EXHIBIT 4.4.(b)
MASTER PLAN
MASTER DEFINED CONTRIBUTION RETIREMENT PLAN
AMENDED EFFECTIVE AS OF JANUARY 1, 1998
The Banco Popular de Puerto Rico Master Defined Contribution Retirement
Plan (the "Master Plan") may be adopted through the execution of an adoption
agreement (the "Adoption Agreement") as either a money purchase pension plan or
a profit-sharing plan (the "Plan"), which may, or may not, contain a cash or
deferred arrangement. The Plans established hereunder are intended to qualify
under Sections 1165(a), (e) and (g) of the Puerto Rico Internal Revenue Code of
1994 of 1984, as amended and to comply with all applicable requirements of both
Title I of the Employee Retirement Income Security Act of 1974 , as amended and
the Puerto Rico Internal Revenue Code of 1984, as amended.
By executing the Adoption Agreement, the Employer has established a
Plan governed by the provisions of the Adoption Agreement and this Master Plan
document. If an Employer is interested in establishing more than one type of
Plan, a separate Adoption Agreement must be executed for each Plan. The purpose
of the Plan is to create a retirement fund intended to help provide for the
future security of the Participants and their Beneficiaries. In no event shall
any portion of the principal or income of the Master Trust established by the
Banco Popular de Puerto Rico and forming part of this Plan, or the Trust
established by the Employer to form part of this Plan, be used for, or diverted
to, any purpose other than the exclusive benefit of the Participants and their
Beneficiaries, except as and to the limited extent otherwise specifically
permitted under the Employee Retirement Income Security Act of 1974, as amended
and the Puerto Rico Internal Revenue Code of 1984, as amended.
The Plan consists of this Master Plan Document, the Adoption Agreement
executed by the Employer, the Master Trust established by Banco Popular de
Puerto Rico and/or the Trust established by the Employer, as each may be amended
from time to time. The Master Plan Sponsor is Banco Popular de Puerto Rico.
-2-
MASTER PLAN
Master Defined Contribution Retirement Plan
Copyright@ 1998 by Banco Popular de Puerto Rico
ARTICLE 1 CONSTRUCTIONS, INTENT AND APPLICABLE LAW
1.1 CONSTRUCTION
Whenever used in the Plan, unless the context clearly indicates
otherwise, the masculine pronoun shall include the feminine, the singular shall
include the plural and the plural the singular. The conjunction "or" shall
include both the conjunctive and disjunctive, and the adjective "any" shall mean
one or more or all. Unless the context indicates otherwise, the words "herein",
"hereof", "hereunder" and words of similar import refer to the Plan as a whole
and not only to the section in which they appear. Article, section and paragraph
headings have been inserted for convenience of reference only and are to be
ignored in any construction of the provisions hereof. If any provision of the
Plan shall for any reason be invalid or unenforceable, the remaining provisions
shall nevertheless be valid, enforceable and fully effective.
1.2 INTENT
It is the intent that the Plan shall at all times be a qualified plan
and the Trust shall at all times be exempt from taxation under Section 1165(a)
of the IRC and section 501(a) of the Code (as provided in Section 1022(i)(1) of
ERISA). It is also intended that the cash or deferred arrangement contained in
the Plan meet the requirements of Section 1165(e) of the IRC.
-3-
1.3 GOVERNING LAW
The Plan and all rights hereunder shall be governed by and construed in
accordance with the laws of the Commonwealth of Puerto Rico to the extent such
laws have not been preempted by applicable federal law.
ARTICLE 2 DEFINITIONS
Whenever used in the Plan, unless the context clearly indicates
otherwise, the following terms shall have the following meanings:
2.1 "ACTUAL DEFERRAL PERCENTAGE" shall mean, the ratio (expressed as a
percentage to the nearest one-hundredths of one percent) of (1) the sum of
Pre-Tax Contributions and Qualified Employer Deferral Contributions actually
paid over to the Trust on behalf of each Participant for the Plan Year to (2)
the Participant's Compensation for such Plan Year (whether or not the Employee
was a Participant for the entire Plan Year). For purposes of computing actual
deferral percentages, an Employee who would be a Participant but for the failure
to make Pre-Tax Contributions shall be treated as a Participant on whose behalf
zero (0) Pre-Tax Contributions are made.
2.2 "ADOPTION AGREEMENT" shall mean the Banco Popular de Puerto Rico
Master Defined Contribution Retirement Plan Adoption Agreement executed by the
Employer to establish or amend the Employer's Plan and to specify optional
provisions as part of the Employer's Plan.
2.3 "AFFILIATE" shall mean
-4-
a. any corporation which is a member of the same controlled group of
corporations (within the meaning of ERISA Section 210(c)) as is the Employer,
and
b. any other trade or business (whether or not incorporated) under
common control (within the meaning of ERISA Section 210(d)) with the Employer.
2.4 "AFTER-TAX CONTRIBUTIONS" shall mean voluntary contributions made
by a Participant to the Plan during the Plan Year as described in Article 5.
2.5 "AFTER-TAX CONTRIBUTIONS ACCOUNT", with respect to a Participant,
shall mean the account established under the Plan for such Participant
representing the After-Tax Contributions plus any gains or losses allocated to
such account in accordance with the provisions of the Plan, as adjusted to
reflect distributions therefrom. Such account will be fully vested and
nonforfeitable at all times.
2.6 "ANNUITY STARTING DATE" shall mean the first day of the first
period for which an amount is payable as an annuity or, in the case of a benefit
not payable in the form of an annuity, the first day in which all events have
occurred which entitle the Participant to such benefit.
2.7 "AVERAGE ACTUAL DEFERRAL PERCENTAGE" shall mean the average
(expressed as a percentage to the nearest one-hundredth of one percent) of the
Actual Deferral Percentage of Participants in a group.
2.8 "BENEFICIARY" shall mean the person or persons (natural or
otherwise) designated by a Participant or Beneficiary, or by the Plan, to
receive any benefit payable upon the death of the Participant or Beneficiary.
-5-
2.9 "COMPENSATION", unless elected otherwise in the Adoption Agreement,
shall mean with respect to any Participant total compensation paid by the
Employer during the Plan Year that is currently includible in income for income
tax purposes. Amounts contributed by the Employer under the Plan, except for
Pre-Tax Contributions, and any nontaxable fringe benefits shall not be
considered as Compensation. For a Self-Employed Individual or Owner-Employee,
Compensation will mean his Earned Income.
2.10 "DISABILITY" shall mean a physical or mental condition which in
the judgment of the Plan Administrator, based upon medical reports and other
evidence satisfactory to the Plan Administrator, presumably permanently prevents
an Employee from satisfactorily performing usual duties for the Employer or the
duties of such other position or job which the Employer makes available and for
which such Employee is qualified by reason of training, education, or
experience. Qualification by an Employee for permanent Disability benefits under
the social security system shall be deemed adequate evidence of Disability for
purposes of this Plan.
2.11 "EARLY RETIREMENT AGE" shall mean the early retirement date
selected by the Employer in the Adoption Agreement.
2.12 "EARLY RETIREMENT DATE" shall mean the first day of any month
coinciding with or following a Participant's attainment of Early Retirement Age.
2.13 "EARNED INCOME" shall mean, with respect to a Self-Employed
Individual, the net earnings from self employment in the trade or business with
respect to which the Plan is established, for which the personal services of the
individual are a material income producing factor. Net earnings will be
determined WITHOUT regard to items excluded from gross income and the deductions
allocable to such items. Net earnings are reduced by
-6-
contributions by the Employer to a qualified plan to the extent deductible under
IRC Section 1023(n).
2.14 "EFFECTIVE DATE" shall mean the date elected in the Adoption
Agreement.
2.15 "1165(E) PLAN" shall mean a profit sharing plan containing a cash
or deferred arrangement qualified under Section 1165(e) of the IRC.
2.16 "ELIGIBLE SPOUSE" shall mean that spouse to whom a Participant is
married on either the Annuity Starting Date or the date of this death, whichever
occurs earlier.
2.17 "EMPLOYEE" shall mean any person employed by the Employer, but
excludes any person who is employed as an independent contractor. Employee
includes a Self-Employed Individual and an Owner-Employee.
2.18 "EMPLOYER" shall mean the Employer or Employers named in the
Adoption Agreement.
2.19 "EMPLOYER CONTRIBUTIONS" shall mean Profit-Sharing Contributions
or Money Purchase Contributions made by the Employer to the Plan pursuant to the
provisions of Article 6.
-7-
2.20 "EMPLOYER CONTRIBUTIONS ACCOUNT", with respect to a Participant,
shall mean the account established under the Plan for such Participant
representing the Employer Contributions (and any forfeitures) plus any gains or
losses allocated to such account in accordance with the provisions of the Plan,
as adjusted to reflect distributions therefrom.
2.21 "EMPLOYER SECURITIES" shall mean stock issued by the Employer or
an Affiliate and which is publicly traded on a nationally recognized stock
exchange.
2.22 "ENTRY DATE" shall mean the date(s) elected in the Adoption
Agreement on which Participants may commence participation in the Plan.
2.23 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
2.24 "EXCESS CONTRIBUTIONS" shall mean, with respect to any Plan Year,
the excess of:
a. The aggregate amount of Pre-Tax Contributions and Qualified Employer
Deferral Contributions actually taken into account in computing the Actual
Deferral Percentage of Highly Compensated Employees for such Plan Year,
over
b. The maximum amount of such contributions permitted by the actual
deferral percentage test.
2.25 "EXCESS DEFERRALS" shall mean those Pre-Tax Contributions that are
includible in a Participant's gross income under IRC Section 1165(e)(7) to the
extent such Participant's Pre-Tax Contributions for a taxable year exceed the
lesser of 10% of the Participant's Compensation or $8,000 for taxable year 1998
and thereafter (or any other
-8-
dollar amount may be determined in the future under the IRC or the regulations
issued thereunder).
2.26 "HIGHLY COMPENSATED EMPLOYEE" shall mean, with respect to a Plan
Year, any Employee who, determined on the basis of Compensation for such Plan
Year, has Compensation greater than two-thirds (2/3) of all other Participants.
2.27 "IRC" shall mean the Puerto Rico Internal Revenue Code of 1994, as
amended.
2.28 "MASTER PLAN" shall mean the Master Defined Contribution
Retirement Plan sponsored by Banco Popular de Puerto Rico, as set forth in this
document.
2.29 "MASTER PLAN SPONSOR" shall mean Banco Popular de Puerto Rico, or
any successor thereof.
2.30 "MATCHING CONTRIBUTIONS" shall mean contributions made by the
Employer to the Plan on behalf of a Participant on account of a Participant's
After-Tax or Pre-Tax Contributions.
2.31 "MATCHING CONTRIBUTIONS ACCOUNT", with respect to a Participant,
shall mean the account established under the Plan for such Participant
representing the Matching Contributions plus any gains or loss allocated to such
account in accordance with the provisions of the Plan, as adjusted to reflect
distributions therefrom.
2.32 "MONEY PURCHASE CONTRIBUTIONS" shall mean contributions made by
the Employer pursuant to a Money Purchase Pension Plan using the formula
established by the Employer in the Adoption Agreement.
-9-
2.33 "NON-HIGHLY COMPENSATED EMPLOYEE" shall mean those Participants
that are not Highly Compensated Employees.
2.34 "NORMAL RETIREMENT AGE" shall mean the latter of:
a. Age sixty-five (65); or
b. The Participant's age on the fifth anniversary of the first day of
the Plan Year in which he/she commenced participation in the Plan.
2.35 "NORMAL RETIREMENT DATE" shall mean the first day of the month
following the end of the Plan Year in which a Participant has attained Normal
Retirement Age.
2.36 "OWNER-EMPLOYEE" shall mean an individual who is a sole
proprietor, or who is a partner or shareholder owning more than 10 percent of
either the capital or profits interest of a special partnership or corporation
of individuals.
2.37 "PARTICIPANT" shall mean any Employee who has become eligible to
participate in the Plan and has not for any reason become ineligible to
participate in the Plan.
2.38 "PLAN" shall mean the Employer's Plan as set forth in this Master
Plan Document and the Adoption Agreement executed by the Employer, including all
amendments to either document.
2.39 "PLAN ADMINISTRATOR" shall mean the person or persons designated
in the Adoption Agreement to control and manage the operation and administration
of the Employer's Plan as provided in Article 14.
-10-
2.40 "PLAN SPONSOR" Shall mean the Employer establishing a Plan
pursuant to the execution of an Adoption Agreement under this Master Plan.
2.41 "PLAN YEAR" shall mean the calendar year unless another Plan Year
is specified in the Adoption Agreement.
2.42 "PRE-TAX CONTRIBUTIONS" shall mean any Employer contributions made
to the Plan at the election of the Participant, in lieu of cash compensation,
pursuant to a salary reduction agreement or other deferral mechanism.
2.43 "PRE-TAX CONTRIBUTIONS ACCOUNT", with respect to a Participant,
shall mean the account established under the Plan for such Participant
representing the Pre-Tax Contributions plus any gains or losses allocated to
such account in accordance with the provisions of the Plan, as adjusted to
reflect distributions therefrom. Such account will be fully vested and
nonforfeitable at all times.
2.44 "PROFIT-SHARING CONTRIBUTIONS" shall mean contributions made by
the Employer pursuant to a Profit-Sharing Plan.
2.45 "QUALIFIED EMPLOYER DEFERRAL CONTRIBUTIONS" shall mean Qualified
Non-Elective Contributions and Qualified Matching Contributions which are taken
into account under this Plan, and any other qualified plans that are maintained
by the Employer which are aggregated with this Plan under section 4.5(b) and
(c), in determining a Participant's Actual Deferral Percentage.
2.46 "QUALIFIED MATCHING CONTRIBUTIONS" shall mean Matching
Contributions which are taken into account under the Plan in determining a
Participant's Actual Deferral Percentage. In order for Matching Contributions to
be considered as
-11-
Qualified Matching Contributions, the Matching Contributions must be one hundred
percent (100%) vested and nonforfeitable when made and must not be distributable
under the Plan to Participants or their Beneficiaries earlier than provided in
section 4.4C.
2.47 "QUALIFIED MATCHING CONTRIBUTIONS ACCOUNT", with respect to a
Participant, shall mean the account established under the Plan for such
Participant representing the Qualified Matching Contributions plus any gains or
losses allocated to such account in accordance with the provisions of the Plan,
as adjusted to reflect distributions therefrom. Such account will be fully
vested and nonforfeitable at all times.
2.48 "QUALIFIED NON-ELECTIVE CONTRIBUTIONS" shall mean contributions
made by the Employer to this Plan (other than Pre-Tax Contributions and Matching
Contributions) which are taken into account in determining a Participant's
Actual Deferral Percentage and which the Participant may not elect to receive in
cash until distributed from the Plan. In order for such contributions to be
considered as Qualified Non-Elective Contributions, they must be one hundred
percent (100%) vested and nonforfeitable when made and must not be distributable
under the terms of the Plan to Participants or their Beneficiaries earlier than
provided in section 4.4C.
2.49 "QUALIFIED NON-ELECTIVE CONTRIBUTIONS ACCOUNT", with respect to a
Participant, shall mean the account established under the Plan for such
Participant representing the Qualified Non-Elective Contributions plus any gains
or losses allocated to such account in accordance with the provisions of the
Plan, as adjusted to reflect distributions therefrom. Such account will be fully
vested and nonforfeitable at all times.
2.50 "ROLLOVER CONTRIBUTIONS" shall mean contributions to the Plan as
described in Article 7.
-12-
2.51 "ROLLOVER CONTRIBUTIONS ACCOUNT", with respect to a Participant,
shall mean the account established under the Plan for such Participant
representing the Rollover Contributions plus any gains or losses allocated
thereto, in accordance with the provisions of the Plan, as adjusted to reflect
distributions therefrom. Such account will be fully vested and nonforfeitable at
all times.
2.52 "SELF-EMPLOYED INDIVIDUAL" shall mean an individual who has Earned
Income for the taxable year from the trade or business for which the Plan is
established, or an individual who would have had Earned Income but for the fact
that the trade or business had no net profits for the taxable year.
2.53 "SPOUSAL CONSENT" shall mean the Eligible Spouse's written consent
which acknowledges the effect of the Participant's election and is witnessed by
the Plan Administrator (or any Plan representative appointed by the Plan
Administrator for such purposes) or a notary public. The written consent shall
specify the nonspouse Beneficiary, if any (and, in the case of a Participant's
election to waive a qualified joint and survivor annuity, the alternate form of
distribution elected). A Spousal Consent shall be irrevocable unless the
Participant changes his Beneficiary designation or revokes his election to waive
the qualified joint and survivor annuity or the qualified pre-retirement
survivor annuity, as applicable; upon such event, a consent shall be deemed to
be revoked. Notwithstanding the foregoing, Spousal Consent is not required if
the Participant establishes to the satisfaction of a Plan Administrator that
such written consent may not be obtained because there is no Eligible Spouse or
that the Eligible Spouse cannot be located. In addition, no Spousal Consent is
necessary if the Participant has been legally separated or abandoned within the
meaning of local law and the Participant provides the Plan Administrator with a
court order to that effect, so long as such court order does not conflict with a
qualified domestic relations order as defined in Article 17. If the Eligible
Spouse is legally incompetent to consent, the
-13-
Eligible Spouse's legal guardian may consent on his/her behalf, even if the
legal guardian is the Participant.
2.54 "TRUST" shall mean the Master Trust established under the Plan by
Banco Popular de Puerto Rico and/or the Trust established by the Employer for
purposes of the Plan, as specified by the Employer in the Adoption Agreement, in
both cases for the payment of the benefits provided by the Plan.
2.55 "TRUSTEE" shall mean Banco Popular de Puerto Rico or other person
appointed by the Employer, as specified by the Employer in the Adoption
Agreement.
2.56 "VALUATION DATE" shall mean the last business day of the Plan Year.
The Plan Sponsor or Employer may designate other valuation dates.
ARTICLE 3 PARTICIPATION
3.1 INITIAL PARTICIPATION
An Employee shall become a Participant in the Plan in accordance with
the following requirements:
a. Each Employee who, on the Effective Date of the Plan, has complied
with the minimum age and service requirements specified by the Employer in
the Adoption Agreement will become a Participant as of such date.
b. Each Employee (other than one who is a Participant under subsection
a. above) will become a Participant on the Entry Date immediately following
the date in which he complies with the minimum age and service requirements
specified by the Employer in the Adoption Agreement.
-14-
c. Employees who are included in a unit of Employees covered by a
collective bargaining agreement between the Employer and Employee
representatives, where retirement benefits were the subject of good faith
bargaining with the Employer and the agreement does not call for his
inclusion in the Plan and Employees who are nonresidents of Puerto Rico are
not allowed to participate in the Plan.
d. Unless specified otherwise in the Adoption Agreement, the Entry
Dates will be the first day of the first and seventh months of the Plan
Year (January 1 and July 1 for calendar year Plans). If the Adoption
Agreement provides for additional or other Entry Dates, the Entry Dates
will be as so specified; provided that the first day of the Plan Year will
always be an Entry Date.
e. If the Employer's Plan permits Pre-Tax Contributions or After-Tax
Contributions, each Employee who has become a Participant under the
preceding subsections of this section may make Pre-Tax Contributions and/or
After-Tax Contributions subject to the applicable provisions of the Plan
and the Adoption Agreement, and such an Employee will be considered a
Participant even if he elects not to make Pre-Tax Contributions or
After-Tax Contributions. However, an Employee may not make Pre-Tax
Contributions and/or After-Tax Contributions before the date the Employer
signs the Adoption Agreement.
3.2 TERMINATION OF PARTICIPATION
An Employee will cease to be a Participant when he is no longer
eligible to participate in the Plan due either to a change in his employment
status or to the termination of his service as an Employee because of
Disability, death, retirement or any other reason.
-15-
3.3 RESUMES PARTICIPATION
If a former Participant returns to service with the Employer, he will
resume participation in the Plan immediately upon his return.
3.4 RULES RELATING TO SERVICE
The rules and definitions regarding the computation of years of service
for purposes of determining eligibility to participate in the Plan and vesting
will be as follows:
A. HOURS OF SERVICE METHOD. The definitions and rules in this
subsection will apply to Employers who in the Adoption Agreement elected to have
Employees' service determined under the hours of service method.
1. EMPLOYMENT COMMENCEMENT DATE means the date on which an Employee
first performs an hour of service; or, in the case of an Employee who has
incurred one or more breaks in service, as defined below, such Employee's
employment commencement date shall mean the date on which such Employee first
performs an hour of service following such breaks in service.
2. ELIGIBILITY COMPUTATION PERIOD, with respect to an Employee, means
the period of twelve (12) consecutive months commencing on an Employee's most
recent employment commencement date, or any anniversary thereof, in which he is
credited with at least 1000 hours of service.
3. YEAR OF SERVICE, with respect to an Employee, means an eligibility
computation period during which an Employee completes at least 1,000 hours of
service regardless of whether such Employee is in service continuously during
all of such eligibility
-16-
computation period. An Employee who completes one thousand (1,000) hours of
service during an eligibility computation period shall not be deemed to have
completed a year of service until the last day of such eligibility computation
period regardless of when such Employee completes such one thousand (1,000)
hours of service.
4. HOURS OF SERVICE:
a. each hour for which an Employee is paid, or entitled to payment, by
the Employer for the performance of duties for the Employer during any
eligibility computation period. These hours will be credited to the
Employee for the eligibility computation period in which the duties are
performed;
b. each hour for which an Employee is paid, or entitled to payment, by
the Employer on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity (including
Disability), layoff, jury duty, military duty or leave of absence.
Notwithstanding the preceding sentence, no more than 501 hours of service
shall be credited under this subsection b to an Employee on account of any
single continuous period during which the Employee performs no duties
(whether or not such period occurs within a single eligibility computation
period). Hours under this subsection b will be calculated and credited
under United States Department of Labor Regulations, 29 C.F.R.
ss.2530.200b-2(b) and (c), which are incorporated herein by this reference;
c. each hour for which back pay, irrespective of mitigation of damages,
is either awarded or agreed to by the Employer. The same hours of service
shall not be credited both under subsections a or b, as the case may be,
and under this subsection c; and no more than 501 hours of service shall be
credited under this
-17-
subsection c with respect to payments of back-pay, to the extent that such
pay is agreed to or awarded for a period of time described in subsection b
during which the Employee did not perform or would not have performed any
duties. These hours will be credited to the Employee for the eligibility
computation period(s) to which the award or agreement pertains rather than
the computation period in which the award, agreement or payment is made;
d. in addition to hours credited to an Employee under subsections a
through c above, an Employee will be credited with the number of hours (not
exceeding 40 for a full week or pro rata portion of 40 for a partial week)
he normally would have worked except for the fact that he was absent on one
of the following types of unpaid absence: (i) leave of absence for a period
authorized by the Employer under a leave policy applied uniformly to all
Employees, provided he returns to service with the Employer at or before
the expiration of such period; or (ii) leave of absence for service in the
armed forces of the United States, provided he returns to service with the
Employer within the period during which his reemployment rights are
protected by law; and
e. solely for purposes of determining whether a break in service, as
defined in subsection 5, has occurred in an eligibility computation period,
an Employee who is absent from work for maternity or paternity reasons will
receive credit for the hours of service which would otherwise have been
credited to such Employee but for such absence, (or in any case in which
such hours cannot be determined, eight hours of service per day of such
absence). For purposes of this subsection e, an absence from work for
maternity or paternity reasons means an absence (i) by reason of the
pregnancy of the Employee, (ii) by reason of a birth of a child of the
Employee, (iii) by reason of the placement of a child with the Employee in
connection with the Employee's adoption of such child, or (iv) for purposes
of caring for such child for
-18-
a period beginning immediately following such birth or placement. No more
than 501 hours of service shall be credited under this subsection e. The
hours of service credited under this subsection e will be credited (i) in
the eligibility computation period in which the absence begins if the
crediting is necessary to prevent a break in service in that period, or
(ii) in all other cases, in the following eligibility computation period if
necessary to prevent a break in service in that eligibility computation
period.
5. BREAK IN SERVICE, with respect to an Employee, means a computation
period during which such Employee does not complete more than five hundred (500)
hours of service.
6. VESTING COMPUTATION PERIOD, for purposes of computing an Employee'
nonforfeitable right to his Employer Contributions Account and/or Matching
Contributions Account, an Employee's vesting computation period(s) will be the
period of twelve (12) consecutive months commencing on an Employee's most recent
employment commencement date, or any anniversary thereof, in which he is
credited with at least 1000 hours of service.
7. COUNTING YEARS OF SERVICE FOR PARTICIPATION, all of an Employee's
years of service with the Employer are counted toward meeting the Plan's
participation eligibility requirement (if any), except that, if the Plan
provides for 100% vesting after two years or less of service, service before a
break in service which occurs before the Employee satisfies the Plan's
requirement for eligibility will be disregarded. However, the preceding sentence
will not apply if the Employer's Plan is a 1165(e) Plan.
-19-
If the service requirement to become a Participant as specified in the
Adoption Agreement includes a fractional year, an Employee will not be required
to complete any minimum number of hours of service to receive credit for such
fractional year.
8. COUNTING YEARS OF SERVICE FOR VESTING. For purposes of determining a
Participant's vested percentage, all of his years of service will be counted,
except that, if the Plan specifically so provided, the following years of
service will not be counted:
a. years of service completed before age 18;
b. years of service before the Employer maintained the Plan or a
predecessor plan.
A plan is a predecessor plan if it was terminated on or after the date
it was required to comply with ERISA and within five years before or after the
Effective Date of the Plan. A plan is not treated as a predecessor plan with
respect to an Employee unless he was a participant in such plan.
9. SERVICE WITH OTHER ORGANIZATIONS.
a. To determine whether an Employee is a Participant and to determine
his vested percentage, an Employee will receive credit for Hours of Service
under section 3.4A.4 for employment with the Employer and any Affiliate.
Service credited under this paragraph shall be limited to the period that
the other entities were related to the Employer in the manner described in
section 2.3 of the Master Plan document, unless the Employer has elected in
the Adoption Agreement to recognize service with any such entity for any
period prior to the time such relationship commenced.
-20-
b. If the Employer maintains a plan of a predecessor employer, service
with the predecessor employer will be treated as service with the Employer.
c. If not treated as service with the Employer under section 3.4A.9.b
above, service with any entity specifically so designated in the Adoption
Agreement will be treated as service with the Employer.
B. ELAPSED TIME METHOD. The definitions and rules in this subsection
will apply to Employers who in the Adoption Agreement elected to have Employees'
service determined under the elapsed time method.
1. SERVICE
a. IN GENERAL. Service of an Employee includes all of the following:
i. any period of service, as defined below, whether or not
continuous; and
ii. for a reemployed Employee, any period of severance provided
that his reemployment commencement date occurs within one year
after his severance date.
b. YEAR OF SERVICE. To determine an Employee's years of service, all
of his service will be aggregated and each 365 days of such aggregated
service will constitute a year of service. If any provision of the Plan
calls for completion of a fractional year of service, such fraction of
365 days of the Employee's aggregated service will satisfy the
provision; for example, if one-half year of service is required,
-21-
then such requirement will be met when the Employee's aggregated
service equals 183 days.
2. DEFINITIONS RELATING TO SERVICE
a. PERIOD OF SERVICE shall mean an Employee's service, beginning on his
employment commencement date or reemployment commencement date and
ending on his severance date.
b. EMPLOYMENT COMMENCEMENT DATE. An Employee's employment commencement
date is the date on which he first completes an hour of service, as
defined below.
c. REEMPLOYMENT COMMENCEMENT DATE. In the case of an Employee who has a
period of severance which is not taken into account under subsection
1.a(ii), the reemployment date is the date on which he first
completes an hour of service after such period of severance.
d. PERIOD OF SEVERANCE. A period of severance of an Employee means a
period beginning on his severance date and, if applicable, ending on
his reemployment commencement date.
In the case of an Employee who is absent from work for maternity or
paternity reasons, the 12-consecutive month period beginning on the date of such
absence will constitute a year of service; the first anniversary of the first
date of such absence will be treated as neither a period of service nor a period
of severance; any period after the 24- consecutive month period beginning on the
date of such absence will constitute a period of severance. For purposes of this
section, an absence from work for maternity or paternity
-22-
reasons means an absence (1) by reason of the pregnancy of the Employee, (2) by
reason of the birth of a child of the Employee, (3) by reason of the placement
of a child with the Employee in connection with the Employee's adoption of such
child, or (4) for purposes of caring for such child for a period beginning
immediately following such birth or placement.
Each Employee will share in Employer Contributions and Matching
Contributions for the period beginning on the date the Employee commences
participation under the Plan and ending on the date on which such Employee
severs employment with the Employer or is no longer a Participant.
e. SEVERANCE FROM SERVICE DATE. An Employee's severance from service
date is the earlier of:
i the date on which he quits, retires, is discharged or dies, or
ii. the first anniversary of the first day of a period during which
he is absent (with or without compensation) from performing
duties for the Employer for any reason other than quit,
retirement, discharge or death, such as vacation, holiday,
sickness, leave of absence or layoff
a. HOUR OF SERVICE. Hour of service is an hour for which the Employee
is paid or entitled to payment for the performance of duties for the
Employer.
3. COUNTING YEARS OF SERVICE FOR PARTICIPATION. All of an Employee's
years of service with the Employer are counted toward meeting the Plan's
participation requirement (if any), except that, if the Plan provides for 100%
vesting after two years or less
-23-
of service, service will be disregarded if it was completed before a period of
severance of one year or more which occurs before the Employee satisfied the
Plan's service requirement for eligibility. However, the preceding sentence will
not apply if the Employer's Plan is a 1165(e) Plan.
4. COUNTING YEARS OF SERVICE FOR VESTING. For purposes of determining a
Participant's vested percentage, all of his years of service will be counted
except that, if the Plan so provides, the following years of service will not be
counted:
a. service completed before age 18;
b. service before the Employer maintained this Plan or a predecessor
Plan.
A plan is a predecessor plan if it was terminated on or after the date
it was required to comply with ERISA and within five years before or after the
Effective Date of this Plan. A plan is not treated as a predecessor plan with
respect to an Employee unless he was a participant in such plan.
5. SERVICE WITH OTHER ORGANIZATIONS.
a. To determine whether an Employee is a Participant and to determine
his vested percentage, an Employee will receive credit for Hours of Service
under section 3.4A.4 for employment with the Employer and any Affiliate.
Service credited under this paragraph shall be limited to the period that
the other entities were related to the Employer in the manner described in
section 2.3 of the Master Plan document, unless the Employer has elected in
the Adoption Agreement to recognize
-24-
service with any such entity for any period prior to the time such
relationship commenced.
b. If the Employer maintains a plan of a predecessor employer, service
with the predecessor employer will be treated as service with the Employer.
c. If not treated as service with the Employer under section 3.4B.5.b
above, service with any entity specifically so designated in the Adoption
Agreement will be treated as service with the Employer.
3.5 BENEFITS FOR OWNER-EMPLOYEES
If the Plan provides contributions or benefits for one or more
Owner-Employees who together control the trade or business with respect to which
the Plan is established, and who also control as Owner-Employees, one or more
other trades or businesses, the Plan and plans established with respect to such
other trades or businesses must, when looked at as a single plan, satisfy
Sections 1165(a) and (g) of the IRC with respect to the Employees of the trade
or business with respect for which the Plan is established and all such other
trades or businesses. If the Plan provides contributions or benefits for one or
more Owner-Employees who control one or more other trades or businesses, the
Employees of each other trades or businesses must be included in a plan which
satisfies the requirements of Sections 1165(a) and (g) of the IRC and which
provides contributions and benefits not less favorable than those provided for
such Owner-Employee under the Plan. If an individual is covered as an
Owner-Employee under two or more additional plans of trades or businesses not
controlled by him, and the individual controls one or more other trades or
businesses, the contributions or benefits of the Employees under the plan of the
trade or business controlled by him must be at least as favorable as those
provided for him under the plan of the trade of business not controlled by him.
For purposes of this subsection, an Owner-Employee, or two or more
Owner-Employees, shall be considered to
-25-
control a trade or business if such Owner-Employee, or such two or more
Owner-Employees together:
a. own the entire interest in an unincorporated trade or business, or
b. in the case of a special partnership or corporation of individuals,
own more than 50 percent of either the capital interest or the profits
interest in such partnership or corporation of individuals.
For purposes of the preceding sentence, an Owner-Employee or two or
more Owner-Employees shall be treated as owning any interest in a special
partnership or corporation of individuals which is owned, directly or
indirectly, by a special partnership or corporation of individuals, which such
Owner-Employee or such two or more Owner-Employees are considered to control
within the meaning of the preceding sentence.
ARTICLE 4 PRE-TAX CONTRIBUTIONS
4.1 ELIGIBILITY
If the Employer's Plan is a profit-sharing plan and the Adoption
Agreement so provides, an Employee who meets the participation requirements of
section 3.1 may elect to make Pre-Tax Contributions under IRC Section 1165(e).
Pre-Tax Contributions are voluntary and no Employee is required to make such
contributions. Pre-Tax Contributions Accounts are fully vested and
nonforfeitable at all times.
4.2 PRE-TAX CONTRIBUTION ELECTION
The Participation must file a written election form with the Plan
Administrator indicating the amount of Pre-Tax Contributions he wishes to make
and
-26-
agreeing to reduce his Compensation by such amount. Subject to any rules
specified in the Adoption Agreement or established by the Plan Administrator, a
Participant may increase, decrease, discontinue or resume his Pre-Tax
Contributions during a Plan Year by filing an appropriate form with the Plan
Administrator. A discontinuance of Pre-Tax Contributions will be effective as
soon as reasonably practicable after the Plan Administrator's receipt of the
Participant's election form. An increase or decrease of Pre-Tax Contributions,
or a resumption after a discontinuance, will be effective as of the Entry Date
next following the Participant's timely election.
No change under the preceding paragraph may cause a Participant's
Pre-Tax Contributions to exceed the maximum provided for under section 4.4.
The Plan Administrator, with the approval of the Plan Sponsor, may
establish reasonable rules of uniform application governing Participants'
elections and changes. Such rules may include the number and frequency of
elections or changes during any Plan Year, effective dates for elections or
changes (for example, the first day of the payroll period coinciding with or
next following the applicable election or change date), cutoff dates for timely
filing of elections or changes, and other rules to facilitate operation of this
article.
Notwithstanding the preceding, a Participant will be permitted to
change his election at least once each year.
4.3 COLLECTION OF PRE-TAX CONTRIBUTIONS
The Employer will collect Participants' Pre-Tax Contributions using
payroll procedures. The Employer will transfer the amounts collected to the
Trustee as of the earliest date when such contributions can reasonably be
segregated from the Employer's
-27-
general assets, but not later than fifteen (15) business days after the end of
the month in which such amounts would otherwise have been payable to the
Participant in cash.
4.4 LIMITATIONS ON PRE-TAX CONTRIBUTIONS
A. LIMITS ON PRE-TAX CONTRIBUTIONS. The minimum amount of Pre-Tax
Contributions the Participant may elect to make is one percent (1%) of his
Compensation. Pre-Tax Contributions may not exceed the lesser of: (1) ten
percent (10%) of the Participant's Compensation up to a maximum of $8,000 (or
any other dollar amount may be established in the future under the IRC or the
regulations issued thereunder) in any calendar year; (2) the maximum amount
permitted under section 4.5 for Highly Compensated Employees for any Plan Year;
or (3) any maximum or other limitation imposed by the Plan Administrator.
If a Participant makes Pre-Tax Contributions in a calendar year equal
to the legal applicable maximum, his Pre-Tax Contributions will immediately
cease.
B. LIMITS DUE TO WITHDRAWALS. Notwithstanding section 4.1 and section
4.4.A above, a Participant who makes a withdrawal on account of a financial
hardship under section 9.1 may not make Pre-Tax Contributions or After-Tax
Contributions hereunder (or under any other Plan maintained by the Employer) for
a period of 12 months following the date of the in-service withdrawal. Also, in
the taxable year following the date of the withdrawal, such a Participant may
not make Pre-Tax Contributions which, when added to his Pre-Tax Contributions
made during the taxable year of the withdrawal, exceed the amount specified in
subsection A above.
C. LIMITS ON DISTRIBUTIONS. Pre-Tax Contributions may not be
distributed to Participants or their Beneficiaries earlier than:
-28-
1. separation from service, death or Disability,
2. termination of the Plan without the establishment of a successor
plan,
3. the date of the sale or other disposition to an unrelated entity of
substantially all of the assets used by the Employer in a trade or business,
provided the Employee continues in employment with the purchaser of the assets,
4. the date of sale or other disposition to an unrelated
entity of a subsidiary of the Employer, provided the Employee continues in
employment with the subsidiary,
5. reaching the age of fifty-nine and a half (59 1/2) years, or
6. a case of financial hardship, as defined in section 9.1.
4.5 ACTUAL DEFERRAL PERCENTAGE TEST
A. As of the last day of each Plan Year, the Average Actual Deferral
Percentages of Highly Compensated Employees (such average is called the HCE-ADP
in this section) may not exceed the Average Actual Deferral Percentages of
Non-Highly Compensated Employees (such average is called the NHCE-ADP in this
section) by more than the amount specified in the following table:
IF NHCE-ADP IS: HCE-ADP MAY NOT EXCEED:
less than 2% two times NHCE-ADP
2% but less than 8% two percentage points more than NHCE-ADP
8% or higher 10%
-29-
The determination and treatment of Participant's Actual Deferral
Percentages will be subject to the requirements of any applicable regulations
under ERISA or the IRC.
B. The Actual Deferral Percentage for any Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible to make Pre-Tax
Contributions (and, if applicable, to receive Qualified Employer Deferral
Contributions allocated to his accounts) under two or more arrangements
described in IRC Section 1165(e) that are maintained by the Employer, shall be
determined as if such Pre-Tax Contributions (and, if applicable, such Qualified
Employer Deferral Contributions) were made under a single arrangement. If a
Highly Compensated Employee participates in two or more cash or deferred
arrangements that have different Plan Years, all cash or deferred arrangements
ending with or within the same calendar year shall be treated as a single
arrangement.
C. In the event that this Plan satisfies the requirements of IRC
Sections 1165(e), 1165(a)(3) or 1165(a)(4) only if aggregated with one or more
other Plans, or if one or more other Plans satisfy the requirements of such
Sections of the IRC only if aggregated with this Plan, then this section shall
be applied by determining the Actual Deferral Percentage of Employees as if all
such Plans were a single Plan.
D. For purposes of determining the Actual Deferral Percentage test,
Pre-Tax Contributions and Qualified Employer Deferral Contributions must be made
before the last day of the twelve-month period immediately following the Plan
Year to which contributions relate.
E. The Employer shall maintain records sufficient to demonstrate
satisfaction of the Actual Deferral Percentage test and the amount of Qualified
Employer Deferral Contributions used in such test.
-30-
4.6 QUALIFIED NON-ELECTIVE CONTRIBUTIONS
If the Employer's Plan provides for Profit-Sharing Contributions and
such contributions meet the requirements of this section, then, subject to the
requirements of applicable regulations, the Plan Administrator may elect to
treat all or part of such contributions as Qualified Non-Elective Contributions
which will be considered Qualified Employer Deferral Contributions for purposes
of the Actual Deferral Percentage test of section 4.5, above.
Profit-Sharing Contributions meet the requirements of this section if
they are always fully vested when made, and they are subject to the limitations
on distribution of section 4.4C. Also, any Profit-Sharing Contributions not
treated as Qualified Employer Deferral Contributions under the preceding
paragraph must be nondiscriminatory under IRC Section 1165(a)(4).
In lieu of distributing Excess Contributions as provided in section
4.8A. of the Plan, the Employer may make Qualified Non-Elective Contributions
under the Plan on behalf of Non-Highly Compensated Employees in an amount as is
needed to meet the Actual Deferral Percentage test. In such case, the allocation
of Qualified Non-Elective Contributions shall be made only to the accounts of
Participants who are Non-Highly Compensated Employees in the ratio that each
Participant's Compensation for the Plan Year bears to the Compensation of all
such Participants for such Plan Year.
4.7 QUALIFIED MATCHING CONTRIBUTIONS
Generally, Matching Contributions will not be included in determining a
Participant's Deferral Percentage. However, if the Plan provides for Matching
Contributions and such contributions meet the requirements of this section, the
Plan Administrator may
-31-
elect to treat all or part of such contributions as Qualified Matching
Contributions which will be considered Qualified Employer Deferral Contributions
for purposes of the Actual Deferral Percentage tests of section 4.5 above.
Matching Contributions meet the requirements of this section if they
are fully vested when made, and they are subject to the limitations on
distribution of section 4.4C.
Qualified Matching Contributions will be taken into account as
Qualified Employer Deferral Contributions for purposes of calculating the Actual
Deferral Percentages, subject to such other requirements as may be prescribed by
the Puerto Rico Secretary of the Treasury and shall be made as are needed to
meet the Actual Deferral Percentage test. The Employer will make Qualified
Matching Contributions to the Plan on behalf of Participants who are Non-Highly
Compensated Employees who make either Pre-Tax Contributions and/or After-Tax
Contributions to the Plan.
4.8 MONITORING PARTICIPANT'S ACTUAL DEFERRAL PERCENTAGES
The Plan Administrator (or an administrative service provider - which
may be the Trustee or the Plan Sponsor - retained by the Plan Administrator to
perform recordkeeping and other administrative duties) will monitor
Participants' Actual Deferral Percentages to insure compliance with the
requirements of section 4.5 above. Any adjustments in Participants' elections or
Actual Pre-Tax Contributions necessary to meet the requirements of section 4.5
will be made as follows: The Plan Administrator will reduce the Actual Deferral
Percentage of the participating Highly Compensated Employee who has the highest
Actual Deferral Percentage until it reaches the Actual Deferral Percentage of
the next participating Highly Compensated Employee(s) with the next highest
Actual Deferral Percentage; then the Plan Administrator will reduce the Actual
Deferral Percentages of both or all such participating Highly Compensated
Employees until they reach that of the Highly
-32-
Compensated Employee(s) with the then next highest Actual Deferral Percentage;
and so on. The foregoing reductions will be made only to the extent necessary to
meet the requirements of section 4.5.
A. EXCESS CONTRIBUTIONS. The Plan Administrator will adjust Pre-Tax
Contributions elections by Highly Compensated Employees in accordance with the
preceding paragraph at such time or times before or during a Plan Year as the
Plan Administrator deems advisable to insure that the requirements of section
4.5 are met as of the last day of the Plan Year.
If, notwithstanding the preceding sentence, the requirements of section
4.5 are not met as of the last day of a Plan Year, such adjustments may be made
after the end of a Plan Year in one or a combination of the following ways: (i)
paying to a Participant the amount of his Excess Contributions plus earnings (or
losses) on such excess, (ii) recharacterizing the Excess Contributions of such a
Participant as After-Tax Contributions during such year, or (iii) in the
Employer's discretion, by making Qualified Non-Elective Contributions or
Qualified Matching Contributions that meet the requirements of section 4.6 or
4.7, respectively, on behalf of Non-Highly Compensated Employees in the amount
needed so that the requirements of section 4.5 are met. For purposes of the
preceding sentence, any such payment or recharacterization of Excess
Contributions will be designated as such by the Employer, and will be made by
the end of the succeeding Plan Year. However, the amount to be paid or
recharacterized will be reduced by any amounts relating to such Plan Year
previously withdrawn by the Participant. For purposes of clause (ii) of this
paragraph, recharacterizing will be available only if the Adoption Agreement
permits After-Tax Contributions.
Recharacterized amounts will remain nonforfeitable and subject to the
same distribution requirements as Pre-Tax Contributions. Amounts may not be
recharacterized
-33-
by a Highly Compensated Employee to the extent that such amount in combination
with other After-Tax Contributions made by that Employee would exceed any stated
limit provided in the Adoption Agreement, or by the Puerto Rico Secretary of the
Treasury, on After-Tax Contributions. Recharacterized amounts will be taxable to
the Participant in the tax year in which the Participant would have received
them in cash.
Recharacterization must occur no later than two and one-half months
after the last day of the Plan Year in which such Excess Contributions arose and
is deemed to occur no earlier than the date the last Highly Compensated Employee
is informed in writing of the amount recharacterized and the consequences
thereof.
Excess Contributions shall be distributed from the Participant's
Pre-Tax Contributions Account and Qualified Matching Contributions Account (if
applicable) in proportion to the Participant's Pre-Tax Contributions and
Qualified Matching Contributions (to the extent used in the Actual Deferral
Percentage test) for the Plan Year. Excess Contributions shall be distributed
from the Participant's Qualified Non-Elective Contributions Account only to the
extent that such Excess Contributions exceed the balance in the Participant's
Pre-Tax Contributions Account and Qualified Matching Contributions Account.
A distribution of Excess Contributions under this section may be made
notwithstanding any otherwise applicable restrictions or Spousal Consent
requirements on in-service withdrawals or distributions.
4.9 EXCESS DEFERRALS
Notwithstanding any other provision of the Plan, Excess Deferrals, plus
any income and minus any loss allocable thereto, shall be distributed no later
than April 15 to any
-34-
Participant to whose account Excess Deferrals were assigned for the preceding
year and who claims Excess Deferrals for such taxable year. A withdrawal of an
Excess Deferral under this section may be made notwithstanding any otherwise
applicable restrictions or Spousal Consent requirement on in-service
withdrawals. The amount of any Excess Deferrals to be withdrawn under this
section will be reduced by any amounts previously distributed or recharacterized
under section 4.8.
4.10 LIMITS ON DISCONTINUANCE OF CONTRIBUTIONS
Notwithstanding section 4.1, section 4.2 and section 4.4A above, a
Participant who discontinues his' or her's Pre-Tax Contributions may not make
Pre-Tax Contributions or After-Tax Contributions hereunder (or under any other
Plan maintained by the Employer) for a period of 12 months following the date of
such discontinuance of the Pre-Tax Contributions.
ARTICLE 5 AFTER-TAX CONTRIBUTIONS
5.1 ELIGIBILITY
If the Adoption Agreement so provides, an Employee may elect to make
After-Tax Contributions. After-Tax Contributions are voluntary and no Employee
will be required to make such contributions. After-Tax Contributions Accounts
are fully vested and nonforfeitable at all times.
5.2 LIMITS ON AMOUNT
The minimum amount of After-Tax Contributions a Participant may elect
is 1 percent of his Compensation. After-Tax Contributions for any Plan Year may
not exceed
-35-
the lesser of 10% of the Aggregate Compensation paid to the Employee during all
the years he or she has been a Plan Participant or any other limitation imposed
by the Plan Administrator. The Plan Administrator shall adjust in the future
this maximum limitation as needed to ensure that the Plan shall meet any limits
prescribed by the IRC and Regulations thereunder. Additional restrictions on
After-Tax Contributions may apply in certain cases to Participants who make a
in-service withdrawal on account of a financial hardship under section 9.1. (See
the first sentence of section 4.4B.)
5.3 AFTER-TAX CONTRIBUTION ELECTION
The procedures for electing and changing After-Tax Contributions will
be similar to those described in section 4.2.
5.4 COLLECTION OF AFTER-TAX CONTRIBUTIONS
The Employer will collect Participants' After-Tax Contributions using
payroll or other procedures.
The Employer will transfer the amounts collected to the Trustee as of
the earliest date on which such contributions can reasonably be segregated from
the Employer's general assets, but not later than fifteen (15) business days
after the end of the month in which such amounts are received by the Employer or
the date on which such amounts would otherwise have been payable to the
Participant in cash.
-36-
ARTICLE 6 EMPLOYER AND MATCHING CONTRIBUTIONS
6.1 ELIGIBILITY
If the Adoption Agreement so provides, the Employer will make Employer
Contributions (Money Purchase Contributions or Profit-Sharing Contributions)
and/or Matching Contributions to all Participants pursuant to the provisions of
this Article 6. Participants will have a vested and nonforfeitable interest in
their Employer Contributions Account and Matching Contributions Account in
accordance with the vesting schedule specified by the Employer in the Adoption
Agreement.
6.2 EMPLOYER CONTRIBUTIONS
A. IN GENERAL. For each Plan Year that the Plan is in effect, the
Employer will make Employer Contributions (Money Purchase Contributions or
Profit-Sharing Contributions) in cash, the amount (if any) to be determined
according to the provisions of this Article. If, due to miscalculation or error,
the Employer Contributions exceed the amount prescribed or determined by the
Employer, such excess may, at the election of the Employer, be treated as a
contribution for the succeeding Plan Year or years.
The Employer Contribution may be paid in a single sum or installments,
but the total amount will be paid to the Trustee not later than the earlier of
the time (including extensions thereof) prescribed by law for filing the
Employer's Puerto Rico income tax return for its taxable year ending with or
within the Plan Year.
B. MONEY PURCHASE PENSION PLANS. If pursuant to the Adoption Agreement
the Plan is a money purchase pension plan, the following provisions will apply:
-37-
1. MONEY PURCHASE CONTRIBUTION. For each Plan Year the Employer will
contribute an amount which will equal the contribution required for all
Participants entitled to receive an allocation for such year under the
contribution formula elected by the Employer in the Adoption Agreement.
2. MAXIMUM CONTRIBUTION. Employer Contributions to the Plan shall not
exceed the maximum amount which the Employer may deduct under IRC section
1023(n), or any successor provision or similar statutory provisions hereafter
enacted.
3. FORFEITURES. Forfeitures will be either allocated to the accounts of
Participants during such Plan Year in the proportion that each such
Participant's Compensation during such Plan Year bears to the total Compensation
during such Plan Year of all such Participants or used to reduce the amount the
Employer must contribute to the Plan.. No forfeitures will occur solely as a
result of an Employee's withdrawal of Employee contributions.
C. PROFIT-SHARING PLANS. If pursuant to the Adoption Agreement the Plan
is a profit-sharing plan, the following provisions will apply:
1. PROFIT-SHARING CONTRIBUTION. If specified in the Adoption Agreement,
for each Plan Year in which the Plan is in effect, the Employer shall make
contributions to the Trust in such amounts as it may determine; the Employer
will not be obligated to contribute any particular amount in a Plan Year or to
make any contribution at all in any particular Plan Year.
2. MAXIMUM CONTRIBUTION. All Employer Contributions to the Plan shall
be made out of Net Profits and shall not exceed the lesser of:
a. The Employer's Net Profits; or
-38-
b. The maximum amount permitted to be deducted by the Employer under
IRC section 1023(n), or any successor or similar statutory provisions hereafter
enacted.
3. NET PROFITS DEFINED. "Net Profits" for purposes of this formula
shall mean, in the case of a for profit Employer, the taxable income of the
Employer as determinable for Puerto Rico income tax purposes, without any
deduction for taxes based upon income or for contributions made by the Employer
under the Plan or to any other qualified plans maintained by the Employer and
including any undistributed Net Profits from prior years, after deduction of
taxes based upon income and contributions made by the Employer under the Plan or
any other qualified plans maintained by the Employer. In the case of a not-for
profit Employer, "Net Profits" shall mean the surplus of the Employer as
determinable for Puerto Rico income tax purposes, without any deduction for
contributions made by the Employer under the Plan or to any other qualified
plans maintained by the Employer and including any accumulated surplus from
prior years, after deduction of contributions made by the Employer under the
Plan or any other qualified plans maintained by the Employer.
4. FORFEITURES. Forfeitures will be either allocated to the accounts of
Participants during such Plan Year in the proportion that each such
Participant's Compensation during such Plan Year bears to the total Compensation
during such Plan Year of all such Participants or to reduce the amount the
Employer must contribute to the Plan. No forfeitures will occur solely as a
result of an Employee's withdrawal of Employee contributions.
6.3 ALLOCATION OF EMPLOYER CONTRIBUTIONS
Employer Contributions for each Plan Year shall be allocated as of the
last day of such Plan Year (even though receipt of the Employer Contributions by
the Trustee
-39-
may take place after the close of such Plan Year) among the Employer
Contributions Accounts of those Participants who either completed more than 500
hours of service or were actively employed by the Employer at the end of such
Plan Year.
Notwithstanding the above, a Participant whose employment with the
Employer terminates because of his retirement, Disability or death during the
Plan Year is not required to fulfill the foregoing employment requirement to
share in the allocation of Employer Contributions for such Plan Year.
Employer Contributions will be allocated so that each Participant
receives a proportionate amount of the total Employer Contribution equal to the
ratio of his Compensation over the Compensation of all Participants for the Plan
Year (Employer Contributions to a profit-sharing plan), or so that each
Participant receives the percentage of his Compensation for the Plan Year
specified in the Adoption Agreement (money purchase pension plan).
6.4 MATCHING CONTRIBUTIONS
A. AMOUNT OF CONTRIBUTION. If the Employer so chooses in the Adoption
Agreement, for each matching period, as defined below, the Employer will make a
Matching Contribution in cash on behalf of each Participant who makes Pre-Tax
Contributions under Article 4 and/or After-Tax Contributions under Article 5
during such period. A Participant will be required to be an Employee on the last
day of a matching period (or to have left employment during such period because
of retirement, death or Disability) in order to receive a Matching Contribution
for such period.
-40-
The amount of such Matching Contribution will be as specified in the
Adoption Agreement. The Employer will not make a Matching Contribution with
respect to any Excess Contributions under section 4.8.
The Plan Administrator will select the matching period, which may be
the Plan Year or a period shorter than the Plan Year such as each month, three
months (quarterly), four months (tri-annual) or six months (semi-annual).
Matching contributions for a matching period will be transferred to the Trustee
within a reasonable time after the end of such period. However, the total amount
of the Employer's matching contributions for a Plan Year will be paid to the
Trustee by the time specified in section 6.2.
Matching Contributions shall be vested in accordance with the vesting
schedule selected in the Adoption Agreement. In any event, Matching
Contributions shall be fully vested at Normal Retirement Age, upon the complete
or partial termination of the Plan, or upon the complete discontinuance of
contributions by the Employer.
B. SOURCE OF CONTRIBUTIONS. In a profit-sharing or 1165(e) plan, the
Matching Contributions required under this section will be limited to the
Employer's net profits, as defined in section 6.2C.3.
C. USE OF FORFEITURES. Any forfeitures occurring during a matching
period will be allocated to the accounts of Participants during such Plan Year
in the proportion that each such Participant's Compensation during such Plan
Year bears to the total Compensation during such Plan Year of all such
Participants.
-41-
ARTICLE 7 ROLLOVERS
7.1 ROLLOVER CONTRIBUTIONS
A. With the approval of the Plan Administrator, an Employee may:
1. make a rollover transfer to the Plan of cash in an amount which
constitutes all of a qualifying rollover distribution, as defined in IRC Section
1165(b)(2); or
2. cause any amount which could be rolled over to the Plan under
subsection 1 to be transferred directly to the Trustee of the Plan from the
Trustee or custodian of a Puerto Rico qualified plan or annuity. In the case of
such transfers directly from another Puerto Rico qualified plan funded through a
trust or annuity contract, amounts consisting of the following will be accounted
for separately: employer contributions to a money purchase plan, employer
contributions to a profit-sharing or 1165(e) plan, pre-tax contributions and
after-tax contributions. The Employee will be responsible for providing the Plan
Administrator with records that will reflect such amounts separately.
B. The Employer, the Plan Administrator and the Trustee have no
responsibility for determining the propriety of, proper amount or time of, or
status as a tax free transaction of any transfer under subsection a above.
C. If an Employee who is not yet a Participant makes a transfer under
subsection a above, he will be considered to be a Participant with respect to
administering such transferred amount only. He will not be a Participant for any
other purpose of the Plan until he completes the participation requirements
under Article 3.
-42-
D. The Employer, Plan Administrator or Trustee in its discretion may
direct the return to the Employee (or the retransfer to another Trustee or
custodian designated by the Employee) of any transfer to the extent that such
return is deemed necessary to insure the continued qualification of this Plan
under IRC Section 1165(a) or that holding such contribution hereunder would be
administratively burdensome.
E. The Plan Administrator will credit any Rollover Contribution to the
Participant's Rollover Contributions Account as soon as practicable after
receipt thereof by the Trustee. Any amounts separately accounted for under
subsection A.2 above will be separately accounted for hereunder as subaccounts
within the Employee's Rollover Contributions Account.
ARTICLE 8 VESTING
8.1 VESTING
A Participant will have a vested and nonforfeitable interest in that
percentage of his Employer Contributions Account and/or Matching Contributions
Account determined under the vesting schedule specified by the Employer in the
Adoption Agreement.
8.2 FULL VESTING
Notwithstanding section 8.1, Participants will become fully vested in
their Employer Contributions Account and/or Matching Contributions Account upon
the earlier of (i) reaching Normal Retirement Age while still employed by the
Employer; (ii) upon retirement at their Normal Retirement Date or at an Early
Retirement Date as specified in the Adoption Agreement; (iii) upon Disability as
defined in section 2.10; or (iv) upon death while still an Employee.
-43-
8.3 PAYMENT OF VESTED INTEREST
A Participant's vested interest in his accrued benefit will be paid to
him, or payments will begin, on a date elected by the Participant and will be
paid to him in one or more of the methods described in section 10.1 as elected
by the Participant. The Participant's election as to either time or form of
payment will be subject to the rules of Article 10.
8.4 FORFEITURE OF NON-VESTED INTEREST
A Participant who has separated from service will forfeit the
non-vested portion of his accrued benefit on the day after he incurs a period of
five consecutive breaks in service (as per section 3.4A, if the Employer's Plan
counts service for vesting purposes using the hours of service method), or a
Period of Severance of sixty (60) months (as per section 3.4B, if the Employer's
Plan counts service for vesting purposes using the elapsed time method).
Forfeitures applied as provided in Articles 6.2B.3 and 6.2C.4 of this Plan.
8.5 RESUMPTION OF EMPLOYMENT
A former Participant who returns to employment with the Employer after
a period of less than five consecutive breaks in service will receive credit for
all his prior years of service for vesting purposes.
8.6 CALCULATING VESTED INTEREST AFTER WITHDRAWAL OR DISTRIBUTION
This section applies only in cases in which the Employer chooses in the
Adoption Agreement the graded vesting schedule. Where a Participant's Employer
Contributions Account and/or Matching Contributions Account is charged with a
withdrawal
-44-
or distribution at a time when he is not fully vested in such account, the
remaining balance of the Participant in such account will be credited to a
separate suspense account within the Participant's Employer Contributions
Account and/or Matching Contributions Account, or accounting records will be
maintained in a manner which has the same effect as establishing a separate
suspense account. The Participant's vested interest in such separate suspense
account will be determined in accordance with the following formula:
X = P(AB + W/D) - W/D
For purposes of the formula:
a. "X" is the Participant's vested interest in the separate suspense
account at the time the formula is applied;
b. "P" is the Participant's vested percentage in his/her Employer
Contributions Account and/or Matching Contributions Account at the time the
formula is applied;
c. "AB" is the balance in the separate suspense account at the time the
formula is applied; and
d. "W/D" is the amount withdrawn by, or distributed to, the Participant
at the time the formula is applied.
The term remaining balance as used in this section means a
Participant's interest in his Employer Contributions Account and/or Matching
Contributions Account remaining after a withdrawal or distribution of a portion
or all of his vested interest therein.
-45-
ARTICLE 9 IN-SERVICE WITHDRAWALS
9.1 WITHDRAWAL OF PRE-TAX CONTRIBUTIONS
A. AMOUNT. A Participant may make in-service withdrawals from his
Pre-Tax Contributions Account in the event of financial hardship only. The
maximum withdrawal from the Participant's Pre-Tax Contributions Account is the
smaller of the amount of his Pre-Tax Contributions, without earnings or
investment gains, or the amount needed to alleviate his financial hardship. A
Participant, however, may not apply for more than two (2) in-service withdrawals
in any Plan Year.
B. FINANCIAL HARDSHIP.
1. An in-service withdrawal will be on account of financial hardship
only if the Participant has an immediate and heavy financial need and the
withdrawal is necessary to meet such need.
2. A withdrawal will be deemed to be on account of an immediate and
heavy financial need if it is occasioned by:
a. a deductible medical expense incurred by the Participant or his
spouse, children or dependent;
b. purchase of the Participant's principal residence (not including
mortgage payments);
c. tuition payments and educational expenses for the next twelve months
of post-secondary education for the Participant or his spouse, child or
dependent;
-46-
d. rent or mortgage payments to prevent the Participant's eviction from
or the foreclosure of the mortgage on his principal residence; or
e. such other event or circumstances as the Puerto Rico Secretary of
the Treasury through regulations may permit.
3. A withdrawal will be deemed necessary to satisfy the Participant's
financial needs if either:
a. the Participant has made all non-financial hardship withdrawals and
obtained all nontaxable loans available under all of the Employer's
qualified retirement Plans; and each such other Plan which provides for
Pre-Tax Contributions contains restrictions similar to those in section
4.4B.; or
b. the Participant satisfies such other requirements as may be
prescribed by the Puerto Rico Secretary of the Treasury.
4. A Participant must establish to the Plan Administrator's
satisfaction both that the Participant has an immediate and heavy financial need
and that the withdrawal is necessary to meet the need, as provided in
subsections 2 and 3 above.
A Participant's application for a financial hardship withdrawal will be
in writing on such form and containing such information (or other evidence or
materials establishing the Participant's financial hardship) as the Plan
Administrator may require. The Plan Administrator's determination of the
existence of and the amount needed to meet a financial hardship will be binding
on the Participant.
-47-
Any withdrawal under this section will be paid to the Participant as
soon as practicable after the Plan Administrator's receipt of the Participant's
withdrawal form.
C. WITHDRAWALS AFTER AGE 59 1/2. Notwithstanding subsection B above,
1. to the extent provided in the Adoption Agreement, a Participant may
make in-service withdrawals from his Pre-Tax Contributions, Qualified Matching
and/or Qualified Non-Elective Contributions Accounts after he has reached age
59-1/2; and
2. a Participant may make in-service withdrawals from his Pre-Tax
Contributions, Qualified Matching and/or Qualified Non-Elective Contributions
Accounts under the following circumstances: (i) termination of the Plan without
the establishment of a successor Plan; (ii) the sale or other disposition to an
unrelated entity of substantially all of the assets used by the Employer in a
trade or business, provided the Employee continues in employment with the
purchaser of the assets; (iii) the sale or other disposition to an unrelated
entity of a subsidiary of the Employer, provided the Employee continues in
employment with the subsidiary.
D. SPOUSAL CONSENT TO IN-SERVICE WITHDRAWALS. A married Participant's
spouse must consent to an in-service withdrawal under this section. Such consent
must be in writing and witnessed by a notary public or the Plan Administrator
(or any Plan representative appointed by the Plan Administrator for such
purpose).
E. PAYMENT. Any withdrawal under this section will be paid to the
Participant as soon as practicable after the Plan Administrator's receipt of the
Participant's withdrawal form.
-48-
F. LIMITATION ON FUTURE CONTRIBUTIONS. A Participant who makes an
in-service withdrawal under this section may not make a Pre-Tax Contribution or
After-Tax Contribution for a period of up to 12 months following such in-service
withdrawal. The Participation shall also be subject to the additional
restrictions imposed on Article 4.4B of this Plan.
9.2 WITHDRAWAL OF AFTER-TAX CONTRIBUTIONS
A. AMOUNT. A Participant whose employment has not terminated may upon
reasonable advance written notice to the Plan Administrator withdraw all or any
portion of his After-Tax Contributions Account to the extent not previously
withdrawn.
B. PAYMENT. Any withdrawal under this section will be paid to the
Participant as soon as practicable after the Plan Administrator's receipt of the
Participant's withdrawal form; however the Plan Administrator may approve an
earlier payment of some or all of the amount to be withdrawn if such earlier
payment would not be detrimental to the interests of the other Participants.
C. LIMITATION ON FUTURE WITHDRAWALS. If so provided in the Adoption
Agreement, a Participant who makes an in-service withdrawal under this section
may not make a Pre-Tax Contribution or After-Tax Contribution for a period of 12
months following the date of such in-service withdrawal. The Participant shall
also be subject to the additional restrictions imposed on Article 4.4B of this
Plan.
The Plan Sponsor and the Plan Administrator may establish reasonable
minimum withdrawal amounts and reasonable limitations on the frequency or number
of withdrawals during a Plan Year. No forfeitures will occur solely as a result
of an Employee's making an in-service withdrawal.
-49-
9.3 WITHDRAWAL OF MATCHING CONTRIBUTIONS
A. AMOUNT. A Participant may make in-service withdrawals from his
vested portion of his Matching Contributions Account, to the extent provided in
the Adoption Agreement. The Adoption Agreement may limit such in-service
withdrawals to financial hardship situations, or may permit in-service
withdrawals for reasons other than financial hardship.
Any withdrawal under this section will be paid to the Participant as
soon as practicable after the Plan Administrator's receipt of the Participant's
withdrawal form.
9.4 WITHDRAWALS OF PROFIT-SHARING CONTRIBUTIONS
A. AMOUNT. A Participant may make in-service withdrawals from his
vested portion of his Profit-Sharing Contributions Account, to the extent
provided in the Adoption Agreement. The Adoption Agreement may limit such
in-service withdrawals to financial hardship situations, or may permit
in-service withdrawals for reasons other than financial hardship.
Any withdrawal under this section will be paid to the Participant as
soon as practicable after the Plan Administrator's receipt of the Participant's
withdrawal form.
9.5 WITHDRAWALS OF MONEY PURCHASE CONTRIBUTIONS
A. AMOUNT. A Participant may make in-service withdrawals from his
vested portion of his Money Purchase Contributions Account, to the extent
provided in the Adoption Agreement. The Adoption Agreement may limit such
in-service withdrawals to
-50-
financial hardship situations, or may permit in-service withdrawals for reasons
other than financial hardship.
Any withdrawal under this section will be paid to the Participant as
soon as practicable after the Plan Administrator's receipt of the Participant's
withdrawal form.
9.6 WITHDRAWALS OF ROLLOVER CONTRIBUTIONS
A. AMOUNTS. A Participant may upon reasonable advance written notice to
the Plan Administrator withdraw all or any portion of his Rollover Contributions
Account. The Plan Administrator may establish reasonable minimum withdrawal
amounts.
Notwithstanding the preceding paragraph, amounts separately accounted
for under section 7.1A.2 will be subject to restrictions on withdrawal as
follows: employer contributions to a money purchase plan or profit-sharing plan
are not available for in-service withdrawal; pre-tax contributions are available
for in-service withdrawal only under section 9.1; Qualified Employer Deferral
Contributions are not available for in-service withdrawal; matching and
after-tax contributions are available for in-service withdrawal, as provided in
the Adoption Agreement.
B. PAYMENT. Any withdrawal under this section will be paid to the
Participant as soon as practicable after the Plan Administrator's receipt of the
Participant's withdrawal form; however, the Plan Administrator may approve an
earlier payment of all or some of the amount to be withdrawn if such earlier
payment would not be detrimental to the interests of the other Participants.
-51-
ARTICLE 10 DISTRIBUTION OF BENEFITS
10.1 METHODS OF DISTRIBUTION
A. The distribution of benefits to which a Participant may become
entitled shall be made in accordance with this Article 10.
1. The benefits provided by the Plan shall be distributed under
whichever of the following methods is elected by the Employer in the Adoption
Agreement:
a. The purchase of a nontransferable, conventional fixed or variable
annuity contract, providing payments at least annually, of such type and
from such insurance company approved by the Plan Administrator;
b. A single distribution of the entire vested balance then standing in
the Participant's accounts; or
c. Payments in monthly, quarterly, semiannual or annual installments of
substantially equal designated amounts over a period of years certain.
If the Employer elects more than one method of distribution in the
Adoption Agreement, then, the Participants shall elect under which of those
methods his or her benefits shall be distributed.
Except in the case of a Participant in a profit sharing or 1165(e)
version of this Master Plan, retirement benefits to a married Participant will
be paid in the form of a qualified joint and survivor annuity unless the
Participant elects otherwise as provided in subsection A.2.b, below. Under a
profit sharing or 1165(e) version of this Master Plan, the
-52-
Participant will only receive his benefits in the form of a lump sum payment. If
the Participant elects or is entitled to receive his accrued benefits under this
Master Plan in the form of a lump sum payment, such benefits shall be paid, at
the Participant's discretion, in cash, common stock of the Plan Sponsor, if
applicable, or a combination thereof. The value of the Participant's benefits
shall be determined as provided in Article 9.2.B of this Master Plan.
An election to receive a Plan distribution under any method set forth
in this subsection A.1 for an Annuity Starting Date which occurs on or after the
Participant's Normal Retirement Age, Early Retirement Age or Disability shall
apply to all subsequent distributions made from the Participant's accounts.
Except with respect to the payment of a qualified joint and survivor annuity
pursuant to subsection A.2 below, the Participant shall in all cases elect a
distribution method which requires that the present value of the payments to be
made to the Participant exceed fifty percent (50%) of the present value of the
total payments to be made to the Participant and his Beneficiary, determined as
of the date such payments commence.
2. If at any time the Participant elects or has elected that his
benefits be paid through the purchase of an annuity, the Plan Administrator
shall direct the Trustee to purchase an annuity contract in the form of a
qualified joint and survivor annuity for all distributions to the Participant.
a. The term "qualified joint and survivor annuity" means an annuity
that commences immediately for the life of the Participant if he does not
have an Eligible Spouse or, if he has an Eligible Spouse, an annuity that
commences immediately, which is at least as valuable as any other alternate
form of benefit payable under the Plan, for the life of his Eligible
Spouse. Upon the election of the Participant, which may be made at any time
and any number of times, the survivor annuity shall be fifty
-53-
percent (50%) or one hundred percent (100%) of the amount of the annuity
payable during the joint lives of the Participant and his Eligible Spouse,
both of which shall be actuarially equivalent; provided that in the event
no election is made, the survivor annuity shall be fifty percent (50%) of
the amount payable during the Participant's and his Eligible Spouse's joint
lives. In determining the Participant's interest subject to the qualified
joint and survivor annuity requirement, any security interest held by the
Plan by reason of a loan outstanding to the Participant shall reduce the
Participant's interest if the security interest is treated as payment in
satisfaction of the Plan loan to the Participant.
b. Notwithstanding the foregoing, a Participant may elect to waive the
qualified joint and survivor annuity and thereby receive an alternate form
of distribution. Such waiver must be made within the ninety (90) day period
ending on the Participant's Annuity Starting Date with respect to such
benefit. A Participant may subsequently revoke an election to waive a
qualified joint and survivor annuity and elect again to waive the qualified
joint and survivor annuity at any time and any number of times prior to
such Annuity Starting Date. All such elections and revocations shall be in
writing. Any election to waive a qualified joint and survivor annuity (1)
must specify the alternate form of distribution elected, (2) must be
accompanied by the designation of a specific nonspouse beneficiary
(including any class of beneficiaries or any contingent beneficiaries) who
will receive the benefit upon the Participant's death, if applicable, and
(3) must be accompanied by a Spousal Consent, to the extent required under
section 2.53.
B. If a Participant dies before the Annuity Starting Date with respect
to such benefits, the portion of his vested accounts balances which are not
currently being distributed in the form of a qualified joint and survivor
annuity shall be distributed as provided in this subsection B.
-54-
1. If the Participant is unmarried on the date of his death, his entire
interest (reduced by any security interest held by the Plan by reason of a loan
outstanding to the Participant) shall be distributed to his Beneficiary in a
single distribution or in installments at the time set forth in section 10.3.
2. Except as provided in subsection 3 below, if the Participant is
married on the date of his death, his entire interest (reduced by any security
interest held by the Plan by reason of a loan outstanding to the Participant)
shall be distributed to his Beneficiary in a single distribution or in
installments at the time set forth in section 10.3.
3. If the Participant is married on the date of his death and the Plan
is, with respect to the Participant, an offset plan or a direct or indirect
transferee (in a transfer after December 31, 1984) of a defined benefit plan, a
money purchase pension plan (including a target benefit plan), or a stock bonus
or profit-sharing plan which otherwise would be required to provide for a life
annuity form of payment to the Participant, then fifty percent (50%) of the
Participant's vested interest as of the date of his death (or fifty percent
(50%) of the amount of the Participant's accounts attributable to the
transferred amount, if such transferred amount is separately accounted for and
gains, losses, withdrawals, contributions, forfeitures, and other credits or
charges are allocated on a reasonable basis between the transferred amount and
other assets in the Participant's accounts) shall be applied toward the purchase
of an annuity for the life of his Eligible Spouse (a "qualified pre-retirement
survivor annuity") unless otherwise elected as provided below. This Plan shall
be considered to be an offset plan if it is used to offset benefits in a plan
which is subject to the survivor annuity requirements with respect to the
Participant whose benefits are offset. In determining the Participant's
interest, any security interest held by the Plan by reason of a loan outstanding
to the Participant shall reduce the Participant's interest if the security
interest is treated as payment in satisfaction of the Plan loan to the
Participant. The portion of the Participant's vested interest not applied to the
purchase of the qualified pre-retirement
-55-
survivor annuity shall be distributed to the Participant's Beneficiary as
provided in subsection B:
a. Within the applicable notice period, each Participants shall be
furnished with a written "notice of the qualified pre-retirement survivor
annuity" in such terms and in such manner as would be comparable to the
"general notice of distribution" provided pursuant to section 10.2A. This
notice must be accompanied by a general description of the eligibility
conditions, relative values, and other material features of each method of
distribution under section 10.1A.1. The "applicable notice period" means,
with respect to each Participant, whichever of the following periods ends
last: (1) the period beginning with the first day of the Plan Year in which
the Participant attains age 32 and ending with the close of the Plan Year
preceding the Plan Year in which the Participant attains age 35; (2) the
period commencing one year before an ending one year after the individual
becomes a Participant; or (3) the period commencing one year before and
ending one year after the annuity requirement of section 10.1A.1.a first
applies to such Participant. In addition, the applicable notice period for
a Participant who separates from service before attaining age 35 shall be
the period beginning one year before and ending one year after the
Participant's separation from service. Such notice shall be given to the
Participant in person, by mailing, by posting, or by placing it in an
Employer publication which is distributed in such a manner as to be
reasonably available to such Participant. If the explanation is to be
posted, it shall be posted at the location within the Participant's
principal place of employment which is customarily used for employer
notices to employees with regard to labor-management relations matters.
b. A Participant may elect to waive a qualified pre-retirement survivor
annuity, revoke such election, and elect again to waive the qualified
pre-retirement survivor annuity at any time and any number of times during
the applicable election
-56-
period. All such elections and revocations shall be in writing. Any
election to waive a qualified pre-retirement survivor annuity must be
accompanied by (1) the designation of a specific nonspouse beneficiary
(including any class of beneficiaries or any contingent beneficiaries) who
will receive the benefit upon the Participant's death, if applicable, and
(2) a Spousal Consent to the extent required under section 2.53. The
"applicable election period" for the waiver of the qualified pre-retirement
survivor annuity shall commence once the Participant receives a written
explanation of such annuity as set forth in section 10.1B.3.a above or on
the first day of the Plan Year in which the Participant attains age 35,
whichever occurs earlier. Any waiver of the qualified pre-retirement
survivor annuity made prior to the first day of the Plan Year in which the
Participant attained age 35 shall become invalid as of such date and a new
waiver must be issued in order for a waiver of a qualified pre-retirement
survivor annuity to be effective.
c. Except as provided in subsection d below, the qualified
pre-retirement survivor annuity benefit shall only apply to a Participant
if he is credited with at least one Hour of Service with the Employer on or
after August 23, 1984.
d. If a Participant dies with an effective waiver of the qualified
pre-retirement survivor annuity in force or the Eligible Spouse so elects
after the Participant's death, his account shall be distributed in the
manner specified for unmarried Participants in section 10.1B.1 above.
10.2 TIME OF DISTRIBUTION TO PARTICIPANT
A. The Plan Administrator must provide the Participant with "general
notice of distribution" no less than thirty (30) and no more than ninety (90)
days before the Participant's Annuity Starting Date. Such notice must be in
writing and must set forth the
-57-
following information: (i) an explanation of the eligibility requirements for,
the material features of, and the relative values of the alternate forms of
benefits available under section 10.1A, and (ii) the Participant's right to
defer receipt of a Plan distribution under sections 10.2C. and d. If the Plan is
a transferee or offset plan with respect to the Participant as set forth in
section 10.1A.1.a, the general notice also shall include (a) the terms and
conditions of a qualified joint and survivor annuity; (b) the Participant's
right to make, and the effect of, an election to waive the qualified joint and
survivor annuity; (c) the rights of the Participant's Eligible Spouse; and (d)
the right to make, and the effect of, a revocation of an election to waive a
qualified joint and survivor annuity. Such notice shall be given to the
Participant in person, by mailing, by posting, or by placing it in an Employer
publication which is distributed in such a manner as to be reasonably available
to such Participant. If the notice is to be posted, it shall be posted at the
location within the Participant's principal place of employment which is
customarily used for Employer notices to employees with regard to
labor-management relation matters.
B. Upon receipt of the general notice of distribution, a Participant
may consent to receive a distribution of his vested accounts (based upon the
valuation date preceding his termination of service) as soon as practicable
after his termination of service. A Participant's vested accounts shall be
distributed in the manner set forth in section 10.1A. If at any time the
Participant elects or has elected that his benefits be paid through the purchase
of an annuity, the Participant's consent to receive such distribution prior to
his Normal Retirement Age must be accompanied by the written consent of the
Participant's Eligible Spouse, if married, which is comparable to the Spousal
Consent requirements in section 2.53, unless the distribution is to be made in
the form of a qualified joint and survivor annuity.
C. Subject to the maximum deferral requirements of sections 10.2E and
F, a Participant may elect to defer receipt of a Plan distribution, provided
that such election
-58-
is in writing, described the form of benefit payment, indicates the date the
distribution is to commence, and is signed by the Participant. To the extent not
consistent with section 10.2D below, in the event that the Participant does not
elect to defer receipt of his distribution, payment of the vested balance in the
Participant's accounts shall begin no later than the 60th day after the latest
of the close of the Plan Year in which:
1. The Participant attains the earlier of age sixty-five (65) or Normal
Retirement Age;
2. Occurs the tenth (10th) anniversary of the year in which the
Participant entered the Plan; or
3. The Participant terminates service with the Employer.
D. In the event that the Participant has terminated service and the
Participant (and the Eligible Spouse, if applicable) neither consents to receive
a Plan distribution nor elects to defer receipt of a Plan distribution, the
Participant's accounts shall be distributed in the normal benefit form as soon
as practicable thereafter, but in no event before the date the Participant
attains Normal Retirement Age, if such vested accounts exceed $5,000 (or, if the
Participant's vested accounts balances exceeded $5,000 prior to such
distribution, is less than or equal to $5,000 for distributions made after the
initial distribution date). For purposes of this section, "normal benefit form"
shall mean a single distribution or, if the Plan is a transferee or offset plan
with respect to the Participant as set forth in section 10.1A.1.a, a qualified
joint and survivor annuity as set forth in section 10.1A.1.b and 10.1A.2,
respectively.
E. If the form of distribution is other than a single distribution,
then the Participant's entire interest shall be paid over a period not extending
beyond the life (or the
-59-
life expectancy) of the Participant and his Beneficiary. For purposes of this
subsection, a Participant may elect (other than in the case of a life annuity)
to have the life expectancy of either he or his spouse, or both, redetermined;
provided, however, that if a timely election is not made, such redetermination
shall not be made. A Participant's election to redetermine life expectancy shall
be made no later than the time distributions are required to commence under
subsection f. below, shall be irrevocable, shall specify the frequency with
which redeterminations are to be made (not more frequently than annually), and
shall require that such redeterminations be made from that date forward.
F. Notwithstanding anything to the contrary contained in this Plan,
distribution of the vested balance in the Participant's accounts, or the first
installment of such distribution, shall be made or commenced, at the employee's
option, on the April 1 of the calendar year following the calendar year in which
the Participant attains age 70 1/2. If the amount of the required payment cannot
be ascertained by the date payment is to be made or commenced, or if it is not
possible to make such payment because of the Plan Administrator's inability to
locate the Participant after making reasonable efforts to do so, a payment
retroactive to the required commencement date shall be made no later than sixty
(60) days after the date the amount of such payment can be ascertained or the
Participant is located.
10.3 TIME OF DISTRIBUTION TO BENEFICIARY
A. A Participant's Beneficiary may consent to receive a distribution of
the Participant's vested accounts balances which shall commence within ninety
(90) days (or within such longer period as is reasonable based on the particular
facts and circumstances) after the Participant's death, to be distributed in the
manner set forth in section 10.1B. If the Beneficiary is the Participant's
Eligible Spouse, such consent must be comparable to the Spousal Consent
requirements in section 2.53.
-60-
B. A Beneficiary may elect to defer such distribution beyond the time
specified in subsection A above, provided that such election is in writing,
describes the form of benefit payment to be received, indicates the date
distributions are to commence, is signed by the Beneficiary, and satisfied the
requirements of subsection D below.
C. In the event that the Beneficiary neither consents to receive a Plan
distribution nor elects to defer receipt of a Plan distribution, the Beneficiary
shall receive a Plan distribution in the normal benefit form within ninety (90)
days (or within such longer period as is reasonable based on the particular
facts and circumstances) after the Participant's death. For purposes of this
subparagraph, "normal benefit form" shall mean a single distribution and, to the
extent required by section 10.1B.3, a qualified pre-retirement survivor annuity.
Notwithstanding the foregoing but subject to subsection d. below, if the
Beneficiary is the Participant's Eligible Spouse and the Plan is a transferee or
offset plan with respect to the Participant as set forth in section 10.1A.1.a,
the Beneficiary shall not receive a Plan distribution before the date the
Participant attained or would have attained Normal Retirement Age if the
Participant's vested accounts balances exceed $5,000 at the time of distribution
(or, if the Participant's vested accounts balances exceeded $5,000 prior to such
distribution, is less than or equal to $5,000 for distributions made after the
initial distribution date).
D. Notwithstanding any provision of this Article to the contrary, any
distribution to a Participant's Beneficiary must comply with the following
requirements:
1. If distributions to a Participant have begun and the Participant
dies before the entire interest has been distributed to him, the remaining
portion shall be distributed at least as rapidly as under the distribution
method being utilized on the date of his death.
-61-
2. Except as provided in subsection D.3 below, in no event shall
distributions be made later than December 31 of the calendar year which contains
the fifth anniversary of the Participant's death unless the Participant's
designated Beneficiary elects to receive payments in substantially equal
installments at least annually for a period not exceeding the Beneficiary's life
expectancy, in which case the first installment must be made by December 31 of
the calendar year immediately following the calendar year of the Participant's
death. Any such election shall be made prior to the date the distribution is
scheduled to commence.
3. An Eligible Spouse who elects to receive installment payments as set
forth in subsection D.2 above, over such Eligible Spouse's life expectancy
(which may be redetermined no more frequently than annually) may defer
commencement of payments until December 31 of the calendar year the deceased
Participant would have attained age 70 1/2. Such an election shall be made by
the earlier of (a) the date the distribution is required to commence under the
preceding sentence, or (b) December 31 of the calendar year which contains the
fifth anniversary of the Participant's death. An Eligible Spouse who elects to
have her life expectancy redetermined must do so no later than the time
distributions are required to commence under this subsection, at which time the
election will be irrevocable and shall apply to all subsequent years; provided,
however, that if no election is made by the time distribution is required to
commence, life expectancy may not be redetermined. If the Eligible Spouse elects
to defer such distribution in accordance with this subsection and the Eligible
Spouse dies leaving an unpaid balance, the balance shall be distributed no later
than December 31 of the calendar year which contains the fifth anniversary of
the Eligible Spouse's death to the Beneficiary designated by the Participant or,
in the absence of such designation, to the estate of the Eligible Spouse.
-62-
10.4 SMALL ACCOUNT BALANCES
Notwithstanding anything to the contrary in sections 10.1, 10.2 and
10.3, if the Participant has terminated service or has died with vested accounts
balances of $5,000 or less on the date distributions commence, the entire vested
accounts balance shall be distributed in a single sum distribution as soon as
practicable to the Participant, or, in the event of his death, to his
Beneficiary. No distribution may be made under the preceding sentence after the
Participant's Annuity Starting Date unless the Participant and his Eligible
Spouse consent thereto in a manner which is comparable to the Spousal Consent
requirements in section 2.53.
10.5 NONLIABILITY
Any payment to any Participant, or to his legal representative or
Beneficiary, in accordance with the provisions of the Plan, shall to the extent
thereof be in full satisfaction of all claims hereunder against the Trustee, the
Plan Administrator and the Employer, any of whom may require such Participant,
legal representative or Beneficiary, as a condition precedent to such payment,
to execute a receipt therefor in such form as shall be determined by the
Trustee, the Plan Administrator, or the Employer, as the case may be. The
Employer does not guarantee the Trust, the Participants, former Participants or
their Beneficiaries against lost of or depreciation in value of any right or
benefit that any of them may acquire under the terms of this Plan. All benefits
payable hereunder shall be paid or provided for solely from the Trust, and the
Employer does not assume any liability or responsibility therefor.
-63-
10.6 MISSING PERSONS
In the case of any benefit payable to a person under this Plan, if the
Plan Administrator is unable to locate the person within six (6) months from the
date a certified letter was mailed to such person notifying him of the benefit,
the Plan Administrator shall direct the Trustee to establish a segregated
account. This account shall share in the allocations of Trust income or loss on
a segregated basis. The Trustee shall continue to maintain this segregated
account until: (a) the person entitled to the benefit makes application
therefore; or (b) the benefit reverts by escheat to the state, whichever occurs
first.
10.7 BENEFICIARIES
A. DESIGNATION OF BENEFICIARY. Subject to the qualified pre-retirement
survivor annuity and qualified joint and survivor annuity requirements set forth
in this Article 10, a Participant shall have the right to designate, on forms
provided by the Employer, a Beneficiary or Beneficiaries to receive the benefits
herein provided in the event of this death (reduced by any security interest
held by the Plan by reason of a loan outstanding to the Participant) and to
revoke such designation or to substitute another Beneficiary or Beneficiaries at
any time. Notwithstanding the preceding sentence, if this Plan is not a
transferee or offset plan with respect to the Participant, a married
Participant's initial designation of a Beneficiary or change in Beneficiary
designation to someone other than or in addition to his Eligible Spouse shall
not be effective unless Spousal Consent is obtained.
B. ABSENCE OF VALID DESIGNATION OF BENEFICIARIES. If, upon the death of
a Participant, former Participant or Beneficiary, there is no valid designation
of Beneficiary on file with the Employer, the following shall be designated by
the Plan Administrator as the Beneficiary or Beneficiaries, in order of
priority:
-64-
The surviving spouse;
1. Surviving children, including adopted children, in equal shares;
2. Surviving parents, in equal shares;
3. The Participant's estate;
4. The Beneficiaries estate.
The determination of the Plan Administrator as to which persons, if
any, qualify within the categories listed above shall be final and conclusive
upon all persons.
ARTICLE 11 LOANS
11.1 IN GENERAL
If the Adoption Agreement so provides, loans will be available from the
Plan. If loans are available, the Plan Administrator will establish guidelines
and procedures for loans from the Plan to Participants in specific instances,
which guidelines may include limitations on the number of loans that may be
outstanding to a Participant at any time or on the frequency of loans. Each loan
must be approved by the Plan Administrator and must conform to the loan
guidelines and procedures. The guidelines and procedures must be formulated and
administered so that they conform with ERISA section 408(b)(1) and ERISA Reg.
ss.2550.408-1(d). In addition, the following requirements of this section must
be satisfied.
A. Loans are available to all Participants and any other person
required by the United States Department of Labor on a reasonably equivalent
basis. However, no loan will be made to a Participant who is an Owner-Employee
or a shareholder-employee unless such person has at his expense obtained an
administrative exemption from ERISA's
-65-
prohibited transaction rules from the United States Department of Labor with
respect to such loan, unless the United States Department of Labor has issued a
prohibited transaction class exemption covering such loans. Any loan will be
evidenced by a promissory note signed by the Participant.
B. Loans shall not be made available to Highly Compensated Employees in
an amount greater than the amount made available to Non-Highly Compensated
Employees.
C. Loans are adequately secured and bear a reasonable rate of interest.
However, no more than fifty percent (50%) of a Participant's non-forfeitable
accrued benefit may be pledged as collateral.
Each loan hereunder will be a Participant-directed investment for the
benefit of the Participant requesting such loan; accordingly, any default in the
repayment of principal or interest of any loan hereunder will reduce the amount
available for distribution to such Participant (or his Beneficiary). Thus, any
loan hereunder will be effectively and adequately secured by the Participant's
accounts.
D. A loan to a Participant (when added to the outstanding balance of
all other loans from this Plan and any other qualified plan maintained by the
Employer) shall not be in an amount that exceeds the lesser of:
1. $50,000 reduced by the excess, if any, of:
i. the highest outstanding balance of loans from the plan during the
one-year period ending on the day before such loan is made, over
-66-
ii. the outstanding balance of loans from the Plan on the date such
loan is made; or
2. fifty percent (50%) of the vested Participant's account balances.
A Participant, however, may not have outstanding more than two (2)
loans in any Plan Year.
E. Except as provided in the next sentence, the maximum term of a loan
will be five years. If a Participant requests a loan for the acquisition of the
principal residence of the Participant, the maximum repayment period will be
determined by reference to bank loans for the same purpose.
F. A Participant must obtain the consent of his or her spouse, if any,
within the 90 day period before the time the account balance is used as security
for the loan. A new consent is required if the account balance is used as
security for any increase in the loan balance, for renegotiation, extension,
renewal, or other revision of the loan. However, Spousal Consent is not
necessary if the total amount of loans outstanding hereunder does not exceed
$5,000. The consent of any subsequent spouse will not be necessary in order to
foreclose the Plan's security interest in the Participant's account balance if
the Participant's then spouse validly consented to the original use of the
account balance as security (or if the Participant was unmarried at such time).
If a valid Spousal Consent has been obtained in accordance with this
section, then, notwithstanding any other provision of this Plan, the portion of
the Participant's vested account balance used as a security interest held by the
Plan by reason of a loan outstanding to the Participant shall be taken into
account for purposes of determining the amount of the account balance payable at
the time of death or distribution, but only if the reduction is used
-67-
as repayment of the loan. If less than 100% of the Participant's vested account
balance (determined without regard to the preceding sentence) is payable to the
surviving spouse, then the account balance shall be adjusted by first reducing
the vested account balance by the amount of the security used as repayment of
the loan, and then determining the benefit payable to the surviving spouse.
G. The Plan Administrator may require a Participant to agree to repay
the principal and interest of a loan through regular payroll deduction payments.
The Plan Administrator may establish back-up repayment procedures for
Participants who do not make payroll deduction repayment; except as may
otherwise be permitted under ERISA or the IRC, any such back-up procedures will
provide for substantially level amortization payments made quarterly or more
frequently. Any loan hereunder may be prepaid, in whole or in part, at any time
without penalty. If a Participant's service as an Employee is terminated for any
reason, the entire unpaid principal and interest of any loan then outstanding to
such Participant will become immediately due and payable.
If a Participant defaults on any payment of interest or principal of a
loan hereunder or defaults upon any other obligation relating to such loan, the
Plan Administrator may take (or direct the Trustee to take) such action or
actions as it determines to be necessary to protect the interest of the Plan.
Such actions may include commencing legal proceedings against the Participant,
or foreclosing on any security interest in the Participant's account or other
security given in connection with a loan hereunder. In the event of a default,
foreclosure on the Participant's note and attachment of one or more of the
Participant's accounts given as security will not occur until a distributable
event occurs in the Plan.
An assignment or pledge of any portion of the Participant's interest in
the Plan and a loan, pledge, or assignment with respect to any insurance
contract purchased under the Plan, will be treated as a loan under this section.
-68-
H. In the case of any Participant with one or more loans outstanding
hereunder, the amount available for distribution to such Participant (or his
Beneficiary) will consist of the Participant's vested account balance(s) (not
including the outstanding principal and accrued but unpaid interest on such
loans), plus the notes representing such loans.
ARTICLE 12 INVESTMENTS
12.1 IN GENERAL
A. Investment Funds will mean any investment fund or Employer
Securities chosen by the Employer in the Adoption Agreement as an investment
medium for the Plan. The Master Plan Sponsor and the Plan Administrator shall
have the discretion to make available and terminate such funds as they shall
deem appropriate.
B. The Master Plan Sponsor may impose requirements concerning the
investment funds or securities in which contributions to the Plan must be
invested, and the Employer agrees to observe such requirements as a condition of
participating in this Master Plan. Subject to such requirements, the Employer
may permit each Participant to direct the investment of some or all of the
contributions to his accounts. To the extent that Participants do direct the
investment of their accounts, ERISA section 404(c) will apply to the Employer's
Plan, and neither the Employer, the Plan Administrator, the Trustee, the Master
Plan Sponsor nor any other fiduciary will have any responsibility or liability
for the Participant's exercise of such investment control or for any loss of
diminution in value occasioned thereby.
The Trustee shall be considered a directed Trustee unless it is
otherwise agreed to by the parties in the Adoption Agreement.
-69-
12.2 PARTICIPANT INVESTMENT DIRECTIONS
A. If the Employer allows, amounts credited to a Participant's accounts
will be invested in the investment funds selected by the Employer in the
Adoption Agreement for the Plan in accordance with the Participant's directions.
Such Participant investment control may be permitted with respect to certain
types of contributions but no others. Where allowed, a Participant's investment
directions will govern the investment of contributions to his accounts and the
transfer of amounts in one investment fund to another. Participants' exercise of
investment control over their accounts will be subject to any rules of the Plan
Administrator under section 12.3.
B. Subject to the Plan Sponsor's requirements under section 12.1B.
above, the investment of any account over which the Participant does not
exercise investment control under subsection a. above shall be made in equal
proportions among the investment funds chosen by the Employer in the Adoption
Agreement.
12.3 RULES FOR EXERCISE OF INVESTMENT OPTIONS
Any designation of investments by the Participants will be subject to
nondiscriminatory general rules established by the Plan Administrator and the
Trustee; such rules may include; (a) restrictions on the minimum amount or
percentage of any contribution which may be placed in any particular investment
fund; (b) restrictions on the use of different amounts or percentages for
different types of contributions; (c) minimums or maximums (or both) on the
amount which may be invested or transferred to or from any particular investment
fund; and (d) restrictions on the time and frequency of designations, changes in
designations and transfers from one investment fund to another including the
required advance notice.
-70-
These rules may differ for different types of contributions. The
effective date of any change in a Participant's election respecting allocation
of contributions among investment funds or any transfer from one fund to another
must coincide with a valuation date for each fund, unless the Plan
Administrator, Plan Sponsor and Trustee provide otherwise.
12.4 INVESTMENT IN EMPLOYER STOCK
A. Voting of Employer Stock Generally.
Each Participant shall have the right and shall be afforded the
opportunity to instruct the Trustee how to vote at any meeting of the
shareholders of the issuer of Employer Stock the total number of shares of
Employer Stock held in the Participant's Account. Instructions by Participants
to the Trustee shall be in such form and pursuant to such regulations as the
Plan Administrator and the Trustee may prescribe. Any such instructions shall
remain in the strict confidence of the Trustee. Any share for which no such
instructions are received by the Trustee shall be voted by the Trustee in the
same proportion as the shares for which instructions are received.
B. Tender of Exchange Offers.
In the event of a tender or exchange offer for any or all shares of
Employer Stock, the Plan Administrator and the Trustee shall notify each
Participant or Beneficiary and utilize its best efforts to timely distribute or
cause to be distributed to him such information as will be distributed to the
shareholders of the issuer of the Employer Stock in connection with any such
tender or exchange offer. Each Participant or his Beneficiary shall have the
right to instruct the Trustee in writing not to tender or exchange shares of
Employer Stock credited to his account under the Trust. The Trustee shall tender
or exchange all shares of
-71-
common stock credited to a Participant's Account under the Trust unless
instructions not to tender or exchange such shares have been received.
ARTICLE 13 ACCOUNTS
13.1 SEPARATE ACCOUNTS
A. The Plan Administrator and the Trustee shall establish and maintain,
where appropriate, separate accounts for each Participant, including Pre-Tax
Contributions Account, After-Tax Contributions Account, Employer Contributions
Account, Matching Contributions Account, and Rollover Contributions Account; a
Participant's Rollover Contributions Account may contain subaccounts as provided
in section 7.1. Earnings will be credited to such accounts (and subaccounts) in
accordance with the provisions of this Article. Since these individual accounts
are maintained only for accounting purposes, a segregation of the Trust assets
within each account is not required.
B. The Plan Administrator may itself maintain records of Participants'
accounts or may arrange for such records to be maintained by an outside service
provider (which may be the Master Plan Sponsor or Trustee or a person contracted
by the Master Plan Sponsor or Trustee). If the Plan Administrator arranges with
a service provider to maintain records of Participants' accounts, the Plan
Administrator will provide such information as is necessary for the service
provider to maintain such accounts as required herein.
13.2 VALUATION AND ALLOCATION OF EARNINGS AND LOSSES TO PARTICIPANTS
ACCOUNTS
As of each Valuation Date, the Plan Administrator shall allocate to the
account of each Participant the net earnings and gains or losses on the
Participant's account received by the Trustee since the preceding Valuation
Date.
-72-
13.3 ALLOCATION OF EXPENSES
Any fees and expenses will be paid by the Employer unless it elects not
to pay any or all such fees and expenses; in such event, any fee or expense not
paid by the Employer will be paid from the Trust and will be allocated to the
accounts of Participants or to collective investment funds in which accounts are
invested in a manner which reasonably reflects the accounts and investment funds
that generated such fees and expenses. Approximations may be used whenever its
is not feasible to allocate such expenses on an exact basis.
ARTICLE 14 PLAN ADMINISTRATION
14.1 PLAN ADMINISTRATOR
The Employer will be the Plan Administrator for purposes of section
3(16) of ERISA, and any reference in this document or the Adoption Agreement to
the Plan Administrator means the Employer. The Employer may in the Adoption
Agreement designate an individual or a group of individuals acting as a
committee to act on the Employer's behalf in carrying out its duties as Plan
Administrator. Such persons may, but need not, be Participants or Employees,
partners, or officers of the Employer. The Employer will notify the Trustee of
any such appointment. The Employer may remove any such individual or committee
member at any time with or without cause, by filing written notice of his
removal with the Trustee. Any such individual or committee member may resign at
any time by filing his written resignation with the Employer and the Trustee. A
vacancy however arising, will be filled by the Employer.
If the Employer does not appoint an individual or committee to act for
the Employer, the Employer will carry out the responsibilities of the Plan
Administrator. If the
-73-
Employer is a sole proprietorship, in the event of the sole proprietor's death,
his executor or administrator will be the Plan Administrator. If the Employer is
a partnership, in the event of the death of all the partners, the executor or
administrator of the last to die will be the Plan Administrator.
14.2 PLAN ADMINISTRATION
The Plan Administrator is a named fiduciary of the Plan. In addition,
the Plan Administrator shall have the power and the duty to perform the
following administrative functions according to the policies, interpretations,
rules, practices and procedures established by the Employer in accordance with
the respective areas of named fiduciary responsibilities:
A. Apply Plan rules determining eligibility for participation or
benefits;
B. Calculate service and compensation credits for benefits;
C. Prepare employee communications materials;
D. Maintain Participants' service and employment records;
E. Prepare reports required by government agencies, which shall include
maintaining records to demonstrate compliance with the Actual Deferral
Percentage test of Article 4 of the Plan that indicate the extent that Qualified
Non-Elective Contributions and Qualified Matching Contributions were taken into
account to satisfy such requirements;
F. Calculate benefits;
-74-
G. Orient new Participants and advise Participants regarding their
rights and options under the Plan;
H. Collect contributions and apply contributions as provided in the
Plan;
I. Prepare reports concerning Participants' benefits; and
J. Process claims.
The Plan Administrator (and those to whom it has delegated its
authority) shall have vested in it under the terms of this Plan full
discretionary and final authority when exercising its duties hereunder.
14.3 COMPENSATION AND EXPENSES
The Plan Administrator will serve without compensation unless otherwise
determined by the Employer, but no Employee of the Employer will be compensated
for his service as Plan Administrator. All reasonable expenses of operating and
administering the Plan will be paid by the Employer or from the assets of the
Trust, as provided in section 13.3. Such expenses include the compensation of
all persons employed or retained by the Plan Administrator (such as attorneys,
accountants, actuaries, trustee or other consultants or specialists), premiums
for insurance or bonds protecting the Plan and required by law or deemed
advisable by the Plan Administrator, and all other fees, expenses or costs of
Plan administration.
-75-
14.4 CLAIMS PROCEDURES
A. FILING OF CLAIM. A Participant or Beneficiary who believes he is
entitled to a benefit which he has not received may file a claim in writing with
the Plan Administrator. The Plan Administrator may require a claimant to submit
additional information, if necessary to process the claim. The Plan
Administrator shall review the claim and render its decision within ninety (90)
days from the date the claim is filed (or the requested additional information
is submitted, if later), unless special circumstances require an extension of
time for processing the claim. If such an extension is required, written notice
of the extension shall be furnished the claimant within the initial ninety (90)
day period. The notice shall indicate the special circumstances requiring the
extension and the date by which the Plan Administrator expects to reach a
decision on the claim. In no event shall the extension exceed a period of ninety
(90) days from the end of the initial period.
B. NOTICE OF CLAIM DENIED. If the Plan Administrator denies a claim, in
whole or in part, it shall provide the claimant with written notice of the
denial within the period specified in subparagraph a. The notice shall be
written in language calculated to be understood by the claimant, and shall
include the following information:
1. The specific reason for such denial;
2. Specific reference to pertinent Plan provisions upon which the
denial is based;
3. A description of any additional material or information which may be
needed to clarify or perfect the request, and an explanation of why such
information is required; and
-76-
4. An explanation of the Plan's review procedure with respect to the
denial of benefits.
C. REVIEW PROCEDURE. Any claimant whose claim has been denied, in whole
or in part, shall follow those review procedures as set forth herein.
1. A claimant whose claim has been denied, in whole or in part, may
request a full and fair review of the claim by the Plan Administrator by making
written request therefor within sixty (60) days of receipt of the notification
of denial. The Plan Administrator, for good cause shown, may extend the period
during which the request may be filed. The claimant shall be permitted to
examine all documents pertinent to the claim and shall be permitted to submit
issues and comments regarding the claim to the Plan Administrator in writing.
2. The Plan Administrator shall render its decision within sixty (60)
days after receipt of the application for review, unless special circumstances
(such as the need to hold a hearing) require an extension of time for
processing, in which case the decision shall be rendered as soon as possible but
not later than one hundred and twenty (120) days after receipt of a request for
review. If an extension of time is necessary, written notice shall be furnished
the claimant before the extension period commences.
3. The Plan Administrator shall decide whether a hearing shall be held
on the claim. If so, it shall notify the claimant in writing of the time and
place for the hearing. Unless the claimant agrees to a shorter period, the
hearing shall be scheduled at least fourteen (14) days after the date of the
notice of hearing. The claimant and/or his authorized representative may appear
at any such hearing.
-77-
4. The Plan Administrator shall send its decision on review to the
claimant in writing within the time specified in his section. If the claim is
denied, in whole or in part, the decision shall specify the reasons for the
denial in a manner calculated to be understood by the claimant, referring to the
specific Plan provisions on which the decision is based. The Plan Administrator
shall not be restricted in its review to those provisions of the Plan cited in
the original denial of the claim.
5. If the Plan Administrator does not furnish its decision on review
within the time specified in this subsection c., the claim shall be deemed
denied on review.
14.5 AGENT FOR LEGAL PROCESS
The Employer shall be the agent for service of legal process.
ARTICLE 15 AMENDMENT, TERMINATION OR MERGER OF MASTER PLAN AND PLAN
15.1 AMENDMENT BY PLAN SPONSOR
The Master Plan Sponsor may amend any or all provisions of this Master
Plan at any time without obtaining the consent of the Employer, and the Employer
hereby expressly delegates authority to amend this Master Plan to the Master
Plan Sponsor.
15.2 AMENDMENT BY EMPLOYER
Except for changes of design options selected in the Adoption
Agreement, if the Employer amends the Plan or non-elective portions of the
Adoption Agreement it will no longer participate in this Master Plan and will be
considered to have an individually designed plan.
-78-
15.3 RESTRICTIONS ON AMENDMENTS
No amendment under section 15.1 or 15.2 will:
A. cause or permit any part of the assets of the Trust to be diverted
to purposes other than the exclusive benefit of Participants and their
Beneficiaries, or cause or permit any portion of such assets to revert to or
become the property of the Employer;
B. retroactively deprive any Participant of any benefit of which he was
entitled hereunder by reason of contributions made by the Employer or the
Participant before the amendment, unless such amendment is necessary to conform
the Trust or Plan to, or satisfy the conditions of any law, governmental
regulation or ruling or to permit the Plan and Trust to meet the requirements of
ERISA and the IRC;
C. decrease a Participant's account balance, except as permitted in
ERISA Section 302(c)(8). For purposes of this paragraph, a Plan amendment which
has the effect of decreasing a Participant's account balance or eliminating an
optional form of benefit, with respect to benefits attributable to service
before the amendment shall be treated as reducing an accrued benefit;
D. if the vesting schedule of a Plan is amended, for an Employee who is
a Participant as of the later of the date such amendment is adopted or the date
it becomes effective, cause the nonforfeitable percentage (determined as of such
date) of such Employee's right to his Employer-derived accrued benefit to be
less than his percentage computed under the Plan without regard to such
amendment; also, if an amendment affects the vesting schedule of a Plan, any
Participant with three (3) or more Years of Service will have his vesting
determined under the pre-amendment vesting schedule if this would result in such
Participant having a greater vested interest then under the new vesting
schedule.
-79-
E. eliminate an optional form of distribution in violation of ERISA
Section 204(g); or
F. increase or otherwise affect the duties, liabilities or rights of
the Trustee unless the Trustee consents thereto in writing.
15.4 NONREVERSION
Except as provided in this section, the assets of the Plan shall never
inure to the benefit of an Employer; such assets shall be held for the exclusive
purpose of providing benefits to Participants and their Beneficiaries and for
defraying the reasonable administrative expenses of the Plan.
A. If an Employer Contribution is made by virtue of a mistake of fact,
to the extent permitted by applicable law, this section shall not prohibit the
return of such contribution to the Employer within one (1) year after the
payment of the contribution.
B. If a deduction for an Employer Contribution is disallowed under IRC
Section 1023(n), or any successor provision thereto, to the extent permitted by
applicable law, the contribution shall be returned to the Employer (to the
extent disallowed) within one (1) year after such disallowance.
15.5 TERMINATION OF THE PLAN
Although the Employer has established the Plan with the bona fide
intention and expectation that it will be able to make contributions
indefinitely, nevertheless the Employer is not and shall not be under any
obligation or liability whatsoever to continue its contributions or to maintain
the Plan for any given length of time. An Employer may in its
-80-
sole and absolute discretion, discontinue such contributions or terminate the
Plan with respect to its Employees, in accordance with the provisions of the
Plan, at any time with no liability whatsoever for such discontinuance or
termination. If the Plan is terminated or partially terminated, or if
contributions of an Employer are completely discontinued, the rights of all
affected Participants in their accounts shall thereupon become nonforfeitable,
notwithstanding any other provisions of the Plan. However, the Trust shall
continue until all Participants' accounts have been completely distributed to or
for the benefit of the Participants, in accordance with the Plan.
15.6 DISPOSITION AND TERMINATION OF THE PLAN
A. Upon complete or partial termination of the Plan, the Plan
Administrator will determine, subject to the joint and survivor rules of this
Plan, whether to direct the Trustee to continue to hold the accounts of
Participants affected by the termination or partial termination, to disburse
them as immediate benefit payments, to purchase immediate or deferred annuity
contracts, or to follow any other procedure he deems advisable. The Trustee will
follow the directions of the Plan Administrator.
B. For purposes of each Employer adopting the Plan, the Trustee created
hereunder will terminate when all the assets in the Trust related to such
Employer have been distributed.
15.7 MERGER OF PLANS
A. If the Employer merges or consolidates with or into a corporation,
or if substantially all of the assets of the Employer are transferred to another
business, the Plan hereby created shall terminate on the effective date of such
merger, consolidation or transfer. However, if the surviving corporation
resulting from such merger or consolidation, or the
-81-
business to which the Employer's assets have been transferred, adopts this Plan,
it shall continue and such corporation or business shall succeed to all rights,
powers and duties of the Employer hereunder. The employment of any Employee who
continues in the employ of such successor corporation or business shall not be
deemed to have been terminated for any purpose hereunder.
B. In no event shall this Plan be merged or consolidated with any other
plan, nor shall there be any transfer of assets or liabilities from this Plan to
any other plan, unless immediately after such merger, consolidation or transfer,
each Participant's benefits, if such other plan were then to terminate, are at
least equal to or greater than the benefits to which the Participant would have
been entitled, had this Plan been terminated immediately before such merger,
consolidation, or transfer.
ARTICLE 16 TRANSFERS FROM OR TO OTHER QUALIFIED PLANS
16.1 TRANSFERS FROM ANOTHER PLAN OF THE EMPLOYER
A. Notwithstanding any other provision hereof, the Employer, with the
approval of the Master Plan Sponsor, may cause to be transferred to the Trustee
all or any of the assets held (whether by a Trustee, custodian, or otherwise)
under any other defined contribution Plan which satisfies the requirements of
IRC Section 1165(a) and which is maintained by the Employer for the benefit of
any of the Participants hereunder. If the Trustee is keeping separate accounts
for each Participant, any such assets so transferred will be accompanied by
written instructions from the Employer or Plan Administrator naming the
Participants for whose benefit such assets have been transferred and showing
separately the respective contributions by the Employer and by the Participants
and the current value of the assets attributable thereto.
-82-
B. Upon receipt of any assets transferred to it under subsection (a),
the Trustee may sell any non-cash assets and invest the proceeds and any cash
transferred to it. The Trustee will make appropriate credits to the proper
accounts in accordance with the Employer's or Plan Administrator's instructions.
16.2 TRANSFERS TO OTHER PLANS
Upon the written request of the Employer, the Trustee will transfer an
amount designated by the Employer to the Trustee or custodian of any other
qualified Plan under which Plan Participants are covered.
ARTICLE 17 QUALIFIED DOMESTIC RELATIONS ORDER
17.1 GENERAL
The provisions of section 18.1 shall not be applicable to a Qualified
Domestic Relations Order (as defined in section 17.2), and payment of benefits
under the Plan shall be made in accordance with the terms of such order,
provided that such order:
A. creates or recognizes the existence of an alternate payee's (as
defined in section 17.2) right to, or assigns to an alternate payee the right
to, receive all or a portion of the benefits payable to a Participant under the
Plan;
B. clearly specifies:
1. the name and the last known mailing address (if any) of the
Participant and the name and mailing address of each alternate payee covered by
the order;
-83-
2. the amount or percentage of the Participant's benefits to be paid by
the Plan to each such alternate payee or the manner in which such amount or
percentage is to be determined;
3. the number of payments or the period to which the order applies; and
4. the name of each plan to which such order applies;
C. does not require the Plan to provide any type or form of benefit, or
any option, not otherwise provided under the Plan;
D. does not require the Plan to provide increased benefits (determined
on the basis of actuarial value); and
E. does not require the payment of benefits to an alternate payee which
are required to be paid to another alternate payee under another order
previously determined to be Qualified Domestic Relations Order.
17.2 DEFINITIONS
The following terms shall have the following meanings for purposes of
this Article:
A. "ALTERNATE PAYEE" means any spouse, former spouse, child or other
dependent of a Participant who is recognized by a domestic relations order as
having a right to receive all, or a portion of, the benefits payable under the
Plan with respect to such Participant.
-84-
B. "QUALIFIED DOMESTIC RELATIONS ORDER" means any judgment, decree or
order (including approval of a property settlement agreement), which:
1. relates to the provision of child support, alimony payments, or
marital property rights to a spouse, former spouse, child, or other dependent of
a Participant;
2. is made pursuant to a state domestic relations law (including a
community property law); and
3. which meets the requirements of the foregoing section 17.1.
17.3 PAYMENTS AFTER THE EARLIEST RETIREMENT AGE
In the case of any payment made before a Participant has separated from
service, a Qualified Domestic Relations Order shall not be considered as failing
to meet the requirements of section 17.1C solely because such order requires
that payment of benefits be made to an alternate payee:
a. on or after the date on which the Participant first attains (or
would have attained) the earliest retirement age;
b. as if the Participant had retired on the date on which such payment
is to begin under such order (but taking into account only the present
value of benefits accrued); and
c. in any form in which such benefits may be paid under the Plan to the
Participant.
-85-
17.4 TREATMENT OF FORMER SPOUSE AS SURVIVING SPOUSE
To the extent provided in any Qualified Domestic Relations Order:
a. the former spouse of a Participant shall be treated as a "surviving
spouse" of such Participant for purposes of Section 205 of ERISA; and
b. if married for at least one (1) year to the Participant, such former
spouse shall be treated as meeting the requirements of Section 205(f) of
ERISA.
17.5 PROCEDURES
The Plan Administrator shall promptly notify a Participant and any
other alternate payee of the receipt of a domestic relations order and of the
Plan's procedure for determining whether the order meets the requirements of a
Qualified Domestic Relations Order under this Article. Within a reasonable
period of time after the receipt of such order, the Plan Administrator, in
accordance with such procedures as it shall from time to time establish, shall
determine whether such order meets the requirements of a Qualified Domestic
Relations Order under this Article and shall notify the Participant and each
alternate payee of such determination.
17.6 PROCEDURES DURING PERIOD OF DETERMINATION
During any period of time in which the issue of whether a domestic
relations order meets the requirements of a Qualified Domestic Relations Order
under this Article is being determined by a court of competent jurisdiction, the
Plan Administrator shall segregate in a separate account in the Plan or in an
escrow account the amounts which would have been payable to the alternate payee
during such period if the order had been determined to be a
-86-
Qualified Domestic Relations Order under this Article. If within eighteen (18)
months such order is determined to be a Qualified Domestic Relations Order under
this Article, the Plan Administrator shall instruct the Trustee to pay the
segregated amounts (plus any interest thereon) to the person or persons entitled
thereto. If within eighteen (18) months it is determined that such order is not
a Qualified Domestic Relations Order under this Article, or the issue as to
whether such order so qualifies is not resolved, then the Plan Administrator
shall instruct the Trustee to pay the segregated amounts (plus any interest
thereon) to the person or persons who would have been entitled to such amounts
if there had been no order. Any determination that an order is a Qualified
Domestic Relations Order under this Article which is made after the end of the
eighteen (18) month period, shall be applied prospectively only.
ARTICLE 18 MISCELLANEOUS
18.1 NON-ALIENATION AND NON-ASSIGNMENT OF BENEFITS
Except as provided in Article 17, no benefit under this Plan shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, and any attempt so to do shall be void, nor shall
any benefit be in any manner liable for or subject to garnishment, attachment,
execution or levy, or liable for or subject to the debts, contracts,
liabilities, engagements or torts of the person entitled to such benefit; and in
the event that the Plan Administrator shall find that any Participant or other
person entitled to a benefit under this plan has become bankrupt or that any
attempt has been made to anticipate, alienate, sell, transfer, assign, pledge,
encumber or charge any of his benefits under this Plan, then such benefit shall
cease and terminate and in that event the Plan Administrator shall hold or apply
the same to or for the benefit of such Participant or such other person, his
spouse, children, parents or other blood relatives, or any of them.
-87-
18.2 LIMITATION ON RIGHTS CREATED BY PLAN
A. The adoption and maintenance of the Plan and Trust will not be
construed to give a Participant the right to continue in the employ of the
Employer or to interfere with the right of the Employer to discharge, lay off or
discipline a Participant at any time, or give the Employer the right to require
any Participant to remain in its employ or to interfere with the Participant's
right to terminate his employment.
B. The adoption and maintenance of the Plan and Trust, the creation of
any account or the payment of any benefit will not be construed as creating any
legal or equitable right against the Employer or the Trust except as this Plan
specifically provides.
C. The Employer, the Trustee, the Plan Administrator and the Rollover
Contributions Account do not guaranty the payment of benefits hereunder and
benefits will be paid only to the extent of the assets of the Trust. It is a
condition of participation in the Plan that each Participant (and his
Beneficiary or anyone else claiming through him) will look only to the assets of
the Trust for the payment of any benefit to which he or his Beneficiary or other
person is entitled.
18.3 ALLOCATION OF RESPONSIBILITIES
The Employer, the Trustee and the Plan Administrator will each have
only those duties and responsibilities specifically allocated to each of them
under the Plan. There will be no joint fiduciary responsibility between or among
fiduciaries unless specifically stated otherwise. Any person may serve in more
than one fiduciary capacity.
-88-
18.4 CURRENT ADDRESS OF PAYEE
The Plan Administrator, the Trustee and the Employer have no obligation
to locate any person entitled to payments hereunder and will be fully protected
if all payments, notices and other papers are mailed to the last address of
which such person has notified the Plan Administrator in writing, or are
withheld pending receipt of proof of his current address and proof that he is
alive.
18.5 APPLICATION OF PLAN'S TERMS
A. If an Employee retired, died or otherwise terminated his service
before the Effective Date of the Employer's Plan, the Employee and his
beneficiaries will receive no benefits and will have no rights under the Plan.
B. If an Employee retires, dies or otherwise terminates his service on
or after the Effective Date of the Employer's Plan, the benefits and rights of
the Employee and his beneficiaries will be determined in accordance with the
terms of the Plan that are in effect on the date of such termination of service.
C. The allocations to a Participant's account for any year of reference
will be determined in accordance with the terms of the Plan that are in effect
for such year.
18.6 EMPLOYERS WITH EMPLOYEES WITHIN AND WITHOUT PUERTO RICO OR THAT
ARE MEMBERS OF AN AFFILIATED GROUP OF CORPORATIONS OR PARTNERSHIPS
The satisfaction of the participation and non-discrimination
requirements of Sections 1165(a)(3)(A), 1165(a)(4), and 1165(e)(3) of the IRC
shall be determined by taking into the account the active Employees that the
Employer has in Puerto Rico.
-89-
Notwithstanding the above, in the case of an Employer having Employees within
and without Puerto Rico or that are members of an affiliated group of
corporations or partnerships (within the meaning of Section 1028 of the IRC)
that adopt the same plan, said Employer or Employers may elect to meet the above
mentioned requirements as follows:
i. By taking into the account all the active Employees (employed within
and without Puerto Rico) of the Employers or of each individual employer;
ii. By taking into the account all the Employees of the affiliated
group of corporation or partnerships (even if some of the members of the
affiliated group of corporations or partnerships have no Employees in
Puerto Rico);
iii. By taking into the account all the Employees of those members of
the affiliated group of corporations or partnerships having Employees in
Puerto Rico; or
iv. By taking into the account all the Employees employed by the
members of the affiliated group of corporations or partnerships in Puerto
Rico.
The above-mentioned options shall be available as long as the Plan
offers to the Puerto Rico resident Employees the same benefits offered to those
Employees located outside of Puerto Rico.
18.7 USERRA
Notwithstanding any provision of this Plan to the contrary,
contributions, benefits and service credit with respect to qualified military
service will be provided in accordance with the Uniformed Services Employment
and Reemployment Rights Act, effective for employment on or after December 12,
1994.
-90-