Prior Contributions. As of any date
permitted by the Committee, a Participant (or a former Participant whose Account
has not been distributed from the Plan) may change the percentages (in minimum
multiples as may be determined from time to time by the Committee) in which the
investment of the portion of his or her Cash Contribution Account attributable
to prior contributions shall be allocated among the funds maintained by the
Trustee.
8.6 Valuation of Cash Contribution Accounts.
(a) As of each Valuation Date, Participants' Cash Contribution
Accounts shall be valued pursuant to the terms of the Plan. Such valuation shall
be conclusive and binding upon all persons having an interest in the Trust Fund.
(b) The Committee shall adjust the value of each Elective
Contribution Subaccount, Matching Contribution Subaccount, Profit Sharing
Subaccount, or Rollover Contribution Subaccount, as the case may be, maintained
under Participants' Cash Contribution Accounts as of each Valuation Date to
reflect the effect of income received and accrued, realized and unrealized
profits and losses, and all other transactions of the preceding period. Such
adjustments shall be made with respect to the period since the next preceding
Valuation Date by (i) deducting from each such Subaccount the total of all
payments made from such Subaccount during such period, (ii) adding to or
deducting from, as the case may be, each such Subaccount such proportion of each
item of income, profit or loss as the amount in such Subaccount as of the next
preceding Valuation Date bears to the total of the amounts in all of such
Participants' Elective Contribution Subaccount, Matching Contribution
Subaccount, Profit Sharing Subaccount, or Rollover Contribution Subaccount, as
the case may be, as of the preceding Valuation Date and (iii) adding
contributions to each such Elective Contribution Subaccount, Matching
Contribution Subaccount, Profit Sharing Subaccount, or Rollover Contribution
Subaccount, as the case may be, pursuant to Sections 4 and 5 of the Plan. In
making such allocations, the Committee can conclusively rely on the valuations
of the Subaccounts by the Trustee in accordance with the Plan and the Trust.
SECTION 9. RETIREMENT DATES
9.1 Normal Retirement Date. The Normal Retirement Date of a Participant
shall be his or her 65th birthday or, if earlier, the date on which the
Participant has attained age fifty (50) and completed seven (7) Years of
Service. Upon attainment of his or her Normal Retirement Date, a Participant
shall have a nonforfeitable right to 100% of his or her Account.
9.2 Deferred Retirement Date. A Participant who remains in Service after
his or her Normal Retirement Date may retire on a Deferred Retirement Date which
shall be the first day of the month coincident with or next following his or her
termination of Service or as specified in a written application to the
Committee.
SECTION 10. ELIGIBILITY FOR PAYMENT OF ACCOUNTS
AND VESTED INTERESTS
10.1 Participants' Right to Account Upon Termination Due to Retirement,
Death or Disability.
(a) A Participant shall have a nonforfeitable right to his or
her Account upon the occurrence of any of the following events while employed by
the Employer:
(i) attainment of his or her Retirement Date;
(ii) his or her death; or
(iii)his or her Disability.
(b) Upon the termination of Service of any Participant on or after
his or her Retirement Date or by reason of his or her death or Disability
("Terminated Participant"), the Terminated Participant (or, in the event of the
Participant's death, his or her Beneficiary) shall be entitled to an amount
equal to the Terminated Participant's Account, including any subsequent
contribution allocated to the Terminated Participant's Account pursuant to
Sections 6 or 7 with respect to the Plan Year in which the Participant's Service
is terminated. The Participant's Account shall be distributable, in accordance
with the methods and rules of distribution described in Section 11, as soon as
practicable following the Participant's termination of Service. The value of the
Participant's Account shall be determined as of the Valuation Date coincident
with or immediately preceding the date of distribution of the Participant's
Account.
10.2 Participants' Right to Account Upon Other Termination of Service.
Upon the termination of Service of any Participant prior to his or her
Retirement Date for any reason other than death or Disability, the Terminated
Participant shall be entitled to receive an amount equal to the sum of (i) 100%
of the Participant's Elective Contribution Subaccount, Matching Contribution
Subaccount, and Rollover Contribution Subaccount and (ii) the Participant's
Vested Interest in his or her Profit Sharing Subaccount and ESOP Account,
including the Participant's Vested Interest in any subsequent contribution
allocated to the Participant's Account pursuant to Sections 6 or 7 with respect
to the Plan Year in which the Participant's Service terminated. The
Participant's Account shall be distributable, in accordance with the methods and
rules of distribution described in Section 11, as soon as practicable following
the Valuation Date immediately following the Participant's termination of
Service. The value of the Participant's Account shall be determined as of the
Valuation Date coincident with or immediately preceding the date of distribution
of the Participant's Account. If such Terminated Participant's Vested Interest
is less than 100 percent, the non-vested balance of such Participant's Profit
Sharing Subaccount and ESOP Account shall be forfeited and reallocated pursuant
to Section 4.5 as of the last day of the earlier of (i) the Plan Year in which
the Participant's Account is distributed, or (ii) the Plan Year in which the
Participant incurs a Total Break in Service.
10.3 Vesting Schedule for Determining Vested Interests. For all purposes of
this Plan, a Participant's Vested Interest in his or her Profit Sharing
Subaccount and ESOP Account shall consist of (i) the Participant's percentage of
his or her Profit Sharing Subaccount and (ii) the percentage of the
Participant's ESOP Account, both as determined from the following vesting
schedule on the basis of the number of Years of Service which the Participant
has completed as of the date of the Participant's termination of Service.
VESTING SCHEDULE
Years of Service Percentage
Less than two years 0%
Two years but less than three years 25%
Three years but less than four years 50%
Four years or more 100%
10.4 Breaks in Service. If a Participant's Service is terminated prior
to his or her Retirement Date for any reason other than the Participant's death
or Disability prior to completing three Years of Service, and such Participant
incurs a Total Break in Service, such Participant shall not be entitled to any
benefit attributable to amounts allocated to the Participant's Profit Sharing
Subaccount or ESOP Account prior to such Total Break in Service. If a
Participant returns to Service, Years of Service before such return shall be
counted, in addition to Years of Service following such return, in determining
the Participant's Vested Interest in the amount credited to the Participant's
Profit Sharing Subaccount or ESOP Account subsequent to the Participant's return
to Service. If such Participant does not complete one Year of Service following
his or her return, then the Participant shall not be entitled to any further
benefit under the Plan and the non-vested balance of any Profit Sharing
Contribution or ESOP Contributions credited or recredited to such Participant's
Profit Sharing Subaccount or ESOP Account subsequent to the Participant's return
shall be forfeited and reallocated pursuant to Section 4.5 upon the
Participant's termination of Service. All forfeitures shall occur in conformity
with the ordering rules of Section 54.4975-11(d) of the Regulations.
10.5 Participant's Right to Restoration of Account Upon Return to Service.
If a Terminated Participant who had a vested interest in such Participant's
Profit Sharing Subaccount or ESOP Account returns to Service prior to incurring
a Total Break in Service, the non-vested balance of the Terminated Participant's
Account, if any, forfeited pursuant to Section 10.2 shall be recredited to such
Participant's Account, provided that, not later than the fifth anniversary of
the first date on which the Participant is subsequently employed, such
Participant repays the full amount of any distribution made to the Participant
upon his or her prior termination of Service. Any amount so repaid, together
with any non-vested portion of such Participant's Account recredited pursuant to
this Section 10.5, shall be invested in the Trust Fund. If such Participant
fails to make a repayment of any distributed amounts pursuant to this Section
10.5, the non-vested portion of such Participant's Account, if any, shall not be
recredited.
10.6 Participant's Right to Account Upon Death After Termination of
Service. Subject to the provisions of Section 10, if a Terminated Participant
dies before payment of the full value of his or her Account from the Trust Fund,
an amount equal to the current value of the unpaid portion of the Participant's
Vested Interest in his or her Account, including any subsequent contribution
allocated to the Terminated Participant's Account pursuant to Sections 6 or 7
with respect to the Plan Year in which the Participant's Service is terminated,
shall be distributable, in accordance with the methods and rules of distribution
described in Section 11, as soon as practicable following the Participant's
death. The value of the Participant's Account shall be determined as of the
Valuation Date coincident with or immediately preceding the date of distribution
of the Participant's Account.
10.7 Amendment of Vesting Schedule. If the vesting schedule contained in
Section 10.3 is amended, each Participant who has completed at least three (3)
Years of Service may elect, during the election period specified in this
Section, to have his or her vested percentage determined without regard to such
amendment. For purposes of this Section, the election period shall begin as of
the date on which the amendment changing the vesting schedule is adopted, and
shall end on the latest of the following dates: (i) the date occurring sixty
(60) days after the Plan amendment is adopted; (ii) the date which is sixty (60)
days after the day on which the Plan amendment becomes effective; (iii) the date
which is sixty (60) days after the day the Participant is issued written notice
of the Plan amendment by the Committee; or (iv) such later date as may be
specified by the Committee. The election provided for in this Section shall be
made in writing and shall be irrevocable when made.
10.8 Distribution Following Attainment of Age 59-1/2 to Former Participants
of The Hampton Pension Services, Inc. 401(k) Retirement Savings Plan. A
Participant who was employed by Hampton Pension Services, Inc. on November 6,
1995 shall be entitled to receive, at any time following the date such
Participant attains age 59-1/2, a distribution of all or any portion of the
Participant's Account, to the extent attributable to any amounts that were
transferred to the Plan from such Participant's former account in The Hampton
Pension Services, Inc. 401(k) Retirement Savings Plan.
10.9 Transfer to Non-Participating Affiliate. For purposes of applying the
provisions of this Section 10, a Participant whose employment has transferred
from the Employer to a Non-Participating Affiliate will not be treated as having
terminated employment.
SECTION 11. METHOD OF PAYMENT OF ACCOUNTS
AND WITHDRAWALS
11.1 Methods of Payment. Any benefit payable under the Plan, except as
otherwise provided in Section 11.2 shall be payable as soon as practicable
following the last day of the calendar month in which falls a Participant's
termination of Service (or other event requiring a distribution under the Plan),
in one lump sum payment from the Trust Fund, provided that the Participant may
elect to direct the Committee to directly transfer all or any portion of his or
her "eligible rollover distribution" (as defined in Section 11.8 below) to
another tax-qualified plan pursuant to Section 401(a)(31) of the Code. A
Participant who has no Vested Interest in his or her Account upon his or her
termination of Service will be deemed to have received a full distribution of
his or her Account as of such date. A Participant who elects not to receive a
distribution at the time set forth in the first sentence may receive a
distribution at any time thereafter upon reasonable notice to the Plan.
Subject to the provisions of Section 11.3 with respect to the distribution
of Shares, any distribution hereunder shall be made in cash; provided, however,
that pursuant to procedures adopted from time to time by the Committee, a
Participant may elect to receive a distribution in the form of shares of the
assets in which such Participant's Account was invested immediately prior to the
distribution, but only if such distribution is made directly to a rollover IRA
established with the Employer as custodian.
11.2 Commencement of Payment. Notwithstanding any other provision of the
Plan to the contrary, (i) if a Participant has a Vested Interest in his or her
Account with a value of $5,000 or less, it shall be distributed in one lump sum
as soon as is administratively feasible following the last day of the calendar
month in which such Participant's termination of employment occurs, and (ii) if
a Participant has a Vested Interest in his or her Account with a value of more
than $5,000, it shall not commence to be distributed without the consent of the
Participant before the Participant's Normal Retirement Date.
In the absence of receipt of such consent by the Committee, payment of
the benefit to such Participant shall commence as soon as practicable after the
Participant's attainment of his or her Normal Retirement Date, which benefit
shall be in an amount equal to the value of the Participant's distributable
Account as of the Valuation Date coincident with or immediately following the
Participant's attainment of his or her Normal Retirement Date. In any case where
distribution of any benefit amount from the Participant's Cash Contribution
Account is to be deferred, the Committee shall either (i) establish or cause to
be established a special account for the benefit of the former Participant, to
be invested by the Trustee in a fixed investment account established by the
Trustee or (ii) cause all amounts in the Participant's Cash Contribution Account
deferred by the Participant to be invested at the Participant's election in the
same manner as the normal Cash Contribution Accounts maintained for Participants
under to the Plan.
11.3 Special Rules For Distribution of Shares.
(a) A Participant may elect to receive a distribution of the
Participant's Vested Interest from his or her account entirely in whole Shares,
with the value of any fractional interest in Shares paid in cash. Any cash or
other property in a Participant's Account for which a distribution in Shares is
elected will be used by the Purchasing Agent to acquire Shares, valued as of the
last day of the calendar month in which occurs (i) the Participant's election to
receive a distribution of his or her Account pursuant to Section 11.1, (ii) the
Participant's termination of Service, in the case of a distribution pursuant to
Section 11.2(i), or (iii) the Participant's Normal Retirement Date (or the
Participant's death, if earlier), in the case of a distribution pursuant to
Section 11.2(ii) to a Participant who failed to consent to a distribution prior
to his or her Normal Retirement Date (the "Share Conversion Date").
Notwithstanding the foregoing, if applicable corporate charter or bylaw
provisions restrict ownership of substantially all outstanding Shares to
Employees or to a plan or trust described in Section 401(a) of the Code, then
any distribution of a Participant's Vested Interest in the Participant's ESOP
Account shall be in cash. When a distribution consists in whole or in part of
Shares, and if such Shares consists of more than one class of securities, the
distribution of such Shares shall consist of substantially the same proportion
of each such class of Shares as such classes of Shares represent proportions of
the Participant's Account. If the record date for dividends payable with respect
to Shares distributable to a Participant occurs following the Share Conversion
Date, such dividends shall not be considered attributable to such Shares, but
shall be considered as earnings of the Fund and allocated among Participants'
Accounts pursuant to Section 8.6(b).
(b) Notwithstanding anything in Section 11 to the contrary, in the
discretion of the Committee, Section 11.1 may not apply to Shares held in a
Participant's ESOP Account until the close of the Plan Year in which any Exempt
Loan used to acquire such Shares is repaid in full.
(c) If at the time of distribution, Shares distributed from the
Trust Fund that were acquired with the proceeds of an Exempt Loan are not
treated as "readily tradable on an established market" within the meaning of
Section 409(h) of the Code and Regulations, such Shares shall be subject to a
put option in the hands of a Qualified Holder by which such Qualified Holder may
sell all or any part of such Shares to the Trust. Should the Trust decline to
purchase all or any part of such Shares, the Employer shall purchase those
Shares that the Trust declines to purchase. The put option shall be subject to
the following conditions:
(i) The term "Qualified Holder" shall mean the Participant or
Beneficiary receiving the distribution of such Shares, any other party to whom
the Shares are transferred by gift or reason of death, or any trustee of an
individual retirement account (as defined under Code Section 408) to which all
or any portion of the distributed Shares is transferred pursuant to a tax-free
"rollover" transaction satisfying the requirements of Sections 402 and 408 of
the Code.
(ii) During the 60-day period following any distribution of such
Shares, a Qualified Holder shall have the right to require the Trust or the
Employer to purchase all or a portion of the distributed Shares held by the
Qualified Holder. The purchase price to be paid for any such Shares shall be
their fair market value determined as of the Valuation Date coinciding with or
immediately preceding the exercise of the put option under this Section
11.3(c)(ii), provided that in the case of a transaction between the Plan and a
"disqualified person" within the meaning of Section 4975(e)(2) of the Code, such
fair market value shall be determined as of the date of the transaction.
(iii) If a Qualified Holder shall fail to exercise such put
option, the put option shall temporarily lapse upon the expiration of the 60-day
period. As soon as practicable following the last day of the Plan Year in which
the 60-day option period expires, the Employer shall notify the non-electing
Qualified Holder (if he or she is then a shareholder of record) of the valuation
of the Shares as of that date. During the 60-day period immediately following
receipt of such valuation notice, the Qualified Holder shall again have the
right to require the Employer to purchase all or any portion of the distributed
Shares. The purchase price to be paid therefor shall be based on the valuation
of the Shares as of the Valuation Date coinciding with or immediately preceding
the exercise of the option under this Section 11.3(c)(iii), provided that in the
case of a transaction between the Plan and a "disqualified person" within the
meaning of Section 4975(e)(2) of the Code, such fair market value shall be
determined as of the date of the transaction.
(iv) The foregoing put options under Section 11.3(c)(ii) and
(iii) hereof shall be effective solely against the Employer and shall not
obligate the Plan or Trust in any manner.
(v) Except as otherwise required or permitted by the Code, the
put options under this Section 11.3(c) shall satisfy the requirements of Section
54.4975-7(b) of the Treasury Regulations to the extent, if any, that such
requirements apply to such put options.
If a Qualified Holder exercises a put option under this Section
11.3(c), payment for the Shares shall be made in substantially equal annual
payments over a period beginning not later than 30 days after the exercise of
the put option and not exceeding five years (provided that adequate security and
reasonable interest are provided with respect to unpaid amounts).
Except as provided in this Section 11.3(c) or in Section 11.2,
no shares acquired with the proceeds of an Exempt Loan may be subject to a put,
call or other option, or buy-sell or similar arrangement while held by or
distributed from the Plan. The rights and protections set forth in this Section
11.3(c) shall be non-terminable.
11.4 Payments to Surviving Spouse or Beneficiary. If a Participant or
former Participant dies before the commencement of his or her benefits under the
Plan, such Participant's or former Participant's Vested Interest in his or her
Account is payable in full to his or her Surviving Spouse. If such Participant
has no Surviving Spouse, he or she may designate a Beneficiary pursuant to
Section 14. A Participant may with the written consent of his or her spouse
elect to designate a Beneficiary other than or in addition to his or her spouse.
The written consent of the spouse must acknowledge the effect of such election
and must be witnessed by a representative of the Plan or a notary public. Any
such election may not be changed without spousal consent. Such an election or
revocation must be made in accordance with the procedures developed by the
Committee in accordance with the Code and Regulations.
11.5 Latest Date for Commencement of Benefits.
(a) Payments will commence no later than 60 days following the latest
of the close of the Plan Year in which:
(i) the Participant attains his or her Normal Retirement Date,
(ii) occurs the 10th anniversary of the year in which the
Participant commenced participation in the Plan, or
(iii)the Participant terminates his or her Service with the
Employer.
(b) Notwithstanding the provisions of the foregoing sentence, if the
amount payable cannot be ascertained, or, subject to the provisions of Section
20.6, the Participant cannot be located after reasonable efforts, a payment
retroactive to the date determined under the foregoing sentence may be made not
later than 60 days after the earliest date on which the amount of such payment
can be ascertained under the Plan or the date on which the Participant is
located (whichever is applicable).
(c) Notwithstanding any other provision of the Plan, benefits payable
to a Participant who is a five percent (5%) owner, as defined in Section 416 of
the Code with respect to the Plan Year ending in the calendar year in which the
Participant attains age 70 1/2, shall commence no later than April 1st of the
calendar year following the calendar year in which such Participant attains age
70 1/2. Commencing July 1, 1997, to the extent permitted by the Code and
Regulations, Participants who are not five percent (5%) owners may elect to
commence distribution of their benefits on April 1st of the calendar year
following the later of the calendar year in which such Participant attains age
70 1/2 or the calendar year following the calendar year in which such
Participant retires.
(d) If a Participant dies before benefits have commenced,
distributions to any Surviving Spouse or Beneficiary shall be made as soon as
administratively feasible, but not later than five years after such
Participant's death. In the event that payment is made to the Participant's
Surviving Spouse, such distribution shall not commence later than the date on
which such Participant would have had to commence distributions under Section
401(a)(9) of the Code (or, in either case, on any later date prescribed by
Regulations). If the Participant's Surviving Spouse dies after such
Participant's death but before distribution has been made to such Surviving
Spouse, the Section 11.5(d) shall be applied to require payment of any benefits
as if such Surviving Spouse were the Participant.
(e) Pursuant to Regulations, any benefit paid to a child shall be
treated as if paid to a Participant's Surviving Spouse if such amount would
become payable to such Surviving Spouse on the child's attaining majority, or
other designated event permitted by Regulations.
11.6 Redirection of Investment of ESOP Account.
(a) Upon both attaining age 50 and completing five Years of Service,
a Participant shall be permitted to direct the Plan to transfer all or any
portion of the Vested Interest in the Participant's ESOP Account to the
Participant's Cash Contribution Account.
(b) In addition, effective as of May 1, 1999, upon completing the
number of Years of Service indicated in the table below, a Participant shall be
permitted to direct the Plan to transfer the percentage indicated below of the
Vested Interest in the Participant's ESOP Account to the Participant's Cash
Contribution Account.
Years of Service Percentage
5 50
10 75
15 100
(c) Any directions pursuant to this Section 11.6 shall be made
pursuant to rules prescribed by the Committee, and shall be effective as soon as
administratively feasible, but not later than 30 days from the date on which
such direction is given. Any directions given pursuant to subsection (b) hereof
may be given not more than once per Plan Year. For purposes of this Section
11.6, the number of the Participant's Years of Service shall be determined
without regard to Hours of Service, and shall be based on periods of continuous
service from the date the Participant commenced employment with the Company.
(d) In the event that the Participant's Account does not provide at
least three investment options to the Participant other than investment in
Shares, the Committee shall provide diversification options to any Participant
required to be given such diversification options under Section 401(a)(28)(B) of
the Code in a manner consistent with the Code. Notwithstanding the foregoing,
the ability to make transfers may be restricted by the Committee to the extent
necessary to comply with any applicable federal securities laws (including Rule
144); provided, however, that in no event shall a Participant be prevented from
transferring any amount necessary in order to meet the diversification
requirements set forth in Section 401(a)(28)(B) of the Code.
(e) In addition, effective as of April 1, 2001, the ESOP Accounts of
all Participants shall be transferred to the Participant's Cash Contribution
Account. Thereafter, Participants may direct the investment of the prior ESOP
Account balances in the same manner as the remainder of the Participant's Cash
Contribution Account.
11.7 Hardship Withdrawals.
(a) A Participant (other than a Terminated Participant) may elect to
withdraw all or any portion of the Vested Interest in his or her Cash
Contribution Account attributable to Elective Contributions (but excluding any
earnings on Elective Contributions accruing after December 31, 1988), Rollover
Contributions, Matching Contributions, and Profit Sharing Contributions (if, and
only if, the withdrawal of Profit Sharing Contributions is occasioned by a life
threatening illness to the Participant) by giving written notice thereof to the
Committee specifying such date, which shall not be less than 30 days following
the date such notice is given to the Committee. Such notice shall designate that
the hardship withdrawal shall be withdrawn from the investment funds in which
the Participant has directed investment of the Participant's Cash Contribution
Account.
(b) The Committee may authorize a hardship withdrawal only for:
(i) medical expenses described in Section 213(d) of the Code
incurred or immediately anticipated by the Participant, the Participant's
spouse, or any dependents of the Participant (as defined in Section 152 of the
Code);
(ii) the purchase (excluding mortgage payments) of a principal
residence of the Participant;
(iii)the payment of tuition and related educational fees for
the next 12 months of post-secondary education for the Participant or the
Participant's spouse, children, or dependents; or
(iv) the need to prevent the eviction of the Participant from
the Participant's principal residence or foreclosure on the mortgage of the
Participant's principal residence.
(c) A hardship withdrawal may be authorized only to the extent
necessary to satisfy the hardship. A distribution will be deemed to be necessary
to satisfy the hardship only if the distribution is not in excess of the amount
of the immediate and heavy financial need of the Participant and such
Participant's tax obligations as a result of such distribution and the Employee
certifies in writing that such a hardship exists (and the Committee has no
knowledge to the contrary); provided that the Committee may set stricter
standards for making such determination on a nondiscriminatory basis; and
provided further that the Participant must obtain the written consent of his or
her spouse to the extent required by law. The Committee's decision shall be
final and binding on the Participant.
(d) In the event that a Participant's Vested Interest is less than
100% at the time of making a withdrawal from his Profit Sharing Subaccount
pursuant to Section 11.7(a), the Participant's Vested Interest in his or her
Profit Sharing Subaccount at any relevant time thereafter shall be equal to an
amount ("X") determined by the following formula: X = P [AB + (R x D)] - (R x
D). For purposes of applying the formula: P is the Participant's Vested Interest
at the relevant time, AB is the balance of the Participant's Profit Sharing
Subaccount at the relevant time; D is the amount distributed to the Participant
pursuant to Section 11.7(a); and R is the ratio of the Participant's Profit
Sharing Subaccount balance at the relevant time to the Participant's Profit
Sharing Subaccount balance immediately after the distribution pursuant to
Section 11.7(a).
11.8 Direct Rollovers to Another Qualified Plan or IRA.
(a) This Section 11.8 applies to distributions made on or after
January 1, 1993. Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a distributee's election under this Section 11.8, a
distributee may elect, at the time and in the manner prescribed by the
Committee, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee in a direct
rollover.
(b) An eligible rollover distribution is any distribution of all or
any portion of the balance to the credit of the distributee, except that an
eligible rollover distribution does not include: any distribution that is one of
a series of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the distributee or the joint
lives (or joint life expectancies) of the distributee and the distributee's
designated Beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under Section 401(a)(9)
of the Code; and the portion of any distribution that is not includable in gross
income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
(c) An eligible retirement plan is an individual retirement account
described in section 408(a) of the Code, an individual retirement annuity
described in section 408(b) of the Code, an annuity plan described in section
403(a) of the Code or a qualified trust described in section 401(a) of the Code,
that accepts the distributee's eligible rollover distribution. However, in the
case of an eligible rollover distribution to the surviving spouse, an eligible
retirement plan is an individual retirement account or individual retirement
annuity.
(d) A distributee includes a Participant or former Participant. In
addition, the Participant's or former Participant's Surviving Spouse and the
Participant's or former Participant's spouse or former spouse who is the
alternate payee under a qualified domestic relations order, as defined in
Section 414(p) of the Code, are distributees with regard to the interest of the
Surviving Spouse, spouse or former spouse.
(e) A direct rollover is a payment by the Plan to the eligible
retirement plan specified by the distributee.
(f) If a distribution is one to which Sections 401(a)(11) and 417 of
the Code do not apply, such distribution may commence less than 30 days after
the notice required under Section 1.411(a)-11(c) of the Regulations is given,
provided that:
(1) the Committee clearly informs the Participant that the
Participant has a right to a period of at least 30 days after receiving the
notice to consider the decision of whether or not to elect a distribution (and,
if applicable, a particular distribution option), and
(2) the Participant, after receiving the notice, affirmatively
elects a distribution.
11.9 Certain Securities Law Restrictions. Any distribution of Shares
pursuant to this Section 11 shall be subject to all applicable laws, rules and
regulations and to such approvals by stock exchanges or governmental agencies as
may be deemed necessary or appropriate by the Board of Directors. Each
distributee may be required to give the Employer a written representation that
such distributee will not be involved in a violation of state or federal
securities laws, including the Securities Act of 1933, as amended; the form of
such written representation will be prescribed by the Board of Directors.
11.10 Participant Loans.
(a) Upon the written request of a Participant who is an Employee (or
who is employed by a Non-Participating Affiliate), the Committee may direct the
Trustee to make a loan to such Participant from such Participant's Account.
Loans to Participants pursuant to this Section 11.10 shall be administered by
the Committee and shall be subject to a Participant Loan Policy and such other
procedures as may be adopted from time to time by the Committee. The Company
shall not have the discretion to refuse a loan request, so long as the terms of
the loan comply with the requirements of this Section 11.10 and the Participant
Loan Policy. The terms of the loan shall be determined by the Committee, subject
to the limits set forth in this Section, and shall be evidenced by the
Participant's promissory note. Loans shall be held in a segregated Account of
the Trust. An Employee who has made a Rollover Contribution shall be considered
a Participant for purposes of this Section, even if such Employee has not yet
become a Participant pursuant to Section 3.
(b) The aggregate outstanding balance of all loans to a Participant
from this Plan and all other qualified plans maintained by the Employer, when
added to any principal repayments on any participant loans made within the
twelve-month period preceding the date on which the loan is made, may not exceed
the lesser of (i) $50,000 or (ii) 50% of the vested interest in the
Participant's Account as of the day of making the loan.
(c) Principal and interest shall be repaid in level, periodic
installments by payroll deductions not less frequent than quarterly over a
definite period of time not to exceed five (5) years, provided, however, that in
the case of a loan the proceeds of which are used by the Participant to acquire
a principal residence of the Participant, the loan may be repayable over a
reasonable period of time in excess of five (5) years as determined by the
Committee.
(d) All loans shall be secured by a lien on the Participant's
interest in the trust. The amount of the loan may not exceed fifty percent (50%)
of the value of the Participant's vested Account balance at the time the loan is
made. The Committee may determine that any distribution made pursuant to the
Plan shall be reduced by an amount up to the outstanding principal and interest
balance of the loan.
(e) Any loan made pursuant to this Section 11.10 must not constitute
a prohibited transaction as defined in Section 4975 of the Code.
(f) Loan repayments will be suspended under the Plan as permitted
under Section 414(u)(4) of the Code.
11.11 Other In-Service Withdrawals. A Participant (other than a Terminated
Participant) who has completed five (5) Years of Service may elect at any time,
but not more than once in each Plan Year, to withdraw all or any portion of the
Vested Interest in such Participant's ESOP Account or such Participant's Cash
Contribution Account attributable to Profit Sharing Contributions, ESOP
Contributions or Rollover Contributions by giving written notice thereof to the
Committee specifying such date, which shall not be less than 30 days following
the date such notice is given to the Committee. Such notice shall designate that
the withdrawal shall be withdrawn from the investment funds in which the
Participant has directed investment of the Participant's Cash Contribution
Account.
SECTION 12. MAXIMUM AMOUNT OF ALLOCATION
12.1 Section 415 Limitations. Annual additions to a Participant's Account
with respect to any Plan Year may not exceed the limitations set forth in
Section 415 of the Code, which are incorporated herein by reference. For these
purposes, (i) "annual additions" shall have the meaning set forth in Section
415(c)(2) of the Code, as modified elsewhere in the Code and the Regulations,
(ii) the limitation year shall mean the Plan Year unless any other twelve
consecutive month period is designated pursuant to a written resolution adopted
by the Employer, (iii) "compensation" shall have the meaning elected by the
Employer pursuant to Section 415(c)(3) of the Code, and (iv) "annual additions"
shall include annual additions under all other defined contribution plans
maintained by the Employer or any Affiliated Employer. Effective for Plan Years
beginning on or after January 1, 1998, "compensation" shall be computed without
reduction for a Participant's elective deferrals under Section 402(g)(3) of the
Code or for contributions made by the Employer or the Participant under Section
125 of the Code. If the requirements of Section 7.5(a) are satisfied, the term
"annual additions" shall not include any amounts credited to the Participant's
Account (i) due to Participating Employer contributions relating to interest
payments on an Exempt Loan deductible under Section 404(a)(9)(B) of the Code, or
(ii) attributable to a forfeiture of Shares acquired with the proceeds of an
Exempt Loan.
Effective for limitation years commencing prior to January 1, 1999, if a
Participant in the Plan also participates in any defined benefit plan (as
defined in Sections 414(j) and 415(k) of the Code) maintained by the Employer or
any Affiliated Employer, in the event that in any Plan Year the sum of the
Participant's Defined Benefit Fraction (as defined in Section 415(e)(2) of the
Code) and the Participant's Defined Contribution Fraction (as defined in Section
415(e)(3) of the Code) exceed 1.0, the benefit under such defined benefit plan
or plans shall be reduced in accordance with the provisions of that plan or
those plans, so that the sum of such fractions with respect to the Participant
will not exceed 1.0. If this reduction does not ensure that the limitation set
forth in Section 12.1 is not exceeded, then the annual addition to any defined
contribution plan, other than the Plan, shall be reduced in accordance with the
provisions of that plan but only to the extent necessary to ensure that such
limitation is not exceeded.
12.2 Refund or Forfeiture of Amounts in Excess of Section 415 Limits.
(a) In the event that amounts which would otherwise be allocated to a
Participant's Account under the Plan must be reduced by reason of the
limitations of Section 12.1, then such reduction shall be made in the following
order or priority, but only to the extent necessary:
(i) first the Participant's Profit Sharing Contributions shall
be forfeited and reallocated pursuant to this Section 12.2; and then
(ii) the Participant's Matching Contributions shall be forfeited
and reallocated pursuant to this Section 12.2; and then
(iii)the Participant's Elective Contributions shall be refunded
to the Participant; and then
(iv) Shares allocated to the Participant's Account attributable
to ESOP Contributions shall be forfeited and reallocated pursuant to this
Section 12.2.
(b) Forfeitures arising under the Plan and allocable to such
Participant in respect of such Plan Year shall be reallocated to the Accounts of
other Participants as of the end of the Plan Year for which such reduction is
made in the manner provided under Section 4.5 above.
(c) If, with respect to any Plan Year, there is an excess
contribution on account of the limitations contained in this Section 12.2, and
such excess cannot be fully allocated in accordance with Section 12.2(b) because
of the limitations prescribed in this Section 12, the amount of such excess
which cannot be so allocated shall be held in suspense and allocated in the
succeeding Plan Year prior to any other contributions by the Employer for such
Plan Year.
SECTION 13. VOTING AND TENDER OR EXCHANGE RIGHTS
13.1 Voting and Tender or Exchange of Shares in General. Except as
otherwise required by the Act, the Code and the Regulations, all voting and
tender or exchange rights of Shares held in Participants' Accounts shall be
exercised by the Purchasing Agent only as directed by the Participants or their
Beneficiaries or as otherwise provided in accordance with the provisions of this
Section 13.
13.2 Voting of Allocated Shares.
(a) If any Participating Employer has a registration-type class of
securities (as defined in Section 409(e)(4) of the Code or any successor statute
thereto), then, with respect to all corporate matters submitted to shareholders,
all Shares (including fractional interests in Shares) allocated and credited to
the Accounts of Participants shall be voted in accordance with the directions of
such Participants as given to the Purchasing Agent; provided that (i) with
regard to Shares allocated to ESOP Accounts, allocated Shares for which no
directions are received by the Purchasing Agent shall be voted in the same
proportion as allocated Shares for which directions are received are voted
pursuant to this Section 13.2, and (ii) Shares allocated to Accounts other than
ESOP Accounts for which no directions are received by the Purchasing Agent shall
not be voted.
(b) If no Participating Employer has a registration-type class of
securities (as defined in Section 409(e)(4) of the Code or any successor statute
thereto), then, only with respect to corporate matters relating to a corporate
merger or consolidation, recapitalization, reclassification, liquidation,
dissolution, sale of substantially all assets of a trade or business, or such
other similar transaction that Regulations require, all Shares allocated and
credited to the Accounts of Participants shall be voted in accordance with the
directions of such Participants as given to the Purchasing Agent; provided that
(i) with respect to Shares allocated to ESOP Accounts, allocated Shares for
which no directions are received by the Purchasing Agent shall be voted in the
same proportion as allocated Shares for which directions are received are voted
pursuant to this Section 13.2, and (ii) Shares allocated to Accounts other than
ESOP Accounts for which no directions are received by the Purchasing Agent shall
not be voted.
13.3 Mechanics of Voting Allocated Shares. If Participants are entitled
under Section 13.2 to direct the vote with respect to allocated Shares, then, at
least 30 days before each annual or special shareholders' meeting of the
Employer (or, if such schedule cannot be met, as early as practicable before
such meeting), the Committee shall cause each Participant to be furnished with a
copy of the proxy solicitation material sent generally to shareholders, together
with a form requesting confidential instructions concerning the manner in which
the Shares allocated to such Participant's Account are to be voted. Upon timely
receipt of such instructions, the Purchasing Agent (after combining votes of
fractional Shares to give effect to the greatest extent possible to
Participants' instructions) shall vote the Shares as instructed. The
instructions received by the Purchasing Agent from each Participant shall be
held by the Purchasing Agent in strict confidence and shall not be divulged or
released to any person, including, without limitation, any officers or Employees
of any Participating Employer, or of any other Employer. The Trustee, the
Employer, the Purchasing Agent and the Committee shall not make recommendations
to Participants concerning whether to vote or how to vote.
13.4 Voting of Unallocated Shares. With respect to unallocated Shares held
in the Trust Fund, absent specific instructions from the Trustee or other
fiduciary pursuant to the Trust Agreement, the Purchasing Agent shall vote such
Shares in the same proportion as Shares are voted pursuant to Section 13.2;
provided that the Purchasing Agent shall follow any directions of the Trustee or
any other fiduciary authorized to instruct the Trustee with respect to the
voting of such unallocated Shares under the Trust Agreement.
13.5 Tender or Exchange of Allocated Shares. The Committee shall notify
each Participant of each tender or exchange offer for the Shares and utilize its
best efforts to distribute or cause to be distributed to each Participant in a
timely manner all information distributed to shareholders of the Employer in
connection with any such tender or exchange offer. Each Participant shall have
the right from time to time with respect to the Shares allocated to the
Participant's Account to instruct the Purchasing Agent in writing as to the
manner in which to respond to any tender or exchange offer which shall be
pending or which may be made in the future for all Shares or any portion
thereof. A Participant's instructions shall remain in force until superseded by
the Participant. The Purchasing Agent shall tender or exchange whole Shares only
as and to the extent so instructed. If the Purchasing Agent does not receive
instructions from a Participant regarding any tender or exchange offer for
Shares, the Purchasing Agent shall have no discretion in such matter and shall
not tender or exchange any such Shares in response thereto. For purposes of
responding to such tender or exchange offers, each Participant shall be the
"named fiduciary" with respect to such Shares allocated to his or her Account.
Unless and until Shares are tendered or exchanged, the individual instructions
received by the Purchasing Agent from Participants shall be held by the
Purchasing Agent in strict confidence and shall not be divulged or released to
any person, including, without limitation, any officers or Employees of any
Participating Employer, or of any other Employer; provided, however, that the
Purchasing Agent shall advise the Employer, at any time upon request, of the
total number of Shares not subject to instructions to tender or exchange.
13.6 Tender or Exchange of Unallocated Shares. Absent specific instructions
from the Trustee or other fiduciary pursuant to the Trust Agreement, the
Purchasing Agent shall tender unallocated Shares held in the Trust Fund in
proportion to the ratio that (A) the number of Shares with respect to which
Participant instructions favor of the tender or exchange have been received
bears to (b) the number of Shares with respect to which Participant instructions
for or against the tender or exchange have been received; provided that the
Purchasing Agent shall follow any directions of the Trustee or any other
fiduciary authorized to instruct the Trustee with respect to the tender or
exchange of unallocated Shares under the Trust Agreement.
13.7 Voting of Deceased Participant's Shares. If this Section 13 applies to
Shares allocated to the Account of a deceased Participant, such Participant's
Beneficiary shall be entitled to direct the manner in which to respond to any
tender or exchange offer as if such Beneficiary were the Participant.
SECTION 14. DESIGNATION OF BENEFICIARIES
14.1 Designation of Beneficiary. Each Participant shall file with the
Committee a written designation of one or more persons as the Beneficiary who
shall be entitled to receive the amount, if any, payable under the Plan upon his
or her death. A Participant may from time to time revoke or change his or her
Beneficiary designation without the consent of any prior Beneficiary by filing a
new designation with the Committee. The last such designation received by the
Committee shall be controlling; provided, however, that no designation, or
change or revocation thereof, shall be effective unless received by the
Committee prior to the Participant's death, and in no event shall it be
effective as of a date prior to such receipt. A Participant's Beneficiary
designation shall not be effective to the extent that payments to the Surviving
Spouse are required pursuant to Section 11, and in no event shall it be
effective as of a date prior to such receipt.
14.2 Failure to Designate Beneficiary. If no such Beneficiary designation
is in effect at the time of a Participant's death, or if no designated
Beneficiary survives the Participant, the payment of the amount, if any, payable
under the Plan upon his or her death shall be made to the Participant's
Surviving Spouse, if any; or if the Participant has no Surviving Spouse, then to
the Participant's children, if any, in equal shares; or if the Participant has
no children, to the Participant's parents, if any, in equal shares; or if the
Participant has no parents, to the Participant's brothers and sisters, if any,
in equal shares. If the Participant has no brothers or sisters, payment shall be
made to the Participant's estate. If the Committee is in doubt as to the right
of any person to receive such amount, the Committee may direct the Trustee to
retain such amount, without liability for any interest thereon, until the rights
thereto are determined, or the Committee may direct the Trustee to pay such
amount into any court of appropriate jurisdiction and such payment shall be a
complete discharge of the liability of the Plan and the Trust Fund therefor.
SECTION 15. ADMINISTRATION OF THE PLAN
15.1 The Committee. The Committee shall have general responsibility for the
administration, interpretation and construction of the Plan. The Committee shall
be responsible for establishing and maintaining Plan records, including
responsibility for compliance with the Actual Deferral Percentage and Actual
Contribution Percentage tests described in Sections 4.6 and 5.3, and the
Committee shall be responsible for complying with the reporting and disclosure
requirements of the Act. The Committee shall report to the Board of Directors,
or to a committee of the Board of Directors designated for that purpose,
periodically as shall be specified by the Board of Directors or such designated
committee, with regard to the matters for which it is responsible under the
Plan.
15.2 The Trustee. Except as otherwise provided in the Trust Agreement or
the Plan, the Trustee may act only as directed by the Committee, the Employer or
any other party, as applicable. The Trustee shall have responsibility under the
Plan for the management and control of the assets of the Plan. The Committee
shall periodically review the performance and methods of the Trustee. The
Employer or the Committee shall have the power to appoint, remove or change the
Trustee and, to the extent that the Trust Fund is invested in assets other than
Shares, shall have the power to appoint or remove one or more investment
advisers and to delegate to such adviser authority and discretion to manage
(including the power to acquire and dispose of) the assets of the Plan, provided
that (i) such adviser with such authority and discretion shall be either a bank
or a registered investment adviser under the Investment Advisers Act of 1940,
and shall acknowledge in writing that it is a fiduciary with respect to the Plan
and (ii) the Committee shall periodically review the investment performance and
methods of each adviser(s) with such authority and discretion. The Committee
shall establish investment standards and policies and communicate the same to
the Trustee. If annuities are to be purchased under the Plan, the Committee
shall determine what contracts should be made available to terminated
Participants or purchased by the Trust Fund.
15.3 Committee's Responsibility for Entering into Exempt Loans and
Valuation of Shares. The Committee shall have responsibility for directing the
Trustee as to whether and under what terms it shall enter into an Exempt Loan
and for directing the Purchasing Agent whether and under what terms it shall
purchase or otherwise dispose of Shares. In the event that there is no generally
recognized market for Shares, the Committee shall be the named fiduciary with
responsibility for determining the fair market value of the Shares, provided,
that any such determination shall be in accordance with applicable Regulations,
if any, and the Committee shall, in making such determination, retain an
independent appraiser to make such valuation on behalf of the Committee in
accordance with Section 7.9.
15.4 Committee's Power to Engage Outside Experts. The Committee may arrange
for the engagement of such legal counsel, who may be counsel for the Employer,
and make use of such agents and clerical or other personnel as they each shall
require or may deem advisable for purposes of the Plan. The Committee may rely
upon the written opinion of such counsel and the accountants engaged by the
Committee and may delegate to any such agent of said Committee its authority to
perform any act hereunder, including without limitation, those matters involving
the exercise of discretion, provided that such delegation shall be subject to
revocation at any time at the discretion of said Committee. The Committee shall
engage such certified public accountants, who may be accountants for the
Employer, as it shall require or may deem advisable for purposes of the Plan.
15.5 Composition of Committee. The Committee shall consist of at least
three members, each of whom shall be appointed by, shall remain in office at the
will of, and may be removed, with or without cause, by the Board of Directors.
Any member of said Committee may resign at any time. No member of said Committee
shall be entitled to act on or decide any matter relating solely to himself or
any of his or her rights or benefits under the Plan. The members of the
Committee shall not receive any special compensation for serving in their
capacities as members of such Committee but shall be reimbursed for any
reasonable expenses incurred in connection therewith. Except as otherwise
required by the Act, no bond or other security need be required of the Committee
or any member thereof in any jurisdiction. Any member of the Committee, or any
agent to whom said Committee delegates any authority, and any other person or
group of persons, may serve in more than one fiduciary capacity (including
service both as a Trustee and administrator) with respect to the Plan.
15.6 Actions of Committee. The Committee shall elect or designate its own
chairman, establish its own procedures and the time and place for its meetings
and provide for the keeping of minutes of all meetings. A majority of the
members of the Committee shall constitute a quorum for the transaction of
business at a meeting of the Committee. Any action of the Committee may be taken
upon the affirmative vote of a majority of the members of the Committee at a
meeting or, at the direction of its Chairman, without a meeting, by mail,
telephone or facsimile, provided that all of the members of the Committee are
informed by mail or telephone of their right to vote on the proposal and of the
outcome of the vote thereon.
15.7 Disbursement of Plan Funds. The Committee shall cause to be kept full
and accurate accounts of receipts and disbursements of the Plan, shall cause to
be deposited all funds of the Plan to the name and credit of the Plan in such
depositories as may be designated by the Committee, shall cause to be disbursed
the monies and funds of the Plan when so authorized by the Committee and shall
generally perform such other duties as may be assigned to them from time to time
by the Committee.
15.8 Application for Benefits. Each Participant or Beneficiary believing
himself eligible for benefits under the Plan shall apply for such benefits by
completing and filing with the Committee an application for benefits on a form
supplied by the Committee. Before the date on which benefit payments commence,
each such application must be supported by such information and data as the
Committee deems relevant and appropriate. Evidence of age, marital status (and,
in the appropriate instances, health, death or disability) and location of
residence shall be required of all applicants for benefits. All claims for
benefits under the Plan shall, within a reasonable period of time, be decided by
one or more persons designated in writing by the chairman of the Committee.
15.9 Denied Claims for Benefits. In the event that any claim for benefits
is denied in whole or in part, the Participant or Beneficiary whose claim has
been so denied shall be notified of such denial in writing by the Committee. The
notice advising of the denial shall specify the reason or reasons for denial,
make specific reference to pertinent Plan provisions, describe any additional
material or information necessary for the claimant to perfect the claim
(explaining why such material or information is needed) and shall advise the
Participant or Beneficiary, as the case may be, of the procedure for the appeal
of such denial. All appeals shall be made by the following procedure:
(a) The Participant or Beneficiary whose claim has been denied shall
file with the Committee a notice of desire to appeal the denial. Such notice
shall be filed within sixty (60) days of notification by the Committee of claim
denial, shall be made in writing and shall set forth all of the facts upon which
the appeal is based. Appeals not timely filed shall be barred.
(b) The Committee shall, within thirty (30) days of receipt of the
Participant's or Beneficiary's notice of appeal, establish a hearing date on
which the Participant or Beneficiary may make an oral presentation to the
Committee in support of his or her appeal. The Participant or Beneficiary shall
be given not less than ten (10) days' notice of the date set for the hearing.
(c) The Committee shall consider the merits of the claimant's written
and oral presentations, the merits of any facts or evidence in support of the
denial of benefits and such other facts and circumstances as the Committee shall
deem relevant. If the claimant elects not to make an oral presentation, such
election shall not be deemed adverse to the claimant's interest, and the
Committee shall proceed as set forth below as though an oral presentation of the
contents of the claimant's written presentation had been made.
(d) The Committee shall render a determination upon the appealed
claim which determination shall be accompanied by a written statement as to the
reasons therefor. The determination so rendered shall be binding on all parties.
(e) For all purposes under the Plan, such decisions on claims (where
no review is requested) and decisions on review (where review is requested)
shall be final, binding and conclusive on all interested persons as to
participation and benefit eligibility, the Employee's amount of Compensation and
any other matter of fact or interpretation relating to the Plan.
15.10 Indemnification. To the maximum extent permitted by law, no member of
the Committee shall be personally liable by reason of any contract or other
instrument executed by such member of the Committee or on his or her behalf in
the Committee member's capacity as a member of such Committee nor for any
mistake of judgment made in good faith, and the Employer shall indemnify and
hold harmless, directly from its own assets (including the proceeds of any
insurance policy the premiums of which are paid from the Employer's own assets),
each member of the Committee and each other officer, employee or director of the
Employer to whom any duty or power relating to the administration or
interpretation of the Plan or to the management and control of the assets of the
Plan may be delegated or allocated, against any cost or expense (including
counsel fees) or liability (including any sum paid in settlement of a claim with
the approval of the Employer) arising out of any act or omission to act in
connection with the Plan unless arising out of such person's own fraud or
willful misconduct. The Employer shall advance funds for legal expenses to the
extent permitted by the Act.
15.11 Agent for Service of Process. The Committee or such other person as
may from time to time be designated by the Committee shall be the agent for
service of process under the Plan.
SECTION 16. EXPENSES
16.1 Payment of Plan Expenses. The expenses incurred in the management and
administration of the Plan shall be paid from the Trust Fund, except to the
extent the Employer, in its sole discretion, may choose to pay such expenses
from time to time; provided that any Trustee expenses paid to The Charles Schwab
Trust Company shall be payable solely by the Employer. Such expenses shall
include (i) the fees and expenses of any employee and of the Trustee for the
performance of their duties under the Plan and Trust Fund (including but not
limited to obtaining investment advice, record keeping services and legal
services), (ii) the expenses incurred by the members of the Committee in the
performance of their duties under the Plan (including reasonable compensation
for any legal counsel, certified public accountants, consultants and agents, and
cost of services rendered with respect to the Plan) and (iii) all other proper
charges and disbursements of the Trustee or the members of the Committee
(including settlements of claims or legal actions approved by counsel to the
Plan).
16.2 Expenses Attributable to Investment of Plan Assets and Taxes.
Brokerage fees, transfer taxes and any other expenses incident to the purchase
or sale of securities by the Trustee shall be deemed to be part of the cost of
such securities, or deducted in computing the proceeds therefrom, as the case
may be. Expenses attributable to investments of the Trust Fund shall be paid out
of the Trust Fund, except to the extent the Employer, in its sole discretion,
may choose to pay such expenses from time to time; provided that expense
entirely attributable to any one investment or to any one investment fund shall
be allocated pro rata in accordance with Account balances among Accounts
invested in such investment or investment fund. Taxes, if any, of any and all
kinds whatsoever which are levied or assessed on any assets held or income
received by the Trustee shall be paid out of the Trust Fund.
SECTION 17. EMPLOYER PARTICIPATION
17.1 Adoption of Plan by Affiliated Employer. Any Affiliated Employer may
adopt the Plan and the Trust Fund by resolution of its board of directors or
equivalent governing body provided that (i) the Board of Directors has not
expressly disallowed participation by such Affiliated Employer in the Plan; (ii)
the Affiliated Employer has not previously expressly declined to participate in
the Plan; or (iii) the Affiliated Employer is not precluded from participating
in the Plan by a legally binding written document that precludes such
participation; and provided further that the Board of Directors consents to such
adoption. Any Affiliated Employer which so adopts the Plan shall be deemed to
appoint Charles Schwab & Co., Inc., the Committee and the Trustee its exclusive
agents to exercise on its behalf all of the power and authority conferred under
the Plan or the Trust Agreement. This authority shall continue until the Plan is
terminated and the relevant Trust Fund assets have been distributed.
17.2 Termination of Participation by Participating Employer. A
Participating Employer may terminate its participation in the Plan by giving the
Committee prior written notice specifying a termination date which shall be the
last day of a month at least 60 days subsequent to the date such notice is
received by the Committee. The Board of Directors may terminate any
Participating Employer's participation in the Plan, as of any termination date
specified by the Committee, for the failure of the Participating Employer to
make proper contributions or to comply with any other provision of the Plan.
17.3 Effect of Termination of Participation by Participating Employer.
Upon termination of the Plan as to any Participating Employer, such
Participating Employer shall not make any further contributions under the Plan
and no amount shall thereafter be payable under the Plan to or with respect to
any Participants then employed by such Participating Employer, except as
provided in this Section 17. To the maximum extent permitted by the Act, any
rights of Participants no longer employed by such Participating Employer and of
former Participants and their Beneficiaries and Surviving Spouses and other
eligible survivors under the Plan shall be unaffected by such termination and
any transfer, distribution or other disposition of the assets of the Plan as
provided in this Section 17 shall constitute a complete discharge of all
liabilities under the Plan with respect to such Participating Employer's
participation in the Plan and any Participant then employed by such
Participating Employer.
The interest of each such Participant who is in Service with such
Participating Employer as of the termination date is the amount, if any,
credited to his or her Account after payment of or provision for expenses and
charges and appropriate adjustment of the Accounts of all such Participants for
expenses and charges as described in Section 16, and all forfeitures shall be
nonforfeitable as of the termination date, and upon receipt by the Committee of
IRS approval of such termination, the full current value of such amount shall be
paid from the Trust Fund in the manner described in Section 17.4 or transferred
to a successor employee benefit plan which is qualified under Section 401(a) of
the Code; provided, however, that in the event of any transfer of assets to a
successor employee benefit plan the provisions of Section 17.4 will apply. No
advances against such payments shall be made prior to such receipt of approval,
but after such receipt the Committee, in its sole discretion, may direct the
Trustee to make one or more advances in accordance with Section 11.1.
All determinations, approvals and notifications referred to above
shall be in form and substance and from a source satisfactory to the Committee.
To the maximum extent permitted by the Act, the termination of the Plan as to
any Participating Employer shall not in any way affect any other Participating
Employer's participation in the Plan.
17.4 Limitations on Transfer of Plan Assets to Successor Plan. No transfer
of the Plan's assets and liabilities to a successor employee benefit plan
(whether by merger or consolidation with such successor plan or otherwise) shall
be made unless each Participant would, if either the Plan or such successor plan
then terminated, receive a benefit immediately after such transfer which (after
taking account of any distributions or payments to such Participants as part of
the same transaction) is equal to or greater than the benefit such Participant
would have been entitled to receive immediately before such transfer if the Plan
had then been terminated. The Committee may also request appropriate
indemnification from the employer or employers maintaining such successor plan
before making such a transfer.
17.5 Shares Allocated to Suspense Fund Excluded from Transfer of Plan
Assets to Successor Plan. Notwithstanding any provision of this Section 17 to
the contrary, any Shares allocated to a Suspense Subfund shall not be
transferred to a successor employee benefit plan except as is required or
permitted by the Committee in accordance with the terms of an Exempt Loan and
the Regulations.
SECTION 18. AMENDMENT OR TERMINATION OF THE PLAN
18.1 Amendment, Suspension or Termination of Plan.
(a) Subject to the provisions of Section 18.1(b) and (c) hereof, the
board of directors of the Plan Sponsor reserves the right at any time to suspend
or terminate the Plan, any contributions thereunder, or any other agreement or
arrangement forming a part of the Plan, in whole or in part and for any reason,
and to adopt any amendment or modification thereto, all without the consent of
any Participating Employer, Participant, Beneficiary, Surviving Spouse or other
eligible survivor. Subject to the provisions of Section 18.1(b) and (c) hereof,
the Board of Directors reserves the right at any time to amend or modify the
Plan. Each Participating Employer by its adoption of the Plan shall be deemed to
have delegated this authority to the Board of Directors.
(b) The Board of Directors shall not make any amendment or
modification which would (i) retroactively impair any rights to any benefit
under the Plan which any Participant, Beneficiary, Surviving Spouse or other
eligible survivor would otherwise have had at the date of such amendment by
reason of the contributions theretofore made or (ii) make it possible for any
part of the funds of the Plan (other than such part as is required to pay taxes,
if any, and administration expenses as provided in Section 16) to be used for or
diverted to any purposes other than for the exclusive benefit of Participants
and their Beneficiaries and Surviving Spouses and other eligible survivors under
the Plan prior to the satisfaction of all liabilities with respect thereto.
18.2 Power to Retroactively Amend, Suspend or Terminate Plan Provisions.
Subject to the provisions of Section 18.1, any amendment, modification,
suspension or termination of any provision of the Plan may be made retroactively
if necessary or appropriate to qualify or maintain the Plan as a plan meeting
the requirements of Sections 401(a) of the Code or any other applicable
provision of law (including the Act) as now in effect or hereafter amended or
adopted and the Regulations issued thereunder.
18.3 Notice of Amendment, Suspension or Termination. Notice of any
amendment, modification, suspension or termination of the Plan shall be given by
the Board of Directors or the board of directors of the Plan Sponsor, as the
case may be, to the Trustee and all Participating Employers.
18.4 Effect of Termination of Plan. Upon termination of the Plan, no
Participating Employer shall make any further contributions under the Plan and
no amount shall thereafter be payable under the Plan to or with respect to any
Participant except as provided in this Section 18, and to the maximum extent
permitted by the Act, transfers or distributions of the assets of the Plan as
provided in this Section 18 shall constitute a complete discharge of all
liabilities under the Plan. The provisions of the Plan which are necessary for
the operation of the Plan and the distribution or transfer of the assets of the
Plan shall remain in force.
Upon receipt by the Committee of IRS approval of such termination, the
full current value of such adjusted amount, and the full value of each account
described in Sections 6.2 and 7.1 above, shall be paid from the Trust Fund to
each Participant and former Participant (or, in the event of the death of a
Participant or former Participant, to the Surviving Spouse or Beneficiary
thereof) in any manner of distribution specified in Section 11 above, including
payments which are deferred until the Participant's termination of Service, as
the Committee shall determine. Without limiting the foregoing, any such
distribution may be made in cash or in property, or both, as the Committee in
its sole discretion may direct.
All determinations, approvals and notifications referred to above
shall be in form and substance and from a source satisfactory to the Committee.
18.5 Partial Termination of Plan. In the event that any governmental
authority, including without limitation the IRS, determines that a partial
termination (within the meaning of the Act) of the Plan has occurred or if there
is a complete discontinuance of Employer contributions then (i) the interest of
each Participant affected thereby in his or her Account shall become
nonforfeitable as of the date of such partial termination or complete
discontinuance of contributions and (ii) the provisions of Sections 18.2, 18.3
and 18.4 above, which in the opinion of the Committee are necessary for the
execution of the Plan and the allocation and distribution of the assets of the
Plan, shall apply.
18.6 Trust for Exclusive Benefit of Participant. In no event shall any part
of the Trust Fund (other than such part as is required to pay taxes, if any, and
administration expenses as provided in Section 16 above) be used for or diverted
to any purposes other than for the exclusive benefit of Participants and their
Beneficiaries and Surviving Spouses under the Plan.
SECTION 19. TOP-HEAVY PLAN REQUIREMENTS
19.1 Top-Heavy Plan - In General. For any Plan Year for which this Plan is
a Top-Heavy Plan, the provisions of this Section 19 shall apply notwithstanding
any other provisions of the Plan.
19.2 Effect of Top-Heavy Status. Each Participant who (i) is a Non-Key
Employee and (ii) is employed on the last day of the Plan Year, shall be
entitled to have contributions allocated to his or her Account of not less than
three percent (3%) of the Participant's Compensation (the "Minimum Contribution
Percentage") regardless of (i) whether such Non-Key Employee has completed a
Year of Service, and (ii) the amount of such Non-Key Employee's Compensation;
provided, however, that the minimum contribution percentage for any Plan Year
shall not exceed the percentage at which contributions are made under the Plan
for the Plan Year for the Key Employee for whom such percentage is the highest
for such Plan Year. For this purpose, such percentage shall be determined by
dividing the contributions made for such Key Employee by so much of his or her
Compensation (which solely for this purpose includes Elective Contributions made
by the Employer for the Key Employee) for the Plan Year as does not exceed
$150,000 (adjusted automatically for increases in accordance with the
Regulations).
Contributions taken into account under this Section 19.2 shall include
contributions under this Plan and under all other defined contribution plans (as
defined in Section 414(i) of the Code) required to be included in an Aggregation
Group; provided, however, that such contributions shall not include (i)
contributions to any defined contribution plan in the required aggregation group
if such contributions enable such a defined contribution plan to meet the
requirements of Sections 401(a)(4) or 410 of the Code or (ii) contributions
under the Social Security Act or any other federal or state law.
19.3 Top-Heavy Vesting Schedule.
In the event that the Plan is a Top-Heavy Plan, all contributions shall be
vested at a rate not slower than the following vesting schedule:
Years of Service Percentage
Less than two years 0%
At least two years but less than three years 20%
At least three years but less than four years 50%
At least four years but less than five years 75%
Five years or more 100%
19.4 Definitions.
(a) "Top-Heavy Plan" means this Plan for any Plan Year if, as of the
Determination Date, (i) the present value of the Accounts of all Participants
who are Key Employees (excluding former Key Employees) exceeds 60 percent of the
present value of all Participants' Accounts (excluding former Key Employees) or
(ii) the Plan is required to be in an Aggregation Group which for such Plan Year
is a Top-Heavy Group. In determining whether the Plan constitutes a Top-Heavy
Plan, the Committee shall make the following adjustments:
(i) When more than one plan is aggregated, the Committee shall
determine separately for each plan as of any Determination Date, the present
value of accrued benefits of all Participants and the value of Accounts of all
Participants.
(ii) Any such determination shall include the present value of
distributions made to former Participants under the applicable plan (including a
terminated plan) during the five-year period ending on the Determination Date,
unless reflected in the value of the accrued benefits or the Accounts of such
former Participants as of the Determination Date.
(iii)Any such determination shall include any Rollover
Contribution from any other plan as follows:
(A) If the Rollover Contribution is initiated by the
Employee and made to or from a plan maintained by a corporation which is not an
Affiliated Employer, the plan providing the distribution shall include such
distribution in the value of such accrued benefit or Account.
(B) If the Rollover Contribution is not initiated by
the Employee or made from a plan maintained by an Affiliated Employer, the plan
accepting the distribution shall include such distribution in the value of such
accrued benefit or Account.
(b) "Determination Date" means for any Plan Year the last day of the
next preceding Plan Year.
(c) "Aggregation Group" means all plans maintained by the Employer
or any Affiliated Employer which are required to be aggregated or permitted to
be aggregated. For purposes of this Section 19.4(c),
(i) The group of plans that are required to be aggregated
(the "required aggregation group") includes each plan of the Employer or any
Affiliated Employer in which a Key Employee is a Participant, and each other
plan of the Employer or any Affiliated Employer which enables a plan in which a
Key Employee is a Participant to meet the requirements of Sections 401(a)(4) or
410 of the Code; and
(ii) The group of plans that are permitted to be aggregated (the
"permissive aggregation group") includes the required aggregation group plus one
or more plans of the Employer or any Affiliated Employer that is not part of the
required aggregation group and that the Committee certifies as constituting a
plan within the permissive aggregation group. Such plan or plans may be added to
the permissive aggregation group only if the permissive aggregation group would
continue to meet the requirements of Sections 401(a)(4) and 410 of the Code.
(d) "Top Heavy Group" means the Aggregation Group, if as of any
Determination Date, the sum of (i) the present value of the accrued benefits of
all Participants who are Key Employees under all defined benefit plans (within
the meaning of Section 414(j) of the Code) included in the Aggregation Group
plus (ii) the aggregate value of the Accounts of all Participants who are Key
Employees under all defined contribution plans (within the meaning of Section
414(i) of the Code) included in the Aggregation Group exceeds 60 percent of the
sum of (i) the present value of the accrued benefits for all Participants
(excluding former Key Employees), under all such defined benefit plans plus (ii)
the aggregate value of the Accounts of all Participants (excluding former Key
Employees) under all such defined contribution plans. If the Aggregation Group
that is a Top-Heavy Group is a required aggregation group, each plan in the
Aggregation Group will be a Top-Heavy Plan. If the Aggregation Group that is a
Top-Heavy Group is a permissive aggregation group, only those plans that are
part of the required aggregation group will be treated as a Top-Heavy Plan. If
the Aggregation Group is not a Top-Heavy Group, no plan within such Aggregation
Group will be a Top-Heavy Plan.
For purposes of Section 19.4(a), the present value of accrued benefits
under any defined benefit plan and the value of Accounts under any defined
contribution plan shall be determined as of the Valuation Date that is
coincident with the Determination Date in accordance with the Regulations.
(e) "Key Employee" means any Employee or former Employee who, at any
time during the Plan Year preceding the Determination Date or during any of the
four preceding Plan Years, is or was one of the following:
(i) An officer of the Employer or any Affiliated Employer
having annual compensation (within the meaning of Section 414(q)(4)) greater
than 50 percent of the amount in effect under Section 415(b)(1)(A) of the Code
for any Plan Year (as adjusted for increases in the cost of living in accordance
with the Regulations). For purposes of the preceding sentence there shall be
treated as officers for any such Plan Year no more than the lesser of:
(A) 50 Employees, or
(B) the greater of three Employees or 10 percent of the
Employees of the Employer or any Affiliated Employer;
(ii) One of the ten Employees owning (or considered as owning
within the meaning of Section 318 of the Code) more than a five percent (5%)
interest and one of the largest interests in the Employer or any Affiliated
Employer. An Employee will not be considered such an owner for any Plan Year if
the Employee's compensation (within the meaning of Section 414(q)(4)) is less
than $30,000 (as adjusted for increases in the cost of living in accordance with
the Regulations); for purposes of determining ownership pursuant to Section
19.4(e)(ii) the aggregation rules of Section 414(b), (c) and (m) of the Code
apply.
(iii)Any person who owns (or considered as owning within the
meaning of Section 318 of the Code) more than a five percent interest in the
Employer;
(iv) Any person having compensation (within the meaning of
Section 414(q)(4)) of more than $150,000, and owning (or considered as owning
within the meaning of Section 318 of the Code) more than a one percent interest
in the Employer. For purposes of this Section 19.4(e), a Beneficiary of a Key
Employee shall be treated as a Key Employee and the interests inherited by such
Beneficiary shall be treated the same as if owned by the Key Employee.
(f) "Non-Key Employee" means any "Non-Key Employee" as defined in
Section 416(i)(2) of the Code and the Regulations promulgated thereunder.
19.5 Maintenance of Defined Benefit Plan in Addition to Plan.
Effective for limitation years commencing prior to January 1, 2000, in the
event that the Plan is a Top-Heavy Plan for any Plan Year and the Employer also
maintains a defined benefit plan (within the meaning of Section 414 of the Code)
which provides benefits on behalf of Participants, then one of the two following
provisions shall apply:
(1) If the Plan is a Top-Heavy Plan for any Plan Year but would not
be a "Top-Heavy Plan" for the Plan Year if "90 percent" were substituted for "60
percent" in Section 19.4(a), then Section 19.2 shall be applied for such Plan
Year by substituting "four percent" for "three percent."
(2) If a Top-Heavy Plan would continue to be a "Top-Heavy Plan" for
the Plan Year if "90 percent" were substituted for "60 percent", then the
denominator of the defined contribution plan fraction shall be calculated for
such Plan Year by substituting "1.0" for "1.25", except with respect to any
Participant who is not entitled to an allocation of Employer contributions and
does not receive any accruals under any defined benefit plan (within the meaning
of Section 414(j) of the Code) maintained by the Employer.
In the event that another defined contribution plan or a defined benefit
plan maintained by the Employer provides contributions or benefits on behalf of
Participants, the Committee shall take such other plan into account as a part of
this Plan to the extent required by the Code and in accordance with the
Regulations.
SECTION 20. GENERAL LIMITATIONS AND PROVISIONS
20.1 Exclusive Benefit of Participants and Beneficiaries. In no event shall
any part of the funds of the Plan be used for or diverted to any purposes other
than for the exclusive benefit of Participants and their Beneficiaries under the
Plan except as permitted under Section 403(c) of the Act. Upon the transfer by a
Participating Employer of any money to the Trustee, all interest of the
Participating Employer therein shall cease and terminate.
20.2 No Rights to Continued Employment. Nothing contained in the Plan shall
give any employee the right to be retained in the employment of the Employer or
any Affiliated Employer or affect the right of the Employer or any Affiliated
Employer to dismiss any employee. The adoption and maintenance of the Plan shall
not constitute a contract between the Employer and any employee or be
consideration for, or an inducement to or condition of, the employment of any
employee.
20.3 Trust Sole Source of Benefits. The Trust Fund shall be the sole source
of benefits under the Plan and, except as otherwise required by the Act, the
Employer and the Committee assume no liability or responsibility for payment for
such benefits, and each Participant, Surviving Spouse, Beneficiary or other
person who shall claim the right to any payment under the Plan shall be entitled
to look only to the Trust Fund for such payment and shall not have any right,
claim or demand therefor against the Employer, the Committee, or any Participant
thereof, or any employee or director of the Employer.
20.4 Risk of Decrease in Assets. Each Participant, Beneficiary and
Surviving Spouse shall assume all risk in connection with any decrease in the
value of the assets of the Trust Fund and the Participants' Accounts or special
accounts and neither the Employer nor the Committee shall be liable or
responsible therefor.
20.5 Incapacity of Participant or Beneficiary. If the Committee shall find
that any person to whom any amount is payable under the Plan is unable to care
for his or her affairs because of illness or accident, or is a minor, or has
died, then any payment due such person or his or her estate shall be made to his
or her duly appointed legal representative. Any such payment shall be a complete
discharge of the liability of the Plan and the Trust Fund therefor.
20.6 Antialienation; Qualified Domestic Relations Orders.
(a) Except insofar as may otherwise be required by law or pursuant to
the terms of a Qualified Domestic Relations Order, as set forth in this Section
20.5, no amount payable at any time under the Plan and the Trust Fund shall be
subject in any manner to alienation by anticipation, sale, transfer, assignment,
bankruptcy, pledge, attachment, charge or encumbrance of any kind nor in any
manner be subject to the debts or liabilities of any person, and any attempt to
so alienate or subject any such amount, whether presently or thereafter payable,
shall be void. If any person shall attempt to, or shall, alienate, sell,
transfer, assign, pledge, attach, charge or otherwise encumber any amount
payable under the Plan and Trust Fund, or any part thereof, or if by reason of
his or her bankruptcy or other event happening at any such time such amount
would be made subject to his or her debts or liabilities or would otherwise not
be enjoyed by such person, then the Committee, if it so elects, may direct that
such amount be withheld and that the same or any part thereof be paid or applied
to or for the benefit of such person.
(b) Upon receipt of notification of any judgment, decree or order
(including approval of a property settlement agreement) which relates to the
provision of child support, alimony payments, or marital property rights of a
spouse, former spouse, child, or other dependent of a Participant and which is
made pursuant to a state domestic relations law (including a community property
law) (herein referred to as a "domestic relations order"), the Committee shall
(i) notify the Participant and any prospective Alternate Payee named in the
order of the receipt and date of receipt of such domestic relations order and of
the Plan's procedures for determining the status of the domestic relations order
as a Qualified Domestic Relations Order, and (ii) within a reasonable period
after receipt of such order, determine whether it constitutes a Qualified
Domestic Relations Order. The Plan's procedures for the determination of whether
a domestic relations order constitutes a Qualified Domestic Relations Order
shall be set forth by the Committee in writing, shall provide for the
notification of each person specified in that order as entitled to payment of
benefits under the Plan (at the address included in the domestic relations
order) of such procedures promptly upon receipt by the Committee of such
domestic relations order, and shall permit the prospective Alternate Payee to
designate a representative for receipt of copies of notices that are sent to the
prospective Alternate Payee with respect to a domestic relations order.
(c) During any period in which the issue of whether a domestic
relations order is a Qualified Domestic Relations Order is being determined (by
the Committee, by a court of competent jurisdiction, or otherwise), including
the period beginning on the date of the Committee's receipt of the order, the
Committee shall segregate in a separate account in the Plan or in an escrow
account held by a Trustee the amounts, if any, which would have been payable to
the Alternate Payee during such period if the order had been determined to
constitute a Qualified Domestic Relations Order, provided that if no payments
would otherwise be made under the Plan to the Alternate Payee or to the
Participant or a Beneficiary of the Participant while the status of the order as
a Qualified Domestic Relations Order is being determined, no segregation into a
separate or escrow account shall be required. If a domestic relations order is
determined to be a Qualified Domestic Relations Order within eighteen (18)
months of the date of its receipt by the Committee (or from the beginning of any
other period during which the issue of its being a Qualified Domestic Relations
Order is being determined by the Committee) the Committee shall cause to be paid
to the persons entitled thereto the amounts, if any, held in the separate or
escrow account referred to above in one lump sum. If a domestic relations order
is determined not be a Qualified Domestic Relations Order, or if the status of
the domestic relations order as a Qualified Domestic Relations Order is not
finally resolved within such eighteen month period, the Committee shall cause
the separate account or escrow account balance to be returned, with interest
thereon, to the Participant's Account or to be paid to the person or persons to
whom such amount would have been paid if there had been no such domestic
relations order, whichever shall apply. Any subsequent determination that such
domestic relations order is a Qualified Domestic Relations Order shall be
prospective in effect only.
(d) (i) Benefits payable to an Alternate Payee shall be payable in
one lump sum and in no event shall such benefits continue beyond the lifetime of
the Alternate Payee. Such payment may be made at the time specified in the
Qualified Domestic Relations Order irrespective of whether the Participant has
attained the "earliest retirement age" (within the meaning of Section
414(p)(4)(B) of the Code). In particular, no Alternate Payee shall have the
right with respect to any benefit payable by reason of a Qualified Domestic
Relations Order to (A) designate a beneficiary with respect to amounts becoming
payable under the Plan, (B) elect a method of benefit distribution providing for
benefits continuing beyond the Alternate Payee's lifetime, (C) provide
survivorship benefits to a spouse or dependent of such Alternate Payee or to any
other person, spouse, dependent or other person, or (D) transfer rights under
the Qualified Domestic Relations Order by will or by state law of intestacy.
(ii) None of the payments, benefits or rights of any Alternate
Payee shall be subject to any claim of any creditor, and, in particular, to the
fullest extent permitted by law, all such payments, benefits and rights shall be
free from attachment, garnishment, trustee's process, or any other legal or
equitable process available to any creditor of such Alternate Payee. No
Alternate Payee shall have the right to alienate, anticipate, commute, pledge,
encumber or assign any of the benefits or payments which he or she may expect to
receive, contingently or otherwise, under the Plan.
(iii) Alternate Payees shall not have any right to (A) borrow
money under any Participant loan provisions under the Plan, (B) exercise any
Participant investment direction rights or privileges under the Plan, (C)
exercise any other election, privilege, option or direction rights of the
Participant under the Plan except as specifically provided in the Qualified
Domestic Relations Order, or (D) receive communications with respect to the Plan
except as specifically provided by law, regulation or the Qualified Domestic
Relations Order.
(iv) Each Alternate Payee shall advise the Committee in writing
of each change of his or her name, address or marital status, and of each change
in the provisions of the Qualified Domestic Relations Order or any circumstance
set forth therein which may be material to the Alternate Payee's entitlement to
benefits thereunder or the amount thereof. Until such written notice has been
provided to the Committee, the Committee shall be (A) fully protected in not
complying with, and in conducting the affairs of the Plan in a manner
inconsistent with, the information set forth in the notice, and (B) required to
act with respect to such notice prospectively only, and then only to the extent
provided for in the Qualified Domestic Relations Order. The Committee shall not
be required to modify or reverse any payment, transaction or application of
funds occurring before the receipt of any notice that would have affected such
payment, transaction or application of funds, nor shall the Committee or any
other party be liable for any such payment, transaction or application of funds.
(v) Except as specifically provided for in the Qualified
Domestic Relations Order, an Alternate Payee shall have no right to interfere
with the exercise by the Participant or by any Beneficiary of their respective
rights, privileges and obligations under the Plan.
(e) For purposes of this Plan, a Qualified Domestic Relations Order
means any judgment, decree, or order (including approval of a property
settlement agreement) which has been determined by the Committee in accordance
with procedures established under the Plan, to constitute a qualified domestic
relations order within the meaning of Section 414(p)(1) of the Code and
Alternate Payee means any person entitled to current or future payment of
benefits under the Plan pursuant to a Qualified Domestic Relations Order.
20.7 Inability to Locate Participant or Beneficiary. If the Committee
cannot ascertain the whereabouts of any person to whom a payment is due under
the Plan, and if, after five years from the date such payment is due, a notice
of such payment due is mailed to the last known address of such person, as shown
on the records of the Committee or the Employer, and within three months after
such mailing such person has not made written claim therefor, the Committee, if
it so elects, may direct that such payment and all remaining payments otherwise
due to such person be canceled on the records of the Plan and the amount thereof
applied to reduce the contributions of the Employer, and upon such cancellation,
the Plan and the Trust Fund shall, to the maximum extent permitted by the Act,
have no further liability therefor except that, in the event such person later
notifies the Committee of his or her whereabouts and requests the payment or
payments due to such person under the Plan, the amount so applied shall be paid
to him or her as provided in Section 11. All elections, designations, requests,
notices, instructions, and other communications from the Employer, a
Participant, Beneficiary, Surviving Spouse or other person to the Committee
required or permitted under the Plan shall be in such form as is prescribed from
time to time by the Committee, shall be mailed or delivered to such location as
shall be specified by the Committee, and shall be deemed to have been given and
delivered only upon actual receipt thereof by the Committee at such location.
20.8 Failure to Receive IRS Approval. Notwithstanding any other provision
herein, if this Plan shall not be approved by the IRS under the provisions of
the Code and the Regulations for any reason (including failure to comply with
any condition for such approval imposed by the IRS) contributions made after the
restatement of this Plan and prior to such denial shall be returned, without any
liability to any person, within one year after the date of denial of such
approval.
20.9 Contributions Conditioned on Deductibility. Notwithstanding any other
provision herein, all contributions to the Trust Fund are expressly conditioned
upon their deductibility under Section 404 of the Code and the Regulations, and
in the event of the final disallowance of the deduction for any contribution, in
whole or in part, then such contribution (to the extent the deduction is
disallowed) shall upon direction of the Committee, which shall be given in
conformity with the provisions of the Act, be returned, without liability to any
person, within one year after such final disallowance.
20.10 Mistake of Fact. Notwithstanding any other provisions herein, if any
contribution is made by a mistake of fact, such contribution shall upon the
direction of the Committee, which shall be given in conformity with the
provisions of the Act, be returned, without liability to any person, within one
year after the payment of such contribution.
20.11 Communications with Committee. All elections, designations, requests,
notices, instructions, and other communications from the Employer, a
Participant, Beneficiary, Surviving Spouse or other person to the Committee
required or permitted under the Plan shall be in such form as is prescribed from
time to time by such Committee, shall be mailed by first-class mail or delivered
to such location as shall be specified by such Committee, and shall be deemed to
have been given and delivered only upon actual receipt thereof by such Committee
at such location.
20.12 Communications with Participants and Beneficiaries. All notices,
statements, reports and other communications from the Employer or the Committee
to any Employee, Participant, Surviving Spouse, Beneficiary or other person
required or permitted under the Plan shall be deemed to have been duly given
when delivered to, or when mailed by first-class mail, postage prepaid and
addressed to, such Employee, Participant, Surviving Spouse, Beneficiary or other
person at his or her address last appearing on the records of the Committee.
20.13 Prior Service Credit. Upon such terms and conditions as the
Committee may approve, and subject to any required IRS approval, benefits may be
provided under the Plan to a Participant with respect to any period of the
Participant's prior employment by any organization, and such benefits (and any
Service credited with respect to such period of employment under Section 2.25)
may be provided for, in whole or in part, by funds transferred, directly or
indirectly (including a rollover from an individual retirement account), to the
Trust Fund from an employee benefit plan of such organization which qualified
under Section 401(a) of the Code.
20.14 Gender and Number. Except where otherwise required by the context,
whenever used in the Plan the masculine gender includes the feminine and the
singular shall include the plural.
20.15 Headings. The captions preceding the Sections of the Plan have been
inserted solely as a matter of convenience and in no way define or limit the
scope or intent of any provisions of the Plan.
20.16 Governing Law. The Plan and all rights thereunder shall be governed
by and construed in accordance with the Act and, to the extent not inconsistent
therewith, the laws of the State of California.
20.17 Severability of Provisions. If any provision of the Plan shall be
held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof, and the Plan shall be construed and enforced
as if such provisions had not been included.
20.18 Heirs, Assigns and Personal Representatives. The Plan shall be
binding upon the heirs, executors, administrators, successors and assigns of the
parties, including each Participant and Beneficiary, present and future and all
persons for whose benefit there exists any QDRO with respect to any Participant
(except that no successor to the Plan Sponsor shall be considered a Plan Sponsor
unless that successor adopts the Plan).
20.19 Reliance on Data and Consents. The Plan Sponsor, the Employer, each
participating Employer, the Board of Directors, the Committee, the Trustee, all
fiduciaries with respect to the Plan, and all other persons or entities
associated with the operation of the Plan, the management of its assets, and the
provision of benefits thereunder, may reasonably rely on the truth, accuracy and
completeness of all data provided by any Participant, Surviving Spouse,
Beneficiary, and Alternate Payee, including, without limitation, data with
respect to age, health and marital status. Furthermore, the Plan Sponsor, the
Employer, each participating Employer, the Board of Directors, the Committee,
the Trustee, and all fiduciaries with respect to the Plan may reasonably rely on
all consents, elections and designations filed with the Plan or those associated
with the operation of the Plan and its corresponding Trust by any Participant,
Surviving Spouse, Beneficiary, Alternate Payee, or any representative of any
such person, without duty to inquire into the genuineness of any such consent,
election or designation. None of the aforementioned persons or entities
associated with the operation of the Plan, its assets and the benefits provided
under the Plan shall have any duty to inquire into any such data, and all may
rely on such data being current to the date of reference, it being the duty of
the Participants, Surviving Spouses, Beneficiaries and Alternate Payees to
advise the appropriate parties of any change in such data.
20.20 Qualified Military Service. Notwithstanding any provision of this
Plan to the contrary, contributions, benefits and service credit with respect to
qualified military service will be provided in accordance with Section 414(u) of
the Code.
SECTION 21. APPLICATION TO PUERTO RICO EMPLOYEES
21.1 Modifications Applicable to Puerto Rico. The provisions of this
Section shall govern the application of the provisions of the Plan to
Participants who are employed by the Company in and are residents of the
Commonwealth of Puerto Rico ("Puerto Rico Participants"):
(a) Notwithstanding Section 2.25, the definition of "Highly
Compensated Participant" shall be a Puerto Rico Participant employed by the
Company who receives Compensation that exceeds the Compensation paid to two
thirds of the Puerto Rico Participants, as provided in Section 165(e) of the
Puerto Rico Income Tax Act;
(b) The following shall apply in lieu of the second sentence of
Section 5.1(a) hereof: The Salary Reduction Agreement shall provide for Elective
Contributions equal to any whole percentage between one percent (1%) and ten
Percent (10%) of a Participant's Compensation in any payroll period, not to
exceed $7,500 (reduced by any contributions made by the Participant to an IRA)
in any calendar year;
(c) The Actual Deferral Percentage Test set forth in Section 5.3
shall be applied separately with respect to Puerto Rico Participants. For
purposes of applying the Actual Deferral Percentage Test to Puerto Rico
Participants, the definition of Highly Compensated Employee contained in
subparagraph (a) hereof shall be used; and
(d) For purposes of applying subparagraphs (b) and (c) of this
Section 21.1, the definition of Compensation contained in Section 2.11 shall be
applied without regard to clause (xii) thereof.
In all other respects, the terms of this Plan shall apply to Puerto
Rico Participants.