DOWNEY SAVINGS AND LOAN ASSOCIATION, F.A.
EMPLOYEES' RETIREMENT AND SAVINGS PLAN
(October 1, 1997 Restatement)
Fidelity Management Trust Company, its affiliates and employees may
not provide you with legal or tax advice in connection with the
execution of this document. It should be reviewed by your attorney
and/or accountant prior to execution.
CORPORATEplan for RETIREMENT
VOLUME SUBMITTER
PLAN DOCUMENT SYSTEMS
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
1.1 - Plan Definitions
1.2 - Interpretation
ARTICLE II
SERVICE
2.1 - Definitions
2.2 - Crediting of Hours of Service
2.3 - Crediting of Continuous Service
2.4 - Eligibility Service
2.5 - Vesting Service
2.6 - Crediting of Service on Transfer or Amendment
ARTICLE III
ELIGIBILITY
3.1 - Eligibility
3.2 - Transfers of Employment
3.3 - Reemployment
3.4 - Notification Concerning New Eligible Employees
3.5 - Effect and Duration
ARTICLE IV
TAX-DEFERRED CONTRIBUTIONS
4.1 - Tax-Deferred Contributions
4.2 - Amount of Tax-Deferred Contributions
4.3 - Changes in Reduction Authorization
4.4 - Suspension of Tax-Deferred Contributions
4.5 - Resumption of Tax-Deferred Contributions
4.6 - Delivery of Tax-Deferred Contributions
4.7 - Vesting of Tax-Deferred Contributions
ARTICLE V
AFTER-TAX AND ROLLOVER CONTRIBUTIONS
5.1 - No After-Tax Contributions
5.2 - Rollover Contributions
5.3 - Vesting of Rollover Contributions
ARTICLE VI
EMPLOYER CONTRIBUTIONS
6.1 - Contribution Period
6.2 - Profit-Sharing Contributions
6.3 - Allocation of Profit-Sharing Contributions
(i)
6.4 - Qualified Nonelective Contributions
6.5 - Allocation of Qualified Nonelective Contributions
6.6 - Matching Contributions
6.7 - Allocation of Matching Contributions
6.8 - Verification of Amount of Employer Contributions by the Sponsor
6.9 - Payment of Employer Contributions
6.10 - Eligibility to Participate in Allocation
6.11 - Vesting of Employer Contributions
6.12 - Election of Former Vesting Schedule
6.13 - Forfeitures to Reduce Employer Contributions
ARTICLE VII
LIMITATIONS ON CONTRIBUTIONS
7.1 - Definitions
7.2 - Code Section 402(g) Limit
7.3 - Distribution of Excess Deferrals
7.4 - Limitation on Tax-Deferred Contributions of Highly Compensated
Employees
7.5 - Distribution of Excess Tax-Deferred Contributions
7.6 - Limitation on Matching Contributions of Highly Compensated
Employees
7.7 - Forfeiture or Distribution of Excess Contributions
7.8 - Multiple Use Limitation
7.9 - Determination of Income or Loss
7.10 - Code Section 415 Limitations on Crediting of Contributions and
Forfeitures
7.11 - Coverage Under Other Qualified Defined Contribution Plan
7.12 - Coverage Under Qualified Defined Benefit Plan
7.13 - Scope of Limitations
ARTICLE VIII
TRUST FUNDS AND SEPARATE ACCOUNTS
8.1 - General Fund
8.2 - Investment Funds
8.3 - Loan Investment Fund
8.4 - Income on Trust
8.5 - Separate Accounts
8.6 - Sub-Accounts
ARTICLE IX
LIFE INSURANCE CONTRACTS
9.1 - No Life Insurance Contracts
ARTICLE X
DEPOSIT AND INVESTMENT OF CONTRIBUTIONS
10.1 - Future Contribution Investment Elections
10.2 - Deposit of Contributions
10.3 - Election to Transfer Between Funds
(II)
ARTICLE XI
CREDITING AND VALUING SEPARATE ACCOUNTS
11.1 - Crediting Separate Accounts
11.2 - Valuing Separate Accounts
11.3 - Plan Valuation Procedures
11.4 - Finality of Determinations
11.5 - Notification
ARTICLE XII
LOANS
12.1 - Application for Loan
12.2 - Reduction of Account Upon Distribution
12.3 - Requirements to Prevent a Taxable Distribution
12.4 - Administration of Loan Investment Fund
12.5 - Default
12.6 - Special Rules Applicable to Loans
12.7 - Loans Granted Prior to Amendment
ARTICLE XIII
WITHDRAWALS WHILE EMPLOYED
13.1 - Withdrawals of Rollover Contributions
13.2 - Limitations on Withdrawals
13.3 - Order of Withdrawal from a Participant's SubAAccounts
ARTICLE XIV
TERMINATION OF EMPLOYMENT AND SETTLEMENT DATE
14.1 - Termination of Employment and Settlement Date
14.2 - Separate Accounting for NonAVested Amounts
14.3 - Disposition of NonAVested Amounts
14.4 - Recrediting of Forfeited Amounts
ARTICLE XV
DISTRIBUTIONS
15.1 - Distributions to Participants
15.2 - Distributions to Beneficiaries
15.3 - Cash Outs and Participant Consent
15.4 - Required Commencement of Distribution
15.5 - Reemployment of a Participant
15.6 - Restrictions on Alienation
15.7 - Facility of Payment
15.8 - Inability to Locate Payee
15.9 - Distribution Pursuant to Qualified Domestic Relations Orders
ARTICLE XVI
FORM OF PAYMENT
16.1 - Normal Form of Payment
16.2 - Optional Form of Payment
(iii)
16.3 - Change of Option Election
16.4 - Direct Rollover
16.5 - Notice Regarding Forms of Payment
16.6 - Reemployment
16.7 - Distribution in the Form of Employer Stock
16.8 - Section 242(b)(2) Elections
ARTICLE XVII
BENEFICIARIES
17.1 - Designation of Beneficiary
17.2 - Spousal Consent Requirements
ARTICLE XVIII
ADMINISTRATION
18.1 - Authority of the Sponsor
18.2 - Action of the Sponsor
18.3 - Claims Review Procedure
18.4 - Qualified Domestic Relations Orders
18.5 - Indemnification
18.6 - Actions Binding
ARTICLE XIX
AMENDMENT AND TERMINATION
19.1 - Amendment
19.2 - Limitation on Amendment
19.3 - Termination
19.4 - Reorganization
19.5 - Withdrawal of an Employer
ARTICLE XX
ADOPTION BY OTHER ENTITIES
20.1 - Adoption by Related Companies
20.2 - Effective Plan Provisions
ARTICLE XXI
MISCELLANEOUS PROVISIONS
21.1 - No Commitment as to Employment
21.2 - Benefits
21.3 - No Guarantees
21.4 - Expenses
21.5 - Precedent
21.6 - Duty to Furnish Information
21.7 - Withholding
21.8 - Merger, Consolidation, or Transfer of Plan Assets
21.9 - Back Pay Awards
21.10 - Condition on Employer Contributions
21.11 - Return of Contributions to an Employer
21.12 - Validity of Plan
21.13 - Trust Agreement
(iv)
21.14 - Parties Bound
21.15 - Application of Certain Plan Provisions
21.16 - Leased Employees
21.17 - Transferred Funds
ARTICLE XXII
TOP-HEAVY PROVISIONS
22.1 - Definitions
22.2 - Applicability
22.3 - Minimum Employer Contribution
22.4 - Adjustments to Sectiony415 Limitations
22.5 - Accelerated Vesting
ARTICLE XXIII
EFFECTIVE DATE
23.1 - Effective Date of Amendment and Restatement
(v)
PREAMBLE
The Downey Savings and Loan Association, F.A. Employees' Retirement and Savings
Plan, originally effective as of January 1, 1978, is hereby amended and restated
in its entirety. The Plan, as amended and restated hereby, is intended to
qualify as a profit-sharing plan under Section 401(a) of the Code, and includes
a cash or deferred arrangement that is intended to qualify under Section 401(k)
of the Code. The Plan is maintained for the exclusive benefit of eligible
employees and their beneficiaries.
Notwithstanding any other provision of the Plan to the contrary, a Participant's
vested interest in his Separate Account under the Plan on and after the
effective date of this amendment and restatement shall be not less than his
vested interest in his account on the day immediately preceding the effective
date. In addition, notwithstanding any other provision of the Plan to the
contrary, the forms of payment and other Plan provisions that were available
under the Plan immediately prior to the later of the effective date of this
amendment and restatement or the date this amendment and restatement is adopted
and that may not be eliminated under Section 411(d)(6) of the Code shall
continue to be available to Participants who had an account under the Plan on
the day immediately preceding the later of the effective date or the date this
amendment and restatement is adopted.
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ARTICLE I
DEFINITIONS
1.1 - PLAN DEFINITIONS
As used herein, the following words and phrases have the meanings hereinafter
set forth, unless a different meaning is plainly required by the context:
The "ADMINISTRATOR" means the Sponsor unless the Sponsor designates another
person or persons to act as such.
An "AFTER-TAX CONTRIBUTION" means any after-tax employee contribution made by a
Participant as may be permitted under Article V.
The "BENEFICIARY" of a Participant means the person or persons entitled under
the provisions of the Plan to receive distribution hereunder in the event the
Participant dies before receiving distribution of his entire interest under the
Plan.
The "CODE" means the Internal Revenue Code of 1986, as amended from time to
time. Reference to a section of the Code includes such section and any
comparable section or sections of any future legislation that amends,
supplements, or supersedes such section.
The "COMPENSATION" of a Participant for any period means the wages as defined in
Section 3401(a) of the Code, determined without regard to any rules that limit
compensation included in wages based on the nature or location of the employment
or services performed, and all other payments made to him for such period for
services as an Employee for which his Employer is required to furnish the
Participant a written statement under Sections 6041(d), 6051(a)(3), and 6052 of
the Code, and excluding reimbursements or other expense allowances, fringe
benefits, moving expenses, deferred compensation, and welfare benefits, but
determined prior to any exclusions for amounts deferred under Section 125,
402(e)(3), 402(h)(1)(B), 403(b), or 457(b) of the Code or for certain
contributions described in Section 414(h)(2) of the Code that are picked up by
the employing unit and treated as employer contributions.
Notwithstanding the foregoing, Compensation shall not include the following:
o Compensation in excess of $80,000 for non-management commissioned
Employees.
o prizes or gifts.
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In no event, however, shall the Compensation of a Participant taken into account
under the Plan for any Plan Year exceed (1) $200,000 for Plan Years beginning
prior to January 1, 1994, or (2) $150,000 for Plan Years beginning on or after
January 1, 1994 (subject to adjustment annually as provided in Section
401(a)(17)(B) and Section 415(d) of the Code; provided, however, that the dollar
increase in effect on January 1 of any calendar year, if any, is effective for
Plan Years beginning in such calendar year). If the Compensation of a
Participant is determined over a period of time that contains fewer than 12
calendar months, then the annual compensation limitation described above shall
be adjusted with respect to that Participant by multiplying the annual
compensation limitation in effect for the Plan Year by a fraction the numerator
of which is the number of full months in the period and the denominator of which
is 12; provided, however, that no proration is required for a Participant who is
covered under the Plan for less than one full Plan Year if the formula for
allocations is based on Compensation for a period of at least 12 months. In
determining the Compensation, for purposes of applying the annual compensation
limitation described above, of a Participant who is a five percent owner or
among the ten Highly Compensated Employees receiving the greatest Compensation
for the Plan Year, the Compensation of the Participant's spouse and of his
lineal descendants who have not attained age 19 as of the close of the Plan Year
shall be included as Compensation of the Participant for the Plan Year. If as a
result of applying the family aggregation rule described in the preceding
sentence the annual compensation limitation would be exceeded, the limitation
shall be prorated among the affected family members in proportion to each
member's Compensation as determined prior to application of the family
aggregation rules.
A "CONTRIBUTION PERIOD" means the period specified in Article VI for which
Employer Contributions shall be made.
An "ELIGIBLE EMPLOYEE" means any Employee who has met the eligibility
requirements of Article III to have Tax-Deferred Contributions made to the Plan
on his behalf.
The "ELIGIBILITY SERVICE" of an employee means the period or periods of service
credited to him under the provisions of Article II for purposes of determining
his eligibility to participate in the Plan as may be required under Article III
or Article VI.
An "EMPLOYEE" means any employee of an Employer other than (i) an employee who
is covered by a collective bargaining agreement, (ii) a nonresident alien who
does not receive United States
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source income, (iii) a leased employee, or (iv) an employee within the meaning
of Internal Revenue Code Section 401(c)(3).
An "EMPLOYER" means the Sponsor and any entity which has adopted the Plan as may
be provided under Article XX, including Downey Financial Corp., Downey Auto
Finance Corp., DSL Service Company, and Downey Affiliated Insurance Agency.
An "EMPLOYER CONTRIBUTION" means the amount, if any, that an Employer
contributes to the Plan as may be provided under Article VI or Article XXII.
An "ENROLLMENT DATE" means the first day of each Plan Year quarter.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time. Reference to a section of ERISA includes such section and any
comparable section or sections of any future legislation that amends,
supplements, or supersedes such section.
The "GENERAL FUND" means a Trust Fund maintained by the Trustee as required to
hold and administer any assets of the Trust that are not allocated among any
separate Investment Funds as may be provided in the Plan or the Trust Agreement.
No General Fund shall be maintained if all assets of the Trust are allocated
among separate Investment Funds.
A "HIGHLY COMPENSATED EMPLOYEE" means an Employee or former Employee who is a
highly compensated active employee or highly compensated former employee as
defined hereunder.
A "highly compensated active employee" includes any Employee who performs
services for an Employer during the determination year and who (i) was a five
percent owner at any time during the determination year or the look back year,
(ii) received compensation from an Employer during the look back year in excess
of $75,000 (subject to adjustment annually at the same time and in the same
manner as under Section 415(d) of the Code), (iii) was in the top paid group of
employees for the look back year and received compensation from an Employer
during the look back year in excess of $50,000 (subject to adjustment annually
at the same time and in the same manner as under Section 415(d) of the Code),
(iv) was an officer of an Employer during the look back year and received
compensation during that year in excess of 50 percent of the dollar limitation
in effect for that year under Section 415(b)(1)(A) of the Code or, if no officer
received compensation in excess of that amount for the look back year or the
determination year, received the greatest compensation for the look back year of
any officer, or (v) was one of the 100
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employees paid the greatest compensation by an Employer for the determination
year and would be described in (ii), (iii), or (iv) above if the term
"determination year" were substituted for "look back year".
A "highly compensated former employee" includes any Employee who separated from
service from an Employer and all Related Companies (or is deemed to have
separated from service from an Employer and all Related Companies) prior to the
determination year, performed no services for an Employer during the
determination year, and was a highly compensated active employee for either the
separation year or any determination year ending on or after the date the
Employee attains age 55.
The determination of who is a Highly Compensated Employee hereunder, including
determinations as to the number and identity of employees in the top paid group,
the 100 employees receiving the greatest compensation from an Employer, the
number of employees treated as officers, and the compensation considered, shall
be made in accordance with the provisions of Section 414(q) of the Code and
regulations issued thereunder. For purposes of this definition, the following
terms have the following meanings:
(a) The "determination year" means the Plan Year or, if the Administrator makes
the election provided in paragraph (b) below, the period of time, if any,
which extends beyond the look back year and ends on the last day of the
Plan Year for which testing is being performed (the "lag period"). If the
lag period is less than 12 months long, the dollar amounts specified in
(ii), (iii), and (iv) above shall be prorated based upon the number of
months in the lag period.
(b) The "look back year" means the 12-month period immediately preceding the
determination year; provided, however, that the Administrator may elect
instead to treat the calendar year ending with or within the determination
year as the "look back year".
An "HOUR OF SERVICE" with respect to a person means each hour, if any, that may
be credited to him in accordance with the provisions of Article II.
An "INVESTMENT FUND" means any separate investment Trust Fund maintained by the
Trustee as may be provided in the Plan or the Trust Agreement or any separate
investment fund maintained by the Trustee, to the extent that there are
Participant Sub-Accounts under such funds, to which assets of the Trust may be
allocated and separately invested.
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A "MATCHING CONTRIBUTION" means any Employer Contribution made to the Plan on
account of a Participant's Tax-Deferred Contributions as provided in Article VI.
The "NORMAL RETIREMENT DATE" of an employee means the date he attains age 65.
A "PARTICIPANT" means any person who has a Separate Account in the Trust.
The "PLAN" means Downey Savings and Loan Association, F.A. Employees' Retirement
and Savings Plan, as from time to time in effect.
A "PLAN YEAR" means the 12-consecutive-month period ending on December 31.
A "PROFIT-SHARING CONTRIBUTION" means any Employer Contribution made to the Plan
as provided in Article VI, other than Matching Contributions and Qualified
Nonelective Contributions.
A "QUALIFIED NONELECTIVE CONTRIBUTION" means any Employer Contribution made to
the Plan as provided in Article VI that may be taken into account to satisfy the
limitations on contributions by Highly Compensated Employees under Article VII.
A "RELATED COMPANY" means any corporation or business, other than an Employer,
which would be aggregated with an Employer for a relevant purpose under Section
414 of the Code.
A "ROLLOVER CONTRIBUTION" means any rollover contribution to the Plan made by a
Participant as may be permitted under Article V.
A "SEPARATE ACCOUNT" means the account maintained by the Trustee in the name of
a Participant that reflects his interest in the Trust and any Sub-Accounts
maintained thereunder, as provided in Article VIII.
The "SETTLEMENT DATE" of a Participant means the date on which a Participant's
interest under the Plan becomes distributable in accordance with Article XV.
The "SPONSOR" means Downey Savings and Loan Association, F.A., and any successor
thereto.
A "SUB-ACCOUNT" means any of the individual sub-accounts of a Participant's
Separate Account that is maintained as provided in Article VIII.
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A "TAX-DEFERRED CONTRIBUTION" means the amount contributed to the Plan on a
Participant's behalf by his Employer in accordance with his reduction
authorization executed pursuant to Article IV.
The "TRUST" means the trust maintained by the Trustee under the Trust Agreement.
The "TRUST AGREEMENT" means the agreement entered into between the Sponsor and
the Trustee relating to the holding, investment, and reinvestment of the assets
of the Plan, together with all amendments thereto.
The "TRUSTEE" means the trustee or any successor trustee which at the time shall
be designated, qualified, and acting under the Trust Agreement. The Sponsor may
designate a person or persons other than the Trustee to perform any
responsibility of the Trustee under the Plan, other than trustee
responsibilities as defined in Section 405(c)(3) of ERISA, and the Trustee shall
not be liable for the performance of such person in carrying out such
responsibility except as otherwise provided by ERISA. The term Trustee shall
include any delegate of the Trustee as may be provided in the Trust Agreement.
A "TRUST FUND" means any fund maintained under the Trust by the Trustee.
A "VALUATION DATE" means the date or dates designated by the Sponsor and
communicated in writing to the Trustee for the purpose of valuing the General
Fund and each Investment Fund and adjusting Separate Accounts and Sub-Accounts
hereunder, which dates need not be uniform with respect to the General Fund,
each Investment Fund, Separate Account, or Sub-Account; provided, however, that
the General Fund and each Investment Fund shall be valued and each Separate
Account and Sub-Account shall be adjusted no less often than once annually.
The "VESTING SERVICE" of an employee means the period or periods of service
credited to him under the provisions of Article II for purposes of determining
his vested interest in his Employer Contributions Sub-Account, if Employer
Contributions are provided for under either Article VI or Article XXII.
1.2 - INTERPRETATION
Where required by the context, the noun, verb, adjective, and adverb forms of
each defined term shall include any of its other forms. Wherever used herein,
the masculine pronoun shall include the feminine, the singular shall include the
plural, and the plural shall include the singular.
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ARTICLE II
SERVICE
2.1 - DEFINITIONS
For purposes of this Article, the following terms have the following meanings:
(a) The "continuous service" of an employee means the service credited to him
in accordance with the provisions of Section 2.3 of the Plan.
(b) The "employment commencement date" of an employee means the date he first
completes an Hour of Service.
(c) A "maternity/paternity absence" means a person's absence from employment
with an Employer or a Related Company because of the person's pregnancy,
the birth of the person's child, the placement of a child with the person
in connection with the person's adoption of the child, or the caring for
the person's child immediately following the child's birth or adoption. A
person's absence from employment will not be considered a
maternity/paternity absence unless the person furnishes the Administrator
such timely information as may reasonably be required to establish that the
absence was for one of the purposes enumerated in this paragraph and to
establish the number of days of absence attributable to such purpose.
(d) The "reemployment commencement date" of an employee means the first date
following a severance date on which he again completes an Hour of Service.
(e) The "severance date" of an employee means the earlier of (i) the date on
which he retires, dies, or his employment with an Employer and all Related
Companies is otherwise terminated, or (ii) the first anniversary of the
first date of a period during which he is absent from work with an Employer
and all Related Companies for any other reason; provided, however, that if
he terminates employment with or is absent from work with an Employer and
all Related Companies on account of service with the armed forces of the
United States, he shall not incur a severance date if he is eligible for
reemployment rights under the Uniformed Services Employment and
Reemployment Rights Act of 1994 and he returns to work with an Employer or
a Related Company within the period during which he retains such
reemployment rights.
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2.2 - CREDITING OF HOURS OF SERVICE
A person shall be credited with an Hour of Service for each hour for which he is
paid, or entitled to payment, for the performance of duties for an Employer or
any Related Company.
2.3 - CREDITING OF CONTINUOUS SERVICE
A person shall be credited with continuous service for the aggregate of the
periods of time between his employment commencement date or any reemployment
commencement date and the severance date that next follows such employment
commencement date or reemployment commencement date; provided, however, that an
employee who has a reemployment commencement date within the
12-consecutive-month period following the earlier of the first date of his
absence or his severance date shall be credited with continuous service for the
period between such severance date and reemployment commencement date.
2.4 - ELIGIBILITY SERVICE
An employee shall be credited with Eligibility Service equal to his continuous
service.
2.5 - VESTING SERVICE
Years of Vesting Service shall be determined in accordance with the following
provisions:
(a) An employee shall be credited with years of Vesting Service equal to his
period of continuous service.
(b) Notwithstanding the provisions of paragraph (a), continuous service
completed by an employee prior to a severance date shall not be included in
determining the employee's years of Vesting Service unless the employee had
a nonforfeitable right to any portion of his Separate Account, excluding
that portion of his Separate Account that is attributable to Rollover
Contributions, as of the severance date, or the period of time between the
severance date and his reemployment commencement date is less than the
greater of five years or his period of continuous service determined as of
the severance date; and provided, however, that solely for purposes of
applying this paragraph, if a person is on a maternity/paternity absence
beyond the first anniversary of the first day of such absence, his
severance date shall be the second anniversary of the first day of such
maternity/paternity absence.
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2.6 - CREDITING OF SERVICE ON TRANSFER OR AMENDMENT
Notwithstanding any other provision of the Plan to the contrary, if an Employee
is transferred from employment covered under a qualified plan maintained by an
Employer or a Related Company for which service is credited based on Hours of
Service and computation periods in accordance with Department of Labor
Regulations Section 2530.200 through 2530.203 to employment covered under the
Plan or, prior to amendment, the Plan provided for crediting of service on the
basis of Hours of Service and computation periods, an affected Employee shall be
credited with Eligibility Service and Vesting Service hereunder equal to:
(a) the Employee's years of service credited to him under the Hours of Service
method before the computation period in which the transfer or the effective
date of the amendment occurs, plus
(b) the greater of (i) the period of service that would be credited to the
Employee under the elapsed time method provided hereunder for his
employment during the entire computation period in which the transfer or
the effective date of the amendment occurs or (ii) the service taken into
account under the Hours of Service method for such computation period as of
the transfer date or the effective date of the amendment, plus
(c) the service credited to such Employee under the elapsed time method
provided hereunder for the period of time beginning on the day after the
last day of the computation period in which the transfer or the effective
date of the amendment occurs.
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ARTICLE III
ELIGIBILITY
3.1 - ELIGIBILITY
Each Employee who was an Eligible Employee immediately prior to the effective
date of this amendment and restatement shall continue to be an Eligible
Employee. Each other Employee shall become an Eligible Employee as of the
Enrollment Date coinciding with or next following the date on which he has both
attained age 21 and completed one year of Eligibility Service.
3.2 - TRANSFERS OF EMPLOYMENT
If a person is transferred directly from employment with an Employer or with a
Related Company in a capacity other than as an Employee to employment as an
Employee, he shall become an Eligible Employee as of the date he is so
transferred if prior to an Enrollment Date coinciding with or preceding such
transfer date he has met the eligibility requirements of Section 3.1. Otherwise,
the eligibility of a person who is so transferred to elect to have Tax-Deferred
Contributions made to the Plan on his behalf shall be determined in accordance
with Section 3.1.
3.3 - REEMPLOYMENT
If a person who terminated employment with an Employer and all Related Companies
is reemployed as an Employee and if he had been an Eligible Employee prior to
his termination of employment, he shall again become an Eligible Employee on the
date he is reemployed. Otherwise, the eligibility of a person who terminated
employment with an Employer and all Related Companies and who is reemployed by
an Employer or a Related Company to elect to have Tax-Deferred Contributions
made to the Plan on his behalf shall be determined in accordance with Section
3.1 or 3.2.
3.4 - NOTIFICATION CONCERNING NEW ELIGIBLE EMPLOYEES
Each Employer shall notify the Administrator as soon as practicable of Employees
becoming Eligible Employees as of any date.
3.5 - EFFECT AND DURATION
Upon becoming an Eligible Employee, an Employee shall be entitled to elect to
have Tax-Deferred Contributions made to the Plan on his behalf and shall be
bound by all the terms and conditions of the Plan and the Trust Agreement. A
person shall continue as an Eligible Employee eligible to have Tax-Deferred
Contributions
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made to the Plan on his behalf only so long as he continues employment as an
Employee.
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ARTICLE IV
TAX-DEFERRED CONTRIBUTIONS
4.1 - TAX-DEFERRED CONTRIBUTIONS
Effective as of the date he becomes an Eligible Employee, or any subsequent
Enrollment Date, each Eligible Employee may elect in writing in accordance with
rules prescribed by the Administrator to have Tax-Deferred Contributions made to
the Plan on his behalf by his Employer as hereinafter provided. An Eligible
Employee's written election shall include his authorization for his Employer to
reduce his Compensation and to make Tax-Deferred Contributions on his behalf and
his election as to the investment of his contributions in accordance with
Article X. Tax-Deferred Contributions on behalf of an Eligible Employee shall
commence with the first payment of Compensation made on or after the date on
which his election is effective.
4.2 - AMOUNT OF TAX-DEFERRED CONTRIBUTIONS
The amount of Tax-Deferred Contributions to be made to the Plan on behalf of an
Eligible Employee by his Employer shall be an integral percentage of his
Compensation of not less than 1 percent nor more than 15 percent. In the event
an Eligible Employee elects to have his Employer make Tax-Deferred Contributions
on his behalf, his Compensation shall be reduced for each payroll period by the
percentage he elects to have contributed on his behalf to the Plan in accordance
with the terms of his currently effective reduction authorization.
4.3 - CHANGES IN REDUCTION AUTHORIZATION
An Eligible Employee may change the percentage of his future Compensation that
his Employer contributes on his behalf as Tax-Deferred Contributions at such
time or times during the Plan Year as the Administrator may prescribe by filing
an amended reduction authorization with his Employer such number of days prior
to the date such change is to become effective as the Administrator shall
prescribe. An Eligible Employee who changes his reduction authorization shall be
limited to selecting a percentage of his Compensation that is otherwise
permitted hereunder. Tax-Deferred Contributions shall be made on behalf of such
Eligible Employee by his Employer pursuant to his amended reduction
authorization filed in accordance with this Section commencing with Compensation
paid to the Eligible Employee on or after the date such filing is effective,
until otherwise altered or terminated in accordance with the Plan.
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4.4 - SUSPENSION OF TAX-DEFERRED CONTRIBUTIONS
An Eligible Employee on whose behalf Tax-Deferred Contributions are being made
may have such contributions suspended at any time by giving such number of days
advance written notice to his Employer as the Administrator shall prescribe. Any
such voluntary suspension shall take effect commencing with Compensation paid to
such Eligible Employee on or after the expiration of the required notice period
and shall remain in effect until Tax-Deferred Contributions are resumed as
hereinafter set forth.
4.5 - RESUMPTION OF TAX-DEFERRED CONTRIBUTIONS
An Eligible Employee who has voluntarily suspended his Tax-Deferred
Contributions may have such contributions resumed at such time or times during
the Plan Year as the Administrator may prescribe, by filing a new reduction
authorization with his Employer such number of days prior to the date as of
which such contributions are to be resumed as the Administrator shall prescribe.
4.6 - DELIVERY OF TAX-DEFERRED CONTRIBUTIONS
As soon after the date an amount would otherwise be paid to an Employee as it
can reasonably be separated from Employer assets, each Employer shall cause to
be delivered to the Trustee in cash all Tax-Deferred Contributions attributable
to such amounts.
4.7 - VESTING OF TAX-DEFERRED CONTRIBUTIONS
A Participant's vested interest in his Tax-Deferred Contributions Sub-Account
shall be at all times 100 percent.
14
ARTICLE V
AFTER-TAX AND ROLLOVER CONTRIBUTIONS
5.1 - NO AFTER-TAX CONTRIBUTIONS
There shall be no After-Tax Contributions made to the Plan.
5.2 - ROLLOVER CONTRIBUTIONS
An Employee who was a participant in a plan qualified under Section 401 or 403
of the Code and who receives a cash distribution from such plan that he elects
either (i) to roll over immediately to a qualified retirement plan or (ii) to
roll over into a conduit IRA from which he receives a later cash distribution,
may elect to make a Rollover Contribution to the Plan if he is entitled under
Section 402(c), Section 403(a)(4), or Section 408(d)(3)(A) of the Code to roll
over such distribution to another qualified retirement plan. The Administrator
may require an Employee to provide it with such information as it deems
necessary or desirable to show that he is entitled to roll over such
distribution to another qualified retirement plan. An Employee shall make a
Rollover Contribution to the Plan by delivering, or causing to be delivered, to
the Trustee the cash that constitutes the Rollover Contribution amount within 60
days of receipt of the distribution from the plan or from the conduit IRA in the
manner prescribed by the Administrator. If the Employee does not already have an
investment election on file with the Administrator, the Employee shall also
deliver to the Administrator his election as to the investment of his
contributions in accordance with Article X.
5.3 - VESTING OF ROLLOVER CONTRIBUTIONS
A Participant's vested interest in his Rollover Contributions Sub-Account shall
be at all times 100 percent.
15
ARTICLE VI
EMPLOYER CONTRIBUTIONS
6.1 - CONTRIBUTION PERIOD
The Contribution Period for Matching Contributions under the Plan shall be each
payroll period. The Contribution Period for Qualified Nonelective Contributions
under the Plan shall be each Plan Year. The Contribution Period for
Profit-Sharing Contributions under the Plan shall be each Plan Year.
6.2 - PROFIT-SHARING CONTRIBUTIONS
Each Employer shall make a Profit Sharing Contribution to the Plan for the
Contribution Period in an amount necessary to allocate to each Employee who is
eligible to participate in the allocation of Profit-Sharing Contributions for
the Contribution Period, as determined under this Article, the following
percentage of each such eligible Employee's Compensation based on such
Employee's age as of the first day of the Contribution Period:
Age Percent of Compensation
21 through 33 2.00
34 2.10
35 2.26
36 2.45
37 2.64
38 2.85
39 3.08
40 3.33
41 3.59
42 3.88
43 4.19
44 4.53
45 4.89
46 5.28
47 5.70
48 6.16
49 6.65
50 7.18
51 7.76
52 8.38
53 9.05
54 9.77
55 10.56
56 11.40
57 12.31
16
58 13.30
59 14.46
60 or more 15.00
Notwithstanding any other provision of the Plan to the contrary, Compensation
with respect to any period ending prior to the date on which an Employee first
became eligible to participate in the allocation of Profit-Sharing Contributions
shall be disregarded in determining the amount of the Employer's Profit-Sharing
Contribution.
6.3 - ALLOCATION OF PROFIT-SHARING CONTRIBUTIONS
Any Profit-Sharing Contribution made for a Contribution Period shall be
allocated among the Employees who are eligible to participate in the allocation
of Profit-Sharing Contributions for the Contribution Period, as determined under
this Article. The allocable share of each such Employee shall be an amount
determined in accordance with the provisions of the preceding section.
6.4 - QUALIFIED NONELECTIVE CONTRIBUTIONS
Each Employer may, in its discretion, make a Qualified Nonelective Contribution
to the Plan for the Contribution Period in an amount determined by the Sponsor.
6.5 - ALLOCATION OF QUALIFIED NONELECTIVE CONTRIBUTIONS
Any Qualified Nonelective Contribution made by an Employer for the Contribution
Period shall be allocated among its Employees during the Contribution Period who
are eligible to participate in the allocation of Qualified Nonelective
Contributions for the Contribution Period, as determined under this Article,
other than any such Employee who is a Highly Compensated Employee. The allocable
share of each such Employee shall be either (i) in the ratio which his
Compensation from the Employer for the Contribution Period bears to the
aggregate of such Compensation for all such Employees or (ii) a flat dollar
amount, as determined by the Sponsor for the Contribution Period.
Notwithstanding any other provision of the Plan to the contrary, Compensation
with respect to any period ending prior to the date on which an Employee first
became eligible to participate in the allocation of Qualified Nonelective
Contributions shall be disregarded in determining the amount of the Employee's
allocable share.
17
6.6 - MATCHING CONTRIBUTIONS
Each Employer shall make a Matching Contribution to the Plan for each
Contribution Period in an amount equal to 25 percent of the aggregate "eligible
Tax-Deferred Contributions" for the Contribution Period made on behalf of its
Employees during the Contribution Period who are eligible to participate in the
allocation of Matching Contributions for the Contribution Period, as determined
under this Article. For purposes of this Article, "eligible Tax-Deferred
Contributions" with respect to an Employee mean the Tax-Deferred Contributions
made on his behalf for the Contribution Period in an amount up to, but not
exceeding, the "match level". For purposes of this Article, the "match level"
means 4 percent of an Employee's Compensation for the Contribution Period,
excluding Compensation with respect to any period ending prior to the date on
which an Employee first became eligible to participate in the allocation of
Matching Contributions. Notwithstanding the foregoing, in no event shall the
Matching Contribution allocation to an Employee for the Plan Year exceed 1% of
his Compensation for such Plan Year.
6.7 - ALLOCATION OF MATCHING CONTRIBUTIONS
Any Matching Contribution made by an Employer for the Contribution Period shall
be allocated among its Employees during the Contribution Period who are eligible
to participate in the allocation of Matching Contributions for the Contribution
Period, as determined under this Article. The allocable share of each such
Employee shall be an amount equal to 25 percent of the "eligible Tax-Deferred
Contributions" made on his behalf for the Contribution Period.
6.8 - VERIFICATION OF AMOUNT OF EMPLOYER CONTRIBUTIONS BY THE SPONSOR
The Sponsor shall verify the amount of Employer Contributions to be made by each
Employer in accordance with the provisions of the Plan. Notwithstanding any
other provision of the Plan to the contrary, the Sponsor shall determine the
portion of the Employer Contribution to be made by each Employer with respect to
an Employee who transfers from employment with one Employer as an Employee to
employment with another Employer as an Employee.
6.9 - PAYMENT OF EMPLOYER CONTRIBUTIONS
Employer Contributions made for a Contribution Period shall be paid in cash or
in qualifying employer securities, as defined in Section 407(d)(5) of ERISA, to
the Trustee within the period of time required under the Code in order for the
contribution to be deductible by the Employer in determining its Federal income
taxes for the Plan Year.
18
6.10 - ELIGIBILITY TO PARTICIPATE IN ALLOCATION
Each Employee shall be eligible to participate in the allocation of Employer
Contributions beginning on the date he becomes, or again becomes, an Eligible
Employee in accordance with the provisions of Article III. Notwithstanding the
foregoing, no person shall be eligible to participate in the allocation of
Profit-Sharing Contributions for a Contribution Period unless he is employed by
an Employer or a Related Company on the last day of the Contribution Period;
provided, however, that if the Plan would not otherwise meet the minimum
coverage requirements of Section 410(b) of the Code in any Plan Year, the group
of Employees eligible to participate in the allocation of Profit-Sharing
Contributions shall be expanded to include the minimum number of Employees who
are not employed by an Employer or a Related Company on the last day of the
Contribution Period that is necessary to meet the minimum coverage requirements.
The Employees who become eligible to participate under the provisions of the
immediately preceding clause shall be those Employees who have completed the
greatest number of Hours of Service during the Contribution Period.
6.11 - VESTING OF EMPLOYER CONTRIBUTIONS
A Participant's vested interest in his Qualified Nonelective Contributions
Sub-Account shall be at all times 100 percent. A Participant's vested interest
in his Profit-Sharing and Matching Contributions Sub-Accounts shall be
determined in accordance with the following schedule:
Years of Vesting Service Vested Interest
------------------------ ---------------
Less than 1 0%
1 but less than 2 20%
2 but less than 3 40%
3 but less than 4 60%
4 but less than 5 80%
5 or more 100%
Notwithstanding the foregoing, if a Participant is employed by an Employer or a
Related Company on his Normal Retirement Date, the date the sum of his age and
years of Vesting Service equals at least 60, the date he dies, or the date he
becomes physically or mentally disabled such that he can no longer continue in
the service of his Employer, as determined by the Administrator on the basis of
a written certificate of a physician acceptable to it, his vested interest in
his Profit-Sharing and Matching Contributions Sub-Accounts shall be 100 percent.
19
6.12 - ELECTION OF FORMER VESTING SCHEDULE
If the Sponsor adopts an amendment to the Plan that directly or indirectly
affects the computation of a Participant's vested interest in his Employer
Contributions Sub-Account, any Participant with three or more years of Vesting
Service shall have a right to have his vested interest in his Employer
Contributions Sub-Account continue to be determined under the vesting provisions
in effect prior to the amendment rather than under the new vesting provisions,
unless the vested interest of the Participant in his Employer Contributions
Sub-Account under the Plan as amended is not at any time less than such vested
interest determined without regard to the amendment. A Participant shall
exercise his right under this Section by giving written notice of his exercise
thereof to the Administrator within 60 days after the latest of (i) the date he
receives notice of the amendment from the Administrator, (ii) the effective date
of the amendment, or (iii) the date the amendment is adopted. Notwithstanding
the foregoing, a Participant's vested interest in his Employer Contributions
Sub-Account on the effective date of such an amendment shall not be less than
his vested interest in his Employer Contributions Sub-Account immediately prior
to the effective date of the amendment.
6.13 - FORFEITURES TO REDUCE EMPLOYER CONTRIBUTIONS
Notwithstanding any other provision of the Plan to the contrary, the amount of
the Employer Contribution required under this Article for a Plan Year shall be
reduced by the amount of any forfeitures occurring during the Plan Year that are
not used to pay Plan expenses.
20
ARTICLE VII
LIMITATIONS ON CONTRIBUTIONS
7.1 - DEFINITIONS
For purposes of this Article, the following terms have the following meanings:
(a) The "actual deferral percentage" with respect to an Eligible Employee for a
particular Plan Year means the ratio of the Tax-Deferred Contributions made
on his behalf for the Plan Year to his test compensation for the Plan Year,
except that, to the extent permitted by regulations issued under Section
401(k) of the Code, the Sponsor may elect to take into account in computing
the numerator of each Eligible Employee's actual deferral percentage the
qualified nonelective contributions made to the Plan on his behalf for the
Plan Year; provided, however, that contributions made on a Participant's
behalf for a Plan Year shall be included in determining his actual deferral
percentage for such Plan Year only if the contributions are made to the
Plan prior to the end of the 12-month period immediately following the Plan
Year to which the contributions relate. The determination and treatment of
the actual deferral percentage amounts for any Participant shall satisfy
such other requirements as may be prescribed by the Secretary of the
Treasury.
(b) The "aggregate limit" means the sum of (i) 125 percent of the greater of
the average contribution percentage for eligible participants other than
Highly Compensated Employees or the average actual deferral percentage for
Eligible Employees other than Highly Compensated Employees and (ii) the
lesser of 200 percent or two plus the lesser of such average contribution
percentage or average actual deferral percentage, or, if it would result in
a larger aggregate limit, the sum of (iii) 125 percent of the lesser of the
average contribution percentage for eligible participants other than Highly
Compensated Employees or the average actual deferral percentage for
Eligible Employees other than Highly Compensated Employees and (iv) the
lesser of 200 percent or two plus the greater of such average contribution
percentage or average actual deferral percentage.
(c) The "annual addition" with respect to a Participant for a limitation year
means the sum of the Tax-Deferred Contributions and Employer Contributions
allocated to his Separate Account for the limitation year (including any
21
excess contributions that are distributed pursuant to this Article), the
employer contributions, employee contributions, and forfeitures allocated
to his accounts for the limitation year under any other qualified defined
contribution plan (whether or not terminated) maintained by an Employer or
a Related Company concurrently with the Plan, and amounts described in
Sections 415(l)(2) and 419A(d)(2) of the Code allocated to his account for
the limitation year; provided, however, that the annual addition for
limitation years beginning prior to January 1, 1987 shall not be
recalculated to treat all employee contributions as annual additions.
(d) The "Code Section 402(g) limit" means the dollar limit imposed by Section
402(g)(1) of the Code or established by the Secretary of the Treasury
pursuant to Section 402(g)(5) of the Code in effect on January 1 of the
calendar year in which an Eligible Employee's taxable year begins.
(e) The "contribution percentage" with respect to an eligible participant for a
particular Plan Year means the ratio of the matching contributions made to
the Plan on his behalf for the Plan Year to his test compensation for such
Plan Year, except that, to the extent permitted by regulations issued under
Section 401(m) of the Code, the Sponsor may elect to take into account in
computing the numerator of each eligible participant's contribution
percentage the Tax-Deferred Contributions and/or qualified nonelective
contributions made to the Plan on his behalf for the Plan Year; provided,
however, that any Tax-Deferred Contributions and/or qualified nonelective
contributions that were taken into account in computing the numerator of an
eligible participant's actual deferral percentage may not be taken into
account in computing the numerator of his contribution percentage; and
provided, further, that contributions made by or on a Participant's behalf
for a Plan Year shall be included in determining his contribution
percentage for such Plan Year only if the contributions are made to the
Plan prior to the end of the 12-month period immediately following the Plan
Year to which the contributions relate. The determination and treatment of
the contribution percentage amounts for any Participant shall satisfy such
other requirements as may be prescribed by the Secretary of the Treasury.
(f) An "elective contribution" means any employer contribution made to a plan
maintained by an Employer or any Related Company on behalf of a Participant
in lieu of cash compensation pursuant to his written election to defer
22
under any qualified CODA as described in Section 401(k) of the Code, any
simplified employee pension cash or deferred arrangement as described in
Section 402(h)(1)(B) of the Code, any eligible deferred compensation plan
under Section 457 of the Code, or any plan as described in Section
501(c)(18) of the Code, and any contribution made on behalf of the
Participant by an Employer or a Related Company for the purchase of an
annuity contract under Section 403(b) of the Code pursuant to a salary
reduction agreement.
(g) An "eligible participant" means any Employee who is eligible to have
Tax-Deferred Contributions made on his behalf (if Tax-Deferred
Contributions are taken into account in computing contribution percentages)
or to participate in the allocation of matching contributions.
(h) An "excess deferral" with respect to a Participant means that portion of a
Participant's Tax-Deferred Contributions that when added to amounts
deferred under other plans or arrangements described in Sections 401(k),
408(k), or 403(b) of the Code, would exceed the Code Section 402(g) limit
and is includable in the Participant's gross income under Section 402(g) of
the Code.
(i) A "family member" of an Employee means the Employee's spouse, his lineal
ascendants, his lineal descendants, and the spouses of such lineal
ascendants and descendants.
(j) A "limitation year" means the calendar year.
(k) A "matching contribution" means any employer contribution allocated to an
Eligible Employee's account under the Plan or any other plan of an Employer
or a Related Company solely on account of elective contributions made on
his behalf or employee contributions made by him.
(l) A "qualified nonelective contribution" means any employer contribution made
on behalf of a Participant that the Participant could not elect instead to
receive in cash, that is a qualified nonelective contribution as defined in
Section 401(k) and Section 401(m) of the Code and regulations issued
thereunder, is nonforfeitable when made, and is distributable only as
permitted in regulations issued under Section 401(k) of the Code.
(m) The "test compensation" of an Eligible Employee for a Plan Year means
compensation as defined in Section 414(s) of the Code and regulations
issued thereunder, limited, however, to (1) $200,000 for Plan Years
beginning prior to
23
January 1, 1994, or (2) $150,000 for Plan Years beginning on or after
January 1, 1994 (subject to adjustment annually as provided in Section
401(a)(17)(B) and Section 415(d) of the Code; provided, however, that the
dollar increase in effect on January 1 of any calendar year, if any, is
effective for Plan Years beginning in such calendar year). If the test
compensation of a Participant is determined over a period of time that
contains fewer than 12 calendar months, then the annual compensation
limitation described above shall be adjusted with respect to that
Participant by multiplying the annual compensation limitation in effect for
the Plan Year by a fraction the numerator of which is the number of full
months in the period and the denominator of which is 12; provided, however,
that no proration is required for a Participant who is covered under the
Plan for less than one full Plan Year if the formula for allocations is
based on Compensation for a period of at least 12 months. In determining
the test compensation, for purposes of applying the annual compensation
limitation described above, of a Participant who is a five percent owner or
among the ten Highly Compensated Employees receiving the greatest test
compensation for the limitation year, the test compensation of the
Participant's spouse and of his lineal descendants who have not attained
age 19 as of the close of the limitation year shall be included as test
compensation of the Participant for the limitation year. If as a result of
applying the family aggregation rule described in the preceding sentence
the annual compensation limitation would be exceeded, the limitation shall
be prorated among the affected family members in proportion to each
member's test compensation as determined prior to application of the family
aggregation rules.
7.2 - CODE SECTION 402(G) LIMIT
In no event shall the amount of the Tax-Deferred Contributions made on behalf of
an Eligible Employee for his taxable year, when aggregated with any elective
contributions made on behalf of the Eligible Employee under any other plan of an
Employer or a Related Company for his taxable year, exceed the Code Section
402(g) limit. In the event that the Administrator determines that the reduction
percentage elected by an Eligible Employee will result in his exceeding the Code
Section 402(g) limit, the Administrator may adjust the reduction authorization
of such Eligible Employee by reducing the percentage of his Tax-Deferred
Contributions to such smaller percentage that will result in the Code Section
402(g) limit not being exceeded. If the Administrator determines that the
Tax-Deferred Contributions
24
made on behalf of an Eligible Employee would exceed the Code Section 402(g)
limit for his taxable year, the Tax-Deferred Contributions for such Participant
shall be automatically suspended for the remainder, if any, of such taxable
year.
If an Employer notifies the Administrator that the Code Section 402(g) limit has
nevertheless been exceeded by an Eligible Employee for his taxable year, the
Tax-Deferred Contributions that, when aggregated with elective contributions
made on behalf of the Eligible Employee under any other plan of an Employer or a
Related Company, would exceed the Code Section 402(g) limit, plus any income and
minus any losses attributable thereto, shall be distributed to the Eligible
Employee no later than the April 15 immediately following such taxable year. Any
Tax-Deferred Contributions that are distributed to an Eligible Employee in
accordance with this Section shall not be taken into account in computing the
Eligible Employee's actual deferral percentage for the Plan Year in which the
Tax-Deferred Contributions were made, unless the Eligible Employee is a Highly
Compensated Employee. If an amount of Tax-Deferred Contributions is distributed
to a Participant in accordance with this Section, matching contributions that
are attributable solely to the distributed Tax-Deferred Contributions, plus any
income and minus any losses attributable thereto, shall be forfeited by the
Participant. Any such forfeited amounts shall be treated as a forfeiture under
the Plan in accordance with the provisions of Article XIV as of the last day of
the month in which the distribution of Tax-Deferred Contributions pursuant to
this Section occurs.
7.3 - DISTRIBUTION OF EXCESS DEFERRALS
Notwithstanding any other provision of the Plan to the contrary, if a
Participant notifies the Administrator in writing no later than the March 1
following the close of the Participant's taxable year that excess deferrals have
been made on his behalf under the Plan for such taxable year, the excess
deferrals, plus any income and minus any losses attributable thereto, shall be
distributed to the Participant no later than the April 15 immediately following
such taxable year. Any Tax-Deferred Contributions that are distributed to a
Participant in accordance with this Section shall nevertheless be taken into
account in computing the Participant's actual deferral percentage for the Plan
Year in which the Tax-Deferred Contributions were made. If an amount of
Tax-Deferred Contributions is distributed to a Participant in accordance with
this Section, matching contributions that are attributable solely to the
distributed Tax-Deferred Contributions, plus any income and minus any losses
attributable thereto, shall be forfeited by the Participant. Any such forfeited
amounts shall be treated as a forfeiture under the Plan
25
in accordance with the provisions of Article XIV as of the last day of the month
in which the distribution of Tax-Deferred Contributions pursuant to this Section
occurs.
7.4 - LIMITATION ON TAX-DEFERRED CONTRIBUTIONS OF HIGHLY COMPENSATED EMPLOYEES
Notwithstanding any other provision of the Plan to the contrary, the
Tax-Deferred Contributions made with respect to a Plan Year on behalf of
Eligible Employees who are Highly Compensated Employees may not result in an
average actual deferral percentage for such Eligible Employees that exceeds the
greater of:
(a) a percentage that is equal to 125 percent of the average actual deferral
percentage for all other Eligible Employees; or
(b) a percentage that is not more than 200 percent of the average actual
deferral percentage for all other Eligible Employees and that is not more
than two percentage points higher than the average actual deferral
percentage for all other Eligible Employees.
In order to assure that the limitation contained herein is not exceeded with
respect to a Plan Year, the Administrator is authorized to suspend completely
further Tax-Deferred Contributions on behalf of Highly Compensated Employees for
any remaining portion of a Plan Year or to adjust the projected actual deferral
percentages of Highly Compensated Employees by reducing their percentage
elections with respect to Tax-Deferred Contributions for any remaining portion
of a Plan Year to such smaller percentages that will result in the limitation
set forth above not being exceeded. In the event of any such suspension or
reduction, Highly Compensated Employees affected thereby shall be notified of
the reduction or suspension as soon as possible and shall be given an
opportunity to make a new Tax-Deferred Contribution election to be effective the
first day of the next following Plan Year. In the absence of such an election,
the election in effect immediately prior to the suspension or adjustment
described above shall be reinstated as of the first day of the next following
Plan Year.
For purposes of applying the limitation contained in this Section, the
Tax-Deferred Contributions, qualified nonelective contributions (to the extent
that such qualified nonelective contributions are taken into account in
computing actual deferral percentages), and test compensation of any Eligible
Employee who is a family member of another Eligible Employee who is a five
percent owner or among the ten Highly Compensated Employees receiving the
greatest test compensation for the Plan Year shall
26
be aggregated with the Tax-Deferred Contributions, qualified nonelective
contributions, and test compensation of such other Eligible Employee, and such
family member shall not be considered an Eligible Employee for purposes of
determining the average actual deferral percentage for all other Eligible
Employees.
In determining the actual deferral percentage for any Eligible Employee who is a
Highly Compensated Employee for the Plan Year, elective contributions and
qualified nonelective contributions (to the extent that qualified nonelective
contributions are taken into account in computing actual deferral percentages)
made to his accounts under any other plan of an Employer or a Related Company
shall be treated as if all such contributions were made to the Plan; provided,
however, that if such a plan has a plan year different from the Plan Year, any
such contributions made to the Highly Compensated Employee's accounts under the
plan for the plan year ending with or within the same calendar year as the Plan
Year shall be treated as if such contributions were made to the Plan.
Notwithstanding the foregoing, such contributions shall not be treated as if
they were made to the Plan if regulations issued under Section 401(k) of the
Code do not permit such plan to be aggregated with the Plan.
If one or more plans of an Employer or Related Company are aggregated with the
Plan for purposes of satisfying the requirements of Section 401(a)(4) or 410(b)
of the Code, then actual deferral percentages under the Plan shall be calculated
as if the Plan and such one or more other plans were a single plan. For Plan
Years beginning after December 31, 1991, plans may be aggregated to satisfy
Section 401(k) of the Code only if they have the same plan year.
The Administrator shall maintain records sufficient to show that the limitation
contained in this Section was not exceeded with respect to any Plan Year and the
amount of the qualified nonelective contributions taken into account in
computing actual deferral percentages for any Plan Year.
7.5 - DISTRIBUTION OF EXCESS TAX-DEFERRED CONTRIBUTIONS
Notwithstanding any other provision of the Plan to the contrary, in the event
that the limitation contained in Section 7.4 is exceeded in any Plan Year, the
Tax-Deferred Contributions made with respect to a Highly Compensated Employee
that exceed the maximum amount permitted to be contributed to the Plan on his
behalf under Section 7.4, plus any income and minus any losses attributable
thereto, shall be distributed to the Highly Compensated Employee prior to the
end of the next succeeding Plan Year. If excess amounts are attributable to
Participants aggregated under the family aggregation rules described in
27
Section 7.4, the excess shall be allocated among family members in proportion to
the Tax-Deferred Contributions made with respect to each family member. If such
excess amounts are distributed more than 2 1/2 months after the last day of the
Plan Year for which the excess occurred, an excise tax may be imposed under
Section 4979 of the Code on the Employer maintaining the Plan with respect to
such amounts.
The maximum amount permitted to be contributed to the Plan on a Highly
Compensated Employee's behalf under Section 7.4 shall be determined by reducing
Tax-Deferred Contributions made on behalf of Highly Compensated Employees in
order of their actual deferral percentages beginning with the highest of such
percentages. The determination of the amount of excess Tax-Deferred
Contributions shall be made after application of Section 7.3, if applicable.
If an amount of Tax-Deferred Contributions is distributed to a Participant in
accordance with this Section, matching contributions that are attributable
solely to the distributed Tax-Deferred Contributions, plus any income and minus
any losses attributable thereto, shall be forfeited by the Participant. Any such
forfeited amounts shall be treated as a forfeiture under the Plan in accordance
with the provisions of Article XIV as of the last day of the month in which the
distribution of Tax-Deferred Contributions pursuant to this Section occurs.
7.6 - LIMITATION ON MATCHING CONTRIBUTIONS OF HIGHLY COMPENSATED EMPLOYEES
Notwithstanding any other provision of the Plan to the contrary, the matching
contributions made with respect to a Plan Year on behalf of eligible
participants who are Highly Compensated Employees may not result in an average
contribution percentage for such eligible participants that exceeds the greater
of:
(a) a percentage that is equal to 125 percent of the average contribution
percentage for all other eligible participants; or
(b) a percentage that is not more than 200 percent of the average contribution
percentage for all other eligible participants and that is not more than
two percentage points higher than the average contribution percentage for
all other eligible participants.
For purposes of applying the limitation contained in this Section, the matching
contributions, qualified nonelective contributions and Tax-Deferred
Contributions (to the extent that such qualified nonelective contributions and
Tax-Deferred Contributions are taken into account in computing contribution
28
percentages), and test compensation of any eligible participant who is a family
member of another eligible participant who is a five percent owner or among the
ten Highly Compensated Employees receiving the greatest test compensation for
the Plan Year shall be aggregated with the matching contributions, qualified
nonelective contributions, Tax-Deferred Contributions, and test compensation of
such other eligible participant, and such family member shall not be considered
an eligible participant for purposes of determining the average contribution
percentage for all other eligible participants.
In determining the contribution percentage for any eligible participant who is a
Highly Compensated Employee for the Plan Year, matching contributions, employee
contributions, qualified nonelective contributions, and elective contributions
(to the extent that qualified nonelective contributions and elective
contributions are taken into account in computing contribution percentages) made
to his accounts under any other plan of an Employer or a Related Company shall
be treated as if all such contributions were made to the Plan; provided,
however, that if such a plan has a plan year different from the Plan Year, any
such contributions made to the Highly Compensated Employee's accounts under the
plan for the plan year ending with or within the same calendar year as the Plan
Year shall be treated as if such contributions were made to the Plan.
Notwithstanding the foregoing, such contributions shall not be treated as if
they were made to the Plan if regulations issued under Section 401(m) of the
Code do not permit such plan to be aggregated with the Plan.
If one or more plans of an Employer or a Related Company are aggregated with the
Plan for purposes of satisfying the requirements of Section 401(a)(4) or 410(b)
of the Code, the contribution percentages under the Plan shall be calculated as
if the Plan and such one or more other plans were a single plan. For Plan Years
beginning after December 31, 1989, plans may be aggregated to satisfy Section
401(m) of the Code only if they have the same plan year.
The Administrator shall maintain records sufficient to show that the limitation
contained in this Section was not exceeded with respect to any Plan Year and the
amount of the elective contributions and qualified nonelective contributions
taken into account in computing contribution percentages for any Plan Year.
7.7 - FORFEITURE OR DISTRIBUTION OF EXCESS CONTRIBUTIONS
Notwithstanding any other provision of the Plan to the contrary, in the event
that the limitation contained in Section 7.6 is exceeded in any Plan Year, the
matching contributions made on
29
behalf of a Highly Compensated Employee that exceed the maximum amount permitted
to be contributed to the Plan on behalf of such Highly Compensated Employee
under Section 7.6, plus any income and minus any losses attributable thereto,
shall be forfeited, to the extent forfeitable, or distributed to the Participant
prior to the end of the next succeeding Plan Year as hereinafter provided. If
excess amounts are attributable to Participants aggregated under the family
aggregation rules described in Section 7.5, the excess shall be allocated among
family members in proportion to the matching contributions and qualified
nonelective contributions (to the extent that qualified nonelective
contributions are taken into account in computing contribution percentages) made
with respect to each family member. If such excess amounts are distributed more
than 2 1/2 months after the last day of the Plan Year for which the excess
occurred, an excise tax may be imposed under Section 4979 of the Code on the
Employer maintaining the Plan with respect to such amounts.
The maximum amount permitted to be contributed to the Plan on behalf of a Highly
Compensated Employee under Section 7.6 shall be determined by reducing matching
contributions made on behalf of Highly Compensated Employees in order of their
contribution percentages beginning with the highest of such percentages.
Any amounts forfeited with respect to a Participant pursuant to this Section
shall be treated as a forfeiture under the Plan in accordance with the
provisions of Article XIV as of the last day of the month in which the
distribution of contributions pursuant to this Section occurs. Excess matching
contributions shall be distributable to the extent the Participant has a vested
interest in his Employer Contributions Sub-Account that is attributable to
matching contributions and shall otherwise be forfeitable. The determination of
the amount of excess matching contributions shall be made after application of
Section 7.3, if applicable, and after application of Section 7.5, if applicable.
7.8 - MULTIPLE USE LIMITATION
Notwithstanding any other provision of the Plan to the contrary, the following
multiple use limitation as required under Section 401(m) of the Code shall
apply: the sum of the average actual deferral percentage for Eligible Employees
who are Highly Compensated Employees and the average contribution percentage for
eligible participants who are Highly Compensated Employees may not exceed the
aggregate limit. In the event that, after satisfaction of Section 7.5 and
Section 7.7, it is determined that contributions under the Plan fail to satisfy
the multiple use limitation contained herein, the multiple use limitation shall
be satisfied by further reducing the actual deferral
30
percentages of Eligible Employees who are Highly Compensated Employees
(beginning with the highest such percentage) to the extent necessary to
eliminate the excess, with such further reductions to be treated as excess
Tax-Deferred Contributions and disposed of as provided in Section 7.5, or in an
alternative manner, consistently applied, that may be permitted by regulations
issued under Section 401(m) of the Code.
7.9 - DETERMINATION OF INCOME OR LOSS
The income or loss attributable to excess contributions that are distributed
pursuant to this Article shall be determined for the preceding Plan Year under
the method otherwise used for allocating income or loss to Participant's
Separate Accounts.
7.10 - CODE SECTION 415 LIMITATIONS ON CREDITING OF CONTRIBUTIONS AND
FORFEITURES
Notwithstanding any other provision of the Plan to the contrary, the annual
addition with respect to a Participant for a limitation year shall in no event
exceed the lesser of (i) $30,000 (adjusted as provided in Section 415(d) of the
Code, with the first adjustment being made for limitation years beginning on or
after January 1, 1996) or (ii) 25 percent of the Participant's compensation, as
defined in Section 415(c)(3) of the Code and regulations issued thereunder, for
the limitation year. If the annual addition to the Separate Account of a
Participant in any limitation year would otherwise exceed the amount that may be
applied for his benefit under the limitation contained in this Section, the
limitation shall be satisfied by reducing contributions made on behalf of the
Participant to the extent necessary in the following order:
Tax-Deferred Contributions made on the Participant's behalf for the
limitation year that have not been matched, if any, shall be reduced.
Tax-Deferred Contributions made on the Participant's behalf for the
limitation year that have been matched and the matching contributions
attributable thereto, if any, shall be reduced pro rata.
Employer Contributions (other than matching contributions and
qualified nonelective contributions) otherwise allocable to the
Participant's Separate Account for the limitation year shall be
reduced.
Qualified nonelective contributions made on the Participant's behalf
for the limitation year shall be reduced.
31
The amount of any reduction of Tax-Deferred Contributions (plus any income
attributable thereto) shall be returned to the Participant. The amount of any
reduction of Employer Contributions shall be deemed a forfeiture for the
limitation year. Amounts deemed to be forfeitures under this Section shall be
held unallocated in a suspense account established for the limitation year and
shall be applied against the Employer's contribution obligation for the next
following limitation year (and succeeding limitation years, as necessary). If a
suspense account is in existence at any time during a limitation year, all
amounts in the suspense account must be allocated to Participants' Separate
Accounts (subject to the limitations contained herein) before any further
Tax-Deferred Contributions or Employer Contributions may be made to the Plan on
behalf of Participants. No suspense account established hereunder shall share in
any increase or decrease in the net worth of the Trust. For purposes of this
Article, excesses shall result only from the allocation of forfeitures, a
reasonable error in estimating a Participant's annual compensation (as defined
in Section 415(c)(3) of the Code and regulations issued thereunder), a
reasonable error in determining the amount of Tax-Deferred Contributions that
may be made with respect to any Participant under the limits of Section 415 of
the Code, or other limited facts and circumstances that justify the availability
of the provisions set forth above.
7.11 - COVERAGE UNDER OTHER QUALIFIED DEFINED CONTRIBUTION PLAN
If a Participant is covered by any other qualified defined contribution plan
(whether or not terminated) maintained by an Employer or a Related Company
concurrently with the Plan, and if the annual addition for the limitation year
would otherwise exceed the amount that may be applied for the Participant's
benefit under the limitation contained in Section 7.10, such excess shall be
reduced first by returning the employee contributions made by the Participant
for the limitation year under all of the defined contribution plans other than
the Plan and the income attributable thereto to the extent necessary. If the
limitation contained in Section 7.10 is still not satisfied after returning all
of the employee contributions made by the Participant under all such other
plans, the excess shall be reduced by returning the elective contributions made
on the Participant's behalf for the limitation year under all such other plans
and the income attributable thereto to the extent necessary on a pro rata basis
among all of such plans. If the limitation contained in Section 7.10 is still
not satisfied after returning all of the elective contributions made on the
Participant's behalf under all such other plans, the procedure set forth in
Section 7.10 shall be invoked to eliminate any such excess. If
32
the limitation contained in Section 7.10 is still not satisfied after invocation
of the procedure set forth in Section 7.10, the portion of the employer
contributions and of forfeitures for the limitation year under all such other
plans that has been allocated to the Participant thereunder, but which exceeds
the limitation set forth in Section 7.10, shall be deemed a forfeiture for the
limitation year and shall be disposed of as provided in such other plans;
provided, however, that if the Participant is covered by a money purchase
pension plan, the forfeiture shall be effected first under any other defined
contribution plan that is not a money purchase pension plan and, if the
limitation is still not satisfied, then under such money purchase pension plan.
7.12 - COVERAGE UNDER QUALIFIED DEFINED BENEFIT PLAN
If a Participant in the Plan is also covered by a qualified defined benefit plan
(whether or not terminated) maintained by an Employer or a Related Company, in
no event shall the sum of the defined benefit plan fraction (as defined in
Section 415(e)(2) of the Code) and the defined contribution plan fraction (as
defined in Section 415(e)(3) of the Code) exceed 1.0 in any limitation year. If,
before October 3, 1973, the Participant was an active participant in a qualified
defined benefit plan maintained by an Employer or a Related Company and
otherwise satisfies the requirements of Section 2004(d)(2) of ERISA, then for
purposes of applying this Section, the defined benefit plan fraction shall not
exceed 1.0. If the Plan satisfied the applicable requirements of Section 415 of
the Code as in effect for all limitation years beginning before January 1, 1987,
an amount shall be subtracted from the numerator of the defined contribution
plan fraction (not exceeding such numerator) as prescribed by the Secretary of
the Treasury so that the sum of the defined benefit plan fraction and the
defined contribution plan fraction computed under Section 415(e)(1) of the Code,
as revised by the Tax Reform Act of 1986, does not exceed 1.0 for such
limitation year. In the event the special limitation contained in this Section
is exceeded, the benefits otherwise payable to the Participant under any such
qualified defined benefit plan shall be reduced to the extent necessary to meet
such limitation.
7.13 - SCOPE OF LIMITATIONS
The limitations contained in Sections 7.10, 7.11, and 7.12 shall be applicable
only with respect to benefits provided pursuant to defined contribution plans
and defined benefit plans described in Section 415(k) of the Code.
33
ARTICLE VIII
TRUST FUNDS AND SEPARATE ACCOUNTS
8.1 - GENERAL FUND
The Trustee shall maintain a General Fund as required to hold and administer any
assets of the Trust that are not allocated among the Investment Funds as
provided in the Plan or the Trust Agreement. The General Fund shall be held and
administered as a separate common trust fund. The interest of each Participant
or Beneficiary under the Plan in the General Fund shall be an undivided
interest. The General Fund may be invested in whole or in part in equity
securities issued by an Employer or a Related Company that are publicly traded
and are "qualifying employer securities" as defined in Section 407(d)(5) of
ERISA.
8.2 - INVESTMENT FUNDS
The Sponsor shall determine the number and type of Investment Funds and select
the investments for such Investment Funds. The Sponsor shall communicate the
same and any changes therein in writing to the Administrator and the Trustee.
Each Investment Fund shall be held and administered as a separate common trust
fund. The interest of each Participant or Beneficiary under the Plan in any
Investment Fund shall be an undivided interest.
The Sponsor may determine to offer one or more Investment Funds that are
invested in whole or in part in equity securities issued by an Employer or a
Related Company that are publicly traded and are "qualifying employer
securities" as defined in Section 407(d)(5) of ERISA.
8.3 - LOAN INVESTMENT FUND
If a loan from the Plan to a Participant is approved in accordance with the
provisions of Article XII, the Sponsor shall direct the establishment and
maintenance of a loan Investment Fund in the Participant's name. The assets of
the loan Investment Fund shall be held as a separate trust fund. A Participant's
loan Investment Fund shall be invested in the note reflecting the loan that is
executed by the Participant in accordance with the provisions of Article XII.
Notwithstanding any other provision of the Plan to the contrary, income received
with respect to a Participant's loan Investment Fund shall be allocated and the
loan Investment Fund shall be administered as provided in Article XII.
34
8.4 - INCOME ON TRUST
Any dividends, interest, distributions, or other income received by the Trustee
with respect to any Trust Fund maintained hereunder shall be allocated by the
Trustee to the Trust Fund for which the income was received.
8.5 - SEPARATE ACCOUNTS
As of the first date a contribution is made by or on behalf of an Employee,
there shall be established a Separate Account in his name reflecting his
interest in the Trust. Each Separate Account shall be maintained and
administered for each Participant and Beneficiary in accordance with the
provisions of the Plan. The balance of each Separate Account shall be the
balance of the account after all credits and charges thereto, for and as of such
date, have been made as provided herein.
8.6 - SUB-ACCOUNTS
A Participant's Separate Account shall be divided into individual Sub-Accounts
reflecting the portion of the Participant's Separate Account that is derived
from Tax-Deferred Contributions, Rollover Contributions, or Employer
Contributions. Each Sub-Account shall reflect separately contributions allocated
to each Trust Fund maintained hereunder and the earnings and losses attributable
thereto. The Employer Contributions Sub-Account shall reflect separately that
portion of such Sub-Account that is derived from Employer Contributions that may
be taken into account to satisfy the limitations on contributions for Highly
Compensated Employees contained in Article VII. Such other Sub-Accounts may be
established as are necessary or appropriate to reflect a Participant's interest
in the Trust.
35
ARTICLE IX
LIFE INSURANCE CONTRACTS
9.1 - NO LIFE INSURANCE CONTRACTS
There shall be no life insurance contracts purchased under the Plan.
36
ARTICLE X
DEPOSIT AND INVESTMENT OF CONTRIBUTIONS
10.1 - FUTURE CONTRIBUTION INVESTMENT ELECTIONS
Each Eligible Employee shall make an investment election in the manner and form
prescribed by the Administrator directing the manner in which his Tax-Deferred
Contributions, Rollover Contributions, and Employer Contributions shall be
invested. An Eligible Employee's investment election shall specify the
percentage, in the percentage increments prescribed by the Administrator, of
such contributions that shall be allocated to one or more of the Investment
Funds with the sum of such percentages equaling 100 percent. The investment
election by a Participant shall remain in effect until his entire interest under
the Plan is distributed or forfeited in accordance with the provisions of the
Plan or until he files a change of investment election with the Administrator,
in such form as the Administrator shall prescribe. A Participant's change of
investment election may be made effective as of the date or dates prescribed by
the Administrator.
10.2 - DEPOSIT OF CONTRIBUTIONS
All Tax-Deferred Contributions, Rollover Contributions, and Employer
Contributions shall be deposited in the Trust and allocated among the Investment
Funds in accordance with the Participant's currently effective investment
election; provided, however, that any contributions made to the Plan in
qualifying employer securities shall be allocated to the Employer securities
Investment Fund established by the Sponsor, pending directions to the
Administrator regarding their future investment. If no investment election is on
file with the Administrator at the time contributions are to be deposited to a
Participant's Separate Account, the Participant shall be notified and an
investment election form shall be provided to him. Until such Participant shall
make an effective election under this Section, his contributions shall be
allocated among the Investment Funds as directed by the Administrator, as
referenced in the service agreement entered into between the Sponsor and the
Trustee.
10.3 - ELECTION TO TRANSFER BETWEEN FUNDS
A Participant may elect to transfer investments from any Investment Fund to any
other Investment Fund. The Participant's transfer election shall specify either
(i) a percentage, in the percentage increments prescribed by the Administrator,
of the amount eligible for transfer, which percentage may not exceed 100
percent, or (ii) a dollar amount that is to be transferred. Subject to any
restrictions pertaining to a particular Investment
37
Fund, a Participant's transfer election may be made effective as of the date or
dates prescribed by the Administrator.
38
ARTICLE XI
CREDITING AND VALUING SEPARATE ACCOUNTS
11.1 - CREDITING SEPARATE ACCOUNTS
All contributions made under the provisions of the Plan shall be credited to
Separate Accounts in the Trust Funds by the Trustee, in accordance with
procedures established in writing by the Administrator, either when received or
on the succeeding Valuation Date after valuation of the Trust Fund has been
completed for such Valuation Date as provided in Section 11.2, as shall be
determined by the Administrator.
11.2 - VALUING SEPARATE ACCOUNTS
Separate Accounts in the Trust Funds shall be valued by the Trustee on the
Valuation Date, in accordance with procedures established in writing by the
Administrator, either in the manner adopted by the Trustee and approved by the
Administrator or in the manner set forth in Section 11.3 as Plan valuation
procedures, as determined by the Administrator.
11.3 - PLAN VALUATION PROCEDURES
With respect to the Trust Funds, the Administrator may determine that the
following valuation procedures shall be applied. As of each Valuation Date
hereunder, the portion of any Separate Accounts in a Trust Fund shall be
adjusted to reflect any increase or decrease in the value of the Trust Fund for
the period of time occurring since the immediately preceding Valuation Date for
the Trust Fund (the "valuation period") in the following manner:
(a) First, the value of the Trust Fund shall be determined by valuing all of
the assets of the Trust Fund at fair market value.
(b) Next, the net increase or decrease in the value of the Trust Fund
attributable to net income and all profits and losses, realized and
unrealized, during the valuation period shall be determined on the basis of
the valuation under paragraph (a) taking into account appropriate
adjustments for contributions, loan payments, and transfers to and
distributions, withdrawals, loans, and transfers from such Trust Fund
during the valuation period.
(c) Finally, the net increase or decrease in the value of the Trust Fund shall
be allocated among Separate Accounts in
39
the Trust Fund in the ratio of the balance of the portion of such Separate
Account in the Trust Fund as of the preceding Valuation Date less any
distributions, withdrawals, loans, and transfers from such Separate Account
balance in the Trust Fund since the Valuation Date to the aggregate
balances of the portions of all Separate Accounts in the Trust Fund
similarly adjusted, and each Separate Account in the Trust Fund shall be
credited or charged with the amount of its allocated share. Notwithstanding
the foregoing, the Administrator may adopt such accounting procedures as it
considers appropriate and equitable to establish a proportionate crediting
of net increase or decrease in the value of the Trust Fund for
contributions, loan payments, and transfers to and distributions,
withdrawals, loans, and transfers from such Trust Fund made by or on behalf
of a Participant during the valuation period.
11.4 - FINALITY OF DETERMINATIONS
The Trustee shall have exclusive responsibility for determining the balance of
each Separate Account maintained hereunder. The Trustee's determinations thereof
shall be conclusive upon all interested parties.
11.5 - NOTIFICATION
Within a reasonable period of time after the end of each Plan Year, the
Administrator shall notify each Participant and Beneficiary of the balances of
his Separate Account and Sub-Accounts as of a Valuation Date during the Plan
Year.
40
ARTICLE XII
LOANS
12.1 - APPLICATION FOR LOAN
A Participant who is a party in interest, other than a shareholder employee, as
defined in Section 408(d)(3) of ERISA, may make written application to the
Administrator for a loan from his Separate Account.
As collateral for any loan granted hereunder, the Participant shall grant to the
Plan a security interest in his vested interest under the Plan equal to the
amount of the loan; provided, however, that in no event may the security
interest exceed 50 percent of the Participant's vested interest under the Plan
determined as of the date as of which the loan is originated in accordance with
Plan provisions. In the case of a Participant who is an active employee, the
Participant also shall enter into an agreement to repay the loan by payroll
withholding. No loan in excess of 50 percent of the Participant's vested
interest under the Plan shall be made from the Plan. Loans shall not be made
available to Highly Compensated Employees in an amount greater than the amount
made available to other employees.
A loan shall not be granted unless the Participant consents in writing to the
charging of his Separate Account for unpaid principal and interest amounts in
the event the loan is declared to be in default.
12.2 - REDUCTION OF ACCOUNT UPON DISTRIBUTION
Notwithstanding any other provision of the Plan, the amount of a Participant's
Separate Account that is distributable to the Participant or his Beneficiary
under Article XIII or XV shall be reduced by the portion of his vested interest
that is held by the Plan as security for any loan outstanding to the
Participant, provided that the reduction is used to repay the loan. If
distribution is made because of the Participant's death prior to the
commencement of distribution of his Separate Account and less than 100 percent
of the Participant's vested interest in his Separate Account (determined without
regard to the preceding sentence) is payable to his surviving spouse, then the
balance of the Participant's vested interest in his Separate Account shall be
adjusted by reducing the vested account balance by the amount of the security
used to repay the loan, as provided in the preceding sentence, prior to
determining the amount of the benefit payable to the surviving spouse.
41
12.3 - REQUIREMENTS TO PREVENT A TAXABLE DISTRIBUTION
Notwithstanding any other provision of the Plan to the contrary, the following
terms and conditions shall apply to any loan made to a Participant under this
Article:
(a) The interest rate on any loan to a Participant shall be a reasonable
interest rate commensurate with current interest rates charged for loans
made under similar circumstances by persons in the business of lending
money.
(b) The amount of any loan to a Participant (when added to the outstanding
balance of all other loans to the Participant from the Plan or any other
plan maintained by an Employer or a Related Company) shall not exceed the
lesser of:
(i) $50,000, reduced by the excess, if any, of the highest outstanding
balance of any other loan to the Participant from the Plan or any
other plan maintained by an Employer or a Related Company during the
preceding 12-month period over the outstanding balance of such loans
on the date a loan is made hereunder; or
(ii) 50 percent of the vested portions of the Participant's Separate
Account and his vested interest under all other plans maintained by an
Employer or a Related Company.
(c) The term of any loan to a Participant shall be no greater than five years,
except in the case of a loan used to acquire any dwelling unit which within
a reasonable period of time is to be used (determined at the time the loan
is made) as a principal residence of the Participant.
(d) Except as otherwise permitted under Treasury regulations, substantially
level amortization shall be required over the term of the loan with
payments made not less frequently than quarterly.
12.4 - ADMINISTRATION OF LOAN INVESTMENT FUND
Upon approval of a loan to a Participant, the Administrator shall direct the
Trustee to transfer an amount equal to the loan amount from the Investment Funds
in which it is invested, as directed by the Administrator, to the loan
Investment Fund established in the Participant's name. Any loan approved by the
Administrator shall be made to the Participant out of the Participant's loan
Investment Fund. All principal and interest paid by the Participant on a loan
made under this Article shall be deposited
42
to his Separate Account and shall be allocated upon receipt among the Investment
Funds in accordance with the Participant's currently effective investment
election. The balance of the Participant's loan Investment Fund shall be
decreased by the amount of principal payments and the loan Investment Fund shall
be terminated when the loan has been repaid in full.
12.5 - DEFAULT
If a Participant fails to make or cause to be made, any payment required under
the terms of the loan within 90 days following the date on which such payment
shall become due or there is an outstanding principal balance existing on a loan
after the last scheduled repayment date, the Administrator shall direct the
Trustee to declare the loan to be in default, and the entire unpaid balance of
such loan, together with accrued interest, shall be immediately due and payable.
In any such event, if such balance and interest thereon is not then paid, the
Trustee shall charge the Separate Account of the borrower with the amount of
such balance and interest as of the earliest date a distribution may be made
from the Plan to the borrower without adversely affecting the tax qualification
of the Plan or of the cash or deferred arrangement.
12.6 - SPECIAL RULES APPLICABLE TO LOANS
Any loan made hereunder shall be subject to the following rules:
(a) Loans limited to Eligible Employees: No loans shall be made to an Employee
who makes a Rollover Contribution in accordance with Article V, but who is
not an Eligible Employee as provided in Article III.
(b) Minimum Loan Amount: A Participant may not request a loan for less than
$1,000.
(c) Maximum Number of Outstanding Loans: A Participant with an outstanding loan
may not apply for another loan until the existing loan is paid in full and
may not refinance an existing loan or attain a second loan for the purpose
of paying off the existing loan. A Participant may not apply for more than
one loan during the Plan Year. The provisions of this paragraph shall not
apply to any loans made prior to the effective date of this amendment and
restatement; provided, however, that a Participant may not apply for a new
loan hereunder until all outstanding loans made to the Participant prior to
the effective date of this amendment and restatement have been paid in
full.
43
(d) Maximum Period for Real Estate Loans: The term of any loan to a Participant
that is used to acquire any dwelling unit which within a reasonable period
of time is to be used (determined at the time the loan is made) as a
principal residence of the Participant shall be no greater than ten years.
(e) Pre-Payment Without Penalty: A Participant may pre-pay the balance of any
loan hereunder prior to the date it is due without penalty.
(f) Effect of Termination of Employment: Upon a Participant's termination of
employment, the balance of any outstanding loan hereunder shall immediately
become due and owing.
12.7 - LOANS GRANTED PRIOR TO AMENDMENT
Notwithstanding any other provision of this Article to the contrary, any loan
made under the provisions of the Plan as in effect prior to this amendment and
restatement shall remain outstanding until repaid in accordance with its terms
or the otherwise applicable Plan provisions.
44
ARTICLE XIII
WITHDRAWALS WHILE EMPLOYED
13.1 - WITHDRAWALS OF ROLLOVER CONTRIBUTIONS
A Participant who is employed by an Employer or a Related Company may elect in
writing, subject to the limitations and conditions prescribed in this Article,
to make a cash withdrawal from his Rollover Contributions Sub-Account.
13.2 - LIMITATIONS ON WITHDRAWALS
Withdrawals made pursuant to this Article shall be subject to the following
conditions and limitations:
A Participant must file a written withdrawal application with the
Administrator such number of days prior to the date as of which it is
to be effective as the Administrator shall prescribe.
Withdrawals may be made effective as soon as reasonably practicable
following the Administrator's receipt of the Participant's direction.
A Participant who makes a withdrawal from his Rollover Contributions
Sub-Account may not make a further withdrawal of Rollover
Contributions under this Article during the remainder of the Plan Year
in which the withdrawal is effective.
13.3 - ORDER OF WITHDRAWAL FROM A PARTICIPANT'S SUB-ACCOUNTS
Distribution of a withdrawal amount shall be made from a Participant's
Sub-Accounts, to the extent necessary, in the order prescribed by the
Administrator, which order shall be uniform with respect to all Participants and
non-discriminatory. If the Sub-Account from which a Participant is receiving a
withdrawal is invested in more than one Investment Fund, the withdrawal shall be
charged against the Investment Funds as directed by the Administrator.
45
ARTICLE XIV
TERMINATION OF EMPLOYMENT AND SETTLEMENT DATE
14.1 - TERMINATION OF EMPLOYMENT AND SETTLEMENT DATE
A Participant's Settlement Date shall occur on the date he terminates employment
with an Employer and all Related Companies because of death, disability,
retirement, or other termination of employment. Written notice of a
Participant's Settlement Date shall be given by the Administrator to the
Trustee.
14.2 - SEPARATE ACCOUNTING FOR NON-VESTED AMOUNTS
If as of a Participant's Settlement Date the Participant's vested interest in
his Employer Contributions Sub-Account is less than 100 percent, that portion of
his Employer Contributions Sub-Account that is not vested shall be accounted for
separately from the vested portion and shall be disposed of as provided in the
following Section.
14.3 - DISPOSITION OF NON-VESTED AMOUNTS
That portion of a Participant's Employer Contributions Sub-Account that is not
vested upon the occurrence of his Settlement Date shall be disposed of as
follows:
(a) If the Participant has no vested interest in his Separate Account upon the
occurrence of his Settlement Date or his vested interest in his Separate
Account as of the date of distribution does not exceed $3,500 resulting in
the Participant's receipt of a single sum payment of such vested interest,
the non-vested balance remaining in the Participant's Employer
Contributions Sub-Account will be forfeited and his Separate Account closed
as of (i) the Participant's Settlement Date, if the Participant has no
vested interest in his Separate Account, or (ii) the date the single sum
payment occurs.
(b) If the Participant's vested interest in his Separate Account exceeds $3,500
and the Participant is eligible for and consents in writing to a single sum
payment of his vested interest in his Separate Account, the non-vested
balance remaining in the Participant's Employer Contributions Sub-Account
will be forfeited and his Separate Account closed as of the date the single
sum payment occurs, provided that such distribution occurs prior to the end
of the second Plan Year beginning on or after the Participant's Settlement
Date.
46
(c) If neither paragraph (a) nor paragraph (b) is applicable, the non-vested
portion of the Participant's Employer Contributions Sub-Account will
continue to be held in such Sub-Account and will not be forfeited until the
end of the five-year period beginning on his Settlement Date.
Whenever the non-vested portion of a Participant's Employer Contributions
Sub-Account is forfeited under the provisions of the Plan with respect to a Plan
Year, the amount of such forfeiture, as of the last day of the Plan Year, shall
be applied first against Plan expenses for the Plan Year and then against the
Employer Contribution obligations for the Plan Year of the Employer for which
the Participant last performed services as an Employee. Notwithstanding the
foregoing, however, should the amount of all such forfeitures for any Plan Year
with respect to any Employer exceed the amount of such Employer's Employer
Contribution obligation for the Plan Year, the excess amount of such forfeitures
shall be held unallocated in a suspense account established with respect to the
Employer and shall for all Plan purposes be applied against the Employer's
Employer Contribution obligations for the following Plan Year.
14.4 - RECREDITING OF FORFEITED AMOUNTS
A former Participant who forfeited the non-vested portion of his Employer
Contributions Sub-Account in accordance with the provisions of this Article and
who is reemployed by an Employer or a Related Company shall have such forfeited
amounts recredited to a new Separate Account in his name, without adjustment for
interim gains or losses experienced by the Trust, if:
(a) he returns to employment with an Employer or a Related Company before the
end of the five-year period beginning on the later of his Settlement Date
or the date he received distribution of his vested interest in his Separate
Account;
(b) he resumes employment covered under the Plan before the end of the
five-year period beginning on the date he is reemployed; and
(c) if he received distribution of his vested interest in his Separate Account,
he repays to the Plan the full amount of such distribution before the end
of the five-year period beginning on the date he is reemployed.
Funds needed in any Plan Year to recredit the Separate Account of a Participant
with the amounts of prior forfeitures in accordance with the preceding sentence
shall come first from forfeitures that arise during such Plan Year, and then
from Trust income
47
earned in such Plan Year, with each Trust Fund being charged with the amount of
such income proportionately, unless his Employer chooses to make an additional
Employer Contribution, and shall finally be provided by his Employer by way of a
separate Employer Contribution.
48
ARTICLE XV
DISTRIBUTIONS
15.1 - DISTRIBUTIONS TO PARTICIPANTS
A Participant whose Settlement Date occurs shall receive distribution of his
vested interest in his Separate Account in the form provided under Article XVI
beginning as soon as reasonably practicable following his Settlement Date or the
date his application for distribution is filed with the Administrator, if later.
In addition, a Participant who continues in employment with an Employer or a
Related Company after his Normal Retirement Date may elect to receive
distribution of all or any portion of his Separate Account in the form provided
under Article XVI at any time following his Normal Retirement Date.
15.2 - DISTRIBUTIONS TO BENEFICIARIES
If a Participant dies prior to the date distribution of his vested interest in
his Separate Account begins under this Article, his Beneficiary shall receive
distribution of the Participant's vested interest in his Separate Account in the
form provided under Article XVI beginning as soon as reasonably practicable
following the date the Beneficiary's application for distribution is filed with
the Administrator. Unless distribution is to be made over the life or over a
period certain not greater than the life expectancy of the Beneficiary,
distribution of the Participant's entire vested interest shall be made to the
Beneficiary no later than the end of the fifth calendar year beginning after the
Participant's death. If distribution is to be made over the life or over a
period certain no greater than the life expectancy of the Beneficiary,
distribution shall commence no later than:
(a) If the Beneficiary is not the Participant's spouse, the end of the first
calendar year beginning after the Participant's death; or
(b) If the Beneficiary is the Participant's spouse, the later of (i) the end of
the first calendar year beginning after the Participant's death or (ii) the
end of the calendar year in which the Participant would have attained age
70 1/2.
If distribution is to be made to a Participant's spouse, it shall be made
available within a reasonable period of time after the Participant's death that
is no less favorable than the period of time applicable to other distributions.
If a Participant dies after the date distribution of his vested interest in his
49
Separate Account begins under this Article, but before his entire vested
interest in his Separate Account is distributed, his Beneficiary shall receive
distribution of the remainder of the Participant's vested interest in his
Separate Account beginning as soon as reasonably practicable following the
Participant's date of death in a form that provides for distribution at least as
rapidly as under the form in which the Participant was receiving distribution.
Notwithstanding the provisions of this Section, distribution may also be made to
a Participant's Beneficiary in accordance with a valid election made by the
Participant pursuant to Section 242(b)(2) of the Tax Equity and Fiscal
Responsibility Act of 1982.
15.3 - CASH OUTS AND PARTICIPANT CONSENT
Notwithstanding any other provision of the Plan to the contrary, if a
Participant's vested interest in his Separate Account does not exceed $3,500,
distribution of such vested interest shall be made to the Participant in a
single sum payment as soon as reasonably practicable following his Settlement
Date. If a Participant's vested interest in his Separate Account is $0, he shall
be deemed to have received distribution of such vested interest as of his
Settlement Date. If a Participant's vested interest in his Separate Account
exceeds $3,500, distribution shall not commence to such Participant prior to his
Normal Retirement Date without the Participant's written consent. If at the time
of a distribution or deemed distribution to a Participant from his Separate
Account, the Participant's vested interest in his Separate Account exceeded
$3,500, then for purposes of this Section, the Participant's vested interest in
his Separate Account on any subsequent date shall be deemed to exceed $3,500.
15.4 - REQUIRED COMMENCEMENT OF DISTRIBUTION
Notwithstanding any other provision of the Plan to the contrary, distribution of
a Participant's vested interest in his Separate Account shall commence to the
Participant no later than the earlier of:
(a) 60 days after the close of the Plan Year in which (i) the Participant's
Normal Retirement Date occurs, (ii) the 10th anniversary of the year in
which he commenced participation in the Plan occurs, or (iii) his
Settlement Date occurs, whichever is latest; or
(b) the April 1 following the close of the calendar year in which he attains
age 70 1/2, whether or not his Settlement Date has occurred, except that if
a Participant attained age 70 1/2 prior to January 1, 1988, and was not a
50
five-percent owner (as defined in Section 416 of the Code) at any time
during the five-Plan-Year period ending within the calendar year in which
he attained age 70 1/2, distribution of such Participant's vested interest
in his Separate Account shall commence no later than the April 1 following
the close of the calendar year in which he attains age 70 1/2 or retires,
whichever is later.
Distributions required to commence under this Section shall be made in the form
provided under Article XVI and in accordance with Section 401(a)(9) of the Code
and regulations issued thereunder, including the minimum distribution incidental
benefit requirements. Notwithstanding the provisions of this Section,
distribution may also be made to a Participant in accordance with a valid
election made by the Participant pursuant to Section 242(b)(2) of the Tax Equity
and Fiscal Responsibility Act of 1982.
15.5 - REEMPLOYMENT OF A PARTICIPANT
If a Participant whose Settlement Date has occurred is reemployed by an Employer
or a Related Company, he shall lose his right to any distribution or further
distributions from the Trust arising from his prior Settlement Date and his
interest in the Trust shall thereafter be treated in the same manner as that of
any other Participant whose Settlement Date has not occurred.
15.6 - RESTRICTIONS ON ALIENATION
Except as provided in Section 401(a)(13) of the Code relating to qualified
domestic relations orders and Section 1.401(a)-13(b)(2) of Treasury regulations
relating to Federal tax levies and judgments, no benefit under the Plan at any
time shall be subject in any manner to anticipation, alienation, assignment
(either at law or in equity), encumbrance, garnishment, levy, execution, or
other legal or equitable process; and no person shall have power in any manner
to anticipate, transfer, assign (either at law or in equity), alienate or
subject to attachment, garnishment, levy, execution, or other legal or equitable
process, or in any way encumber his benefits under the Plan, or any part
thereof, and any attempt to do so shall be void.
15.7 - FACILITY OF PAYMENT
If the Administrator finds that any individual to whom an amount is payable
hereunder is incapable of attending to his financial affairs because of any
mental or physical condition, including the infirmities of advanced age, such
amount (unless prior claim therefor shall have been made by a duly qualified
guardian or other legal representative) may, in the discretion of the
51
Administrator, be paid to another person for the use or benefit of the
individual found incapable of attending to his financial affairs or in
satisfaction of legal obligations incurred by or on behalf of such individual.
The Trustee shall make such payment only upon receipt of written instructions to
such effect from the Administrator. Any such payment shall be charged to the
Separate Account from which any such payment would otherwise have been paid to
the individual found incapable of attending to his financial affairs and shall
be a complete discharge of any liability therefor under the Plan.
15.8 - INABILITY TO LOCATE PAYEE
If any benefit becomes payable to any person, or to the executor or
administrator of any deceased person, and if that person or his executor or
administrator does not present himself to the Administrator within a reasonable
period after the Administrator mails written notice of his eligibility to
receive a distribution hereunder to his last known address and makes such other
diligent effort to locate the person as the Administrator determines, that
benefit will be forfeited. However, if the payee later files a claim for that
benefit, the benefit will be restored.
15.9 - DISTRIBUTION PURSUANT TO QUALIFIED DOMESTIC RELATIONS ORDERS
Notwithstanding any other provision of the Plan to the contrary, if a qualified
domestic relations order so provides, distribution may be made to an alternate
payee pursuant to a qualified domestic relations order, as defined in Section
414(p) of the Code, regardless of whether the Participant's Settlement Date has
occurred or whether the Participant is otherwise entitled to receive a
distribution under the Plan.
52
ARTICLE XVI
FORM OF PAYMENT
16.1 - NORMAL FORM OF PAYMENT
Unless the Participant, or his Beneficiary, if the Participant has died, elects
the optional form of payment, distribution shall be made to the Participant, or
his Beneficiary, as the case may be, in a single sum payment. Distribution of
the fair market value of the Participant's Separate Account under either the
normal or optional forms of payment shall be made in cash or in kind, as elected
by the Participant.
16.2 - OPTIONAL FORM OF PAYMENT
A Participant, or his Beneficiary, as the case may be, may elect to receive
distribution in a series of installments over a period not exceeding the life
expectancy of the Participant, or the Participant's Beneficiary, if the
Participant has died, or a period not exceeding the joint life and last survivor
expectancy of the Participant and his Beneficiary. Each installment shall be
equal in amount except as necessary to adjust for any changes in the value of
the Participant's Separate Account. The determination of life expectancies shall
be made on the basis of the expected return multiples in Table V and VI of
Section 1.72-9 of the Treasury regulations and shall be calculated either once
at the time installment payments begin or annually for the Participant and/or
his Beneficiary, if his Beneficiary is his spouse, as determined by the
Participant at the time installment payments begin.
16.3 - CHANGE OF OPTION ELECTION
A Participant or Beneficiary who has elected the optional form of payment may
revoke or change his election at any time prior to the date as of which his
benefit commences by filing with the Administrator a written election in the
form prescribed by the Administrator.
16.4 - DIRECT ROLLOVER
Notwithstanding any other provision of the Plan to the contrary, in lieu of
receiving distribution in the form of payment provided under this Article, a
"qualified distributee" may elect in writing, in accordance with rules
prescribed by the Administrator, to have any portion or all of a distribution
made on or after January 1, 1993, that is an "eligible rollover distribution"
paid directly by the Plan to the "eligible retirement plan" designated by the
"qualified distributee";
53
provided, however, that this provision shall not apply if the total distribution
is less than $200 and that a "qualified distributee" may not elect this
provision with respect to a portion of a distribution that is less than $500.
Any such payment by the Plan to another "eligible retirement plan" shall be a
direct rollover. For purposes of this Section, the following terms have the
following meanings:
(a) An "eligible retirement plan" means an individual retirement account
described in Section 408(a) of the Code, an individual retirement annuity
described in Section 408(b) of the Code, an annuity plan described in
Section 403(a) of the Code, or a qualified trust described in Section
401(a) of the Code that accepts rollovers; provided, however, that, in the
case of a direct rollover by a surviving spouse, an eligible retirement
plan does not include a qualified trust described in Section 401(a) of the
Code.
(b) An "eligible rollover distribution" means any distribution of all or any
portion of the balance of a Participant's Separate Account; provided,
however, that an eligible rollover distribution does not include: any
distribution that is one of a series of substantially equal periodic
payments made not less frequently than annually for the life or life
expectancy of the qualified distributee or the joint lives or joint life
expectancies of the qualified distributee and the qualified distributee's
designated beneficiary, or for a specified period of ten years or more; and
any distribution to the extent such distribution is required under Section
401(a)(9) of the Code.
(c) A "qualified distributee" means a Participant, his surviving spouse, or his
spouse or former spouse who is an alternate payee under a qualified
domestic relations order, as defined in Section 414(p) of the Code.
16.5 - NOTICE REGARDING FORMS OF PAYMENT
Within the 60 day period ending 30 days before the date as of which distribution
of a Participant's Separate Account commences, the Administrator shall provide
the Participant with a written explanation of his right to defer distribution
until his Normal Retirement Date, or such later date as may be provided in the
Plan, his right to make a direct rollover, and the forms of payment available
under the Plan. Distribution of the Participant's Separate Account may commence
less than 30 days after such notice is provided to the Participant if (i) the
Administrator clearly informs the Participant of his right to
54
consider his election of whether or not to make a direct rollover or to receive
a distribution prior to his Normal Retirement Date and his election of a form of
payment for a period of at least 30 days following his receipt of the notice and
(ii) the Participant, after receiving the notice, affirmatively elects an early
distribution.
16.6 - REEMPLOYMENT
If a Participant is reemployed by an Employer or a Related Company prior to
receiving distribution of the entire balance of his vested interest in his
Separate Account, his prior election of a form of payment hereunder shall become
ineffective.
16.7 - DISTRIBUTION IN THE FORM OF EMPLOYER STOCK
Notwithstanding any other provision of the Plan to the contrary, a Participant
may elect to receive distribution of the fair market value of his Separate
Account in the form of Employer stock. Absent such election, distribution of the
Participant's Separate Account shall be made in cash.
16.8 - SECTION 242(B)(2) ELECTIONS
Notwithstanding any other provisions of this Article, distribution on behalf of
a Participant, including a five-percent owner, may be made pursuant to an
election under Section 242(b)(2) of the Tax Equity and Fiscal Responsibility Act
of 1982 and in accordance with all of the following requirements:
(a) The distribution is one which would not have disqualified the Trust under
Section 401(a)(9) of the Code as in effect prior to amendment by the
Deficit Reduction Act of 1984.
(b) The distribution is in accordance with a method of distribution elected by
the Participant whose interest in the Trust is being distributed or, if the
Participant is deceased, by a Beneficiary of such Participant.
(c) Such election was in writing, was signed by the Participant or the
Beneficiary, and was made before January 1, 1984.
(d) The Participant had accrued a benefit under the Plan as of December 31,
1983.
(e) The method of distribution elected by the Participant or the Beneficiary
specifies the time at which distribution will commence, the period over
which distribution will be made, and in the case of any distribution upon
the
55
Participant's death, the Beneficiaries of the Participant listed in order
of priority.
A distribution upon death shall not be made under this Section unless the
information in the election contains the required information described above
with respect to the distributions to be made upon the death of the Participant.
For any distribution which commences before January 1, 1984, but continues after
December 31, 1983, the Participant or the Beneficiary to whom such distribution
is being made will be presumed to have designated the method of distribution
under which the distribution is being made, if this method of distribution was
specified in writing and the distribution satisfies the requirements in
paragraphs (a) and (e) of this Section. If an election is revoked, any
subsequent distribution will be in accordance with the other provisions of the
Plan. Any changes in the election will be considered to be a revocation of the
election. However, the mere substitution or addition of another Beneficiary (one
not designated as a Beneficiary in the election), under the election will not be
considered to be a revocation of the election, so long as such substitution or
addition does not alter the period over which distributions are to be made under
the election directly, or indirectly (for example, by altering the relevant
measuring life).
56
ARTICLE XVII
BENEFICIARIES
17.1 - DESIGNATION OF BENEFICIARY
A married Participant's Beneficiary shall be his spouse, unless the Participant
designates a person or persons other than his spouse as Beneficiary with his
spouse's written consent. A Participant may designate a Beneficiary on the form
prescribed by the Administrator. If no Beneficiary has been designated pursuant
to the provisions of this Section, or if no Beneficiary survives the Participant
and he has no surviving spouse, then the Beneficiary under the Plan shall be the
Participant's estate. If a Beneficiary dies after becoming entitled to receive a
distribution under the Plan but before distribution is made to him in full, and
if no other Beneficiary has been designated to receive the balance of the
distribution in that event, the estate of the deceased Beneficiary shall be the
Beneficiary as to the balance of the distribution.
17.2 - SPOUSAL CONSENT REQUIREMENTS
Any written spousal consent given pursuant to this Article must acknowledge the
effect of the action taken and must be witnessed by a Plan representative or a
notary public. In addition, the spouse's written consent must either (i) specify
any non-spouse Beneficiary designated by the Participant and that such
Beneficiary may not be changed without written spousal consent or (ii)
acknowledge that the spouse has the right to limit consent to a specific
Beneficiary, but permit the Participant to change the designated Beneficiary
without the spouse's further consent. A Participant's spouse will be deemed to
have given written consent to the Participant's designation of Beneficiary if
the Participant establishes to the satisfaction of a Plan representative that
such consent cannot be obtained because the spouse cannot be located or because
of other circumstances set forth in Section 401(a)(11) of the Code and
regulations issued thereunder. Any written consent given or deemed to have been
given by a Participant's spouse hereunder shall be valid only with respect to
the spouse who signs the consent.
57
ARTICLE XVIII
ADMINISTRATION
18.1 - AUTHORITY OF THE SPONSOR
The Sponsor, which shall be the administrator for purposes of ERISA and the plan
administrator for purposes of the Code, shall be responsible for the
administration of the Plan and, in addition to the powers and authorities
expressly conferred upon it in the Plan, shall have all such powers and
authorities as may be necessary to carry out the provisions of the Plan,
including the power and authority to interpret and construe the provisions of
the Plan, to make benefit determinations, and to resolve any disputes which
arise under the Plan. The Sponsor may employ such attorneys, agents, and
accountants as it may deem necessary or advisable to assist in carrying out its
duties hereunder. The Sponsor shall be a "named fiduciary" as that term is
defined in Section 402(a)(2) of ERISA. The Sponsor may:
(a) allocate any of the powers, authority, or responsibilities for the
operation and administration of the Plan (other than trustee
responsibilities as defined in Section 405(c)(3) of ERISA) among named
fiduciaries; and
(b) designate a person or persons other than a named fiduciary to carry out any
of such powers, authority, or responsibilities;
except that no allocation by the Sponsor of, or designation by the Sponsor with
respect to, any of such powers, authority, or responsibilities to another named
fiduciary or a person other than a named fiduciary shall become effective unless
such allocation or designation shall first be accepted by such named fiduciary
or other person in a writing signed by it and delivered to the Sponsor.
18.2 - ACTION OF THE SPONSOR
Any act authorized, permitted, or required to be taken under the Plan by the
Sponsor and which has not been delegated in accordance with Section 18.1, may be
taken by a majority of the members of the board of directors of the Sponsor,
either by vote at a meeting, or in writing without a meeting, or by the employee
or employees of the Sponsor designated by the board of directors to carry out
such acts on behalf of the Sponsor. All notices, advice, directions,
certifications, approvals, and instructions required or authorized to be given
by the Sponsor as under the Plan shall be in writing and signed by either (i) a
majority of the members of the board of directors of the Sponsor or by such
58
member or members as may be designated by an instrument in writing, signed by
all the members thereof, as having authority to execute such documents on its
behalf, or (ii) the employee or employees authorized to act for the Sponsor in
accordance with the provisions of this Section.
18.3 - CLAIMS REVIEW PROCEDURE
Whenever a claim for benefits under the Plan filed by any person (herein
referred to as the "Claimant") is denied, whether in whole or in part, the
Sponsor shall transmit a written notice of such decision to the Claimant within
90 days of the date the claim was filed or, if special circumstances require an
extension, within 180 days of such date, which notice shall be written in a
manner calculated to be understood by the Claimant and shall contain a statement
of (i) the specific reasons for the denial of the claim, (ii) specific reference
to pertinent Plan provisions on which the denial is based, and (iii) a
description of any additional material or information necessary for the Claimant
to perfect the claim and an explanation of why such information is necessary.
The notice shall also include a statement advising the Claimant that, within 60
days of the date on which he receives such notice, he may obtain review of such
decision in accordance with the procedures hereinafter set forth. Within such
60-day period, the Claimant or his authorized representative may request that
the claim denial be reviewed by filing with the Sponsor a written request
therefor, which request shall contain the following information:
(a) the date on which the Claimant's request was filed with the Sponsor;
provided, however, that the date on which the Claimant's request for review
was in fact filed with the Sponsor shall control in the event that the date
of the actual filing is later than the date stated by the Claimant pursuant
to this paragraph;
(b) the specific portions of the denial of his claim which the Claimant
requests the Sponsor to review;
(c) a statement by the Claimant setting forth the basis upon which he believes
the Sponsor should reverse the previous denial of his claim for benefits
and accept his claim as made; and
(d) any written material (offered as exhibits) which the Claimant desires the
Sponsor to examine in its consideration of his position as stated pursuant
to paragraph (c) of this Section.
59
Within 60 days of the date determined pursuant to paragraph (a) of this Section
or, if special circumstances require an extension, within 120 days of such date,
the Sponsor shall conduct a full and fair review of the decision denying the
Claimant's claim for benefits and shall render its written decision on review to
the Claimant. The Sponsor's decision on review shall be written in a manner
calculated to be understood by the Claimant and shall specify the reasons and
Plan provisions upon which the Sponsor's decision was based.
18.4 - QUALIFIED DOMESTIC RELATIONS ORDERS
The Sponsor shall establish reasonable procedures to determine the status of
domestic relations orders and to administer distributions under domestic
relations orders which are deemed to be qualified orders. Such procedures shall
be in writing and shall comply with the provisions of Section 414(p) of the Code
and regulations issued thereunder.
18.5 - INDEMNIFICATION
In addition to whatever rights of indemnification the members of the board of
directors of the Sponsor or any employee or employees of the Sponsor to whom any
power, authority, or responsibility is delegated pursuant to Section 18.2, may
be entitled under the articles of incorporation or regulations of the Sponsor,
under any provision of law, or under any other agreement, the Sponsor shall
satisfy any liability actually and reasonably incurred by any such person or
persons, including expenses, attorneys' fees, judgments, fines, and amounts paid
in settlement (other than amounts paid in settlement not approved by the
Sponsor), in connection with any threatened, pending or completed action, suit,
or proceeding which is related to the exercising or failure to exercise by such
person or persons of any of the powers, authority, responsibilities, or
discretion as provided under the Plan, or reasonably believed by such person or
persons to be provided hereunder, and any action taken by such person or persons
in connection therewith, unless the same is judicially determined to be the
result of such person or persons' gross negligence or willful misconduct.
18.6 - ACTIONS BINDING
Subject to the provisions of Section 18.3, any action taken by the Sponsor which
is authorized, permitted, or required under the Plan shall be final and binding
upon the Employers, the Trustee, all persons who have or who claim an interest
under the Plan, and all third parties dealing with the Employers or the Trustee.
60
ARTICLE XIX
AMENDMENT AND TERMINATION
19.1 - AMENDMENT
Subject to the provisions of Section 19.2, the Sponsor may at any time and from
time to time, by action of its board of directors, or such officers of the
Sponsor as are authorized by its board of directors, amend the Plan, either
prospectively or retroactively. Any such amendment shall be by written
instrument executed by the Sponsor.
19.2 - LIMITATION ON AMENDMENT
The Sponsor shall make no amendment to the Plan which shall decrease the accrued
benefit of any Participant or Beneficiary, except that nothing contained herein
shall restrict the right to amend the provisions of the Plan relating to the
administration of the Plan and Trust. Moreover, no such amendment shall be made
hereunder which shall permit any part of the Trust to revert to an Employer or
any Related Company or be used or be diverted to purposes other than the
exclusive benefit of Participants and Beneficiaries.
19.3 - TERMINATION
The Sponsor reserves the right, by action of its board of directors, to
terminate the Plan as to all Employers at any time (the effective date of such
termination being hereinafter referred to as the "termination date"). Upon any
such termination of the Plan, the following actions shall be taken for the
benefit of Participants and Beneficiaries:
(a) As of the termination date, each Investment Fund shall be valued and all
Separate Accounts and Sub-Accounts shall be adjusted in the manner provided
in Article XI, with any unallocated contributions or forfeitures being
allocated as of the termination date in the manner otherwise provided in
the Plan. The termination date shall become a Valuation Date for purposes
of Article XI. In determining the net worth of the Trust, there shall be
included as a liability such amounts as shall be necessary to pay all
expenses in connection with the termination of the Trust and the
liquidation and distribution of the property of the Trust, as well as other
expenses, whether or not accrued, and shall include as an asset all accrued
income.
(b) All Separate Accounts shall then be disposed of to or for the benefit of
each Participant or Beneficiary in
61
accordance with the provisions of Article XV as if the termination date
were his Settlement Date; provided, however, that notwithstanding the
provisions of Article XV, if the Plan does not offer an annuity option and
if neither his Employer nor a Related Company establishes or maintains
another defined contribution plan (other than an employee stock ownership
plan as defined in Section 4975(e)(7) of the Code), the Participant's
written consent to the commencement of distribution shall not be required
regardless of the value of the vested portions of his Separate Account.
(c) Notwithstanding the provisions of paragraph (b) of this Section, no
distribution shall be made to a Participant of any portion of the balance
of his Tax-Deferred Contributions Sub-Account prior to his separation from
service (other than a distribution made in accordance with Article XIII or
required in accordance with Section 401(a)(9) of the Code) unless (i)
neither his Employer nor a Related Company establishes or maintains another
defined contribution plan (other than an employee stock ownership plan as
defined in Section 4975(e)(7) of the Code, a tax credit employee stock
ownership plan as defined in Section 409 of the Code, or a simplified
employee pension as defined in Section 408(k) of the Code) either at the
time the Plan is terminated or at any time during the period ending 12
months after distribution of all assets from the Plan; provided, however,
that this provision shall not apply if fewer than two percent of the
Eligible Employees under the Plan were eligible to participate at any time
in such other defined contribution plan during the 24-month period
beginning 12 months before the Plan termination, and (ii) the distribution
the Participant receives is a "lump sum distribution" as defined in Section
402(e)(4) of the Code, without regard to clauses (i), (ii), (iii), and (iv)
of sub-paragraph (A), sub-paragraph (B), or sub-paragraph (H) thereof.
Notwithstanding anything to the contrary contained in the Plan, upon any such
Plan termination, the vested interest of each Participant and Beneficiary in his
Employer Contributions Sub-Account shall be 100 percent; and, if there is a
partial termination of the Plan, the vested interest of each Participant and
Beneficiary who is affected by the partial termination in his Employer
Contributions Sub-Account shall be 100 percent. For purposes of the preceding
sentence only, the Plan shall be deemed to terminate automatically if there
shall be a complete discontinuance of contributions hereunder by all Employers.
62
19.4 - REORGANIZATION
The merger, consolidation, or liquidation of any Employer with or into any other
Employer or a Related Company shall not constitute a termination of the Plan as
to such Employer. If an Employer disposes of substantially all of the assets
used by the Employer in a trade or business or disposes of a subsidiary and in
connection therewith one or more Participants terminates employment but
continues in employment with the purchaser of the assets or with such
subsidiary, no distribution from the Plan shall be made to any such Participant
prior to his separation from service (other than a distribution made in
accordance with Article XIII or required in accordance with Section 401(a)(9) of
the Code), except that a distribution shall be permitted to be made in such a
case, subject to the Participant's consent (to the extent required by law), if
(i) the distribution would constitute a "lump sum distribution" as defined in
section 402(e)(4) of the Code, without regard to clauses (i), (ii), (iii), or
(iv) of sub-paragraph (A), sub-paragraph (B), or sub-paragraph (H) thereof, (ii)
the Employer continues to maintain the Plan after the disposition, (iii) the
purchaser does not maintain the Plan after the disposition, and (iv) the
distribution is made by the end of the second calendar year after the calendar
year in which the disposition occurred.
19.5 - WITHDRAWAL OF AN EMPLOYER
An Employer other than the Sponsor may withdraw from the Plan at any time upon
notice in writing to the Administrator (the effective date of such withdrawal
being hereinafter referred to as the "withdrawal date"), and shall thereupon
cease to be an Employer for all purposes of the Plan. An Employer shall be
deemed automatically to withdraw from the Plan in the event of its complete
discontinuance of contributions, or, subject to Section 19.4 and unless the
Sponsor otherwise directs, it ceases to be a Related Company of the Sponsor or
any other Employer. Upon the withdrawal of an Employer, the withdrawing Employer
shall determine whether a partial termination has occurred with respect to its
Employees. In the event that the withdrawing Employer determines a partial
termination has occurred, the action specified in Section 19.3 shall be taken as
of the withdrawal date, as on a termination of the Plan, but with respect only
to Participants who are employed solely by the withdrawing Employer, and who,
upon such withdrawal, are neither transferred to nor continued in employment
with any other Employer or a Related Company. The interest of any Participant
employed by the withdrawing Employer who is transferred to or continues in
employment with any other Employer or a Related Company, and the interest of any
Participant employed solely by an Employer or a Related Company other than the
withdrawing
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Employer, shall remain unaffected by such withdrawal; no adjustment to his
Separate Accounts shall be made by reason of the withdrawal; and he shall
continue as a Participant hereunder subject to the remaining provisions of the
Plan.
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ARTICLE XX
ADOPTION BY OTHER ENTITIES
20.1 - ADOPTION BY RELATED COMPANIES
A Related Company that is not an Employer may, with the consent of the Sponsor,
adopt the Plan and become an Employer hereunder by causing an appropriate
written instrument evidencing such adoption to be executed in accordance with
the requirements of its organizational authority. Any such instrument shall
specify the effective date of the adoption.
20.2 - EFFECTIVE PLAN PROVISIONS
An Employer who adopts the Plan shall be bound by the provisions of the Plan in
effect at the time of the adoption and as subsequently in effect because of any
amendment to the Plan.
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ARTICLE XXI
MISCELLANEOUS PROVISIONS
21.1 - NO COMMITMENT AS TO EMPLOYMENT
Nothing contained herein shall be construed as a commitment or agreement upon
the part of any person to continue his employment with an Employer or Related
Company, or as a commitment on the part of any Employer or Related Company to
continue the employment, compensation, or benefits of any person for any period.
21.2 - BENEFITS
Nothing in the Plan nor the Trust Agreement shall be construed to confer any
right or claim upon any person, firm, or corporation other than the Employers,
the Trustee, Participants, and Beneficiaries.
21.3 - NO GUARANTEES
The Employers, the Administrator, and the Trustee do not guarantee the Trust
from loss or depreciation, nor do they guarantee the payment of any amount which
may become due to any person hereunder.
21.4 - EXPENSES
The expenses of administration of the Plan, including the expenses of the
Administrator and fees of the Trustee, shall be paid from the Trust as a general
charge thereon, unless the Sponsor elects to make payment. Notwithstanding the
foregoing, the Sponsor may direct that administrative expenses that are
allocable to the Separate Account of a specific Participant shall be paid from
that Separate Account and the costs incident to the management of the assets of
an Investment Fund or to the purchase or sale of securities held in an
Investment Fund shall be paid by the Trustee from such Investment Fund.
21.5 - PRECEDENT
Except as otherwise specifically provided, no action taken in accordance with
the Plan shall be construed or relied upon as a precedent for similar action
under similar circumstances.
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21.6 - DUTY TO FURNISH INFORMATION
The Employers, the Administrator, and the Trustee shall furnish to any of the
others any documents, reports, returns, statements, or other information that
the other reasonably deems necessary to perform its duties hereunder or
otherwise imposed by law.
21.7 - WITHHOLDING
The Trustee shall withhold any tax which by any present or future law is
required to be withheld, and which the Administrator notifies the Trustee in
writing is to be so withheld, from any payment to any Participant or Beneficiary
hereunder.
21.8 - MERGER, CONSOLIDATION, OR TRANSFER OF PLAN ASSETS
The Plan shall not be merged or consolidated with any other plan, nor shall any
of its assets or liabilities be transferred to another plan, unless, immediately
after such merger, consolidation, or transfer of assets or liabilities, each
Participant in the Plan would receive a benefit under the Plan which is at least
equal to the benefit he would have received immediately prior to such merger,
consolidation, or transfer of assets or liabilities (assuming in each instance
that the Plan had then terminated).
21.9 - BACK PAY AWARDS
The provisions of this Section shall apply only to an Employee or former
Employee who becomes entitled to back pay by an award or agreement of an
Employer without regard to mitigation of damages. If a person to whom this
Section applies was or would have become an Eligible Employee after such back
pay award or agreement has been effected, and if any such person who had not
previously elected to make Tax-Deferred Contributions pursuant to Section 4.1
shall within 30 days of the date he receives notice of the provisions of this
Section make an election to make Tax-Deferred Contributions in accordance with
such Section 4.1 (retroactive to any Enrollment Date as of which he was or has
become eligible to do so), then such Participant may elect that any Tax-Deferred
Contributions not previously made on his behalf but which, after application of
the foregoing provisions of this Section, would have been made under the
provisions of Article IV, shall be made out of the proceeds of such back pay
award or agreement. In addition, if any such Employee or former Employee would
have been eligible to participate in the allocation of Employer Contributions
under the provisions of Article VI for any prior Plan Year after such back pay
award or agreement has been effected, his Employer shall make an Employer
Contribution equal to the amount of the Employer Contribution which would have
been
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allocated to such Participant under the provisions of Article VI as in effect
during each such Plan Year. The amounts of such additional contributions shall
be credited to the Separate Account of such Participant. Any additional
contributions made by such Participant and by an Employer pursuant to this
Section shall be made in accordance with, and subject to the limitations of the
applicable provisions of Articles IV, VI, and VII.
21.10 - CONDITION ON EMPLOYER CONTRIBUTIONS
Notwithstanding anything to the contrary contained in the Plan or the Trust
Agreement, any contribution of an Employer hereunder is conditioned upon the
continued qualification of the Plan under Section 401(a) of the Code, the exempt
status of the Trust under Section 501(a) of the Code, and the deductibility of
the contribution under Section 404 of the Code. Except as otherwise provided in
this Section and Section 21.11, however, in no event shall any portion of the
property of the Trust ever revert to or otherwise inure to the benefit of an
Employer or any Related Company.
21.11 - RETURN OF CONTRIBUTIONS TO AN EMPLOYER
Notwithstanding any other provision of the Plan or the Trust Agreement to the
contrary, in the event any contribution of an Employer made hereunder:
(a) is made under a mistake of fact, or
(b) is disallowed as a deduction under Section 404 of the Code,
such contribution may be returned to the Employer within one year after the
payment of the contribution or the disallowance of the deduction to the extent
disallowed, whichever is applicable. In the event the Plan does not initially
qualify under Section 401(a) of the Code, any contribution of an Employer made
hereunder may be returned to the Employer within one year of the date of denial
of the initial qualification of the Plan, but only if an application for
determination was made within the period of time prescribed under Section
403(c)(2)(B) of ERISA.
21.12 - VALIDITY OF PLAN
The validity of the Plan shall be determined and the Plan shall be construed and
interpreted in accordance with the laws of the State or Commonwealth in which
the Sponsor has its principal place of business, except as preempted by
applicable Federal law. The invalidity or illegality of any provision of the
Plan shall not affect the legality or validity of any other part thereof.
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21.13 - TRUST AGREEMENT
The Trust Agreement and the Trust maintained thereunder shall be deemed to be a
part of the Plan as if fully set forth herein and the provisions of the Trust
Agreement are hereby incorporated by reference into the Plan.
21.14 - PARTIES BOUND
The Plan shall be binding upon the Employers, all Participants and Beneficiaries
hereunder, and, as the case may be, the heirs, executors, administrators,
successors, and assigns of each of them.
21.15 - APPLICATION OF CERTAIN PLAN PROVISIONS
A Participant's Beneficiary, if the Participant has died, or alternate payee
under a qualified domestic relations order shall be treated as a Participant for
purposes of directing investments as provided in Article X. For purposes of the
general administrative provisions and limitations of the Plan, a Participant's
Beneficiary or alternate payee under a qualified domestic relations order shall
be treated as any other person entitled to receive benefits under the Plan. Upon
any termination of the Plan, any such Beneficiary or alternate payee under a
qualified domestic relations order who has an interest under the Plan at the
time of such termination, which does not cease by reason thereof, shall be
deemed to be a Participant for all purposes of the Plan.
21.16 - Leased Employees
Any leased employee, other than an excludable leased employee, shall be treated
as an employee of the Employer for which he performs services for all purposes
of the Plan with respect to the provisions of Sections 401(a)(3), (4), (7), and
(16), and 408(k), 410, 411, 415, and 416 of the Code; provided, however, that no
leased employee shall accrue a benefit hereunder based on service as a leased
employee except as otherwise specifically provided in the Plan. A "leased
employee" means any person who performs services for an Employer or a Related
Company (the "recipient") (other than an employee of the recipient) pursuant to
an agreement between the recipient and any other person (the "leasing
organization") on a substantially full-time basis for a period of at least one
year, provided that such services are of a type historically performed, in the
business field of the recipient, by employees. An "excludable leased employee"
means any leased employee of the recipient who is covered by a money purchase
pension plan maintained by the leasing organization
69
which provides for (i) a nonintegrated employer contribution on behalf of each
participant in the plan equal to at least ten percent of compensation, (ii) full
and immediate vesting, and (iii) immediate participation by employees of the
leasing organization (other than employees who perform substantially all of
their services for the leasing organization or whose compensation from the
leasing organization in each plan year during the four-year period ending with
the plan year is less than $1,000); provided, however, that leased employees do
not constitute more than 20 percent of the recipient's nonhighly compensated
work force. For purposes of this Section, contributions or benefits provided to
a leased employee by the leasing organization that are attributable to services
performed for the recipient shall be treated as provided by the recipient.
21.17 - TRANSFERRED FUNDS
If funds from another qualified plan are transferred or merged into the Plan,
such funds shall be held and administered in accordance with any restrictions
applicable to them under such other plan to the extent required by law and shall
be accounted for separately to the extent necessary to accomplish the foregoing.
21.18 - IN WRITING REQUIREMENT
All references in the Plan to "in writing" or "written," other than references
to such terms in Section 15.3, Article XVI and Article XVII, shall include
physical written documents as well as "writings" through electronic and/or
telephonic media.
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ARTICLE XXII
TOP-HEAVY PROVISIONS
22.1 - DEFINITIONS
For purposes of this Article, the following terms shall have the following
meanings:
(a) The "compensation" of an employee means compensation as defined in Section
415 of the Code and regulations issued thereunder. In no event, however,
shall the compensation of a Participant taken into account under the Plan
for any Plan Year exceed (1) $200,000 for Plan Years beginning prior to
January 1, 1994, or (2) $150,000 for Plan Years beginning on or after
January 1, 1994 (subject to adjustment annually as provided in Section
401(a)(17)(B) and Section 415(d) of the Code; provided, however, that the
dollar increase in effect on January 1 of any calendar year, if any, is
effective for Plan Years beginning in such calendar year). If the
compensation of a Participant is determined over a period of time that
contains fewer than 12 calendar months, then the annual compensation
limitation described above shall be adjusted with respect to that
Participant by multiplying the annual compensation limitation in effect for
the Plan Year by a fraction the numerator of which is the number of full
months in the period and the denominator of which is 12; provided, however,
that no proration is required for a Participant who is covered under the
Plan for less than one full Plan Year if the formula for allocations is
based on Compensation for a period of at least 12 months. In determining
the compensation, for purposes of applying the annual compensation
limitation described above, of a Participant who is a five-percent owner or
one of the ten Highly Compensated Employees receiving the greatest
compensation for the Plan Year, the compensation of the Participant's
spouse and of his lineal descendants who have not attained age 19 as of the
close of the Plan Year shall be included as compensation of the Participant
for the Plan Year. If as a result of applying the family aggregation rule
described in the preceding sentence the annual compensation limitation
would be exceeded, the limitation shall be prorated among the affected
family members in proportion to each member's compensation as determined
prior to application of the family aggregation rules.
(b) The "determination date" with respect to any Plan Year means the last day
of the preceding Plan Year, except that
71
the determination date with respect to the first Plan Year of the Plan,
shall mean the last day of such Plan Year.
(c) A "key employee" means any Employee or former Employee who is a key
employee pursuant to the provisions of Section 416(i)(1) of the Code and
any Beneficiary of such Employee or former Employee.
(d) A "non-key employee" means any Employee who is not a key employee.
(e) A "permissive aggregation group" means those plans included in each
Employer's required aggregation group together with any other plan or plans
of the Employer, so long as the entire group of plans would continue to
meet the requirements of Sections 401(a)(4) and 410 of the Code.
(f) A "required aggregation group" means the group of tax-qualified plans
maintained by an Employer or a Related Company consisting of each plan in
which a key employee participates and each other plan that enables a plan
in which a key employee participates to meet the requirements of Section
401(a)(4) or Section 410 of the Code, including any plan that terminated
within the five-year period ending on the relevant determination date.
(g) A "super top-heavy group" with respect to a particular Plan Year means a
required or permissive aggregation group that, as of the determination
date, would qualify as a top-heavy group under the definition in paragraph
(i) of this Section with "90 percent" substituted for "60 percent" each
place where "60 percent" appears in the definition.
(h) A "super top-heavy plan" with respect to a particular Plan Year means a
plan that, as of the determination date, would qualify as a top-heavy plan
under the definition in paragraph (j) of this Section with "90 percent"
substituted for "60 percent" each place where "60 percent" appears in the
definition. A plan is also a "super top-heavy plan" if it is part of a
super top-heavy group.
(i) A "top-heavy group" with respect to a particular Plan Year means a required
or permissive aggregation group if the sum, as of the determination date,
of the present value of the cumulative accrued benefits for key employees
under all defined benefit plans included in such group and the aggregate of
the account balances of key employees under all defined contribution plans
included in such group
72
exceeds 60 percent of a similar sum determined for all employees covered by
the plans included in such group.
(j) A "top-heavy plan" with respect to a particular Plan Year means (i), in the
case of a defined contribution plan (including any simplified employee
pension plan), a plan for which, as of the determination date, the
aggregate of the accounts (within the meaning of Section 416(g) of the Code
and the regulations and rulings thereunder) of key employees exceeds 60
percent of the aggregate of the accounts of all participants under the
plan, with the accounts valued as of the relevant valuation date and
increased for any distribution of an account balance made in the five-year
period ending on the determination date, (ii), in the case of a defined
benefit plan, a plan for which, as of the determination date, the present
value of the cumulative accrued benefits payable under the plan (within the
meaning of Section 416(g) of the Code and the regulations and rulings
thereunder) to key employees exceeds 60 percent of the present value of the
cumulative accrued benefits under the plan for all employees, with the
present value of accrued benefits to be determined under the accrual method
uniformly used under all plans maintained by an Employer or, if no such
method exists, under the slowest accrual method permitted under the
fractional accrual rate of Section 411(b)(1)(C) of the Code and including
the present value of any part of any accrued benefits distributed in the
five-year period ending on the determination date, and (iii) any plan
(including any simplified employee pension plan) included in a required
aggregation group that is a top-heavy group. For purposes of this
paragraph, the accounts and accrued benefits of any employee who has not
performed services for an Employer or a Related Company during the
five-year period ending on the determination date shall be disregarded. For
purposes of this paragraph, the present value of cumulative accrued
benefits under a defined benefit plan for purposes of top-heavy
determinations shall be calculated using the actuarial assumptions
otherwise employed under such plan, except that the same actuarial
assumptions shall be used for all plans within a required or permissive
aggregation group. A Participant's interest in the Plan attributable to any
Rollover Contributions, except Rollover Contributions made from a plan
maintained by an Employer or a Related Company, shall not be considered in
determining whether the Plan is top-heavy. Notwithstanding the foregoing,
if a plan is included in a required or permissive aggregation group that is
not a top-heavy group, such plan shall not be a top-heavy plan.
73
(k) The "valuation date" with respect to any determination date means the most
recent Valuation Date occurring within the 12-month period ending on the
determination date.
22.2 - APPLICABILITY
Notwithstanding any other provision of the Plan to the contrary, the provisions
of this Article shall be applicable during any Plan Year in which the Plan is
determined to be a top-heavy plan as hereinafter defined. If the Plan is
determined to be a top-heavy plan and upon a subsequent determination date is
determined no longer to be a top-heavy plan, the vesting provisions of Article
VI shall again become applicable as of such subsequent determination date;
provided, however, that if the prior vesting provisions do again become
applicable, any Employee with three or more years of Vesting Service may elect
in accordance with the provisions of Article VI, to continue to have his vested
interest in his Employer Contributions Sub-Account determined in accordance with
the vesting schedule specified in Section 22.5.
22.3 - MINIMUM EMPLOYER CONTRIBUTION
If the Plan is determined to be a top-heavy plan, the Employer Contributions
allocated to the Separate Account of each non-key employee who is an Eligible
Employee and who is employed by an Employer or a Related Company on the last day
of such top-heavy Plan Year shall be no less than the lesser of (i) three
percent of his compensation or (ii) the largest percentage of compensation that
is allocated as an Employer Contribution and/or Tax-Deferred Contribution for
such Plan Year to the Separate Account of any key employee; except that, in the
event the Plan is part of a required aggregation group, and the Plan enables a
defined benefit plan included in such group to meet the requirements of Section
401(a)(4) or 410 of the Code, the minimum allocation of Employer Contributions
to each such non-key employee shall be three percent of the compensation of such
non-key employee. Any minimum allocation to a non-key employee required by this
Section shall be made without regard to any social security contribution made on
behalf of the non-key employee, his number of hours of service, his level of
compensation, or whether he declined to make elective or mandatory
contributions. Notwithstanding the minimum top-heavy allocation requirements of
this Section, if the Plan is a top-heavy plan, each non-key employee who is an
Eligible Employee and who is employed by an Employer or a Related Company on the
last day of a top-heavy Plan Year and who is also covered under a top-heavy
defined benefit plan maintained by an Employer or a Related Company will receive
the top-heavy benefits provided under the defined benefit plan in lieu of the
minimum top-heavy
74
allocation under the Plan offset by the benefits provided under the Plan.
22.4 - ADJUSTMENTS TO SECTION 415 LIMITATIONS
If the Plan is determined to be a top-heavy plan and an Employer maintains a
defined benefit plan covering some or all of the Employees that are covered by
the Plan, the defined benefit plan fraction and the defined contribution plan
fraction, described in Article VII, shall be determined as provided in Section
415 of the Code by substituting "1.0" for "1.25" each place where "1.25"
appears, except that such substitutions shall not be applied to the Plan if (i)
the Plan is not a super top-heavy plan, (ii) the Employer Contribution for such
top-heavy Plan Year for each non-key employee who is to receive a minimum
top-heavy benefit hereunder is not less than four percent of such non-key
employee's compensation, and (iii) the minimum annual retirement benefit accrued
by a non-key employee who participates under one or more defined benefit plans
of an Employer or a Related Company for such top-heavy Plan Year is not less
than the lesser of three percent times years of service with an Employer or a
Related Company or thirty percent.
22.5 - ACCELERATED VESTING
If the Plan is determined to be a top-heavy plan, a Participant's vested
interest in his Employer Contributions Sub-Account shall be determined no less
rapidly than in accordance with the following vesting schedule:
Years of Vesting Service Vested Interest
less than 1 0%
1 but less than 2 20%
2 but less than 3 40%
3 but less than 4 60%
4 but less than 5 80%
5 or more 100%
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ARTICLE XXIII
EFFECTIVE DATE
23.1 - EFFECTIVE DATE OF AMENDMENT AND RESTATEMENT
This amendment and restatement is effective as of October 1, 1997.
* * *
EXECUTED AT Newport Beach ,
--------------------------------------
California , this __29th___ day of September , 1997.
- ------------------------ --------- ---------------- --
DOWNEY SAVINGS AND LOAN ASSOCIATION, F.A.
By: /s/ JoLene M. Wryn
-------------------------------------------
Title: SVP, Director of Human Resources
76