EXHIBIT 10.14
TABLE OF CONTENTS
Page
ARTICLE I STATEMENT OF PURPOSE AND INTENTIONS
1.1 Purpose............................................................................................. 1
1.2 Intent to Quality................................................................................... 1
ARTICLE II DEFINITIONS
2.1 Anniversary Date ............................................................................. 2
2.2 Annuity Starting Date ........................................................................ 2
2.3 Beneficiary .................................................................................. 2
2.4 Code ......................................................................................... 2
2.5 Company ...................................................................................... 2
2.6 Compensation ................................................................................. 2
2.7 Date of Employment ........................................................................... 3
2.8 Date of Re-employment ........................................................................ 3
2.9 Effective Date ............................................................................... 3
2.10 Elective Compensation ........................................................................ 3
2.11 Employee ..................................................................................... 3
2.12 Employer ..................................................................................... 5
2.13 Hour of Service .............................................................................. 5
2.14 Individual Accounts .......................................................................... 6
2.15 Insurance Company ............................................................................ 6
2.16 Limitation Year .............................................................................. 6
2.17 Normal Retirement Age and Normal Retirement Date ............................................. 7
2.18 Participant .................................................................................. 7
2.19 Plan ......................................................................................... 7
2.20 Plan Administrator ........................................................................... 7
2.21 Plan Year..................................................................................... 7
2.22 Required Beginning Date ...................................................................... 7
2.23 Retirement and Retirement Date ............................................................... 7
2.24 Service ...................................................................................... 7
2.25 Total and Permanent Disability ............................................................... 7
2.26 Trustees ..................................................................................... 7
2.27 Vested Benefit ............................................................................... 7
ARTICLE III PARTICIPATION
3.1 Commencement of Participation ................................................................ 8
3.2 Minimum Participation Standards .............................................................. 8
3.3 Active Participation; Inactive Participation ................................................. 8
3.4 Cessation of Participation ................................................................... 8
3.5 Participation on Resumption of Employment .................................................... 8
ARTICLE IV CONTRIBUTIONS
4.1.1 Basic Contributions: Amount ................................................................. 9
4.1.2 Basic Contribution Accounts ................................................................. 9
4.1.3 Basic Contributions: Allocations ............................................................ 9
4.1.4 Basic Contributions: Vesting ................................................................ 9
4.2.1 Elective Contributions: Amount .............................................................. 9
4.2.2 Elective Contribution Account.:.............................................................. 12
4.2.3 Elective Contributions: Allocations ......................................................... 12
4.2.4 Elective Contributions: Vesting ............................................................. 12
4.2.5 Elective Contributions: Withdrawals ......................................................... 12
4.3.1 Rollover Contribution: Amount ............................................................... 14
4.3.2 Rollover Contribution Account ............................................................... 14
4.3.3 Rollover Contributions: Allocation .......................................................... 14
4.3.4 Rollover Contributions: Vesting ............................................................. 14
4.4.1 Plan-to-Plan Transfers: Amount .............................................................. 15
4.4.2 Plan-to-Plan Transfer Account ............................................................... 15
4.4.3 Plan-to-Plan Transfer: Allocation ........................................................... 15
4.4.4 Plan-to-Plan Transfers: Vesting ............................................................. 15
ARTICLE V REQUIRED NON-DISCRIMINATION TESTING
5.1.1 Limitation on Additions ..................................................................... 16
5.1.2 Suspense Account ............................................................................ 18
5.2.1 Top-Heavy Provisions: Application ........................................................... 19
5.2.2 Top-Heavy Determination ..................................................................... 19
5.2.3 Special Rules for Top-Heavy Plans ........................................................... 21
5.3 Actual Deferral Percentage Test ............................................................. 22
ARTICLE VI ADMINISTRATION OF PLAN ASSETS
6.1.1 The Investment Fund .......................................................................... 25
6.1.2 Employee Directed Investments ................................................................ 25
6.2 Account Adjustments .......................................................................... 25
6.3 Distribution Adjustments ..................................................................... 26
6.4 Expenses...................................................................................... 26
ARTICLE VII DISTRIBUTIONS
7.1 Termination of Employment (Including Disability) Before Retirement .......................... 27
7.2 Death Benefits .............................................................................. 27
7.3 Retirement................................................................................... 29
7.4 Form of Retirement Benefit .................................................................. 29
7.5 Retirement Benefits: Election of Forms and Commencement of Payments ......................... 30
7.6 Loans to Participants ....................................................................... 33
ARTICLE VIII GENERAL PROVISONS
8.1.1 Plan Modification: Authority................................................................. 37
8.1.2 Plan Modification: Merger.................................................................... 37
8.1.3 Plan Modification: Termination.............................................................. 37
8.2.1 Duties: Plan Administrator................................................................... 37
8.2.2 Duties: Employer............................................................................. 37
8.3 Benefit Claims Procedure..................................................................... 38
8.4 Review Procedure............................................................................. 38
8.5 Qualification of the Plan and Conditions of Contributions ................................... 39
8.6 Beneficiaries................................................................................ 39
8.7 Spendthrift Clause........................................................................... 39
8.8 Annuities.................................................................................... 40
8.9 Limitations of the Employer's Liability ..................................................... 40
8.10 Non-Guarantee of Employment ................................................................. 40
8.11 Applicable Law .............................................................................. 40
ARTICLE IX DIRECT ROLLOVERS
9.1 General Rule............................................................................... 41
9.2 Definitions................................................................................ 41
ARTICLE I
STATEMENT OF PURPOSE AND INTENTIONS
1.1 Purpose
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The Employer adopts this Plan as a defined contribution retirement plan of
the profit-sharing type with a cash or deferred arrangement to provide
retirement benefits and incidental benefits to certain Employees who
qualify for such benefits as more particularly provided herein.
1.2 Intent to Qualify
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It is the Employer's intent that this Plan be a qualified plan in the
meaning of sec. 401 of the Internal Revenue Code of 1986, as amended, that
any trust that may become part hereof be exempt from tax under sec. 501 (a)
of the Code, and that contributions made by the Employer be deductible
under sec. 404 of the Code. This Plan shall be interpreted, applied and
administered in a manner consistent with this intent to qualify. All
amounts contributed to, accumulated and/or held pursuant to this Plan shall
not be diverted to or used for other than the exclusive benefit of the
Participants or their beneficiaries until after such amounts have been
distributed from this Plan. In the event that the portion of this Plan
comprising the qualified cash or deferred arrangement fails to qualify
under the provision of sec. 401(k) of the Code, the Plan as a whole shall
nonetheless be interpreted so as to qualify under sec. 401 (a) of the Code.
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ARTICLE II
DEFINITIONS
For the purpose of this Plan, when the following terms appear in this Plan in
boldface type, they shall have the meanings indicated in this Article unless a
different meaning is clearly required by the context.
Whenever required by the context, masculine pronouns shall include the feminine,
and singular the plural.
2.1 Anniversary Date means each January 1.
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2.2 Annuity Starting Date means the first day of the first period for which an
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amount is payable as an annuity or any other form.
2.3 Beneficiary is defined in Section 8.6, except as specifically provided to
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the contrary elsewhere in this Plan.
2.4 Code means the Internal Revenue Code of 1986, as amended, and all
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regulations promulgated thereunder.
2.5 Company means CIearCommerce Corporation.
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2.6 Compensation means wages, salary, and/or other remuneration that is
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receivable by an individual during a Plan Year in exchange for Service and
that is required to be reported as income on the individual's Form W-2 for
federal income tax withholding purposes under Code sec. 3401(a).
In addition, Compensation shall include the following amounts:
(a) all elective deferrals (as defined by Code sec. 402(g)(3)) made by the
Participant during the Plan Year pursuant to a salary reduction
agreement with the Employer, including those described by Section
4.2.1 of this Plan; and
(b) all Compensation accrued by the Participant during the Plan Year but
which is not then included as taxable income of the Participant
pursuant to a "cafeteria" or other such plan maintained by the
Employer according to Code sec. 125.
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan
Years beginning on or after January 1, 1994, the annual Compensation of
each Employee taken into account under the Plan shall not exceed the OBRA
'93 annual compensation limit. The OBRA '93 annual compensation limit is
$150,000, as adjusted by the Commissioner for increases in the cost of
living in accordance with sec. 401(a)(17)(B) of the Internal Revenue Code.
The cost-of-living adjustment in effect for a calendar year applies to any
period, not exceeding 12 months, over which Compensation is determined
(determination period) beginning in such calendar year. If a determination
period consists of fewer than 12 months, the OBRA '93 annual compensation
limit will be multiplied by a fraction, the numerator of which is the
number of months in the determination period, and the denominator of which
is 12.
For Plan Years beginning on or after January 1, 1994, any reference in this
Plan to ' the limitation under sec. 401(a)(17) of the Code shall mean the
OBRA '93 annual compensation limit set forth in this provision.
2
If Compensation for any prior determination period is taken into account
in determining an Employee's benefits accruing in the current Plan Year,
the Compensation for the prior determination period is subject to the
OBRA '93 annual compensation limit in effect for that prior determination
period. For this purpose, for determination periods beginning before the
first day of the first Plan Year beginning on or after January 1, 1994,
the OBRA '93 annual compensation limit is $150,000.
In applying this limit, the family aggregation rules of Code sec.
414(q)(6) shall apply, except that in applying such rules, the term
"family" shall include only the spouse of the Employee and any lineal
descendants of the Employee who have not attained age 19 before the close
of the Plan Year. In addition, if this limit applies to a family unit,
then for the purposes of this Plan, each affected family member shall be
credited with an amount of Compensation on a pro rata basis, so that such
credited amount, when compared to the adjusted compensation limit, shall
have the same direct proportion that exists in comparing that person's
actual Compensation to the sum of all that family's affected members'
Compensation.
2.7 Date of Employment means the date on which an Employee has his first Hour
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of Service.
2.8 Date of Re-employment means the first date as of which an Employee has an
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Hour of Service after his most recent termination of Service.
2.9 Effective Date means February 1, 1999.
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2.10 Elective Compensation means that portion of a Participant's Compensation
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that is attributable to Service performed while the Participant had in
effect an election to have Elective Contributions made on his behalf,
pursuant to Article IV:
2.11 Employee means a natural person who performs Service for the Employer in
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exchange for Compensation, including any Leased Employee (as described
below) but excluding any independent contractor who is not a Leased
Employee. For the purposes of this plan, Employee shall be further
described as follows.
(a) Highly Compensated Employee ("HCE") means:
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(1) The group of HCEs includes any Employee who during the Plan
Year performs services for the Employer and who (i) is a 5-
percent owner, (ii) receives compensation for the Plan Year in
excess of the sec. 414(q)(1)(B) amount for the Plan Year, (iii)
receives compensation for the Plan Year in excess of the sec.
414(q)(1)(C) amount for the Plan Year and is a member of the
top paid group of Employees within the meaning of sec.
414(q)(4), or (iv) is an officer and receives compensation
during the Plan Year that is greater than 50 percent of the
dollar limitation in effect under sec. 415(b)(1)(A). If no
officer satisfies the compensation requirement during the Plan
Year, the highest paid officer for such year shall be treated
as an HCE.
For purposes of determining who is an HCE, compensation means
wages, salary, and/or other remuneration that is required to be
reported as income on the individual's W-2 for federal income
tax withholding purposes under Code sec. 3401(a), plus all
elective deferrals as defined in Code sec. 402(g)(3) and
benefits pursuant to a Plan under Code sec. 125 that are not
currently taxable.
(2) If an Employee is a family member of either a 5-percent owner
(whether active or former) or an HCE who is one of the 10 most
HCEs ranked on the basis of compensation paid by the Employer
during such year, then
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the family member and the 5-percent owner or top-ten HCE shall be
aggregated. In such case, the family member and 5-percent owner
or top-ten HCE shall be treated as a single Employee receiving
compensation and plan contributions or benefits equal to the sum
of the compensation and benefits of the family member and 5-
percent owner or top-ten HCE. For purposes of this Section,
family member includes the spouse, lineal ascendants and
descendants of the Employee or former Employee, and the spouses
of such lineal ascendants and descendants.
(3) The determination of who is an HCE, including the determination
of the number and identity of Employees in the top paid group,
the number of Employees treated as officers and the compensation
that is taken into account, shall be made in accordance with the
sec. 414(q) and sec. 1.414(q)-1T of the temporary Income Tax
Regulations to the extent they are not inconsistent with the
method established above.
(b) Key Employee means (solely for the purposes of Section 5.2) an
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Employee who, at any time during the Plan Year or four preceding Plan
Years, was:
(1) an officer of the Employer having an annual "compensation"
greater than 50% of the amount in effect under Code sec.
415(b)(1)(A) for any such Plan Year; or
(2) one of the ten Employees having annual "compensation" greater
than the limitation in effect under Code sec. 415(c)(1)(A) and
owning (or considered as owning within the meaning of Code sec.
318) the largest interest of the Employer; or
(3) a 5 percent owner of the Employer; or
(4) a 1 percent owner of the Employer having an annual "compensation"
of more than $150,000.
For the purposes of this Plan, Key Employee shall be described more
particularly by Code sec. 416(i)(1). "Compensation" is defined under
Highly Compensated Employee, above.
(c) Leased Employee means a person who is employed (either as a common law
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employee or an independent contractor) by a leasing organization (but
not by the Employer) and who performs services for the Employer on a
substantially full-time basis for a period of at least one year, where
such services are of a type historically performed by Employees within
the business field of the Employer, and where such services are
provided pursuant to a contract between the leasing organization and
the Employer, EXCEPT that if such person is covered under a money
purchase pension plan maintained by the leasing organization and which
provides (1) a nonintegrated employer contribution rate of at least
71/2% of compensation for services performed prior to January 1, 1987,
and at least 10% of compensation for services performed after December
31, 1986, with compensation being determined according to Code sec.
415(c)(3), but including amounts contributed by the Employer pursuant
to a salary reduction agreement which are excludable from the
Employee's gross income under Code sec. 125, 402(e)(3, 402(h), or
403(b; (2) immediate participation; and (3) full and immediate
vesting, AND if the sum of all such persons is not more than 20% of
the Employer's "nonhighly compensated workforce" (as defined in 26 CFR
sec. 1.414(n)-2(f)(3)(ii)), then for the purposes of this Plan such
person is not a Leased Employee, and is at that time ineligible for a
benefit or any vested interest in this Plan.
4
Any provisions of this Section and this Plan to the contrary
notwithstanding, the term "Leased Employee" shall be more specifically
defined by, and Leased Employees shall be treated under this Plan
consistent with, Code sec. 414(n) and 26 CFR sec. 1.414(n)-2.
2.12 Employer means the Company, and any other person or business organization
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which has adopted and maintains this Plan on behalf of its employees with
the consent of the Company.
In addition, to the extent required for this Plan's qualification for
special tax treatment under the Code, and to the extent otherwise required
by applicable law, Employer also means any predecessor organization which
previously maintained this Plan on behalf of its employees (but only with
regard to that period of time during which the Plan was maintained by such
organization (s)), and any employer which, together with the Employer (as
otherwise defined in this Section), is a member of a controlled group of
corporations in the meaning of Code sec. 414(b), or is a member of a group
of trades or business (whether or not incorporated) under common control
in the meaning of Code sec. 414(c), or is a member of an affiliated
service group in the meaning of Code sec. 414(m), or is otherwise required
to be aggregated by Code sec. 414(o).
2.13 Hour of Service means:
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(a) each hour for which an Employee is paid, or entitled to payment, by
the Employer for the performance of duties;
(b) each hour for which an Employee is directly or indirectly paid, or
entitled to payment, by the Employer on account of a period of time
during which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation, holiday,
illness, incapacity (including disability), layoff, jury duty,
military duty or leave of absence except with respect to payments made
or due under a plan maintained solely for the purpose of complying
with applicable workers' compensation or unemployment compensation or
disability insurance laws or which are solely in reimbursement to the
Employee for medical or medically-related expenses incurred by the
Employee; however, no more than 501 Hours of Service shall be credited
pursuant to this paragraph to an Employee on account of any single
continuous period during which the Employee performs no duties
(whether or not such period occurs in a single Plan Year); and
(c) each hour for which back pay, irrespective of mitigation of damages,
is either awarded or agreed to by the Employer; however, an Hour of
Service shall not be credited under both this paragraph and paragraph
(a) or (b), above.
Hours of Service credited under paragraphs (b) and (c), above, shall be
credited in accordance with Department of Labor Regulations found at 29
CFR sec. 2530.200b-2(b). Hours of Service shall be credited to the
appropriate Plan Year in accordance with 29 CFR sec. 2530.200b-2(c).
Hours of Service included pursuant to paragraph (a) shall be determined
according to records of employment maintained by the Employer. If such
records do not provide an adequate basis for determining the actual number
of Hours of Service accrued by a particular Employee (e.g. a salaried
Employee), then Hours of Service under paragraph (a) shall be credited to
the Employee on a weekly basis and the Employee shall be credited with 45
Hours of Service for every week in which he has accrued at least one Hour
of Service as otherwise described in paragraph (a).
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Special Rule for Maternity or Paternity Absences
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If an Employee is absent from work due to
(a) the pregnancy of the Employee,
(b) the birth of a child to the Employee,
(c) the placement of a child with the Employee pursuant to the Employee's
adoption of the child, or
(d) the care of such child described in (b) or (c) above immediately
following its birth or placement,
the Employee shall nonetheless be credited with the number of Hours of
Services which normally would have been credited to the Employee but for
said absence (or, if the Plan Administrator is unable to determine said
number, with eight (8) Hours of Service for each regularly scheduled
workday the Employee is absent), to a maximum of 501 Hours of Service.
PROVIDED that this special crediting of Hours of Service occurs during
only one Plan Year, and
PROVIDED that the Plan Year in which such Hours of Service are credited in
the Plan Year in which the absence begins, unless such crediting would not
be necessary to avoid a Break in Service Year in said Plan Year, in which
case such Hours of Service shall be credited as they accrue in the Plan
Year immediately following the Plan Year in which the absence begins, and
PROVIDED that the crediting of such Hours of Service shall be solely for
the purpose of avoiding a Break in Service Year, and shall not operate to
increase any Employee's or former Employee's vested percentage or
retirement benefit, nor shall the crediting have any other operative
effect regarding this Plan, and
PROVIDED that, under rules established by the Plan Administrator, the
Employee may be required to provide to the Plan Administrator written
certification from the Employee's attending doctor or other professional
attendant at birth or representative of the relevant adoption agency to
establish that the absence from work is for the reasons referred to above.
2.14 Individual Accounts means, for any Participant, those accounts which are
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both listed below and maintained pursuant to this Plan on his behalf.
(a) Basic Contribution Account
(b) Elective Contribution Account
(c) Rollover Contribution Account
(d) Plan-to-Plan Transfer Account
2.15 Insurance Company means a legal reserve life insurance company, licensed
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to do business in the state of Texas, with which the Trustees have entered
into a contract to provide benefits under the Plan.
2.16 Limitation Year, for purposes of determining the limitation on certain
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additions to the Plan for the benefit of an Employee as described in
Section 5.1.1, means a twelve-consecutive-month period beginning on an
Anniversary Date.
6
2.17 Normal Retirement Age and Normal Retirement Date are defined in Article
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VII under "Retirement".
2.18 Participant means an Employee or former Employee who has become a
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Participant or resumed participation pursuant to Section 3.1 or 3.5 and
who has not subsequently ceased to participate as provided in Section 3.4.
A Participant may be Active or Inactive as provided in Section 3.3.
2.19 Plan means this CIearCommerce Corporation 401 (k) Plan.
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2.20 Plan Administrator means one or more persons appointed by the Trustees to
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control and manage the operation and administration of the Plan. The
person or persons so appointed shall constitute a named fiduciary or
fiduciaries for purposes of the Employee Retirement Income Security Act of
1974. If no Plan Administrator is appointed, then the Trustees shall be
the Plan Administrator.
2.21 Plan Year means a period of time commencing on an Anniversary Date and
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ending with the day immediately preceding the next Anniversary Date.
2.22 Required Beginning Date
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(a) The Required Beginning Date of a Participant who is not a 5% owner is
April 1 of the calendar year following the later of:
(1) the calendar year in which the Participant attained age 701/2,
or
(2) the calendar year in which the Participant retires.
(b) The Required Beginning Date of any Participant who is a 5% owner is
April 1 of the calendar year following the calendar year in which the
Participant attained age 701/2.
(c) 5% owner, for purposes of this Section, means a Participant who is a
5% owner within the meaning of Code sec. 416(i) except without regard
to whether the Plan is actually top-heavy) at any time during the
Plan Year ending with or within the calendar year in which the
Participant attains age 661/2, or any subsequent Plan Year.
2.23 Retirement and Retirement Date are defined in Article Vll under
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"Retirement".
2.24 Service means employment of the Employee by the Employer for the
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performance of labor or duties by the Employee on behalf of the Employer
and for which the Employee is to be compensated by the Employer.
2.25 Total and Permanent Disability means a physical or mental condition that
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in the opinion of the Plan Administrator precludes a person from
employment for which he is qualified because of his experience, training,
and education, and that is expected to continue for not less than 12
months. The Plan Administrator's opinion regarding the degree and
permanence of the disability shall be supported by medical evidence.
2.26 Trustees means those persons or the organization with which the Employer
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has entered into a trust agreement to provide benefits under the Plan.
However, at any time that the Plan is not trusteed, "Trustees" shall mean
the Company.
2.27 Vested Benefit means, at any time, the sum of the Participant's vested
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Individual Account balances.
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ARTICLE III
PARTICIPATION
3.1 Commencement of Participation
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An Employee shall commence participation in the Plan on the first Entry
Date on which he meets the Plan's Minimum Participation Standards.
The Entry Dates shall be the Effective Date, and thereafter each Employee's
Date of Employment or Date of Re-employment, or the first day of each
month.
3.2 Minimum Participation Standards
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An Employee meets the Plan's Minimum Participation Standards at any time
when he satisfies the following conditions:
(a) He is an Employee.
(b) He is at least twenty-one (21) years of age.
3.3 Active Participation: Inactive Participation
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Once an Employee has commenced participation (or if he subsequently ceased
to participate, once he has resumed participation), he shall be an Active
Participant with respect to each Hour of Service accrued while he is an
Employee. At any time thereafter at which he is not an Employee, but before
his participation has ceased, he shall be an Inactive Participant.
3.4 Cessation of Participation
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A Participant shall cease to participate in this Plan (without regard to
his status, as an Employee) as of the first date on which he has most
recently terminated his employment as an Employee and also has no rights
(present or contingent) to any benefit under this Plan.
3.5 Participation on Resumption of Employment
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A former Employee who participated during the period of his prior
employment shall be eligible to resume participation as of his first Hour
of Service upon resumption of employment as an Employee.
Any other former Employee shall be eligible to commence participation as of
the first Entry Date which occurs on or after the date of his resumption of
employment as an Employee.
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ARTICLE IV
CONTRIBUTIONS
4.1.1 Basic Contributions: Amount
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For each Plan Year, the Employer may contribute amounts to the Plan.
These amounts shall be called Basic Contributions, and shall be
determined according to the following provisions.
Basic Top-Heavy Contribution
----------------------------
If a Participant is to be credited with some additional amount
pursuant to the "top-heavy" provisions of Section 5.2 of this Plan,
such additional amount shall be contributed and credited as an
additional portion of the Basic Contribution for that Plan Year.
Any of the provisions of this Section to the contrary notwithstanding,
no amounts may be contributed to the Plan as Basic Contributions in
excess of the maximum amount that the Employer may deduct from its net
income subject to federal income taxation for the Employer's taxable
year on account of which such contributions have been made plus any
amount which may be currently contributed and "carried over" for
succeeding taxable years pursuant to Code sec. 404(a)(3)(A)(ii)
(assuming that the Employer is subject to federal income taxation),
nor shall such amounts exceed the maximum amount which may be
allocated consistently with the limitations stated in Section 5.1.1
Basic Contributions shall be allocated among the Plan's Participants
pursuant to Section 4.1.3 in a uniform and nondiscriminatory manner.
4.1.2 Basic Contribution Accounts
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Each Participant shall have maintained on his behalf a Basic
Contribution Account, which shall be adjusted as provided in Article
VI and which shall be closed when the Participant is entitled to no
further benefits under the terms of the Plan.
4.1.3 Basic Contributions: Allocations
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Basic Top-Heavy Contributions: Allocations
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As of the date the contribution is received by the Plan, each
Participant who is entitled to be credited with an additional amount
of Basic Contribution pursuant to Section 5.2 of this Plan shall have
such amount credited to his Basic Contribution Account.
4.1.4 Basic Contributions: Vesting
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At any time, each Participant's interest in his Basic Contribution
Account balance shall be fully vested in the Participant and not
subject to forfeiture prior to the withdrawal or distribution of such
balance pursuant to this Plan.
4.2.1 Elective Contributions: Amount
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(a) Elective Deferral
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Each Participant may elect to defer his receipt of Compensation
that has not yet become available to him. For each Plan Year, the
total amount of Compensation that may be deferred may equal not
more than the maximum
9
amount of his Elective Compensation for the Plan Year permissible
consistent with Section 5.1.1 and all other limiting provisions
of this Plan, the Code, and all other applicable legal limits.
A Participant may elect to defer Compensation attributable to
bonuses at a rate that differs from the rate elected for other
Compensation.
For each Plan Year, on behalf of each Participant who has made
such an elective deferral, the Employer shall contribute an
amount to the Plan equal to the amount of the Participant's
elective deferral of Compensation for the Plan Year. This
contribution shall be called an Elective Contribution.
Each Elective Contribution shall be paid to the Plan by the
Employer as soon as reasonably practicable (in no event later
than 90 days) after it is withheld by or otherwise paid to the
Employer. In addition, each Elective Contribution shall be paid
to the Plan by the Employer no later than the last day of the
twelve-month period immediately following the Plan Year with
respect to which the contribution is made.
(b) Election
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A Participant may elect to change the amount of his elective
deferrals, and therefore the amount of the Elective Contributions
made on his behalf, within the limits prescribed in subsection
(a) above. A Participant may also elect to cease his elective
deferrals and Elective Contributions altogether, or, having done
so, may elect to recommence them.
A Participant's election to commence elective deferrals may
become effective only as of the Participant's Date of Employment,
Date of Re-employment or the first day of any prospective month.
A Participant's election to recommence or to change the amount of
his elective deferrals may become effective only as of the first
day of any prospective calendar quarter. However, a Participant's
election to defer Compensation attributable to bonuses may take
effect prior to the date the bonus is payable.
A Participant's election to cease his elective deferrals
altogether may become effective only as of the first day of any
prospective payroll period.
Any of the provisions of this subparagraph (b) to the contrary
notwithstanding, any election described by this subparagraph (b)
regarding elective deferrals may become effective only after
written notice delivered to the Plan Administrator within a
reasonable time prior to the effective date of the election.
(c) Limit on Amount
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The total sum of any Participant's elective deferrals for any
taxable year of the Participant may not exceed the limit
prescribed by IRC Reg. 1.402(g)-1(c). (Generally, for taxable
years beginning in 1999, that limit equals $10,000, except for
adjustments made to take into account elective deferrals made to
annuity contracts under Code sec. 403(b)).
For the purposes of this subsection (c), "elective deferrals" has
the meaning defined in IRC Reg. 1.402(g)-1(b), including (but not
limited to) Elective Contributions received by this Plan on the
Participant's behalf.
For any Participant, if this limit on elective deferrals is
exceeded, then the following corrective measures are permitted.
10
(1) The Participant may notify the Plan Administrator of the
excess deferral, and may request that the Plan Administrator
distribute to the Participant an amount not exceeding the
lesser of:
(A) the amount of the excess deferral, plus all income
allocable to the excess deferral;
(B) the sum of all amounts deferred by the Participant and
contributed to the Plan as Elective Contributions on
behalf of the Participant with regard to the affected
taxable year, net of any allocable earnings, gains or
losses attributable to such amounts; or
(C) the balance of the Participant's Elective Contribution
Account as of the date of distribution, minus any
amounts of withholding that are legally required.
In addition, the amount that may be included in a corrective
distribution shall be reduced by any excess contributions
previously distributed to the Participant for the Plan Year
that began with or within the affected taxable year of the
Participant.
To be effective for the purposes of this Plan, the
Participant's notice and request must be in writing and
delivered to the Plan Administrator prior to the first April
15 following the close of the affected taxable year of the
Participant.
To the extent that the Participant has excess deferrals for
the taxable year calculated by taking into account only
elective deferrals under, this Plan and other plans of the
Employer, and absent actual notification by the Participant,
the Participant shall be deemed to have provided the notice
described above in this subsection.
(2) A corrective distribution of excess deferrals and allocable
income may be made during the affected taxable year of the
Participant only if all of the following conditions are
satisfied.
(A) The Participant has designated the amount of the
distribution as being attributable to an excess
deferral. (Because subsection (1) above limits the
amount of the corrective distribution to not more than
the amount of excess deferrals calculated by taking
into account only elective deferrals under this Plan
and other plans of the Employer, and absent an actual
designation by the Participant, the Participant shall
be deemed to have provided the designation described
above in this subsection.)
(B) The corrective distribution is made after the date on
which the Plan received the excess deferral.
(C) The Plan has designated the amount of the distribution
as being attributable to an excess deferral.
(3) Not later than the first April 15 following the close of the
affected taxable year of the Participant, and after receipt
of the Participant's written notice and request, the Plan
Administrator may make the appropriate corrective
distribution, consistent with the provisions of this
subparagraph (c).
11
The Plan Administrator may require that before the
corrective distribution is made, the Participant must
provide to the Plan Administrator additional documentation
evidencing the Participant's representations regarding the
excess deferrals.
The income allocable to excess deferrals for the affected taxable
year of the Participant shall be determined according to the IRC
Reg. 1.402(g)-1(c)(5).
In the event of a corrective distribution of excess deferrals and
allocable income, the balance of the Participant's Elective
Contribution Account shall be reduced accordingly.
4.2.2 Elective Contribution Account
- ----- -----------------------------
On behalf of each Participant who has elected to defer some portion of
his Compensation pursuant to this Article IV, there shall be
maintained an Elective Contribution Account, which shall be adjusted
as provided in Article VI and which shall be closed when the
Participant is entitled to no further benefits under the terms of this
Plan.
4.2.3 Elective Contributions: Allocations
- ----- -----------------------------------
Any Elective Contribution received by the Plan on behalf of a
Participant shall be credited to the Elective Contribution Account of
that Participant as of the date on which the contribution was received
by the Plan.
4.2.4 Elective Contributions: Vesting
- ----- -------------------------------
The Elective Contributions received by the Plan on behalf of any
Participant shall be fully vested in such Participant and not subject
to forfeiture prior to the time they are withdrawn or distributed
pursuant to this Plan.
4.2.5 Elective Contributions: Withdrawals
- ----- -----------------------------------
(a) At any time before his Retirement Date, a Participant may apply
to withdraw an amount from his Elective Contribution Account. The
application must be in writing and received by the Plan
Administrator. If the Participant has attained age 59 1/2 or is
not an Employee as of the date of distribution, the Participant
may withdraw up to the entire balance of his Elective
Contribution Account, including interest or other earnings.
Subject to the additional restrictions of this Section, any other
Participant may withdraw an amount that does not exceed the
balance of the account attributable to Elective Contributions
made on his behalf, excluding any interest or other earnings.
(b) If the Participant is an Employee on the date as of which the
withdrawal is to be distributed, and if the Participant has not
yet attained age 59 1/2 as of the date of distribution, the Plan
Administrator may permit the distribution 'only to the extent
that the Plan Administrator reasonably believes that the
distribution is necessary to satisfy an immediate and heavy
financial need of the Participant, taking into account all
relevant facts and circumstances.
(1) Any of the following facts and circumstances shall
automatically be deemed by the Plan Administrator to
constitute an immediate and heavy financial need of the
Participant:
(A) expenses for medical care (as defined in Code sec.
213(d)) that were either previously incurred by the
Participant, the Participant's spouse, or any
dependents of the Participant (with "dependents" being
as defined by Code sec. 152) or that are necessary for
these persons to obtain such medical care;
12
(B) costs directly related to the purchase of a principal
residence for the Participant (excluding mortgage
payments);
(C) payment of tuition and related educational fees for the
next 12 months of post-secondary education for the
Participant, or the Participant's spouse, children, or
dependents (as defined in Code sec. 152);
(D) payments necessary to prevent the eviction of the
Participant from the Participant's principal residence,
or foreclosure on the mortgage on that residence; or
(E) any other facts and circumstances that the Commissioner
of the Internal Revenue Service has included through
the publication of revenue rulings, notices, or other
documents of general applicability.
A financial need shall not fail to qualify as immediate and
heavy merely because such need was reasonably foreseeable or
voluntarily incurred by the Participant.
(2) In requesting a withdrawal due to financial need, the
Participant shall specifically identify the facts and
circumstances which have caused the financial need and shall
state the amount needed to satisfy the need, which may
include amounts necessary to pay any income taxes or
penalties reasonably anticipated to result from the
distribution. The Participant shall further state that, to
the extent of the amount requested, the financial need
cannot otherwise be satisfied by:
(A) reimbursement or compensation by insurance or
otherwise;
(B) reasonable liquidation of the Participant's assets, but
only to the extent that such liquidation would not in
itself cause an immediate and heavy financial need;
(C) cessation of elective deferrals or any Participant
contributions permitted by the Plan;
(D) other distributions or nontaxable (at the time of the
loan) loans from this Plan or any other plan maintained
by the Employer or any other employer; and/or
(E) borrowing from commercial sources on reasonable
commercial terms.
For the purposes of this subsection, the Participant's
resources shall be deemed to include those assets of the
Participant's spouse arid minor children to the extent that
such assets are reasonably available to the Participant.
(3) Before the withdrawal may be permitted, the Plan
Administrator shall receive from the Participant any
documentation that the Plan Administrator requires in the
performance of his fiduciary duty to substantiate that the
withdrawal is necessary to satisfy the financial need
identified by the Participant. Under no circumstances shall
the Plan Administrator distribute more than the Plan
Administrator reasonably believes is necessary to satisfy
the financial need identified by the Participant.
13
(c) The Plan Administrator shall approve or deny the Participant's
application for such a withdrawal within a reasonable amount of
time after receipt of such application. If approved, payment
shall be made by the Plan Administrator as soon as
administratively practicable, but in any event within ninety (90)
days after the Plan Administrator's receipt of the Participant's
application.
The Plan Administrator shall also issue any denial of such an
application as soon as administratively practicable. Such a
denial shall be delivered in writing and shall state specifically
the reasons for such denial.
(d) The Plan Administrator may limit the frequency of withdrawals.
Such limit shall apply uniformly to all Participants.
(e) The amount of any withdrawal from an Elective Contribution
Account pursuant to this Section shall be charged against that
Account as of the date that the withdrawal is distributed from
the Plan.
4.3.1 Rollover Contribution: Amount
- ----- -----------------------------
The Plan Administrator may accept Rollover Contributions from or on
behalf of a Participant.
As used herein, Rollover Contribution means all or a portion of an
"eligible rollover distribution" described in Code sec. 402(c), or an
amount paid or distributed out of an individual retirement account or
individual retirement annuity described in Code sec. 408(d)(3)(A)(ii).
The Plan Administrator may require such assurance and proofs of fact
from the Participant as may be necessary to determine whether an
amount the Participant desires to contribute is a Rollover
Contribution as defined herein. He may further require the Participant
to agree to indemnify the Plan for any adverse consequences which may
follow if a contribution proves not to have been a Rollover
Contribution. An Employee on whose behalf a transfer described in this
Section is made shall agree to cooperate fully with the Plan
Administrator in effecting any and all corrective measures which may
be required by an agency of the federal government to prevent the
Plan's disqualification as a result of the transfer.
4.3.2 Rollover Contribution Account
- ----- -----------------------------
For the benefit of any Participant on whose behalf the Plan has
accepted any Rollover Contribution, there shall be maintained a
Rollover Account. Rollover Accounts shall be adjusted as provided in
Article VI, and shall be closed when the balances of such accounts,
including allocable earnings, gains and losses, have been distributed
pursuant to this Plan.
4.3.3 Rollover Contributions: Allocation
- ----- ----------------------------------
Any Rollover Contribution received by the Plan pursuant to this
Article IV shall be credited as it is received to the Rollover
Account(s) of the Participant on whose behalf it was received.
4.3.4 Rollover Contributions: Vesting
- ----- -------------------------------
The Rollover Contributions received by the Plan on behalf of any
Participant shall be fully vested in such Participant and not subject
to forfeiture prior to the time they are distributed pursuant to this
Plan.
14
The allocations to be reduced (and the order in which they shall
be reduced) shall be as follows:
(1) Elective Contributions
(2) Basic Contributions
The amount by which an Elective Contribution is reduced shall be
distributed to the Participant on whose behalf it was received as
soon as administratively practicable, and shall include any
earnings and gains that have been' allocated and which are
attributable to that returned amount.
The remaining surplus amounts created by the reductions described
above shall be held in a Suspense Account established and
administered pursuant to Section 5.1.2.
(d) For purposes of this Section, compensation means a Participant's
wages, salary, and/or other remuneration that is required to be
reported as income on the individual's Form W-2 for federal
income tax withholding purposes under Code sec. 3401(a).
For the purposes of this Section, the total amount of
compensation that is actually paid or made available to a
Participant within a Limitation Year shall be the amount of that
Participant's compensation taken into account regarding that
Limitation Year.
(e) Additional Limitation in the Case of Defined Benefit Plan and
-------------------------------------------------------------
Defined Contribution Plan for Same Employee:
--------------------------------------------
(1) In any case where a Participant has at any time participated
in a defined benefit plan maintained by the Employer, the
limitation imposed by this Section (without regard to this
Additional Limitation) shall be reduced to the extent
necessary to prevent the Participant's Combination Ratio
from exceeding 1.0 in any Limitation Year. A Participant's
Combination Ratio is the sum of his Defined Benefit Fraction
and his Defined Contribution Fraction.
(2) A Participant's Defined Benefit Fraction for a Limitation
Year is a fraction -
(A) the numerator of which is his projected annual benefit
(as defined in sec. 415(e) of the Code and regulations
thereunder) to which the Participant would be entitled
under the defined benefit plan as of the close of the
Limitation Year;
(B) the denominator of which is the lesser of:
(i) the product of 1.25 (or, if the Plan is top-heavy
as determined under the provisions of Section 5.2,
1.0) multiplied by the dollar limitation in effect
under sec. 415(b)(1)(A) of the Code for such
Limitation Year, or
(ii) the product of 1.4 multiplied by the amount which
may be taken into account under sec. 415(b)(1)(B)
of the Code with respect to such Participant for
such Limitation Year.
17
(3) A Participant's Defined Contribution Fraction for a
Limitation Year is a fraction -
(A) the numerator of which is the sum of the Annual
Additions (as defined in this Section) to the
Participant's account for the Participant's benefit as
of the close of the Limitation Year arid for all prior
Limitation Years; and
(B) the denominator of which is the sum of the lesser of
the following amounts determined for such Limitation
Year and for each prior Limitation Year of service with
the Employer:
(i) the product of 1.25 (or, if the Plan is top-heavy
as determined under the provisions of Section 5.2,
1.0) multiplied by the dollar limitation in effect
under sec. 415(c)(1)(A) of the Code for such
Limitation Year (determined without regard to sec.
415(c)(6) of the Code), or
(ii) the product of 1.4 multiplied, by the amount which
may be taken into account under sec. 415(c)(1)(B)
of the Code (or subsection (c)(7) or (8), if
applicable) with respect to such Participant for
such Limitation Year.
(4) For purposes of this Additional Limitation, Employee
contributions to any defined benefit plan maintained by
the Employer, whether mandatory or voluntary, shall be
treated as a separate defined contribution: plan
maintained by the Employer.
(5) If an additional limitation is applicable, it shall be
imposed in this Plan before any reduction in the
limitation on benefits payable under any defined
benefit plan, unless the applicable defined benefit
plan provides expressly to the contrary.
(f) Aggregation of Plans
--------------------
For purposes of this Section, all qualified defined
contribution plans (without regard to whether a plan has
been terminated) ever maintained by the Employer will be
treated as part of this Plan, and all qualified defined
benefit plans (without regard to whether a plan has been
terminated) ever maintained by the Employer will be treated
as one defined benefit plan.
Employee contributions (whether mandatory or voluntary) to a
qualified defined benefit plan maintained by the Employer
shall be treated as a Wined contribution plan maintained by
the Employer.
Any qualified defined benefit or defined contribution plan
maintained by any member of a controlled group of
corporations or group of trades or businesses (whether or
not incorporated) under common control (within the meaning
of sec. 414(b) and (c) of the Code as modified by sec.
415(h)) of which the Employer is a member shall be treated
as a plan maintained by the Employer.
5.1.2 Suspense Account
- ----- ----------------
For any Plan Year, any surplus amounts created by reductions described
in Section 5.1.1(c) and not returned to a Participant shall be held
unallocated in a Suspense Account.
18
Any provisions of this Plan to the contrary notwithstanding, any
amounts held in a Suspense Account shall be applied toward Employer
contributions and Plan expenses as such obligations accrue, with the
Employer making no further contributions to the Plan until such time
as the Suspense Account balance has been exhausted.
No amounts held in a Suspense Account may be distributed to any
Participant at any time prior to termination of the Plan. If there are
amounts held in a Suspense Account at a time when the Plan is
terminated, such amounts shall be reallocated to Participants in
proportion to their Compensation for that Plan Year but not in excess
of each Participant's Maximum Annual Addition for the Plan Year. Any
amounts that cannot be reallocated may revert to the Employer
according to Section 8.1.3.
5.2.1 Top-Heavy Provisions: Application
- ----- ----------------------------------
The provisions of Sections 5.2.1 - 5.2.3 shall become effective only
if, as of the first day of the applicable Plan Year, the Plan is top-
heavy pursuant to the Test described in Section 5.2.2.
5.2.2 Top-Heavy Determination
- ----- -----------------------
(a) Definitions
(1) Aggregation Group
-----------------
(A) Required Aggregation Group means
--------------------------
(i) each and every plan of the Employer in which a Key
Employee is a Participant during the Plan Year
containing the Determination Date or any of the
four preceding Plan Years, including any plan that
has subsequently terminated, and
(ii) each other plan of the Employer which enables any
plan described in subsection (i) above to meet the
participation or nondiscrimination requirements of
the Code, including (but not limited to) the
requirements of Code secs. 401(a)(4) and 410.
(B) Permissive Aggregation Group means a Required
----------------------------
Aggregation Group or a plan described in subsection
(A)(i) above together with any other plan of the
Employer which is not required to be included in an
Aggregation Group under subsection (A)(ii)' above but
which may be so included if such group would continue
to meet the participation and nondiscrimination
requirements of the Internal Revenue Code.
(C) Top-Heavy Group means any Required Aggregation Group
---------------
found to be top-heavy pursuant to subsection (b) of
this Section 5.2.2.
(2) Compensation means compensation as defined in Section
------------
5.1.1(d).
(3) Determination Date means
------------------
(A) in the case of the first Plan Year, the last day of
such Plan Year;
(B) in all other cases, the last day of the preceding Plan
Year.
19
(4) Non-Key Employee means any Employee who is not a Key
----------------
Employee.
(5) Present Value of Accrued Benefits means, for this Plan, the
----------------------------------
sum of
(A) the account balances attributable to Basic and Elective
Contributions as of the most recent Valuation Date
occurring within a twelve-month period ending on the
Determination Date, and
(B) an adjustment for certain contributions due as of the
Determination Date, as required by Code sec. 416.
If this Plan is a member of an Aggregation Group, Present
Value of Accrued Benefits shall mean the sum of the account
balances of all Employer and non-deductible Employee
Contribution Accounts maintained for the Participant
pursuant to all defined contribution plans that belong to
the group and of which he is a member and also the sum of
the present values of the vested accrued benefits due the
Participant pursuant to all defined benefit plans that
belong to the group and of which the Participant is a
member.
(6) Valuation Date means the last date in each Plan Year on
--------------
which account balances are valued.
(b) Top-Heavy Test
The Plan (or Aggregation Group) shall be top-heavy for each Plan
Year if, as of the Determination Date, the Plan's (or Aggregation
Group's) top-heavy ratio for the Plan Year exceeds sixty percent
(60%). The top-heavy ratio is the Present Value of Accrued
Benefits of all Key Employees over the Present Value of Accrued
Benefits of all Employees, excluding former Key Employees.
Calculation of the top-heavy ratio shall be made in accordance
with sec. 416 of the Code (with specific reference to Code sec.
416(g)(3)) and shall take into account the following amounts:
(1) Present Value of Accrued Benefits as described in subsection
(a)(5) above; and
(2) The amount of all distributions to Participants or their
Beneficiaries during the Plan Year that includes the
Determination Date and also during the four preceding Plan
Years pursuant to this Plan or pursuant to a terminated plan
which if it had not been terminated would have been required
to be included in an Aggregation Group, EXCEPT
(A) any rollover to this Plan initiated by the Employee and
(B) any transfer to this Plan from a qualified plan
maintained by an unrelated employer; and
(C) any distribution which occurred after the Valuation
Date but prior to the Determination Date to the extent
that such a distribution has been included in the
calculation of the Present Value of Accrued Benefits.
However, calculation of the top-heavy ratio for any Plan Year
shall not take into account the Present Value of Accrued Benefits
or the amount of all distributions made to any individual who has
not performed services for the Employer at any time during the 5-
year period ending on such Plan Year's Determination Date.
20
For, an Aggregation Group, each plan shall initially be tested
separately, and then the plans shall be aggregated by adding
together the results for each plan as of the Determination Dates
that fall within the same calendar year. If the Aggregation Group
includes two or more defined benefit plans, the same actuarial
assumptions will be specified within and used by such plans for
the purposes of this Section 5.2. Also, in such defined benefit
plans proportional subsidies shall be ignored and non-
proportional subsidies considered for the purposes of this
Section 5.2.2(b).
For a Required Aggregation Group, each Plan shall be tested by
determining the Present Value of Accrued Benefits for non-Key
Employees (1) pursuant to the method, if any, that uniformly
applies for accrual purposes under all plans maintained by the
affiliated Employers; or (2) if there is no such method, as if
such Accrued Benefits accrued not more rapidly than the slowest
accrual rate permitted under the fractional accrual rates of sec.
411(b)(1)(C) of the Code.
5.2.3 Special Rules for Too-Heavy Plans
- ----- ---------------------------------
(a) Application of Special Rules
(1) If, after application of the top-heavy test described in
Section 5.2.2(b), this Plan is found not to be top-heavy,
then the special rules set forth below shall not apply to
this Plan. In that event, the other applicable provisions in
this Plan will govern.
(2) If, after application of the top-heavy test in Section
5.2.2( b), this Plan is found to be top-heavy, then the
following special rules shall govern.
(b) Minimum Contribution
(1) For each Plan Year in which the Plan is top-heavy, each non-
Key Employee who is a Participant and who has not separated
from Service at the end of the Plan Year, including any
Participant who failed to complete 1,000 Hours of Service,
and any who did not make an Elective Contribution pursuant
to Section 4.2.1, shall accrue not less than the minimum
contribution described below.
(2) The sum of the Employer's contributions and any forfeitures
allocated to the Individual Accounts of each such
Participant for each Plan Year in which the Plan is top-
heavy must equal not less than
(A) at least three percent (3%) of each such Participant's
compensation for that Plan Year; or
(B) if the highest percentage of compensation provided on
behalf of Key Employees who are Participants for that
Plan Year is less than three percent (3%), then not
less than the same percentage of such compensation for
that Plan Year for each non-Key Employee Participant as
the largest percentage of such compensation provided on
behalf of Key Employee Participants for that Plan Year.
(3) Any provisions of subsection (2) above to the contrary
notwithstanding, for each Plan Year in which the Employer
maintains both a defined benefit plan and a defined
contribution plan and both plans are top-heavy, each non-Key
Employee who is a Participant in both such Plans shall be
credited with not less than a portion of the sum of the
Employer's contributions and forfeitures made under the
terms of this Plan for that Plan Year equal to five percent
(5%) of his compensation.
21
In determining the minimum contribution or benefit that is
required for non-Key Employees by this Section, Elective
Contributions, if any, that are allocated to Key Employees shall
be taken into account. Elective Contributions made on behalf of
non-Key Employees may not be credited as part of any minimum
contribution or benefit required by this Section.
If the Employer is required to contribute an additional amount to
the Plan, on behalf of a Participant as a result of the.
operation of this Article, that amount shall be credited to a
Basic Contribution Account established and maintained on his
behalf.
5.3 Actual Deferral Percentage Test
- --- -------------------------------
(a) For each Plan Year, the Plan Administrator shall perform (or have
performed) an Actual Deferral Percentage Test in order to ensure
that the Plan's cash or deferred arrangement satisfies the
requirements of Code sec. 401(k)(3) and does not impermissibly
discriminate in favor of Participants who are Highly Compensated
Employees ("HCEs").
The Actual Deferral Percentage ("ADP") Test shall compare the ADP
of those Participants who are HCEs with the ADP of those
Participants who are not HCEs.
For any group of Participants, the group's ADP equals the average
(expressed as a percentage) of the actual deferral ratios of that
group's Participants, with each Participant's actual deferral
ratio calculated separately.
For any Plan Year, a Participant's actual deferral ratio consists
of the amount of the Participant's Elective Contribution for the
Plan Year (subject to the limitations of the following paragraph)
expressed as a percentage of his Compensation.
For purposes of this Section 5.3, in any Plan Year, the Plan
Administrator may elect to use compensation as described in
Section 5.1.1(d) or "compensation" as described in the definition
of HCE in Article 11, instead of Compensation, for every
Participant. Also, the Plan Administrator may elect to limit
Compensation (or the applicable alternative) for every
Participant to Compensation received while participating in the
Plan.
In determining a Participant's actual deferral ratio, the
Participant's Elective Contributions may be taken into account
only to the extent that they satisfy the following conditions.
(1) The Elective Contribution must be allocated to an account
maintained on behalf of the Participant as of a day within
the plan year being considered. For the purpose of this
provision, an Elective Contribution shall be considered
allocated as of a date within a plan year only if both:
(A) the allocation is not contingent. upon the
Participant's participation in a plan or performance of
service on any date subsequent to the date of
allocation; and
(B) the amount of the Elective Contribution is actually
paid to the plan pursuant to which the Elective
Contribution is made no later than the end of the
twelve-consecutive-month period immediately following
the plan year to which the contribution relates.
22
(2) The Elective Contribution relates to Compensation that
either:
(A) would have been received by the Participant in the plan
year but for the Participant's election to defer that
Compensation, or
(B) is attributable to service performed by the Participant
in the plan year and, but for the Participant's
election to defer, would have been received by the
Participant within two and one-half months after the
close of the plan year.
In addition, if with reference to a Plan Year the Participant was
an HCE and also participated in more than one cash or deferred
arrangement sponsored by the Employer, then all such cash or
deferred arrangements shall be aggregated and treated as one
arrangement for the purposes of determining the Participant's
actual deferral ratio for that Plan Year. If these arrangements
have different plan years, these arrangements'. plan years that
end with or within the same calendar year shall be aggregated and
treated for ADP purposes as a single arrangement and single plan
year. However, the preceding provisions to the contrary
notwithstanding, contributions and allocations under plans
described by Code sec. 4975(e)(7) (i.e. "ESOPs") shall not be
aggregated.
(b) For each Plan Year, the ADP for the group of Eligible
Participants who are HCEs for that Plan Year shall not exceed the
greater of (1) or (2), where
(1) equals 125% of the ADP for the group of Eligible
Participants who are non-HCEs for that Plan Year; and
(2) equals the lesser of (A) and (B), where
(A) equals 200% of the ADP for the group of Eligible
Participants who are non-HCEs for that Plan Year; and
(B) equals the ADP for the group of Eligible Participants
who are non-HCEs for that Plan Year, plus 2 percentage
points (or such other amount as may be prescribed by
the Secretary of the Treasury).
For the purposes of this subsection, "Eligible Participants"
means those Participants, who during the Plan Year were eligible
to have elected to defer some portion of their Compensation for
that Plan Year so as to receive an Elective Contribution,
regardless of whether such an election was actually made.
(c) If for a Plan Year the ADP limits of subsection (b) above are
exceeded, the amount of excess contributions to be attributed to
each HCE shall be determined by the following leveling method.
The Plan Administrator shall reduce the amount of Elective
Contributions that are allocated pursuant to the Plan for that
Plan Year on behalf of the HCE with the highest actual deferral
ratio. This reduction shall be made only to the extent required
to (1) enable the Plan to meet the ADP limits, or (2) cause the
HCE's actual deferral ratio to equal the actual deferral ratio of
the HCE with the next highest actual deferral ratio, whichever
occurs first.
This process shall be repeated by the Plan Administrator until
the ADP test limits of subsection (b) above have been met.
23
For each Plan Year, the amount of excess contributions, if any,
for each HCE shall equal the sum of the HCE's Elective
Contributions, minus the product of the HCE's actual deferral
ratio (determined after application of this subsection)
multiplied by the HCE's Compensation.
(d) After the close of the Plan Year to which the excess
contributions are attributable, but within twelve months after
such Plan Year's close, the Plan Administrator shall designate as
such and distribute to each HCE the amount (if any) of excess
contributions (plus any earnings, gains or losses described in
Section 6.2 attributable to such contributions) that were made on
that HCE's behalf, minus the sum of any excess deferrals
previously distributed do the HCE for the HCE's taxable year
ending with or within that Plan Year.
(e) Any of the provisions of this Section to the contrary
notwithstanding, in determining the actual deferral ratio of a
Participant who is an HCE, the family aggregation rules described
in paragraph (4) of the definition in Article II of Highly
Compensated Employee shall apply, and the actual deferral ratio
of any such family aggregate shall equal the actual deferral
ratio determined by combining the contributions received by the
Plan on behalf of and Compensation paid to all eligible family
members.
After the actual deferral ratio of such a family aggregate has
been determined, the amount of excess contributions (if any) that
were allocated on behalf of the family aggregate shall be
determined and corrected according to the "leveling" method
described in subsection (c) above. The resulting excess
contributions shall be reallocated among those family members
whose contributions were combined to determine the actual
deferral ratio of the family aggregate, with each such member
being allocated an amount of excess contribution in proportion to
the contributions of each such member that have been combined.
(f) For the purposes of satisfying the limits specified in this
Section and in Code secs. 401(a)(4), 410(b), and 401(k), two or
more cash or deferred arrangements may be aggregated, provided
that such aggregation is consistent with the provisions of IRC
Regs. 1.401 (k)-1(b)(3) and 1.401 (k)-1(g)(1)(ii); for example,
cash or deferred arrangements may be aggregated pursuant to this
subsection only if the respective plans of which they are part
have the same plan years. All elective contributions that are
made under any plan that are aggregated with this Plan for the
purposes of Code sec. 401(a)(4) or sec. 410(b) (other than sec.
410(b)(2)(A)(ii)) are to be treated as if they were made under a
single plan. In addition, if any plans are permissively
aggregated with this Plan for the purposes of Code sec. 401(k),
the aggregated plans must also satisfy Code secs. 401(a)(4) and
410(b) as though they were a single plan.
24
ARTICLE VI
ADMINISTRATION OF PLAN ASSETS
6.1.1 The Investment Fund
- ----- -------------------
All funds received by the Plan pursuant to Article IV, including
amounts deposited with the Insurance Company under an annuity or
insurance contract, shall be credited to the trust fund. The trust
fund shall be of a suitable nature to hold the funds and to provide
the benefits payable under this Plan.
The Plan Administrator shall create and maintain adequate records to
disclose the interest in the trust fund of each Participant or,
where appropriate, his Beneficiary. Such records shall be in the
form of Individual Accounts, and credits and charges shall be made
to such accounts in the manner herein described. These amounts shall
be maintained for accounting purposes only and shall not represent
any segregated or identifiable portion of the trust fund.
All deposits to the trust fund shall be applied for the exclusive
benefit of Participants and their Beneficiaries, except for such
reasonable expenses as may be incurred in the establishment or
operation of the Plan and which are not otherwise paid. Except as
provided in Sections 8.1.3 and 8.5, no amounts in the trust fund nor
any earnings attributable thereto, may ever revert to the Employer
prior to full satisfaction of all liabilities under the Plan.
6.1.2 Employee Directed Investments
- ----- -----------------------------
Amounts held in the trust fund shall be allocated among a variety of
investment options made available and selected by the Trustees
pursuant to the contract with the Insurance Company. Each
Participant and Beneficiary may direct the allocation of the amounts
held in the trust fund on his behalf among these investment options.
To the extent that the Participant or Beneficiary does not direct
the investment of such amounts received on his behalf, the remainder
will automatically be allocated to and invested in one of the
investment options available under the Insurance Company contract
and pursuant to the Trustees' direction.
Each Participant and Beneficiary may elect to redirect the
investment of amounts held in the trust fund on his behalf.
Any of the above-specified directives to allocate, re-allocate,
transfer or remove funds from or among the various investment
options shall be effective for the purposes of this Plan only
prospectively after reasonable notice to the Insurance Company and
subject to any restrictions on the amount or timing of transfers to
or from particular investment options, according to the terms of the
Insurance Company contract or procedures established and uniformly
applied by the Plan Administrator.
6.2 Account Adjustments
- --- -------------------
Individual Accounts shall be valued as of the last day of each
calendar quarter and every other day on which earnings, gains, and
losses are credited. Each Active Account shall be credited with
earnings, gains, and losses according to the terms of its underlying
investments. Plan expenses described in Section 6.4 shall be
allocated at least once in every calendar quarter to Individual
Accounts existing on that allocation date. Each Individual Account
shall receive an allocation of such expenses in the same proportion
that the balance of the Individual Account bears to the sum of the
balances of all Individual Accounts. The allocation dates shall be
determined
25
according to a uniform, consistent, and nondiscriminatory procedure
approved by the. Plan Administrator.
For purposes of this Section, Active Account means each Individual
Account, any Suspense Account, and each other account that can
accrue earnings, gains, and losses, such as an account used for
holding Forfeitures until they can be applied as provided in Article
IV.
6.3 Distribution Adjustments
- --- ------------------------
The amount of any distribution from an Individual Account maintained
on behalf of a Participant pursuant to the terms of this Plan shall
be charged against that Individual Account as of the date such
distribution is made.
6.4 Expenses
- --- --------
For any Plan Year, the Employer may pay the expenses of operating
and maintaining the Plan. Such payment shall be in addition to and
independent of any contributions to the Plan or assets held by the
Plan.
Absent prompt and timely payment by the Employer, the expenses of
operating and maintaining the Plan for the Plan Year shall be
allocated to Individual Accounts pursuant to Section 6.2, EXCEPT
that any expenses attributable to the single sum benefit payment fee
for a distribution other than a death, Total and Permanent
Disability or Retirement shall be directly charged against that
Participant's Individual Accounts.
26
ARTICLE VII
DISTRIBUTIONS
7.1 Termination of Employment (Including Disability) Before Retirement
- --- ------------------------------------------------------------------
(a) If a Participant's employment as an Employee is terminated due
to his Total and Permanent Disability, or due to any other
reason except his death or Retirement, he may elect to receive
his Vested Benefit. To be. effective for the purposes of this
Plan, such an election must be delivered in writing to the
Plan Administrator not more than 90 days before the Annuity
Starting Date that he has selected. In the election the
Participant shall specify a form in which the Vested Benefit
is to be distributed from among the forms described in Section
7.4, and also an Annuity Starting Date (see Section 2.2),
provided that no distribution under this Section shall be made
or commence before the Participant's date of termination as
an. Employee, nor later than the date which would be the
Participant's Normal Retirement Date had he not terminated
such employment until then.
(b) In any event, the Plan Administrator (or Trustee, as
applicable) shall distribute to the Participant his entire
Vested Benefit in a lump sum as soon as administratively
practicable after the time of his termination, provided that
the Participant's Vested Benefit has not ever exceeded $5,000
as of the date of any prior distribution to the Participant or
the date the Participant terminated Service. If the
Participant's entire Vested Benefit equals zero as of the date
his Service terminates, then the Participant shall be deemed
to have received a distribution of his entire Vested Benefit
as of that date of termination.
(c) Any distribution that is made to a Participant pursuant to
this Section shall be in lieu of any and all other benefits,
present or contingent, to which the Participant may be
entitled under the terms of this Plan.
7.2 Death Benefits
- --- --------------
(a) If a Participant who is credited with a Vested Benefit dies
prior to the Annuity Starting Date of his Vested Benefit, then
the Plan shall distribute a death benefit on his behalf.
The amount of the death benefit shall be the actuarial
equivalent of his Vested Benefit (after having taken into
account any security interest in his Vested Benefit that the
Plan has as a result of any currently outstanding loan to the
Participant).
(b) If the Participant 'has a surviving spouse as of his date of
death, the death benefit shall be payable to such surviving
spouse. If the Participant has no surviving spouse, the death
benefit will be paid to the Participant's designated
Beneficiary.
(c) The Participant's death benefit shall be distributed to the
surviving spouse or other designated Beneficiary in the form
of a lump sum, and the Annuity Starting Date of that benefit
shall be as soon as administratively practicable (in any
event, within one year) following the Participant's date of
death. However, if the Participant's Vested Benefit has ever
had a lump sum value of $5,000 or more as of the date of any
prior distribution to the Participant, or the Participant's
date of death, the person to whom that benefit is to be
distributed, whether surviving spouse or other designated
Beneficiary, may elect to have the death benefit distributed
in any other form of benefit described
27
in Section 7.4 and not precluded thereby. To be effective for
the purposes of this Plan, such an election must be in
writing, and must be received by the Plan Administrator prior
to the death benefit's Annuity Starting Date. Given such an
election, the Annuity Starting Date for the death benefit
would then occur within 90 days after receipt of that
election.
In any event, any death benefit payable pursuant to this
Section shall commence or be distributed not later than the
time period described in (1) or (2) below, as appropriate:
(1) if payable to a surviving spouse (or child of the
Participant, as provided below), not later than December
31 of the calendar year in which the Participant would
have attained 70'/2; or
(2) if payable to any other Beneficiary, not later than the
first anniversary of the Participant's death;
PROVIDED that, if said spouse or Beneficiary cannot be located
within the applicable time period specified above, the Plan
Administrator may delay commencement or distribution of
payments for a period ending not later than the first day of
the first month beginning after the sixtieth day following the
date on which such spouse or Beneficiary has been identified
and located by the Plan Administrator and the Plan
Administrator has received any necessary documentation of
death.
A death benefit payable to any surviving child of the
Participant shall be treated as if payable to the surviving
spouse for purposes of (1) above in this subsection PROVIDED
that such benefit will become payable to the surviving spouse
as of the date such child reaches age 21 or as of such other
time as prescribed by the Secretary of the Treasury under
regulations.
If a surviving spouse is eligible to receive death benefits
under this Plan, and if that surviving spouse dies prior to
the Annuity Starting Date of those death benefits, then the
death benefits to which the deceased spouse had been entitled
shall be payable on his or her behalf within such a time-frame
as would be appropriate if the deceased spouse had been the
Participant, with the date of death of the surviving spouse
being substituted for the Participant's. However, the
exceptions provided in Code sec. 401(a)(9)(B)(iv) shall not be
available regarding any surviving spouse of the Participant's
surviving spouse.
(d) If a Participant dies after his Vested Benefit has been
distributed in the form of a lump sum, there shall be no
benefit payable from the Plan as a result of his death. If his
Vested Benefit has been distributed in the form of an annuity,
any benefit payable as a result of his death shall be
determined solely under the terms of the annuity that was
distributed, provided that the remaining portion of such
benefit, if any, shall be distributed to the beneficiary at
least as rapidly as provided in the terms of said annuity but
in any event consistent with Code sec. 401(a)(9)(B).
If a Participant dies while receiving the Payments from
Account described in Section 7.4 before his entire Vested
Benefit has been distributed, his surviving spouse or
Beneficiary may elect in writing to the Plan Administrator to
receive the previously undistributed portion of such Vested
Benefit in the form of a lump sum; in any event, the remaining
portion of such benefit, if any, shall be distributed at least
as rapidly as under the terms of said Payments from Account in
effect for the Participant at death.
28
7.3 Retirement
- --- ----------
A Participant, regardless of his status as an Employee, shall have
attained Retirement Age when he has attained age 65, which shall be
his Normal Retirement Age.
A Participant who has attained Retirement Age may retire by
designating in writing to the Plan Administrator a Retirement Date,
which shall be his Retirement benefit's Annuity Starting Date, and
which may be the first day of any month after he has attained
Normal Retirement Age, but not later than the latest date permitted
by the provisions of Section 7.5 regarding Commencement of
Payments. This latter date shall be the Retirement Date of any
Participant who has not, prior thereto, designated a Retirement
Date.
If the date on which the Participant attains Normal Retirement Age
is the first day of a month, that date shall be his Normal
Retirement Date. Otherwise, the Participant's Normal Retirement
Date shall be the first day of the first month following his
attainment of Normal Retirement Age.
Upon Retirement, a Participant shall commence to receive his Vested
Benefit as provided in Section 7.5.
7.4 Form of Retirement Benefit
- --- --------------------------
(a) Unless a lump sum distribution is required by Section 7.1
(b) or 7.2(c) or unless an optional form of benefit has
been selected pursuant to subsection (b) below, the
Retirement benefit payable to a Participant at the time of
his Retirement shall be the actuarial value of his Vested
Benefit distributed in the form of a Lump Sum, which is a
single payment in an amount equal to the Participant's
Vested Benefit.
(b) A Participant may elect to waive receipt of his Retirement
benefit in the form of a Lump Sum, and instead to receive
his Retirement benefit in one of the following forms.
(1) Annuity for a Period Certain - monthly income
payable for a certain period elected by the
Participant of not more than 240 months. If the
Participant dies after his Retirement Date, or if
the Participant's surviving spouse (or, if none,
his Beneficiary) dies after commencement of
payments, but before the end of the certain period,
payments will commence or be continued for the
remainder of the certain period to the
Participant's surviving spouse or, if the
Participant was unmarried, his Beneficiary (or, if
the annuity is distributed pursuant to Section 7.2,
to a beneficiary designated by. the Participant's
surviving spouse or Beneficiary, as applicable,)
PROVIDED, however, that the certain period elected
shall not extend beyond (1) the life expectancy of
the Participant, (2) the life expectancies of the
Participant and his surviving spouse or designated
Beneficiary, as applicable, (3) if payable pursuant
to Section 7.2, the life expectancy of the
surviving spouse or designated Beneficiary, as
applicable, or (4) 60 months, if by operation of
Section 8.6 the Participant's Beneficiary is his
estate.
However, this optional form may be elected only if
the amount of monthly benefit payable to the
Participant would exceed 50% of the amount he would
receive in the form of a straight life annuity.
(2) Partial Distributions - payments in an amount
specified by the Participant, except that the
amount of each distribution may not be less than
$1,000.
29
(c) Solely for the purposes of distributing to a Participant
his Vested Benefit where such distribution has not
occurred prior to his Required Beginning Date (see Section
7.5(d)(2) below), the Participant may elect to receive the
distribution to commence as of his Required Beginning Date
in the form of Payments from Account, rather than in one
of the forms of Retirement benefit payable already
provided by this Article VII.
Payments from Account shall mean periodic payments in an
amount specified by the Participant or his Beneficiary
continuing until such time as the Participant's Vested
Benefit (adjusted for subsequent Net Adjustments) is
exhausted, PROVIDED however that the period over which
said payments are to be made shall not extent beyond (1)
the life expectancy of the Participant, (2) the life
expectancies of the Participant and his surviving spouse
or other designated Beneficiary, (3) if payable pursuant
to Section 7.2, the life expectancy of the surviving
spouse or other designated Beneficiary, or (4) 60 months,
if by operation of Section 8.6 the Participant's
Beneficiary is his estate.
7.5 Retirement Benefits: Election of Forms and Commencement of Payments
- --- -------------------------------------------------------------------
(a) Applicability of this Section
-----------------------------
In the case of a Participant who will receive a
distribution pursuant to Section 7.1 due to his
termination of employment before his attainment of
Retirement Age, the form of the distribution and the time
of commencement of payments will be as provided in that
Section. The form and time of commencement of death
benefits payable to Beneficiaries shall be governed
according to Section 7.2. The form and time of
commencement of any other benefits payable pursuant to
this Plan will be determined according to this Section and
Section 7.4.
In any event, all distributions required under this
Section shall be determined and made in accordance with
the Income Tax Regulations under Code sec. 401(a)(9),
including the minimum distribution incidental benefit
requirement of sec. 1.401(a)(9)-2 of the regulations.
(b) Commencement of Payments
------------------------
(1) Unless a Participant otherwise elects in a writing
received by the Plan Administrator prior to the
Participant's Annuity Starting Date, payment of the
Participant's Vested Benefit shall begin not later
than the 60th day after the close of the Plan Year
in which occurs the latest of:
(A) the Participant's attainment of Normal
Retirement Age;
(B) the 10th anniversary of the date on which
the Participant commenced participation in
this Plan; or
(C) the Participant's termination of employment
as an Employee,
provided that if the Participant has failed to
provide the Plan Administrator with sufficient
information as to age and marital status or any
other relevant information, so that the amounts of
payment may not be determined, or if the
Participant cannot be located, then the Plan
Administrator may delay commencement of payments
for not more than 60 days after the earliest date
on which the amount and form of payment may be
determined under the terms of this Plan, or the
Participant is located.
30
The amount of payment in the event of such a delay
shall be retroactive to the Participant's
Retirement Date.
Notwithstanding any provisions of this paragraph
(1) to the contrary, the failure of a Participant
and the Participant's spouse to consent to the
distribution of a benefit while that benefit is
immediately distributable pursuant to this Section
shall be deemed to be an election to defer
commencement of payment of that benefit.
(2) Any provisions of this Plan to the contrary
notwithstanding, the entire vested interest of the
Participant in benefits under this Plan: .
(A) will be distributed to the Participant not
later than the. Participant's Required
Beginning Date, or
(B) will be distributed, beginning not later
than the Participant's -Required Beginning
Date, over the life of the Participant or
over the lives of the Participant and a
designated beneficiary (or over a period not
extending beyond the life expectancy of the
Participant or the life expectancy of the
Participant and a designated beneficiary).
For the purpose of determining the amount to be
distributed as of the Participant's Required
Beginning Date, his Vested Benefit shall be valued
as of December 31 of the calendar year immediately
preceding his Required Beginning Date.
The Participant may elect for these required
distributions to be paid in any of the forms of
benefit described in Section 7.4, subject to any
spousal consent requirements that may apply
pursuant to this Plan. Absent such an election,
these distributions automatically shall be payable
in the form described in Section 7.4(a).
(3) If a Participant's interest is to be distributed in
a form other than a Lump Sum, the following minimum
distribution rules shall apply on or after the
Participant's Required Beginning Date.
(A) If the Participant's benefit is to be
distributed over (1) a period not extending
beyond the life expectancy of the
Participant or the joint life and last
survivor expectancy of the Participant and
the Participant's Beneficiary, or (2) a
period not extending beyond the life
expectancy of the Beneficiary, then the
amount required to be distributed for each
calendar year, beginning with distributions
for the first distribution calendar year,
must at least equal the .quotient obtained
by dividing the Participant's benefit by the
applicable life expectancy.
(B) For calendar years beginning before January
1, 1989, if the Participant's spouse (if
any) is not the Beneficiary, the method of
distribution selected must assure that at
least 50% of the present value of the amount
available for distribution is paid within
the life expectancy of the Participant.
(C) For calendar years beginning after December
31, 1988, the amount to be distributed each
year, beginning with distributions for the
first distribution calendar year, shall not
be less than the quotient obtained by
dividing the Participant's benefit by the
lesser of (1) the applicable life
expectancy, or (2) if the Participant's
spouse (if any) is not the Beneficiary, the
applicable divisor determined
31
from the table set forth in 4&A-4 of sec.
1.401(a)(9)-2 of the Income Tax Regulations.
Distributions after the death of the
Participant shall be distributed using the
applicable life expectancy referenced in
subsection (3)(A) above as the relevant
divisor without regard to Regulations sec.
1.401(a)(9)-2.
(D) The minimum distribution required for the
Participant's first distribution calendar
year must be made on or before the
Participant's Required Beginning Date. The
minimum distribution for other calendar
years, including the minimum distribution
for the distribution calendar year in which
the Participant's Required Beginning Date
occurs, must be made on or before .December
31 of that distribution calendar year.
If the Participant's benefit is distributed in the
form of an annuity purchased from an Insurance
Company, any such distribution shall be made in
accordance with the requirements of Code sec.
401(a)(9) and the regulations promulgated
thereunder.
(4) Any additional amounts of Vested Benefit accrued by
the Participant after his Required Beginning Date
shall be distributed annually in the form of a lump
sum consistent with the requirements of Code sec.
401(a)(9) and applicable regulations.
(5) Once distributions have begun to a 5% owner under
this subsection, they must continue to be
distributed even if the Participant ceases to be a
5% owner in a subsequent year.
(6) For the purposes of this subsection, "applicable
life expectancy" means the life expectance (or
joint and last survivor expectancy) calculated
using the attained age of the Participant (or
designated beneficiary) as of the Participant's (or
designated beneficiary's) birthday in the
applicable calendar year reduced by one for each
calendar year which has elapsed since the date the
life expectancy was first calculated.
If the life expectancy is being recalculated, the
applicable life expectancy shall be the life
expectancy as so recalculated.
The applicable calendar year shall be the first
distribution calendar year, and if the life
expectancy is being recalculated, each such
succeeding calendar year.
If annuity payments commence before the Required
Beginning Date, the applicable calendar year is the
year such payments commence. If the distribution is
in the form of an immediate annuity purchased after
the Participant's death with the Participant's
remaining Vested Benefit, the applicable calendar
year is the year of purchase.
(7) Unless otherwise elected by the Participant (or
spouse, as applicable) by the time distributions
are required to begin, life expectancies shall be
recalculated annually. If such an election has been
made by the Participant (or spouse, as applicable),
it shall be irrevocable as to the Participant (or
spouse) and shall apply to all subsequent years.
The life expectancy of a nonspouse beneficiary may
not be recalculated.
32
7.6 Loans to Participants
- --- ---------------------
Each Employee and former Employee who is a party in interest, within
the meaning of Section 3(14) of the Employee Retirement Income Security
Act of 1974, as amended, may apply to obtain loans from the Plan
according to the procedures, and limits described below.
(a) Any application for a loan may only be made in writing, and
will become effective only upon receipt by the Plan
Administrator. The principal amount of the loan requested may
not be less than one thousand dollars ($1,000.,00). Only one
loan shall be outstanding at any time.
(b) The Plan Administrator may choose to grant or deny the
request in a reasonably equivalent and nondiscriminatory
manner, consistent with the requirements of sec. 401 (and all
other relevant provisions) of the Internal Revenue Code, as
amended. However, under no circumstances shall a loan be made
by this Plan to any person who is or is deemed to be (or has
as a member of his immediate family) an "owner-employee" (as
defined in Code sec. 4975(d)) or a "shareholder-employee" of
an S Corporation (as defined in Code secs. 4975(d) and
1379(d)).
(c) If the request is granted and an amount is loaned to the
Employee or former Employee as described above (hereinafter
"the Borrower"), the resulting liability of the Borrower for
repayment of the loan to the Plan shall', be accounted through
the establishment of a Segregated Investment Fund !into which
the principal amount of the loan shall be entered as of the
date on which the amount of the loan is provided to the
Borrower.
Any such loan shall be treated as a directed investment by the
Borrower of Plan assets separate and apart from the Investment
Fund of the Insurance Company or any other assets of the Plan.
As such, any earnings, gains or losses attributable to the
loan shall be credited only to the Segregated Investment Fund
representing that loan, and shall in turn be allocated solely
to the Borrower's Individual Accounts.
(d) Each loan shall bear interest at a reasonable fixed rate
established by the Plan Administrator with reference to the
economic conditions and interest rates being charged by local
financial institutions for similar loans with similar
collateral as of the time when the loan request is being
processed. In addition, the Plan Administrator may require the
Borrower to pay any administrative fees that are deemed to be
necessary to establish or maintain the Segregated Investment
Fund, provided that all such fees or fee schedules shall! Be
disclosed to the Borrower at the time the loan is made and
again prior to ,any modification of such fees or schedules by
the Plan Administrator (which nay be enacted by the Plan
Administrator at any time that the Plan Administrator
determines that such modification is appropriate, in the
exercise of his or fiduciary duty), and further provided that
the ability to obtain loans from the Plan shall remain
available to all Borrowers on a reasonably equivalent basis.
Loans shall not be made available to HCEs in an amount greater
than the amount made available to non-HCEs; however, maximum
loan amounts may vary directly according to the size of each
Participant's vested accrued benefit under this Plan:
Each amount received in repayment of the loan shall be
credited to the Borrower's Segregated Investment Fund as of
the day on which it was received by the Plan Administrator,
after its having first been reduced by any administrative fees
charged by the Plan Administrator pursuant to the preceding
paragraph.
33
(e) Each loan shall be evidenced by a negotiable promissory note
signed by the Borrower within 90 days before the loan is made,
and secured by a potion of the Borrower's Vested Benefit, with
such portion equal to the amount that is loaned to the Borrower
at the time of the loan's origination. The note shall state that
in the event of the Borrower's default on the loan, the Borrower
agrees to be bound by the provisions of this Plan, and
particularly by this Section.
The Plan Administrator, in the exercise of his sole discretion,
may require that additional security or documentation be provided
by the Borrower.
(f) Immediately after the origination of any Plan loan to the
Borrower, the total amount of the outstanding balances of all
loans made to the Borrower from this Plan may not exceed the
lesser of:
(1) 50% of the present value of the Borrower's vested interest
in amounts held under the Plan on the Borrower's behalf
(determined immediately after the loan's origination); or
(2) $50,000, reduced by the excess (if any) of:
(A) the highest outstanding balance of all loans to the
Borrower, under all qualified retirement plans
maintained by the Employer, during the one-year period
ending on the day before the date as of which the most
recent loan was made, over
(B) the outstanding balance of all loans to the Borrower,
under all qualified retirement plans maintained by the
Employer, on the date as of which the most recent loan
was made.
For the purposes of this subsection (f), "Employer" shall be as
defined in Article II, and in addition shall mean any other
employers which when taken together with the Employer(s)
sponsoring this Plan are treated as a single employer under sec.
414(b), (c) or (m) of the Internal Revenue Code, as amended.
For the purposes of this subsection (f), simplified employee
pension plans shall not be regarded as qualified retirement
plans.
(g) Each loan shall be subject to substantially level amortization
with payments at least quarterly.
(h) Each loan shall be distributed (if at all) as soon as reasonably
practicable, but in any event not later than 90 days after the
date on which the Plan Administrator receives the prescribed loan
request.
(i) Whenever possible, loans shall be repaid to the Plan through
periodic payroll deductions from the Borrower's Compensation (if
any).
(j) With the consent of the Plan Administrator, the Borrower may at
any time prepay an amount against the outstanding balance of the
loan; however, unless the entire outstanding balance is prepaid,
repayment installments must continue to be made periodically
according to the pre-arranged repayment schedule.
(k) At any time before it has been completely repaid (including
principal and interest), a loan under this Plan shall be in
default as of the earlier of:
34
(1) the date an Employee (other than an Employee who is a party
in interest within the meaning of Section 3(14) of the
Employee Retirement Income Security Act of 1974, as amended)
terminates Service;
(2) the day immediately following the date on which any periodic
installment payment required under the Promissory Note is
not received by the holder of the Note when due;
(3) the date as of which any amount becomes distributable to a
Borrower from the Plan, including for example the Borrower's
date of Retirement, but only to the extent that such
distribution would result in the' loan balance equaling more
than the Borrower's vested interest in the Plan's assets
after such distribution; or
(4) the fifth anniversary of the date on which the amount of the
loan was paid from the Plan to the Borrower, EXCEPT, that
loan proceeds used to acquire any dwelling unit which within
a reasonable time is to be" used (determined at the time the
loan is made) as the principal residence of the Participant
shall be in default not later than the tenth anniversary Of
the date on which the amount of the loan was paid from the
Plan to the Borrower.
(l) a default occurs due to an Employee's termination of Service, the
entire loan balance including accrued interest shall be due upon
such termination of Service. If the Plan Administrator as holder
of the Promissory Note Determines that a loan under this Plan is
in default, then at the option of the Plan Administrator, the
Borrower may be given a reasonable amount of tine (in any event
not exceeding 60 days) to cure the default by repaying all
amounts that have become due as of that date.
If the default results from a distribution of excess elective
deferrals (pursuant to Code sec. 402(g)(2)), excess contributions
(pursuant to Code sec. 401(k)(8)), or excess aggregate
contributions (pursuant to Code sec. 401(m)(6)), if any, then the
Borrower may cure the default by repaying to the Plan an amount
sufficient to reduce the outstanding balance of the loan to an
amount equal to not more than the Borrower's vested interest in
Plan assets remaining after such distribution.
(m) If there is security for the loan available in addition to or
instead of the Borrower's vested interest in Plan assets, then
upon default, the holder of the Promissory Note may (but is not
required to) look to that other security for liquidation and
repayment of the loan.
(n) To the extent that a default of a loan is not cured or is not
repaid through security other than the Borrower's vested interest
in the Plan's assets, then the Plan Administrator shall reduce
the Borrower's vested interest in the Plan's assets. The amount
of such reduction shall equal the outstanding balance of the
loan, including any interest that has accrued as of that date of
determination, except that if the default has resulted from a
distribution of, Plan assets that has been made to bring the Plan
into compliance with any of the nondiscrimination limits and
tests of the Code (as specified e.g. in Code secs. 401(k),
401(m), or 415), then the amount of the reduction shall equal
only that amount which is necessary to cure the default by
reducing the outstanding balance of the loan to an amount equal
to the Borrower's vested interest in the Plan's assets as of that
date of determination and after the distribution has been made.
35
Any reduction in a Borrower's vested interest in Plan assets
accomplished pursuant to this paragraph shall immediately result
in a corresponding reduction and offset of the outstanding
balance of the loan as of that date of determination.
However, under any circumstances, a Borrower's vested interest in
the Plan's assets may not be reduced pursuant to this subsection
(n) sooner or to a greater extent than such amounts become
distributable consistent with the provisions of Code sec. 401(k),
all other relevant Code sections, and regulations promulgated
thereunder.
(o) In the event that a loan from this Plan to a Borrower is treated
as a distribution under Code sec. 72, and/or under applicable
Department of Labor regulations, the Borrower's obligation to
repay the loan shall remain unchanged by such distribution
treatment.
(p) When the Borrower is no longer indebted under the Promissory Note
(e.g. due to the complete repayment of the loan, or due to
recovery of the loan's security upon default), the Borrower's
Segregated Investment Fund shall then be closed.
36
ARTICLE VIII
GENERAL PROVISIONS
8.1.1 Plan Modification: Authority
- ----- ----------------------------
The Company reserves the right to amend, modify, or terminate the Plan
at any, time, provided that no amendment or modification shall act to
reduce the balances of the Individual Accounts of any Participant
accrued to the time of such amendment or modification.
8.1.2 Plan Modification: Merger
- ----- -------------------------
No merger, consolidation, or transfer of the assets or liabilities of
this Plan with or to any other qualified plan shall be undertaken
unless, after such merger, consolidation, or transfer, each
Participant would, if the Plan then terminated, receive a benefit not
less than the benefit he would have received had the Plan terminated
immediately prior to such merger, consolidation, or transfer.
8.1.3 Plan Modification: Termination
- ----- ------------------------------
Upon termination or partial termination of this Plan, or the complete
discontinuance of contributions by the Employer (as defined in IRC
Reg. 1.401-6(c) and 1.411 (d)-2(d)), the rights of each affected
Participant to benefits accrued to the date of termination or partial
termination, or the complete cessation of contributions by the
Employer,' shall be fully vested to the extent funded. Distributions
due to termination shall be made in a form provided for in this Plan
and shall meet any applicable requirements of Code sec. 401(a)(11),
411, and 417. However, Elective Contributions shall be distributed
because of Plan termination only if the Employer does not establish or
maintain a successor plan within the meaning of IRC Reg. 1.401(k)-
(1)(d)(3) or because of other events described in IRC Reg. 1.401 (k)-
(1)(d)(1)(iii), (iv), and (v).
If, after the allocation of the Plan's assets pursuant to the Plan's
termination, all liabilities of the Plan have been satisfied in full
and there remain surplus Plan assets not necessary to satisfy the
liabilities of the Plan, such surplus shall revert to the Employer,
consistent with the provisions of the termination amendment of this
Plan.
8.2.1 Duties: Plan Administrator
- ----- --------------------------
The Plan Administrator has the discretionary authority to control and
manage the operation and administration of the Plan, including the
specific duties outlined below. The Plan Administrator in his sole
discretion shall make such rules, regulations, interpretations, and
computations and shall take such other actions to administer the Plan
as he may deem appropriate. Such rules, regulations, computations, and
other actions shall be conclusive and binding upon all persons.
Duties of the Plan Administrator include, but are not limited to,
determination of benefits and eligibility to participate, payment of
funds to the Insurance Company or Trustee, authorization of benefit
payments and payment of any expenses incurred in the administration of
the Plan. The Plan Administrator may employ such consultants and
advisors as he deems necessary or desirable for carrying out his
duties under the Plan.
8.2.2 Duties: Employer
- ----- ----------------
Duties of the Employer include, but are not limited to, payment of
funds too the Insurance Company or Trustee, in addition to payment of
any expenses incurred in the administration of the Plan. The Employer
shall indemnify and hold harmless any
37
fiduciary who is an employee of the Employer from any and all claims,
loss, damages, expense (including counsel fees), and liability
(including amounts paid in settlement with the Employer's written
consent) arising from any act or omission of the fiduciary, except
when the same is judicially determined to be done due to the gross
negligence or willful misconduct of the fiduciary.
8.3 Benefit Claims Procedure
- --- ------------------------
Any Participant in this Plan, or his Beneficiary, may make a claim for
benefits due to him under this Plan by delivering a written
application to the Plan Administrator. If a claim is wholly or
partially denied, notice of the decision shall be furnished to the
claimant by the Plan Administrator within 90 days after receipt of the
claim by the Plan Administrator unless special circumstances require
an extension of time for processing the claim. If an extension of time
is required the Plan Administrator shall furnish the claimant with
written notice of that fact, including the reason why an extension is
required and an estimated date upon which a final decision is
expected, which shall be not later than 180 days after the claim was
made. In that event, if the claim is denied in whole or part, written
notice of denial shall be given as soon as practicable, but not later
than 180 days after the claim was made.
A notice of denial of a claim shall state:
(a) the specific reason or, reasons for the denial;
(b) reference to the specific Plan provisions upon which the denial
was based; and
(c) a description of any additional material or information necessary
for the claimant to perfect the claim and an explanation of why
such additional material or information is required.
If this notice is not furnished with the time period provided in this
Section, the claim shall be deemed wholly denied.
8.4 Review Procedure
- --- ----------------
In the event that a claim is denied under this Plan, the claimant or
his authorized representative may apply in writing to the Plan
Administrator within 60 days of receiving notice of the denial or, if
no written notice of denial is received within the 180-day period
prescribed in Section 8.3, within 60 days after the expiration of said
180-day period, asking that the denial be reviewed. This time limit
may be extended by the Plan Administrator if an extension appears to
be reasonable in view of the nature of the claim and the pertinent
circumstances. Upon receipt of such application, the Plan
Administrator shall afford the claimant an opportunity to review
pertinent documents and to submit issues and comments in writing. A
decision on review shall be rendered by the Plan Administrator not
later than 60 days after the claimant's application for review unless
an extension of time for processing is required, in which case a
decision will be made. If an extension of time is required, the Plan
Administrator shall give the claimant written notice of that fact
before the extension period begins. A decision on review shall be in
writing and shall include specific reasons for the decision and
specific references to the Plan provisions on which the decision is
based.
If the claimant has not received written decision on review within 60
days after the request for review was received, or within 120 days if
an extension of time was required, the claim will be considered wholly
denied on review.
38
8.5 Qualification of the Plan and Conditions of Contributions
- --- ---------------------------------------------------------
This Plan, together with any insurance or annuity contracts or trust
agreement used in conjunction with it, is intended to meet the
requirements of the Internal Revenue Service for approval as a tax-
exempt plan or trust under sec. 401 of the Code. Any amendments which
may be necessary to meet these requirements shall be made retroactive
to the date upon which the Plan failed to meet these requirements.
This Plan is adopted with the intent and on the conditions that the
Internal Revenue Service shall by ruling or determination letter
establish that the Plan is "qualified" within the meaning of sec. 401
of the Code, that any trust which is part of this Plan at its adoption
is exempt from taxation pursuant to sec. 501 of the Code and that
contributions to the Plan by the Employer are deductible pursuant to
sec. 404 of the. Code. If any of these conditions are determined
initially by the Internal Revenue Service not to be the case, all
contributions to this Plan made prior to such determination by the
Internal Revenue Service shall be returned to the person or persons
who made them within one year after the date of denial of
qualification of the Plan and the Plan shall terminate unless the
Employer amends the Plan to meet these conditions and such amendment
is determined by the Internal Revenue Service to meet these
conditions, PROVIDED that the application for such determination was
made by the time prescribed by law for filing the Employer's return
for the taxable year in which the Plan was adopted, or such later date
as the Secretary of the Treasury may prescribe.
Contributions to this Plan are made with the intent and on the
condition that such contributions are deductible under sec. 404 of the
Code. If any contribution by the Employer is disallowed as a deduction
by the Internal Revenue Service then, to the extent the deduction is
disallowed, the contribution shall be refunded to the Employer within
one year after the disallowance of the deduction. If any contribution
by the Employer is made by a mistake of fact, such contribution shall
be refunded to the Employer within one year after the payment of the
contribution.
If a refund occurs pursuant to this Section, the amount which shall be
returned to the Employer shall be the excess of the amount which was
contributed over the amount (1) which was deductible, or (2) which
would have been contributed absent the mistake of fact (as the case
may be), without any earnings but net of any losses attributable to
such excess.
8.6 Beneficiaries
- --- -------------
Any payments due under the Plan to a Participant's Beneficiary shall
be paid according to the Beneficiary designation last filed in writing
with the Plan Administrator by the Participant. If no such designation
is made, payments shall be made in the following order of priority:
(a) to the surviving spouse of the Participant;
(b) if no spouse survives the Participant, then to the children of
the Participant in equal shares, with a share by right of
representation to the then surviving children of any deceased
child; or
(c) if neither a spouse, children nor grandchildren survive the
Participant, then to the Participant's estate.
8.7 Spendthrift Clause
- --- ------------------
(a) General Rule
------------
Subject to the exception specified in subsection (b) below,
benefits payable under this Plan shall not be subject in any
manner to anticipation, alienation,
39
sale, transfer, assignment, pledge, encumbrance, charge,
garnishment, execution, or levy of any kind, either voluntary or
involuntary, including any such liability which is for alimony or
other payments for the support of a spouse or former spouse, or
for any other relative of the Employee, prior to actually being
received by the person entitled to the benefit under the terms of
the Plan except as provided below, and any attempt to anticipate,
alienate, sell, transfer, assign, pledge, encumber, charge or
otherwise dispose of any right to benefits payable hereunder
shall be void; also, the Plan shall not in any manner be liable
for; not subject to, the debts, contracts, liabilities,
engagements or torts of any person entitled to benefits
hereunder.
(b) Exception
---------
The provisions of subsection (a) above to the contrary shall not
withstand a right to a benefit payable under this Plan that has
been created, assigned or recognized pursuant to a "qualified
domestic relations order", as defined in Code sec. 414(p).
Administration of the Plan with respect to qualified domestic
relations orders shall at all times be consistent with Code sec.
414, regulations promulgated thereunder, and any other provisions
of state and federal law that may be applicable. Payment of a
benefit to an alternate payee pursuant to a qualified domestic
relations order may be made prior to the time such payment could
be made to the Participant, provided that such payment is
consistent with the provisions of this Plan in all respects
except for the time of payment.
8.8 Annuities
- --- ---------
Any provisions of this Plan to the contrary notwithstanding.
(a) any annuity contract distributed from this Plan shall contain
express provisions sufficient to make such contract
nontransferable; and
(b) the terms of any annuity contract purchased and distributed by
the Plan to a Participant or Participant's spouse shall comply
and be consistent with the requirements of this Plan.
8.9 Limitations of the Employer's Liability
- --- ---------------------------------------
To the extent permitted by law, the liability of the Employer with
respect to any and all obligations arising from or in any way
connected with this Plan shall be limited to amounts already
contributed.
8.10 Non-Guarantee of Employment
- ---- ---------------------------
This Plan shall not be considered to constitute a contract of
employment and nothing contained in the Plan shall give any Employee
the right to be retained in employment, nor shall anything contained
in the Plan interfere with the Employer's right to discharge or retire
any Employee at any time. Participation in the Plan shall not give any
Employee any right or claim in any benefits except as specifically
provided in this Plan.
8.11 Applicable Law
- ---- --------------
The provisions of this Plan shall be governed, construed, and
administered in accordance with federal law, and to the extent that
state law is not preempted by federal law, the law of the state of
Texas.
40
ARTICLE IX
DIRECT ROLLOVERS
9.1 General Rule
- --- ------------
This Article applies to distributions made on or after January 1,
1993. Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a distributee's election under this Article, a
distributee may elect, at the time and in the manner prescribed by the
Plan Administrator, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by
the distributee in a direct rollover
9.2 Definitions
- --- -----------
(a) Eligible rollover distribution: An eligible rollover distribution
is any distribution of all or any portion of the balance to the
credit of the distributee, except that an eligible rollover
distribution does not include: any distribution that is one of a
series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy)
of the distributee or the joint lives (or joint life
expectancies) of the distributee and the distributee's designated
beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is require under
sec. 401(a)(9) of the Code; and the portion of any distribution
that is not includable in gross income (determined without regard
to the exclusion for net unrealized appreciation with respect to
employer securities).
(b) Eligible retirement plan: An eligible retirement plan is an
individual retirement account described in sec. 408(a) of the
Code, an individual retirement annuity described in sec. 408(b)
of the Code, an annuity plan described in sec. 403(a) of the
Code, or a qualified trust described in sec. 401(a) of the Code,
that accepts the distributee's eligible rollover distribution.
However, in the case of an eligible rollover distribution to the
surviving spouse, an eligible retirement plan is an individual
retirement account or individual retirement annuity.
(c) Distributee: A distributee includes an Employee or former
Employee. In addition, the Employee's or former Employee's
surviving spouse and the Employee's or former Employee's spouse
or former spouse who is the alternate payee under a qualified
domestic relations order, as defined in sec. 414(p) of the Code,
are distributees with regard to the interest of the spouse or
former spouse.
(d) Direct rollover: A direct rollover is a payment by the Plan to
the eligible retirement plan specified by the distributee.
41