1
EXHIBIT 10.6
MICROSOFT CORPORATION
SAVINGS PLUS PLAN, AS AMENDED
2
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS Page
----------- ----
1.1 BENEFICIARY . . . . . . . . . . . . . . . . . . . . . . . . . 1-1
1.2 CODE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-1
1.3 COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . 1-1
1.4 EMPLOYEE . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-1
1.5 ELIGIBLE EMPLOYEE . . . . . . . . . . . . . . . . . . . . . . 1-1
1.6 EMPLOYER . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-2
1.7 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-3
1.8 PARTICIPANT . . . . . . . . . . . . . . . . . . . . . . . . . 1-3
1.9 PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-3
1.10 PLAN ADMINISTRATOR . . . . . . . . . . . . . . . . . . . . . . 1-3
1.11 PLAN YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . 1-3
1.12 TRUST FUND . . . . . . . . . . . . . . . . . . . . . . . . . . 1-3
1.13 TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-4
ARTICLE II
ELIGIBILITY TO PARTICIPATE IN PLAN
----------------------------------
2.1 ELIGIBILITY AND ENTRY DATE . . . . . . . . . . . . . . . . . . 2-1
2.2 REEMPLOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . 2-1
2.3 ELECTION AGAINST PARTICIPATION . . . . . . . . . . . . . . . . 2-1
ARTICLE III
EMPLOYEE CONTRIBUTIONS
----------------------
3.1 ELECTION TO DEFER . . . . . . . . . . . . . . . . . . . . . . 3-1
3.2 DEFERRAL ELECTION DATES . . . . . . . . . . . . . . . . . . . 3-1
3.3 TERMINATING AN ELECTION TO DEFER . . . . . . . . . . . . . . . 3-1
3.4 VESTING IN DEFERRALS . . . . . . . . . . . . . . . . . . . . . 3-2
3.4 DISTRIBUTION OF EXCESS DEFERRALS . . . . . . . . . . . . . . . 3-2
ARTICLE IV
EMPLOYER MATCHING CONTRIBUTIONS AND FORFEITURES
-----------------------------------------------
4.1 EMPLOYER MATCHING CONTRIBUTIONS . . . . . . . . . . . . . . . 4-1
4.2 ALLOCATION OF FORFEITURES . . . . . . . . . . . . . . . . . . 4-1
ARTICLE V
VESTING - YEARS OF SERVICE
--------------------------
5.1 EMPLOYEE CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . 5-1
1-1
3
5.2 EMPLOYER CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . 5-1
5.3 YEARS OF SERVICE . . . . . . . . . . . . . . . . . . . . . . . . 5-1
5.4 HOUR OF SERVICE . . . . . . . . . . . . . . . . . . . . . . . . 5-1
5.5 PERIOD OF SEVERANCE . . . . . . . . . . . . . . . . . . . . . . 5-2
5.6 FORFEITURES . . . . . . . . . . . . . . . . . . . . . . . . . . 5-2
ARTICLE VI
PARTICIPANTS' ACCOUNTS AND INVESTMENTS
--------------------------------------
6.1 INDIVIDUAL ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . 6-1
6.2 INVESTMENT FUNDS . . . . . . . . . . . . . . . . . . . . . . . . 6-1
6.3 CHANGING ACCOUNT INVESTMENTS . . . . . . . . . . . . . . . . . . 6-2
6.4 PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-2
6.5 VALUATION OF ACCOUNTS . . . . . . . . . . . . . . . . . . . . . 6-2
ARTICLE VII
PAYMENT OF ACCOUNT BALANCES UPON TERMINATION, DEATH,
DISABILITY, QUALIFIED DOMESTIC RELATIONS ORDERS, DIRECT
ROLLOVERS, SALE OF TRADE OR BUSINESS
------------------------------------
7.1 TERMINATION OF EMPLOYMENT . . . . . . . . . . . . . . . . . . . 7-1
7.2 PAYMENT AT 59-1/2 . . . . . . . . . . . . . . . . . . . . . . . 7-1
7.3 PAYMENT OF ACCOUNT BALANCES UPON DEATH . . . . . . . . . . . . . 7-1
7.4 PAYMENT OF ACCOUNT BALANCES UPON DISABILITY . . . . . . . . . . 7-2
7.5 EARLY RETIREMENT . . . . . . . . . . . . . . . . . . . . . . . . 7-2
7.6 DISTRIBUTIONS UNDER QUALIFIED DOMESTIC RELATIONS ORDERS . . . . 7-2
7.7 SALE OF TRADE OR BUSINESS . . . . . . . . . . . . . . . . . . . 7-3
7.8 NOTICE OF RIGHT TO DEFER PAYMENT . . . . . . . . . . . . . . . . 7-4
ARTICLE VIII
HARDSHIP WITHDRAWALS
--------------------
ARTICLE IX
LIMITATIONS ON EMPLOYEE AND EMPLOYER CONTRIBUTIONS
--------------------------------------------------
9.1 LIMITATIONS ON TOTAL CONTRIBUTIONS TO ACCOUNTS . . . . . . . . 9-1
9.2 AVERAGE ACTUAL DEFERRAL PERCENTAGE TESTS . . . . . . . . . . . 9-1
9.3 ELECTIVE DEFERRALS OR QUALIFIED EMPLOYER DEFERRAL
CONTRIBUTIONS UNDER TWO OR MORE PLANS OR ARRANGEMENTS. . . . . 9-2
9.4 ELECTIVE DEFERRALS, QUALIFIED EMPLOYER DEFERRAL
CONTRIBUTIONS, AND COMPENSATION OF FAMILY MEMBERS. . . . . . . 9-2
9.5 ACTIONS AVAILABLE WHEN TESTS UNSATISFIED . . . . . . . . . . . 9-2
9.6 DISTRIBUTION OF EXCESS CONTRIBUTIONS . . . . . . . . . . . . . 9-3
9.7 AVERAGE CONTRIBUTIONS PERCENTAGE TESTS . . . . . . . . . . . . 9-3
9.8 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS . . . . . . . . 9-4
1-2
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9.9 DEFINITIONS APPLICABLE TO DISCRIMINATION TESTS . . . . . . . . . 9-5
ARTICLE X
ROLLOVER CONTRIBUTIONS
----------------------
10.1 PERMITTED ROLLOVERS . . . . . . . . . . . . . . . . . . . . . . 10-1
10.2 VESTING AND ACCOUNTING . . . . . . . . . . . . . . . . . . . . . 10-1
10.3 DISTRIBUTION UPON TERMINATION . . . . . . . . . . . . . . . . . 10-1
10.4 DIRECT ROLLOVER DISTRIBUTIONS . . . . . . . . . . . . . . . . . 10-1
ARTICLE XI
ADMINISTRATION
--------------
11.1 NAMED FIDUCIARY . . . . . . . . . . . . . . . . . . . . . . . . 11-1
11.2 PLAN ADMINISTRATOR . . . . . . . . . . . . . . . . . . . . . . . 11-1
11.3 FACILITY OF PAYMENTS . . . . . . . . . . . . . . . . . . . . . . 11-2
11.4 APPOINTMENT OF INVESTMENT MANAGER . . . . . . . . . . . . . . . 11-2
11.5 INVESTMENT MANAGER AND TRUSTEE . . . . . . . . . . . . . . . . . 11-2
ARTICLE XII
CLAIMS PROCEDURE
----------------
12.1 DENIAL OF CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . 12-1
12.2 ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . . . . 12-1
ARTICLE XIII
NONALIENATION PROVISION
-----------------------
ARTICLE XIV
TERMINATION
-----------
14.1 PLAN TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . 14-1
14.2 NO REVERSION TO EMPLOYER -- ACCRUED RIGHTS NONFORFEITABLE . . . 14-1
14.3 DISTRIBUTION UPON TERMINATION OR DISCONTINUANCE OF CONTRIBUTIONS 14-1
1-3
5
ARTICLE XV
MERGER OR CONSOLIDATION
ARTICLE XVI
AMENDMENTS
ARTICLE XVII
RIGHTS RESERVED
ARTICLE XVIII
TOP-HEAVY PROVISIONS
ARTICLE XIX
LOANS
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ARTICLE I
DEFINITIONS
The following words shall have the following meanings unless the
context clearly indicates otherwise.
1.1 BENEFICIARY means a person designated by a participant, or by
this Plan if there is no effective designation, to receive benefits payable
under this Plan in the event of the participant's death.
1.2 CODE means the Internal Revenue Code of 1986, as amended.
1.3 COMPENSATION is defined and limited as set forth in Appendix
I, attached hereto and incorporated herein.
1.4 EMPLOYEE means any common law employee of the employer who
receives remuneration for personal services rendered to the employer, and any
"leased employee" as defined in Code Section 414 (n)(2).
1.5 ELIGIBLE EMPLOYEE means a regular employee of the employer who
satisfies the eligibility requirements of section 2.1. For purposes of this
Plan, a "regular employee" of the employer is an employee who is in an approved
headcount position with the employer and on the employer's payroll. An
approved headcount position is one which is (1) authorized in writing during
the annual or out-of-cycle budgeting process and approved by an officer of
Microsoft (or by a Regional Director for positions in subsidiaries of
Microsoft) and (2) on the official human resources database of Microsoft or one
of its subsidiaries. An employee is on an employer's payroll if the employee
is paid from the payroll department of the employer (including payroll
departments of the employer's foreign branches, but not subsidiaries) and the
employer withholds U.S. employment taxes (e.g., income tax, FICA) from the
employee's pay. Notwithstanding the foregoing, the following are not eligible
employees and are not eligible to participate in this Plan even if they meet
the definition of regular employee of the employer:
a. interns;
b. cooperatives;
c. apprentices;
d. nonresident aliens with no U.S. source income;
1-1
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e. employees covered by a collective bargaining
agreement resulting from negotiations in which retirement benefits were the
subject of good faith bargaining and participation in this Plan was not
provided for;
f. leased employees (including leased employees as
defined in Code Section 414(n)(2));
g. temporary employees hired through or employed by
temporary or leasing agencies;
h. temporary employees of the employer; and
i. workers who hold themselves out to the employer as
being independent contractors, or as being employed by another company while
providing services to the employer. For purposes of this Plan, a temporary
employee is one who is hired to work on a specific project or series of
projects which in the aggregate is not expected to exceed six (6) months. This
definition of Eligible Employee is added effective July 1, 1994.
1.6 EMPLOYER means MICROSOFT CORPORATION and any subsidiary or
affiliate of Microsoft Corporation which, with MICROSOFT CORPORATION's
approval, elects to adopt the Plan for its employees. Employers maintaining
the Plan are listed in Appendix II, attached hereto and incorporated herein.
Microsoft Corporation shall have sole discretionary authority over the Plan,
including, without limitation, authority to amend the Plan and appoint
fiduciaries. For purposes of applying to this Plan Code Sections 401, 410,
411, 414 and 415, which sections relate to tax-qualified plans generally,
to minimum participation standards, to minimum vesting standards, to
compensation, and to limitations on benefits and contributions under qualified
retirement plans, all employees of businesses under common control, as defined
in Code Section 414(b) and (c), employees of affiliated service groups under
Code Section 414(m), and employees of any group of employers who must be
aggregated and treated as one employer pursuant to Code Section 414(o), shall
be considered to be employed by the employer.
1.7 ERISA means the Employee Retirement Income Security Act of
1974, as amended.
1-2
8
1.8 PARTICIPANT means an employee who meets the eligibility
requirements of Article II and who has entered the Plan by electing to defer
compensation. An employee shall be considered a participant as long as one or
more accounts are maintained under this Plan on his or her behalf.
1.9 PLAN means the MICROSOFT CORPORATION SAVINGS PLUS PLAN set
forth in this document, as amended from time to time.
1.10 PLAN ADMINISTRATOR means the vice president of finance and
administration. Effective July 1, 1994, Plan Administrator means the Vice
President, Human Resources.
1.11 PLAN YEAR, effective January 1, 1993, means the twelve month
period beginning January 1 and ending December 31. Prior to January 1, 1993,
"Plan Year" meant the twelve month period beginning April 1 and ending March
31.
1.12 TRUST FUND means the assets of the trust established and
maintained according to the provisions of this Plan.
1.13 TRUSTEE means any individual, life insurance company, bank or
trust company or a combination of the foregoing, which the employer has
designated to manage and invest the assets of the Plan.
1-3
9
ARTICLE II
ELIGIBILITY TO PARTICIPATE IN PLAN
2.1 ELIGIBILITY AND ENTRY DATE. Each eligible employee who is 18
years of age or older and who has been employed with the employer for six
months shall be eligible to participate in this Plan except as provided in this
Article II. The eligible employee shall be eligible to elect to defer a
percentage of his or her compensation as of the first day of the month
coinciding with or occurring after the date the eligibility requirements are
met. Preparticipation service with certain companies as set forth in Appendix
II, attached hereto and incorporated herein, shall be counted toward
eligibility. The amendment of the term "employee" to "eligible employee" in
this Section 2.1 is effective July 1, 1994.
2.2 REEMPLOYMENT. If a former plan participant is reemployed as
an eligible employee, that person shall be eligible to participate as of, the
first day of the month coinciding with or occurring after his or her
reemployment.
2.3 ELECTION AGAINST PARTICIPATION. Any eligible employee may
elect not to participate in the Plan at any time for any reason in writing
signed by the eligible employee, a copy of which is delivered to the employer.
2-1
10
ARTICLE III
EMPLOYEE CONTRIBUTIONS
3.1 ELECTION TO DEFER. Each participant may elect, in the manner
provided by the Plan Administrator, to contribute from 1% to 15% of his or her
compensation to a salary deferral account under the Plan, except that such
contribution shall not exceed the annual limitation on elective deferrals under
Code Section 402(g) in any taxable year, which limitation is increased as
permitted by Internal Revenue Service publication to reflect cost-of-living
adjustments ($9,240 for 1994). The employer may, from time to time, change the
percentage of salary that may be deferred. Except as authorized by the Plan
Administrator, all such contributions shall be by payroll reduction.
Contributions shall be transferred to the trust fund within 60 days.
3.2 DEFERRAL ELECTION DATES. On entering the Plan initially or
upon reemployment, an employee may elect to contribute as of the day he or she
is eligible to enter the Plan. All other employees or participants may elect
to contribute, or to change their contribution percentage, effective as of any
January 1, April 1, July 1, and October 1, which dates may be changed from time
to time by the Plan Administrator. An election to contribute may be made on
any date prior to the effective date of the election, in the manner provided by
the Plan Administrator.
3.3 TERMINATING AN ELECTION TO DEFER. A participant may terminate
an election to contribute as of the first day of any month, provided notice of
termination has been given by the fifteenth day of the previous month in the
manner provided by the Plan Administrator. If an employee terminates an
election to contribute, he or she must wait five months (prior to July 1, 1994,
three months) before being eligible again to elect to contribute as of a
January 1, April 1, July 1, or October 1 following the five-month (prior to
July 1, 1994, three-month) waiting period.
3-1
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3.4 DISTRIBUTION OF EXCESS DEFERRALS. Notwithstanding any other
provision of the Plan, excess deferrals (amounts in excess of the annual
limitation on elective deferrals under Code Section 402(g), as increased by a
cost of living factor) and income allocable thereto may be distributed no later
than April 15 to participants who claim for the preceding calendar year such
excess deferrals under two or more plans or to participants who have such
excess deferrals under this Plan. A participant may allocate excess deferrals
to this Plan by submitting to the Plan Administrator no later than March 1 a
statement specifying the excess deferral amount for the preceding calendar year
and stating that, if such amount is not distributed, such excess deferral, when
added to amounts deferred under other plans, exceeds the applicable annual
limit. The excess deferrals distributed to a participant with respect to a
calendar year shall be adjusted for income and, if there is a loss allocable to
the excess deferral, shall in no event be less than the lesser of the
participant's account under the Plan or the participant's elective deferrals
for the calendar year.
3-2
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ARTICLE IV
EMPLOYER MATCHING CONTRIBUTIONS AND FORFEITURES
4.1 EMPLOYER MATCHING CONTRIBUTIONS. The employer shall
contribute funds to the Plan, from its current or retained profits, to match a
portion of each participant's salary deferral. The employer contribution shall
match 50% of each participant's contribution in any plan year up to six percent
of the participant's compensation for the plan year, for a maximum employer
matching contribution of three percent of compensation. The matching
contribution shall be allocated to the participant's employer contribution
account. The employer may from time to time change the amount of the employer
matching contribution, provided any decrease in the matching contribution
formula must be effective only for matching elective deferrals after the date
of change. Total employer contributions for any plan year shall not exceed the
maximum amount which is deductible by the employer for federal income tax
purposes. The employer contribution shall be transferred to the trust fund at
such times as the employer determines, but such contributions shall in no event
be transferred to the trust fund later than the time prescribed by law for the
employer to obtain a federal income tax deduction for the plan year for which
the contribution is made. Employer contributions shall be credited to
participants' employer contribution accounts as of the date of receipt by the
plan.
4.2 ALLOCATION OF FORFEITURES. As of the end of each plan year
forfeitures which have become available for distribution during such year shall
be allocated among the employer contribution accounts of participants employed
on the last day of the plan year in the same proportion as the employer
matching contribution allocated to each such account bears to the aggregate
employer contributions allocated to all such accounts for the plan year.
4-1
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ARTICLE V
VESTING - YEARS OF SERVICE
5.1 EMPLOYEE CONTRIBUTIONS. Each participant shall be 100% vested
in all amounts in his or her salary deferral account.
5.2 EMPLOYER CONTRIBUTIONS. A participant whose employment is
terminated on or after reaching age 65, whose employment is terminated because
of a total and permanent disability, or who dies while employed, shall be 100%
vested in all amounts in his or her employer contribution account. All other
participants who terminate shall be entitled to the vested percentage of their
employer contribution account determined in accordance with the following
schedule:
Years of Service Vested Percentage Forfeited Percentage
---------------- ----------------- --------------------
Less than 2 0% 100%
2 or more years 100% 0%
In computing years of service, all of an employee's years of service shall be
taken into account, except that if an employee has five or more consecutive
one-year periods of severance, years of service after such period of severance
shall not be taken into account for purposes of determining the nonforfeitable
percentage of the employee's accrued benefit derived from employer
contributions which accrued before the period of severance. Preparticipation
service with certain companies as set forth in Appendix II, attached hereto and
incorporated herein, shall be counted toward vesting.
5.3 YEARS OF SERVICE. An employee's years of service at any date
shall equal the number of years, including fractional portions of years, which
have elapsed between the date the employee first performed an hour of service,
or first performed an hour of service upon reemployment, and the date a period
of severance begins. If a period of severance is less than twelve months, the
period of severance shall be included in determining years of service.
5.4 HOUR OF SERVICE. An hour of service means each hour for which
an employee is paid or entitled to payment for the performance of duties for
the employer.
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5.5 PERIOD OF SEVERANCE. A period of severance is a period which
begins on the earlier of (i) the date the employee quits, is discharged,
retires, dies; or (ii) the first anniversary of the date the employee is absent
from service for any other reason, such as disability leave, vacation, or leave
of absence; and which ends when the employee performs an hour of service upon
reemployment. However, if an employee is absent from employment for maternity
or paternity reasons, the period of severance shall begin on the second
anniversary of the first date of such absence. The period between the first
and second anniversaries of the first date of absence from work is neither a
year or fractional year of service, nor a period of severance. An absence for
maternity or paternity reasons includes an absence because of the following:
pregnancy of the individual, birth of a child of the individual, placement of a
child with the individual in connection with the adoption of such child by such
individual or caring for such child for a period beginning immediately
following such birth or placement.
5.6 FORFEITURES. There shall be no forfeiture of any nonvested or
forfeitable interest of any terminating participant until the terminating
participant has had a one-year period of severance. Such non-vested interests
of terminated participants shall be held by the trustee in a separate
forfeiture suspense account until the expiration of a one-year period of
severance when the forfeitures shall be available for distribution as set forth
in Article IV. If the participant is reemployed before sustaining five
consecutive one-year periods of severance, any amount forfeited shall be
restored to his or her employer contribution account, unadjusted by any gains
or losses.
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ARTICLE VI
PARTICIPANTS' ACCOUNTS AND INVESTMENTS
6.1 INDIVIDUAL ACCOUNTS. The trustee shall maintain records to
show the interest in the Plan of each participant and former participant. Such
records shall be in the form of individual accounts. When appropriate, a
participant shall have two accounts, a salary deferral account and an employer
contribution account. The maintenance of individual accounts is only for
accounting purposes, and a segregation of the assets of the trust fund to each
account shall not be required. Notwithstanding the foregoing, to the extent
provided in a written loan policy, a loan made to a participant will be treated
as a participant direction of investment. The participant alone shares in any
principal and interest paid on the loan, and he or she alone bears any expense
or loss incurred in connection with the loan. The Trustee will reflect the
participant's loan on his or her account. Distributions and withdrawals made
from an account shall be charged to the account as of the date paid. Each
participant and former participant shall be advised from time to time, but at
least once a year, as to the status of his or her account or accounts.
6.2 INVESTMENT FUNDS. The trust fund shall consist of the
following investment funds: common stock funds, bond funds, income funds,
money market funds, and the Microsoft Corporation stock fund. The employer may
change the investment funds from time to time. Each participant and former
participant shall direct the trustee as to what portion of his or her accounts
shall be deposited in each fund (or, in the case of a Participant loan pursuant
to Article XIX, what portion of his or her account shall be loaned). If a
participant or former participant wishes to utilize more than one investment
fund, he or she shall designate the percentage of his or her account balances
to be invested in each fund, and the percentages designated shall be in 10%
increments. The trust fund may hold qualified employer securities and
qualified employer real estate in any amount. The Plan is intended to
constitute a plan described in ERISA Section 404(c), and the fiduciaries of
the Plan may be relieved in accordance with ERISA Section 404(c) of liability
for any losses which are the direct and necessary result of investment
instructions given by a participant or former participant.
6-1
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6.3 CHANGING ACCOUNT INVESTMENTS. A change in the designation of
investment funds may be made effective as of any January 1, April 1, July 1,
and October 1 of each year. The dates for changing investment funds may be
changed from time to time by the Plan Administrator.
6.4 PROCEDURES. The Plan Administrator shall adopt such rules and
procedures as it deems advisable with respect to all matters relating to the
selection and use of the investment funds.
6.5 VALUATION OF ACCOUNTS. As of the end of each plan year, the
Plan Administrator shall adjust the net credit balances in the accounts of
participants or former participants in the trust fund, upward or downward, pro
rata, so that the aggregate of such net credit balances will equal the net
worth of each investment fund of the trust fund, using fair market values as
determined by the trustee and after such net worth for the appropriate
investment fund has been reduced by any expenses (to the extent not paid
directly by the employer), withdrawals, distributions and transfers chargeable
to that investment fund which have been incurred but not yet paid. All
determinations made by the trustee with respect to fair market values and net
worth shall be made in accordance with generally accepted principles of trust
accounting, and such determinations when so made by the trustee shall be
conclusive and binding upon all persons having an interest under the Plan.
6-2
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ARTICLE VII
PAYMENT OF ACCOUNT BALANCES UPON
TERMINATION, DEATH, DISABILITY,
QUALIFIED DOMESTIC RELATIONS ORDERS,
SALE OF TRADE OR BUSINESS
7.1 TERMINATION OF EMPLOYMENT. Upon termination of employment for
any reason other than death or disability, the participant shall elect either
to receive his or her balances upon termination or upon reaching age 65, except
that if the value of the participant's accounts does not exceed $3,500 (and did
not exceed $3,500 at the time of any prior distribution), payment shall be made
upon termination. Account balances shall be valued as of the most recent
valuation date prior to date of payment and shall be paid in a single cash
payment, except that the participant or former participant may elect to receive
any or all of the shares allocated to him or her in the Microsoft Corporation
stock fund. Account balances shall be distributed no later than 60 days after
the latest of (i) the plan year in which the participant terminates or (ii) the
plan year in which the participant reaches age 65. Notwithstanding the
foregoing, a person's entire interest must be distributed, or must begin to be
distributed, no later than the first day of April following the calendar year
in which the participant reaches age 70-1/2.
7.2 PAYMENT AT 59-1/2. A participant may elect to receive a
distribution of all or a portion of his or her account balance or balances
under this Plan in a single sum payment upon or after reaching age 59-1/2.
7.3 PAYMENT OF ACCOUNT BALANCES UPON DEATH. If a participant dies
while employed, his or her employer contribution account shall be 100% vested.
Each participant shall designate a beneficiary or beneficiaries to receive all
amounts credited to his or her accounts in the event of the participant's
death. The accounts shall be valued as of the most recent valuation date prior
to payment and shall be paid in a single cash payment to the designated
beneficiary or beneficiaries as soon as feasible after the death. If a
participant is married, the participant may not designate a beneficiary other
than his or her spouse without the
7-1
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spouse's written consent which has been witnessed by a plan representative or a
notary public. If a participant fails to designate a beneficiary, or the
participant has no surviving beneficiary, the amounts payable to a married
participant shall be distributed to his or her spouse and the benefits of a
single participant shall be distributed to his or her estate.
7.4 PAYMENT OF ACCOUNT BALANCES UPON DISABILITY. If a
participant's employment is terminated prior to retirement because of a total
and permanent disability, the employer contribution account shall be 100%
vested. A participant shall be deemed to be totally and permanently disabled
if he or she is eligible for and is receiving Social Security disability
benefits. The participant's accounts shall be valued as of the most recent
valuation date prior to payment and shall be paid in a single cash payment
within sixty (60) days after the disability has been established under this
section, except that the participant may elect to receive any or all of the
shares allocated to him or her in the Microsoft Corporation stock fund. If the
value of the participant's accounts exceeds $3,500 (or exceeded $3,500 at the
time of a prior distribution), the participant may elect to receive the balance
of his or her accounts upon reaching age 65.
7.5 EARLY RETIREMENT. Upon reaching age 55, a participant may
elect early retirement and shall receive the value of his or her salary
deferral account and the vested portion of his or her employer contribution
account, which shall be paid in the time and manner described in Section 7.1 as
if the employee had terminated.
7.6 DISTRIBUTIONS UNDER QUALIFIED DOMESTIC RELATIONS ORDERS.
Distribution to an alternate payee under a qualified domestic relations order
as defined in Code Section 414(p) may be made at any time prior to the
participant's attainment of earliest retirement age if the court order
specifies distribution at an earlier time or permits an agreement between the
Plan and the alternate payee to authorize an earlier distribution and the
alternate payee consents to the distribution.
7.6.1 Qualified Status of Order. The Plan Administrator
shall establish reasonable procedures to determine the qualified status of a
domestic relations order. Upon receiving a domestic relations order, the Plan
Administrator shall promptly notify the participant
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and any alternate payee named in the order in writing of the receipt of the
order and the Plan's procedures for determining the qualified status of the
order. Within a reasonable period of time after receiving the domestic
relations order, the Plan Administrator shall determine the qualified status of
the order and shall notify the participant and each alternate payee in writing
of its determination. The Plan Administrator shall provide notice under this
paragraph by mailing to the individual's address specified in the domestic
relations order, or in a manner consistent with Department of Labor
regulations.
7.6.2 Amounts Payable During Determination Process. If any
portion of the participant's nonforfeitable accrued benefit is payable during
the period the Plan Administrator is making its determination of the qualified
status of the domestic relations order, the Trustee shall make a separate
accounting of the amounts payable. If the Plan Administrator determines the
order is a qualified domestic relations order within 18 months of the date
amounts first are payable following receipt of the order, the amounts shall be
payable in accordance with the order. If the Plan Administrator does not make
its determination of the qualified status of the order within the 18 month
determination period, the amounts shall be payable in the manner in which they
would be distributed if the order did not exist. The order shall be applied
prospectively if the Plan Administrator determines after the 18 month period
that the order is a qualified domestic relations order.
7.6.3 Investment of Amounts Payable. To the extent it is
not inconsistent with the provisions of the qualified domestic relations order,
any partitioned funds may be invested in a segregated subaccount and may be
invested in fixed income investments. A segregated subaccount shall remain a
part of the Trust, but it alone shall share in any income it earns, and it
alone shall bear any expense or loss it incurs. The Trustee shall make any
payments or distributions to the alternate payee(s) by separate benefit checks
or other separate distribution.
7.7 SALE OF TRADE OR BUSINESS. Distributions may also be made in
the event of termination of the Plan, or any part thereof, as described in Code
Section 401(k)(a)(A)(i) and the regulations thereunder, or a disposition of
the assets of a trade or business or the stock of a
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subsidiary with respect to employees who continue employment with the acquiring
corporation or subsidiary as described in Code Section 401(k)(10)(A)(ii) and
(iii) and the regulations thereunder. In no event may amounts attributable to
401(k) elective deferrals be distributed earlier than upon one of the following
events:
(a) Retirement, death, disability or separation from
service (see Code Section 401(k)(10)(A)(i));
(b) Termination of this Plan without establishment of a
successor plan (see Code Section 401(k)(10)(A)(i));
(c) The employee's attainment of age 59-1/2;
(d) The sale or other disposition by a corporation to an
unrelated corporation, which does not maintain this Plan, of substantially all
of the assets used in a trade or business, but only with respect to employees
who continue employment with the acquiring corporation (see Code Section
401(k)(10)(A)(ii));
(e) The sale or other disposition by a corporation of its
interest in a subsidiary to any unrelated entity which does not maintain this
Plan, but only with respect to employees who continue employment with the
subsidiary (see Code Section 401(k)(10)(A)(iii)).
7.8 NOTICE OF RIGHT TO DEFER PAYMENT. A participant whose total
account balances exceed (or have exceeded at the time of a prior distribution)
$3,500 shall be given an explanation of the optional forms of benefit
available, and of his or her right to defer receipt of distribution. If a
participant fails to consent to an immediate distribution, it shall be deemed
an election to defer the commencement of payment of any benefit. However, any
election to defer the receipt of benefits shall not apply with respect to
distributions which are required under Code Section 401(a)(9). Notice of the
rights specified under this Section 7.8 shall be provided no less than 30 days
and no more than 90 days before the "Annuity Starting Date." The "Annuity
Starting Date" is the first day on which all events have occurred which entitle
the participant to receive a distribution (e.g., termination of employment,
consent to distribution). Distribution may
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commence less than 30 days after the notice required under Section
1.411(a)-11(c) of the Income Tax Regulations is given if:
(A) the plan administrator 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
(B) the participant, after receiving the notice,
affirmatively elects a distribution. Written consent of the participant to the
distribution must not be made before the participant receives the notice and
must not be made more than 90 days before the Annuity Starting Date. No
consent shall be valid if a significant detriment is imposed under the plan on
any participant who does not consent to the distribution. Consent to an
immediate distribution is not required after the participant has reached age 65
or has died.
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ARTICLE VIII
HARDSHIP WITHDRAWALS
If a participant has a financial hardship, the participant may
withdraw so much of his or her salary deferral contributions as is necessary to
meet the hardship. The salary deferral contributions will be valued as of the
valuation date on or immediately before the withdrawal and shall be valued at
85% of their value as of the valuation date. Notwithstanding the foregoing, a
participant who has an outstanding loan from the Plan (or must take such a loan
prior to the hardship distribution pursuant to this Article VIII) may not take
a hardship distribution in an amount which exceeds 40% of his or her vested
account balance.
A hardship withdrawal shall be available for any of the following
reasons:
(a) Medical expenses incurred by the participant, the
participant's spouse, or any dependents of the participant or expenses
necessary for those persons to obtain medical care;
(b) Purchase (excluding mortgage payments) of a principal
residence for the participant;
(c) Payment of tuition and related educational expenses
for the next 12 months of post-secondary education for the participant, his or
her spouse, children or dependents;
(d) Preventing the eviction of the participant from his
or her principal residence or foreclosure on the mortgage of the participant's
principal residence; or
(e) Need due to critical financial emergencies, defined
as circumstances of sufficient severity that a participant is confronted by
present or impending financial ruin. The need shall be based on the
participant's net worth statement, which shall form an objective criterion for
determining hardship.
A participant who receives a hardship distribution
(a) shall not receive a distribution in excess of the
participant's immediate and heavy financial need;
(b) shall, prior to the distribution, have received all
other distributions and loans available under all plans maintained by the
employer;
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(c) shall not make elective contributions or have
nonelective participant contributions made to this Plan or any other retirement
plan, stock purchase plan, stock option or similar plan of the employer, until
12 months after receipt of the hardship distribution; and
(d) shall not make contributions to any plan of the
employer, including this Plan, for his or her tax year immediately following
the tax year in which the hardship distribution was received, in excess of (i)
the annual limit applicable under Code Section 402(g) ($9,240 for 1994), as
increased by a cost of living factor, minus (ii) the amount of participant
contributions in the tax year of the hardship distribution.
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ARTICLE IX
LIMITATIONS ON EMPLOYEE AND EMPLOYER CONTRIBUTIONS
9.1 LIMITATIONS ON TOTAL CONTRIBUTIONS TO ACCOUNTS.
Notwithstanding anything in this Plan to the contrary, the total of employee
and employer contributions and forfeitures allocated to a participant's
accounts under this and any other employer sponsored defined contribution plan
for any year shall not exceed the lesser of (i) 25% of the participant's
compensation, reduced by employee compensation deferrals under this Plan for
such year, or (ii) $30,000, or if greater, one-fourth of the defined benefit
dollar limitation set forth in Code Section 415(b)(1) as in effect for the
plan year. The year used to determine the limits on annual additions shall be
the plan year. If such additions exceed the limitation, the excess employer
contributions for the year on behalf of the participant shall be used to reduce
future employer contributions.
9.2 AVERAGE ACTUAL DEFERRAL PERCENTAGE TESTS. With respect to
participant contributions in a plan year, the actual deferral percentage shall
satisfy one of the tests described in (a) or (b) below. (Definitions of words
used in the tests are given in Section 9.9.)
(a) The average actual deferral percentage for eligible
participants who are highly compensated employees for the plan year shall not
exceed the average actual deferral percentage for eligible participants who are
non-highly compensated employees for the plan year multiplied by 1.25;
(b) the average actual deferral percentage for eligible
participants who are highly compensated employees for the plan year shall not
exceed the average actual deferral percentage for eligible participants who are
non-highly compensated employees for the plan year multiplied by 2, provided
that the average actual deferral percentage for eligible participants who are
highly compensated employees does not exceed the average actual deferral
percentage for eligible participants who are non-highly compensated employees
by more than two (2) percentage points or such lesser amount as the Secretary
of the Treasury shall prescribe to
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prevent the multiple use of this alternative limitation with respect to any
highly compensated employee.
9.3 ELECTIVE DEFERRALS OR QUALIFIED EMPLOYER DEFERRAL
CONTRIBUTIONS UNDER TWO OR MORE PLANS OR ARRANGEMENTS. The actual deferral
percentage for any eligible participant who is a highly compensated employee
for the plan year and who is eligible to have elective deferrals or qualified
employer deferral contributions allocated to his account under two or more
plans or arrangements described in Code Section 401(k) that are maintained by
the employer or an affiliated employer shall be determined as if all such
elective deferrals and qualified employer deferral contributions were made
under a single arrangement.
9.4 ELECTIVE DEFERRALS, QUALIFIED EMPLOYER DEFERRAL CONTRIBUTIONS,
AND COMPENSATION OF FAMILY MEMBERS. For purposes of determining the actual
deferral percentage of a participant who is a highly compensated employee
subject to the family aggregation rules of Code Section 414(q)(6), the
elective deferrals, qualified employer deferral contributions and compensation
of such participant shall include the elective deferrals, qualified employer
deferral contributions and compensation of family members, and such family
members shall be disregarded in determining the actual deferral percentage for
participants who are non-highly compensated employees.
The determination and treatment of the elective deferrals, qualified
nonelective contributions and actual deferral percentage of any participant
shall satisfy such other requirements as may be prescribed by the Secretary of
the Treasury.
9.5 ACTIONS AVAILABLE WHEN TESTS UNSATISFIED. In the event that
the Plan Administrator shall at any time have reasonable cause to conclude that
neither of the tests will be satisfied for a plan year, then the Plan
Administrator shall take such actions as the Plan Administrator deems necessary
in accordance with Appendix III, attached hereto and incorporated herein.
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9.6 DISTRIBUTION OF EXCESS CONTRIBUTIONS. Excess contributions
and income allocable thereto shall be distributed no later than the last day of
each plan year to participants on whose behalf such excess contributions were
made for the preceding plan year. "Excess contributions" shall mean the
difference between the participant contributions made by highly compensated
employees and the maximum amount of allowable participant contributions for
those employees. The income allocable to excess contributions shall be
determined by multiplying income allocable to the participant's elective
deferrals and qualified employer deferral contributions for the plan year by a
fraction, the numerator of which is the excess contribution on behalf of the
participant for the preceding plan year and the denominator of which is the sum
of the participant's account balances attributable to elective deferrals and
qualified employer deferral contributions on the last day of the preceding plan
year. The excess contributions which would otherwise be distributed to the
participant shall be adjusted for income; shall be reduced, in accordance with
regulations, by the amount of excess deferrals distributed to the participant;
shall, if there is a loss allocable to the excess contributions, in no event be
less than the lesser of the participant's account under the Plan or the
participant's elective deferrals and qualified employer deferral contributions
for the plan year. Amounts distributed under this section shall be treated as
distributions from the participant's elective deferral account and shall be
treated as distributed from the participant's qualified employer deferral
contribution account only to the extent such excess contributions exceed the
balance in the participant's elective deferral account.
9.7 AVERAGE CONTRIBUTIONS PERCENTAGE TESTS. With respect to
participant contributions and employer matching contributions, the average
contribution percentage shall satisfy one of the tests described in, (a) or (b)
below (definitions of words used in the tests are given in Section 9.9).
(a) The average contribution percentage for eligible
participants who are highly compensated employees for the plan year shall not
exceed the average contribution
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percentage for eligible participants who are non-highly compensated employees
for the plan year multiplied by 1.25;
(b) the average contribution percentage for eligible
participants who are highly compensated employees for the plan year shall not
exceed the average contribution percentage for eligible participants who are
non-highly compensated employees for the plan year multiplied by 2, provided
that the average contribution percentage for eligible participants who are
highly compensated employees does not exceed the average contribution
percentage for eligible participants who are non-highly compensated employees
by more than two (2) percentage points or such lesser amount as the Secretary
of the Treasury shall prescribe to prevent the multiple use of this alternative
limitation with respect to any highly compensated employee.
9.8 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS. Excess
aggregate contributions and income allocable thereto shall be distributed no
later than the last day of each plan year to participants to whose accounts
employee contributions or matching contributions were allocated for the
preceding plan year. "Excess aggregate contributions" shall mean the amount
described in Code Section 401(m)(6)(B). The income allocable to excess
aggregate contributions shall be determined by multiplying the income allocable
to the participant's employee contributions and matching employer contributions
for the plan year by a fraction, the numerator of which is the excess aggregate
contributions on behalf of the participant of the preceding plan year and the
denominator of which is the sum of the participant's account balances
attributable to employee contributions and matching employer contributions on
the last day of the preceding plan year. The excess aggregate contributions to
be distributed to a participant shall be adjusted for income, and, if there is
a loss allocable to the excess aggregate contribution, shall in no event be
less than the lesser of the participant's account under the Plan or the
participant's employee contributions and matching contributions for the plan
year. Excess aggregate contributions shall be distributed from the
participant's matching contribution account
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in proportion to the participant's employee contributions and matching
contributions for the plan year.
9.9 DEFINITIONS APPLICABLE TO DISCRIMINATION TESTS. For purposes
of this Article, the following definitions shall be used:
Actual deferral percentage shall mean the ratio (expressed as a
percentage) of elective deferrals and qualified employer deferral contributions
on behalf of the eligible participant for the plan year to the eligible
participant's compensation for the plan year.
Average actual deferral percentage shall mean the average (expressed
as a percentage) of the actual deferral percentages of the eligible
participants in a group.
Compensation shall mean compensation paid by the employer to the
participant during the taxable year ending with or within the plan year which
is required to be reported as wages on the participant's Form W-2 and shall
also include compensation which is not currently includible in the
participant's gross income by reason of the application of Code Section 125,
or Section 402(e)(3).
Elective deferrals shall mean contributions made to the Plan during
the plan year by the employer, at the election of the participant, in lieu of
cash compensation and shall include contributions made pursuant to a salary
reduction agreement.
Eligible participant shall mean any employee of the employer who is
otherwise authorized under the terms of the Plan to have elective deferrals or
qualified employer deferral contributions allocated to his or her account for
the plan year.
Family Member shall mean an individual described in Code Section
414(q)(6)(B).
Highly Compensated Employee shall mean an individual described in Code
Section 414(q).
Inactive Participant shall mean any employee or former employee who
has ceased to be a participant and on whose behalf an account is maintained
under the Plan.
Matching contribution shall mean any contribution to the Plan made by
the employer for the plan year and allocated to a participant's account by
reason of the participant's employee contributions or elective deferrals.
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Non-highly compensated employee shall mean an employee of the employer
who is neither a highly compensated employee nor a family member.
Participant shall mean any employee of the employer who has met the
eligibility and participation requirements of the Plan.
Qualified employer deferral contributions shall mean qualified
nonelective contributions taken into account under the terms of the Plan in
determining the actual deferral percentage.
Qualified nonelective contributions shall mean contributions (other
than matching contributions) made by the employer and allocated to
participants' accounts that the participant may not elect to receive in cash
until distributed from the Plan; that are 100 percent vested and nonforfeitable
when made; and that are not distributable under the terms of the Plan to
participants or their beneficiaries except in events upon which elective
deferrals may be distributed as described in Section 7.7(a) through (e) of this
Plan.
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ARTICLE X
ROLLOVER CONTRIBUTIONS
10.1 PERMITTED ROLLOVERS. Subject to terms and conditions
established by the Plan Administrator, an employee, whether or not a
participant, may transfer rollover or, effective January 1, 1993, direct
rollover amounts to the trust from other eligible retirement plans as permitted
under, and pursuant to the provisions of, Code Sections 402(c) and 401(a)(31),
respectively. The Plan Administrator shall require written certification that
the contribution qualifies under Code Sections 402(c) or 401(a)(31),
respectively.
10.2 VESTING AND ACCOUNTING. Rollover contributions and earnings
shall be 100% vested and shall be accounted for separately in a rollover
account. All rollover contributions shall be invested and reinvested along
with the assets of the Plan and treated in all respects as other assets of the
Plan.
10.3 DISTRIBUTION UPON TERMINATION. The rollover account shall be
distributed at the same time and in the same manner as the employee's other
accounts. If an employee terminates with no other amounts payable from this
Plan, the rollover account shall be valued as of the valuation date coinciding
with or preceding the date of termination and shall be paid in a single sum
within 60 days after the end of the plan year.
10.4 DIRECT ROLLOVER DISTRIBUTIONS. Notwithstanding any provision
of the Plan to the contrary and subject to the following limitations, on or
after January 1, 1993, a distributee may elect, at the time and in the manner
prescribed by the Plan Administrator, to have any portion of an eligible
rollover distribution paid directly to an eligible retirement plan. Direct
rollovers may not be divided among several plans. A participant may elect to
receive a distribution partly as a direct rollover and partly in a direct
payment to the participant only if the direct rollover amount equals or exceeds
$500.
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The following definitions shall apply to this section 10.4:
(a) Eligible Rollover Distribution. An eligible rollover
distribution is any distribution of all or any portion of the balance to the
credit of the distributee, except that an eligible rollover distribution does
not include:
(i) 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;
(ii) any mandatory minimum distribution at age
70-1/2 under Code Section 401(a)(9); and
(iii) the portion of any distribution that is not
includible in gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
(b) Eligible Retirement Plan. An eligible retirement
plan is an individual retirement account described in Code Section 408(a), an
individual retirement annuity described in Code Section 408(b) (other than an
endowment contract), an annuity plan described in Code Section 403(a), or a
qualified trust described in Code Section 401(a) of a defined contribution
plan, that accepts the distributee's eligible rollover distribution. However,
in the case of an eligible rollover distribution to the surviving spouse, an
eligible retirement plan is an individual retirement account or individual
retirement annuity.
(c) Distributee. A distributee includes an employee or
former employee. In addition, the employee's or former employee's surviving
spouse and the employee's or former employee's spouse or former spouse who is
the alternate payee under a qualified domestic relations order, as defined in
Code Section 414(p), are distributees with regard to the interest of the
spouse or former spouse.
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ARTICLE XI
ADMINISTRATION
11.1 NAMED FIDUCIARY. The employer and the Plan Administrator are
named fiduciaries for purposes of ERISA.
11.2 PLAN ADMINISTRATOR. The Plan Administrator may from time to
time employ agents to aid in the administration of the Plan. The Plan
Administrator shall have the sole power and discretion to interpret and
construe the provisions of this Plan and to determine all questions, including
both interpretive and factual questions arising in connection with the
administration, interpretation and application of the Plan, and shall supply
any omission or reconcile any inconsistency in the Plan. The Plan
Administrator's authority includes, without limitation, the sole authority to
interpret and construe the Plan and determine a participant's eligibility to
participate in the Plan and to receive benefits, and amount of benefits, if
any. Any such action shall be final and conclusive upon all persons. The Plan
Administrator shall decide any disputes which may arise under this Plan
relative to the rights of employees, past and present, and their beneficiaries.
Further, the Plan Administrator shall adopt such rules as it deems necessary,
and give instructions and directions to the trustee as necessary and, in
general, shall direct the administration of the Plan. The Plan Administrator's
authority includes, but is not limited to, the following:
a. to compute, certify, and direct the trustee with
respect to the amount and the kind of benefits to which any participant shall
be entitled hereunder;
b. to authorize and direct the trustee with respect to
all nondiscretionary or otherwise directed disbursements from the trust;
c. to compute and certify to the employer and to the
trustee from time to time the sums of money necessary or desirable to be
contributed to the Plan;
d. to consult with the employer and the trustee
regarding the short and long-term liquidity needs of the Plan in order that the
trustee can exercise any investment discretion in a manner designed to
accomplish specific objectives; and
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e. to prepare and implement a procedure to notify
eligible employees that they may elect to have a portion of their compensation
deferred or paid to them in cash.
11.3 FACILITY OF PAYMENTS. Whenever, in the Plan Administrator's
opinion, a person who is entitled to receive any payment of a benefit or
installment thereof is under a legal disability or is incapacitated in any way
so as to be unable to manage his or her financial affairs, the Plan
Administrator may direct the trustee to make payments to such person or to the
participant's legal representative or to a relative or friend of the
participant for his or her benefit. Any payment of a benefit or installment
thereof made in accordance with the provisions of this section shall be a
complete discharge of any liability for the making of such payment under this
Plan.
11.4 APPOINTMENT OF INVESTMENT MANAGER. The employer shall have
the authority described in ERISA Section 402(c)(3) to appoint one or more
investment managers and contract with each for management of any part of the
trust fund for a reasonable fee. Selection and retention of an investment
manager shall be in the trustee's discretion. Each investment manager shall
have the power to manage, acquire, and dispose of the part of the trust fund
designated by the employer. The investment manager shall have no
responsibility for plan operation or administration.
11.5 INVESTMENT MANAGER AND TRUSTEE. If an investment manager is
appointed:
(a) The trustee shall segregate the trust fund or any
part thereof into one or more investment accounts. The trustee shall appoint
an investment manager for each account and designate the part of the trust fund
to be managed by each investment manager.
(b) The trustee may terminate at any time the authority
of an investment manager to manage an account. In such event or upon
resignation of an investment manager, the trustee may appoint a successor
investment manager for the account.
(c) Each investment manager to whom any fiduciary
responsibility with respect to the Plan or the trust funds allocated is
delegated, shall discharge such responsibility in
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accordance with the standards set forth in ERISA 404(a) and shall acknowledge
such responsibility in writing.
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ARTICLE XII
CLAIMS PROCEDURE
12.1 DENIAL OF CLAIMS. Any denial by the Plan Administrator of a
claim for benefits under the trust by a participant or beneficiary shall be
stated in writing and delivered or mailed to the participant or beneficiary.
Such notice shall set forth the specific reasons for the denial in a manner
that may be understood without legal or actuarial counsel. Any denial of a
claim may be appealed to the Plan Administrator by sending to the Plan
Administrator a written request for review within 90 days after receiving
notice of denial. The Plan Administrator shall give the applicant an
opportunity to review pertinent documents in preparing the applicant's request
for review. The request shall set forth all grounds on which it is based,
supporting facts and other matters which the applicant deems pertinent. The
Plan Administrator may require the applicant to submit such additional facts,
documents or other material as it deems necessary or advisable in making its
review and shall act upon such request within 60 days after the receipt
thereof, unless special circumstances require further time. If the Plan
Administrator confirms the denial in whole or in part, the Plan Administrator
shall notify the applicant, setting forth in a manner calculated to be
understood by the applicant, specific reasons for denial and specific
references to Plan provisions on which the decision was based.
12.2 ARBITRATION. Any controversy or claim arising out of or
relating to this Plan, which is asserted by any person as an employee, former
employee, participant, or beneficiary, shall be settled by arbitration in
accordance with the Commercial Rules of the American Arbitration Association.
Judgment upon the award rendered by the arbitrator shall be entered in a court
having jurisdiction thereof. All such arbitration cases shall be heard by an
attorney licensed in the jurisdiction where the arbitration hearing is to
occur.
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ARTICLE XIII
NONALIENATION PROVISION
No participant shall have the right or power to alienate, anticipate,
commute, pledge, encumber, or assign any of the funds allocated to the
participant under the terms of this Plan, and such funds shall not be subject
to seizure by any creditor of the participant under any writ or proceedings at
law or in equity; provided, that the terms of this Article shall not prohibit
the creation, assignment or recognition of a right to any benefit payable with
respect to a participant if such creation, assignment or recognition of a right
is made under a qualified domestic relations order defined under Code Section
414(p).
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ARTICLE XIV
TERMINATION
14.1 PLAN TERMINATION. The employer shall have the right to
terminate the Plan at any time as to its employees by action of its board of
directors or by action of any committee or officer to whom such board of
directors has delegated the right to terminate the Plan. In addition,
Microsoft Corporation reserves the right to terminate the Plan in its entirety
at any time by action of the Board of Directors of Microsoft Corporation or by
action of any committee or officer to whom the Board of Directors has delegated
such authority to terminate the Plan, and the Plan shall terminate in its
entirety unless Microsoft Corporation permits employers wishing to continue the
Plan as to their respective employees to arrange a spin-off of Plan assets
attributable to accounts of their employees.
14.2 NO REVERSION TO EMPLOYER -- ACCRUED RIGHTS NONFORFEITABLE. No
termination shall have the effect of vesting in the employer any part of the
principal or income of the plan funds. In the case of a termination, partial
termination, or complete discontinuance of contributions, the rights of all
affected employees accrued to the date of such termination or partial
termination, to the extent funded as of such date, shall be nonforfeitable.
14.3 DISTRIBUTION UPON TERMINATION OR DISCONTINUANCE OF
CONTRIBUTIONS. Upon termination of the Plan or a complete discontinuance of
contributions to the Plan the interests of all participants shall fully vest
and distribution shall be made to each participant in the form and manner
determined by the Plan Administrator and as permitted by the Code and ERISA.
See Section 7.7 of this Plan.
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ARTICLE XV
MERGER OR CONSOLIDATION
In the case of any merger or consolidation with, or transfer of,
assets or liabilities to any other retirement Plan, the termination benefits of
participants, former participants and beneficiaries immediately subsequent to
the merger, consolidation or transfer shall be equal to or greater than the
termination benefits immediately prior to such merger, consolidation, or
transfer.
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ARTICLE XVI
AMENDMENTS
Microsoft Corporation reserves the right, from time to time, to make any
amendment or amendments to this Plan by resolution of its Board of Directors,
or by action of any committee or officer to whom the Board of Directors has
delegated authority to amend the Plan, which amendment or amendments shall not
cause any part of the plan funds to be used for, or directed to, any purposes
other than the exclusive benefit of participants, former participants or their
beneficiaries, nor shall any such amendment reduce the amount of accrued
benefit of any participant or beneficiary within the meaning of Code Section
411(d)(6) except to the extent permitted by Code Section 411(d)(6) or the
Treasury Regulations thereunder.
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ARTICLE XVII
RIGHTS RESERVED
The establishment of the Plan as evidenced hereby or as hereafter
modified, the creation of any funds or accounts or the payment of any benefit
hereunder shall not be construed as giving any participant, or any other
person, any legal or equitable right against the employer, the trustee, or the
Plan Administrator, unless the same shall be specifically provided for in this
document or conferred by affirmative action of the employer in accordance with
the terms and provisions of this Plan or as giving any employee or participant
the right to be retained in the service of the employer. All employees shall
remain subject to discharge by the employer to the same extent as if this Plan
had never been executed.
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ARTICLE XVIII
TOP-HEAVY PROVISIONS
If the Plan is top-heavy in any plan year, the provisions of Appendix IV,
attached hereto and incorporated herein, shall supersede any conflicting
provisions in the Plan.
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ARTICLE XIX
LOANS
Beginning January 1, 1993, a participant may borrow from his or her
account in accordance with a non-discriminatory written loan policy, which is
incorporated herein by reference.
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APPENDIX I
DEFINITION OF COMPENSATION
Section 1.3
I.1.3.A. Compensation:
(a) For all plan years commencing on or after April 1,
1989, and prior to January 1, 1994, compensation means an employee's salary or
wages paid during the plan year. Compensation includes bonuses, commissions,
overtime and salary reduction contributions made by an employee to a benefit
plan, but shall not include reimbursement of moving expenses, car allowances,
club dues, income attributable to life insurance, and similar items.
Notwithstanding anything in this Plan to the contrary, the compensation of each
employee taken into account for any such plan year shall not exceed $200,000,
except that such $200,000 shall be increased as permitted by Internal Revenue
Service publication to reflect cost-of-living adjustment.
(b) For all plan years commencing on or after January 1,
1994, an employee's wages, salaries, fees for professional services, and other
amounts received (without regard to whether or not an amount is paid in cash)
for personal services actually rendered in the course of employment with the
employer maintaining the plan to the extent that the amounts are includible in
gross income (including, but not limited to, bonuses, commissions, and overtime
pay). Compensation includes the employee's elective salary reduction
contributions not includible in gross income under Code Section 125 (cafeteria
plans) or Section 402(e)(3) (401(k) plans); and compensation includes foreign
earned income (as defined in Code Section 911(b)), whether or not excludable
from gross income under Code Section 911. Compensation shall not include:
(i) (even if includible in gross income)
reimbursements or other expense allowances, fringe benefits (cash and noncash),
moving expenses, deferred compensation, and welfare benefits;
(ii) employer contributions to a simplified
employee pension described in Code Section 408(k), distributions from a plan
of deferred compensation (regardless of whether such amounts are includible in
the gross income of the employee when distributed);
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(iii) amounts realized from the exercise of a
nonqualified stock option, or when restricted stock (or property) held by an
employee either becomes freely transferable or is no longer subject to a
substantial risk of forfeiture;
(iv) amounts realized by the employee from the
sale, exchange or other disposition of stock acquired under a qualified stock
option; and
(v) other amounts which receive special tax
benefits, such as premiums for group-term life insurance.
I.1.3.B. Compensation for Employees of Controlled Group
In the case of an employee of an employer which is a member of
a controlled group of corporations (as defined in Code Section 414(b) as
modified by Code Section 415(h)), the term "compensation" for such employee
includes compensation from all employers that are members of the group,
regardless of whether the employee's particular employer has a qualified plan.
This rule is also applicable to an employee of two or more trades or businesses
(whether or not incorporated) that are under common control (as defined in Code
Section 414(c) as modified by Code Section 415(h)), to an employee of two or
more members of an affiliated service group as defined in Code Section 414(m),
and to an employee of two or more members of any group of employers who must be
aggregated and treated as one employer pursuant to Code Section 414(o).
I.1.3.C. Limitations on Compensation
(a) In addition to the applicable limitations set forth
in the Plan, and notwithstanding any other provisions of the Plan to the
contrary, for plan years beginning on or after January 1, 1994, the annual
compensation of each employee taken into account under the Plan shall not
exceed the OBRA '93 annual compensation limit. The OBRA '93 annual
compensation limit is $150,000, as adjusted by the Commissioner for increases
in the cost of living in accordance with Code Section 401(a)(17)(B). The
cost-of-living adjustment in effect for a calendar year applies to any period,
not exceeding 12 months, over which compensation is determined (the
"determination period") beginning in such calendar year. If a determination
period consists of fewer than 12 months, the OBRA '93 annual compensation limit
will be
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multiplied by a fraction, the numerator of which is the number of months in the
determination period, and the denominator of which is 12.
For plan years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under Code Section 401(a)(17) shall
mean the OBRA '93 annual compensation limit set forth in this provision.
If compensation for any prior determination period is taken
into account in determining an employee's benefit accruing in the current plan
year, the compensation for that prior determination period is subject to the
OBRA '93 annual compensation limit in effect for that prior determination
period. For this purpose, for determination periods beginning before the first
date of the first plan year beginning on or after January 1, 1994, the OBRA '93
annual compensation limit is $150,000.
For purposes of determining the maximum dollar amount referred
to in this provision, the compensation of any participant who is either a 5%
owner (as defined in Code Section 416(i)) or one of the ten most highly paid
highly compensated employees during the Plan year shall be aggregated with:
(i) the compensation of any lineal descendant who has not attained the age of
19, and (ii) the compensation of a participant who is his or her spouse.
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APPENDIX II
Sections 1.6, 2.1 and 5.2
EMPLOYERS MAINTAINING THE PLAN
Employer Effective Date
___________________________________________ ________________________________
Microsoft Corporation January 1, 1987
Technology Resources Management Corporation November 23, 1992
EMPLOYEES' PREPARTICIPATION SERVICE WITH THESE COMPANIES
IS COUNTED FOR ELIGIBILITY AND VESTING
Company Effective Date Credit is Granted
___________________________________________ ________________________________
Microsoft Corporation January 1, 1987
Technology Resources Management Corporation November 23, 1992
Fox Software, Inc. July 1, 1992
SOFTIMAGE, Inc. June 27, 1994
Bauer Group, Inc. July 1, 1989
Forethought, Inc. August 1, 1987
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APPENDIX III
CODE SECTION 401(k) LIMITATIONS OF COMPENSATION DEFERRALS AND
CODE SECTION 401(m) LIMITATIONS ON COMPENSATION DEFERRALS
III.9.5.A. Definition of Highly Compensated Employee
"Highly compensated employee" shall mean:
(a) Any employee who performs services for the employer
during the "determination year" and who, during the "look-back year" (1) was a
5% owner of the employer; (2) received compensation from the employer in excess
of $75,000 (as adjusted for increases in cost of living as reported in IRS
publications); (3) received compensation from the employer in excess of $50,000
(as adjusted for increases in cost of living as reported in IRS publications)
and was a member of the "top-paid group" for such year; or (4) was an officer
of the employer and received compensation during such year that is greater than
50% of the dollar limitation in effect under Code Section 415(c)(1)(A);
(b) Any employee who performs services for the employer
during the determination year and who, with respect to the determination year,
is either described in (a)(1) above or is both one of the 100 employees who
received the most compensation from the employer during the determination year
and is described in (a)(2), (a)(3) or (a)(4); or
(c) Any employee who separated from service (or was
deemed to have separated) prior to the determination year, and met the
description in (a) or (b) above for either the separation year or any
determination year ending on or after the employee's 55th birthday.
(d) If no officer of the employer has compensation in
excess of 50% of the dollar limitation in effect under Code Section
415(b)(1)(A) during a determination year or a look-back year, the highest paid
officer for such year shall be treated as a highly compensated employee.
(e) If an employee is, during a determination year or
look-back year, a "family member" of either a 5% owner who is an employee or of
a highly compensated employee in the group consisting of the 10 most highly
compensated employees ranked on the basis of compensation paid by the employer
during such year, then the family member and 5% owner or
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top-ten highly compensated employee shall be treated as a single employee, and
their compensation and contributions or benefits under this Plan shall be
aggregated. Except as otherwise provided under Code Section 401(a)(17),
"family member" includes the spouse, lineal ascendants and descendants of the
employee or former employee, and the spouses of such lineal ascendants and
descendants.
(f) The "determination year" shall be the Plan year for
which compliance is being tested, and the "look-back year" shall be the
12-month period immediately preceding the determination year.
(g) The "top-paid group" for a determination year or a
look-back year shall consist of the top 20% of employees ranked on the basis of
compensation received during the year excluding employees described in Code
Section 414(q)(8) and Treasury regulations thereunder. The number of
employees treated as officers shall be limited to 50 (or, if less, the greater
of 3 employees or 10% of the employees). For purposes of this definition of
"highly compensated employee", "compensation" means compensation within the
meaning of Code Section 415(c)(3), but including elective or salary reduction
contributions to a cafeteria Plan, cash or deferred arrangement, or
tax-sheltered annuity.
III.9.5.B. Code Section 401(k) Limitations on Compensation
Deferrals.
(a) The Plan Administrator will estimate as soon as
practicable before the close of the plan year and at such other times as the
Plan Administrator in its discretion determines, the extent, if any, to which
any participant or class of participants will have to reduce contributions
under this Plan.
(b) For each plan year, an actual deferral percentage
will be determined for each participant equal to the ratio of the total amount
of the participant's salary deferrals under section 3.1 for the plan year
divided by the participant's compensation in the plan year. In the case of
family members treated as a single highly compensated employee under the
definition of "highly compensated employee", in accordance with the family
aggregation rules of Code Section 414(q)(6), the actual deferral percentage
shall be the greater of the (1) the actual deferral
III-2
49
percentage determined by combining the compensation deferrals and compensation
of all eligible family members who are highly compensated employees without
regard to family aggregation, and (2) the actual deferral percentage determined
by combining the salary deferrals and compensation of all eligible family
members. Except to the extent taken into account in the preceding sentence,
the deferrals and compensation of such family members shall be disregarded for
purposes of this section. Except as otherwise provided in this paragraph (b),
with respect to participants who have made no salary deferrals under this plan,
such actual deferral percentage will be zero.
(c) The average of the actual deferral percentages for
highly compensated employees ("high average") when compared with the average of
the actual deferral percentages for non-highly compensated employees ("low
average") must meet one of the following requirements:
(1) The high average is no greater than 1.25
times the low average; or
(2) The high average is no greater than two times
the low average and the high average is no greater than the low average plus
two percentage points.
(d) If, pursuant to the estimates by the Plan
Administrator under (a) and (b) above, a participant or class of participants
is not eligible for salary deferral treatment for any or all of the amounts
deferred, then the Plan Administrator may elect, at its discretion, to pursue
any of the following courses of action or any combination thereof:
(1) Excess salary deferrals, and any earnings
attributable thereto through the date of distribution, may be returned to the
employer employing the participant, solely for the purpose of enabling the
employer to withhold any federal, state, or local taxes due on such amounts.
The employer will pay all remaining amounts to the participant within the 2-1/2
month period following the close of the plan year to which the excess salary
deferrals relate to the extent feasible, but in all events no later than 12
months after the close of such plan year.
(2) The Plan Administrator may authorize a
suspension or reduction of salary deferrals.
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(3) The company, in its discretion, may make a
contribution to the Plan, which will be allocated as a fixed dollar amount
among the accounts of non-highly compensated employees who have met the
requirements of section 2.1
(e) The amount of the excess salary deferrals will be
determined by the Plan Administrator by reducing the actual deferral percentage
of the highly compensated employee(s) with the highest actual deferral
percentage to the extent required to enable the plan to meet the limits in (c)
above or to cause the actual deferral percentage of such employee(s) to equal
the actual deferral percentage of the highly compensated employee(s) with the
next-highest actual deferral percentage. The process in the preceding sentence
shall be repeated until the Plan satisfies the limits in (c) above. In the
case of family members subject to the family aggregation rules of Code Section
414(q)(6), excess salary deferrals will be allocated among family members in
proportion to the salary deferrals of each family member that have been
combined under section III.9.5.B.(b) above. Where the actual deferral
percentage is determined under section III.9.5.B.(b)(1) above, however, excess
salary deferrals will be allocated first among the eligible highly compensated
employee family members in proportion to the salary deferrals of each such
highly compensated employee family member until the actual deferral percentage
of the eligible highly compensated employee family members has been reduced to
the actual deferral percentage of the eligible non-highly compensated employee
family members. If reduction of the actual deferral percentage below that of
the eligible non-highly compensated employee family members is required under
section III.9.5.B.(b)(1) to enable the plan to meet the limits in section
III.9.5.B.(c) above, such further reduction shall take into account the salary
deferrals of all eligible family members and shall be allocated among all such
family members in proportion to their salary deferrals. The earnings
attributable to excess salary deferrals will be determined in accordance with
Treasury Regulations.
(f) In the discretion of the Plan Administrator, the
tests described in this section may be applied by aggregating the Plan with any
other defined contribution plans permitted under the Code.
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III.9.5.C. Code Section 401(m) Limitations on Employer Matching
Contributions
(a) For each plan year, a contribution percentage will be
determined for each participant equal to the ratio of the total amount of the
participant's employer matching contributions under section 4.1 for the plan
year divided by the participant's compensation for the plan year. Any employer
matching contributions or employer contributions treated as salary deferrals
under section III.9.5.B.(b) shall not be used to satisfy the requirements of
this Section III.9.5.B.(a), except as otherwise permitted by the Code or
Treasury Regulations. In the case of family members treated as a single highly
compensated employee under the definition of "highly compensated employee" in
accordance with the family aggregation rules of Code Section 414(q)(6), the
contribution percentage shall be the greater of (1) the contribution percentage
determined by combining the employer matching contributions and compensation of
all eligible family members who are highly compensated employees without regard
to family aggregation, and (2) the actual contribution percentage determined by
combining the employer matching contributions and compensation of all eligible
family members. Except to the extent taken into account in the preceding
sentence, the employer matching contributions, compensation and all amounts
treated as employer matching contributions of such family members shall be
disregarded for purposes of this section III.9.5.C. Except as otherwise
provided in this Section III.9.5.C.(b), with respect to participants and for
whom there were no employer matching contributions under this plan, such
contribution percentage will be zero.
(b) The average of the contribution percentages for
highly compensated employees ("high average") when compared with the average of
the contribution percentages for non-highly compensated employees ("low
average") does not exceed the greater of:
(1) 1.25 times the low average; or
(2) The lesser of two times the low average, or
the low average plus two percentage points.
(c) If the contribution percentage for any plan year for
highly compensated employees exceeds the limits established in (b), the excess
contributions for such plan year (and
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the earnings attributable to such excess contributions through the date of
distribution) shall be distributed to the highly compensated employees so that
the contribution percentage of the highly compensated employee(s) with the
highest contribution percentage is reduced to the extent required to enable the
plan to meet the limits in (b) above or to cause the contribution percentage of
such employee(s) to equal the contribution percentage of the highly compensated
employee(s) with the next-highest contribution percentage. The process in the
preceding sentence shall be repeated until the plan satisfies the limits in (b)
above. In the case of family members subject to the family aggregation rules
of Code Section 414(q)(6), excess contributions will be allocated among family
members in proportion to the employer matching contributions of each family
member that have been combined under section III.9.5.C.(a) above. Where the
contribution percentage is determined under section III.9.5.C.(a)(1) above,
however, excess employer matching contributions will be allocated first among
the eligible highly compensated employee family members in proportion to the
employer matching contributions of each such highly compensated employee family
member until the contribution percentage of the eligible highly compensated
employee family members has been reduced to the contribution percentage of the
eligible non-highly compensated employee family members. If reduction of the
contribution percentage below that of the eligible non-highly compensated
employee family members is required under section III.9.5.C.(a)(1) to enable
the plan to meet the limits in section A.3(b) above, such further reduction
shall take into account the employer matching contributions of all eligible
family members in proportion to their employer matching contributions. The
earnings attributable to excess contributions will be determined in accordance
with Treasury Regulations.
(d) The tests of sections III.9.5.B.(c) and III.9.5.C.(b)
shall be met in accordance with the prohibition against the multiple use of the
alternative limitation under Code Section 401(m)(9).
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APPENDIX IV
IV.18.A. TOP-HEAVY DEFINITIONS. The definitions relating to
top-heavy plan provisions are as follows:
(a) Key Employee shall mean any employee or former
employee (and the beneficiaries of such employee) who, in the plan year
containing the determination date, or any of the four preceding plan years is:
(i) An officer of the employer having an annual
compensation from the employer greater than 150 percent of the amount in effect
under Code Section 415(b)(1)(A) for any such plan year. Not more than fifty
employees (or, if fewer, the greater of three employees or ten percent of the
employees), including those employees included under subparagraph (ii), (iii)
and (iv) below, shall be considered as officers for purposes of this
subparagraph.
(ii) One of the ten employees having an annual
compensation from the employer of more than the amount in effect under Code
Section 415(c)(1)(A) in the plan year and owning (or considered as owning
within the meaning of Code Section 318) the largest interests in the employer.
(iii) A five-percent owner of the employer.
(iv) A one-percent owner of the employer having an
annual compensation (within the meaning of Code Section 414(q)(7)) from the
employer of more than $150,000 for a plan year.
Whether an employee is a five-percent owner or a one-percent owner
shall be determined in accordance with Code Section 416(i). If any individual
has not performed services for the employer at any time during the five year
period ending on the determination date, any accrued benefit for such
individual shall not be taken into account.
(b) Top-Heavy Plan shall mean that this Plan is
considered top-heavy for any plan year if any of the following conditions
exists:
(i) If the top-heavy ratio for this Plan exceeds
60% and this Plan is not part of any required aggregation group or permissive
aggregation group of plans.
IV-1
54
(ii) If this Plan is a part of a required
aggregation group of plans but not part of a permissive aggregation group and
the top-heavy ratio for the group of plans exceeds 60%.
(iii) If this Plan is a part of a required
aggregation group and part of a permissive aggregation group of plans and the
top-heavy ratio for the permissive aggregation group exceeds 60%.
(c) Top-Heavy Ratios shall mean the ratios calculated as
follows:
(i) If the employer maintains one or more defined
contribution plans (including any simplified employee pension plan) and the
employer has not maintained any defined benefit plan which during the 5-year
period ending on the determination date(s) has or has had accrued benefits, the
top-heavy ratio for this Plan alone or for the required or permissive
aggregation group as appropriate is a fraction, the numerator of which is the
sum of the account balances of all key employees as of the determination
date(s) (including any part of any account balance distributed in the 5-year
period ending on the determination date(s)), and the denominator of which is
the sum of all account balances (including any part of any account balance
distributed in the 5-year period ending on the determination date(s)), both
computed in accordance with Code Section 416 and the regulations thereunder.
Both the numerator and denominator of the top-heavy ratio are adjusted to
reflect any contribution not actually made as of the determination date, but
which is required to be taken into account on that date under Code Section 416
and the regulations thereunder.
(ii) If the employer maintains one or more defined
contribution plans (including any simplified employee pension plan) and the
employer maintains or has maintained one or more defined benefit plans which
during the 5-year period ending on the determination date(s) has or has had any
accrued benefits, the top-heavy ratio for any required or permissive
aggregation group as appropriate is a fraction, the numerator of which is the
sum of account balances under the aggregated defined contribution plan or plans
for all key employees, determined in accordance with (i) above, and the present
value of accrued benefits under the
IV-2
55
aggregated defined benefit plan or plans for all key employees as of the
determination date(s), and the denominator of which is the sum of the account
balances under the aggregated defined contribution plan or plans for all
participants, determined in accordance with (i) above, and the present value of
accrued benefits under the defined benefit plan or plans for all participants
as of the determination date(s), all determined in accordance with Code Section
416 and the regulations thereunder. The accrued benefits under a defined
benefit plan in both the numerator and denominator of the top-heavy ratio are
adjusted for any distribution of an accrued benefit made in the five-year
period ending on the determination date.
(iii) For purposes of (i) and (ii) above the value
of account balances and the present value of accrued benefits will be
determined as of the most recent valuation date that falls within or ends with
the 12-month period ending on the determination date, except as provided in
Code Section 416 and the regulations thereunder for the first and second plan
years of a defined benefit plan. The account balances and accrued benefits of
a participant (1) who is not a key employee but who was a key employee in a
prior year, or (2) who has not been credited with at least one hour of service
with any employer maintaining the Plan at any time during the 5-year period
ending on the determination date will be disregarded. The calculation of the
top-heavy ratio, and the extent to which distributions, rollovers, and
transfers are taken into account will be made in accordance with Code Section
416 and the regulations thereunder. Deductible employee contributions will not
be taken into account for purposes of computing the top-heavy ratio. When
aggregating plans the value of account balances and accrued benefits will be
calculated with reference to the determination dates that fall within the same
calendar year.
(d) Permissive Aggregation Group shall mean the required
aggregation group of plans plus any other plan or plans of the employer which,
when considered as a group with the required aggregation group, would continue
to satisfy the requirements of Code Sections 401(a)(4) and 410.
(e) Required Aggregation Group shall mean each qualified
plan of the employer in which at least one key employee participates or
participated at any time during the
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56
determination period (regardless of whether the plan has terminated), and any
other qualified plan of the employer which enables such a plan to, meet the
requirements of Code Section 401(a)(4) or Section 410.
(f) Determination Date shall mean for any plan year
subsequent to the first plan year, the last day of the preceding plan year; for
the first plan year of the Plan, the last day of that year.
(g) Valuation Date shall mean the date as of which
account balances or accrued benefits are valued for purposes of calculating the
top-heavy ratio.
(h) Present value shall be based only on the interest and
mortality rates specified in the adoption agreement.
IV.18.B. MINIMUM ALLOCATION.
The employer contributions and forfeitures allocated on behalf of any
participant employed on the last day of the plan year, who is not a key
employee, shall not be less than the lesser of three percent of such
participant's compensation or in the case where the employer has no defined
benefit plan which designates this plan to satisfy Code Section 401, the
largest percentage of employer contributions and forfeitures, as a percentage
of the first $150,000 (or the adjusted limitation under Code Section
401(a)(17)) of the key employee's compensation, allocated on behalf of any key
employee for that year. If the highest rate allocated to a key employee for a
year in which the Plan is top heavy is less than 3%, amounts contributed as a
result of a salary deferral agreement shall be included in determining
contributions made on behalf of key employees. The minimum allocation is
determined without regard to any Social Security contribution. This minimum
allocation shall be made even though, under other plan provisions, the
participant would not otherwise be entitled to receive an allocation, or would
have received a lesser allocation for the year because of (1) the participant's
failure to complete 1,000 hours of service (or any equivalent provided in the
Plan), or (2) the participant's failure to make mandatory employee
contributions to the Plan, or (3) compensation less than a stated amount. An
allocation under this section shall not be made if the participant is covered
under any other plan or plans of
IV-4
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the employer and the minimum allocation or benefit requirement applicable to
top-heavy plans will be met in the other plan or plans. The definition of
compensation in section 1.3 of the Plan shall be the definition for determining
minimum allocations under this section. This definition shall be used for all
top-heavy purposes, including determining whether an employee is a key
employee.
The employer has caused this restated Plan to be duly executed on this
_____ day of June, 1994.
MICROSOFT CORPORATION
By _________________________________
Title: _____________________________
IV-5