EXHIBIT 10.7 - ERIE INSURANCE GROUP
EMPLOYEE SAVINGS PLAN
INTRODUCTION
The Erie Indemnity Company (the "Company") adopted the Erie Insurance Group
Employee Savings Plan (the "Plan") effective January 1, 1989. The Company has
subsequently amended the Plan from time to time and was last amended and
restated the Plan effective as of May 1, 1998.
This amendment and restatement of the Plan shall constitute an amendment,
restatement and continuation of the Plan. This amendment and restatement is
generally effective as of January 1, 2001. However, certain provisions of this
amendment and restatement are effective as of some other date. The provisions of
this amendment and restatement with stated effective dates prior to January 1,
2001, shall be deemed to amend the corresponding provisions, if any, of the Plan
as in effect before this amendment and restatement and all amendments thereto as
of such dates. Events occurring before the applicable effective date of any
provision of this amendment and restatement shall be governed by the applicable
provision of the Plan as in effect on the date of the event.
The purpose of the Plan is to provide a pre-tax long term savings vehicle for
eligible employees and to provide participants with an opportunity to contribute
toward additional retirement security according to the provisions of Section
401(k) of the Internal Revenue Code of 1986, as amended.
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TABLE OF CONTENTS
INTRODUCTION Page
ARTICLE ONE - DEFINITIONS
1.1 Administrator or Plan Administrator......................................1
1.2 Affiliate................................................................1
1.3 Board....................................................................1
1.4 Code.....................................................................1
1.5 Company..................................................................1
1.6 Compensation.............................................................1
1.7 Covered Employee.........................................................2
1.8 Effective Date...........................................................2
1.9 Employee.................................................................2
1.10 Employer.................................................................2
1.11 Employer Matching Contribution...........................................2
1.12 Erie Indemnity Stock.....................................................2
1.13 Erie Indemnity Stock Fund................................................2
1.14 ERISA....................................................................2
1.15 Highly Compensated.......................................................3
1.16 Hour of Service..........................................................3
1.17 Interactive Electronic Communication.....................................4
1.18 Leased Employee..........................................................4
1.19 Normal Retirement Date...................................................4
1.20 Notice...................................................................5
1.21 Participant..............................................................5
1.22 Plan.....................................................................5
1.23 Plan Year................................................................5
1.24 Qualified Domestic Relations Order or QDRO...............................5
1.25 Safe Harbor Matching Contribution........................................6
1.26 Spousal Consent..........................................................6
1.27 Tax Deferred Contribution................................................6
1.28 Test Compensation........................................................6
1.29 Top Paid Group...........................................................7
1.30 Total Account............................................................7
1.31 Trust Agreement..........................................................7
1.32 Trust Fund...............................................................8
1.33 Trustee..................................................................8
1.34 Valuation Date...........................................................8
1.35 Year of Eligibility Service..............................................8
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ARTICLE TWO - PARTICIPATION
2.1 Participation............................................................9
2.2 Rehired Employees........................................................9
2.3 Employment Transfers.....................................................9
ARTICLE THREE - EMPLOYER CONTRIBUTIONS
3.1 Tax Deferred Contributions..............................................11
3.2 Dollar Limitation on Tax Deferred Contributions.........................11
3.3 Actual Deferral Percentage Limitation on Tax Deferred Contributions.....13
3.4 Treatment of Tax Deferred Contributions in Excess of Actual
Deferred Percentage Limitation..........................................15
3.5 Coordination of Distributions of Excess Tax Deferred Contributions......17
3.6 Employer Matching Contributions.........................................17
3.7 Actual Contribution Percentage Limitation on Employer Matching
Contributions........................................................17
3.8 Treatment of Employer Matching Contributions in Excess of
Actual Contribution Percentage Limitation............................18
3.9 Combined Alternative Limitation on Tax Deferred Contributions
and Employer Matching Contributions..................................20
3.10 Safe Harbor Matching Contributions......................................21
3.11 Source of Employer Contributions........................................22
3.12 Investment of Employer Contributions....................................22
3.13 Recovery of Contributions...............................................23
3.14 Other Provisions Relating to Employer Contributions.....................23
ARTICLE FOUR - ROLLOVER CONTRIBUTIONS
4.1 Rollover Contributions .................................................25
4.2 Vesting of Rollover Contributions ......................................25
ARTICLE FIVE - PARTICIPANT ACCOUNTS AND VALUATION OF FUNDS
5.1 Establishment of Participant Accounts ..................................26
5.2 Procedure as of Each Valuation Date ....................................26
5.3 Investment Elections ...................................................26
5.4 Erie Indemnity Stock Fund...............................................28
ARTICLE SIX - VESTING & DISTRIBUTIONS
6.1 Vesting ................................................................30
6.2 Distributions Upon Retirement, or Other Termination of Employment.......30
6.3 Payment of Amounts Distributed .........................................31
6.4 Direct Rollovers........................................................33
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ARTICLE SEVEN - WITHDRAWALS
7.1 Withdrawals Generally ..................................................35
7.2 Hardship Withdrawal ....................................................35
7.3 Safe Harbor Distribution ...............................................36
7.4 Hardship Withdrawal Priority............................................36
7.5 Modifications to Hardship Withdrawal Standards..........................36
ARTICLE EIGHT - THE TRUST FUND
8.1 Trust Agreement ........................................................38
8.2 Appointment of Independent Accountants .................................38
8.3 Appointment of Investment Manager ......................................38
8.4 Investment Committee ...................................................38
8.5 Voting of Erie Indemnity Stock..........................................39
ARTICLE NINE - ADMINISTRATION OF THE PLAN
9.1 The Administrator ......................................................41
9.2 Powers of Administrator.................................................41
9.3 Delegation of Duties....................................................43
9.4 Conclusiveness of Various Documents.....................................43
9.5 Actions to be Uniform...................................................43
9.6 Liability and Indemnification...........................................43
ARTICLE TEN - CLAIMS PROCEDURE
10.1 Claim for Benefit ......................................................45
10.2 Review of Denial of Claim ..............................................45
10.3 Decision by Administrator ..............................................45
ARTICLE ELEVEN - MISCELLANEOUS
11.1 Non-Alienation of Benefits .............................................47
11.2 Risk to Participants and Source of Payments ............................48
11.3 Expenses ...............................................................48
11.4 Rights of Participants .................................................48
11.5 Statement of Accounts ..................................................48
11.6 Designation of Beneficiary .............................................49
11.7 Payment to Incompetents ................................................49
11.8 Authority to Determine Payee ...........................................50
11.9 Severability ...........................................................50
11.10 Employer Records........................................................50
11.11 Limitation on Contributions ............................................50
11.12 IRC 414(u) Compliance Provision.........................................52
ARTICLE TWELVE - AMENDMENT, TERMINATION OR MERGER OF THE PLAN
12.1 Right to Amend .........................................................53
12.2 Right to Terminate .....................................................53
12.3 Merger, Transfer of Assets or Liabilities...............................54
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ARTICLE THIRTEEN - TOP HEAVY PROVISIONS
13.1 Top Heavy Provisions ...................................................55
13.2 Minimum Contribution ...................................................56
13.3 Plan Year in Which Plan is Top Heavy ...................................57
13.4 Plan Year in Which Plan Ceases to be Top Heavy .........................57
13.5 Limited Application of this Article.....................................57
ARTICLE FOURTEEN - LOANS
14.1 Availability of Loans ..................................................58
14.2 Terms and Conditions of Participant Loans ..............................58
14.3 Loan Accounts...........................................................60
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ARTICLE ONE
DEFINITIONS
As used in this Plan, the following terms shall have the following meanings
unless a different meaning is clearly required by the context. Any terms herein
used in the masculine shall be read and construed in the feminine where they
would so apply, and any terms used in the singular shall be read and construed
in the plural if again so applicable.
1.1 "Administrator" or "Plan Administrator" means the Administrator appointed
by the Board in accordance with the provisions of Article Nine.
1.2 "Affiliate" means any other employer which, together with the Company, is
a member of a controlled group of corporations or of a commonly controlled
trade or business (as defined in Code Sections 414(b) and (c) and as
modified, where appropriate, by Code Section 415(h)) or of an affiliated
service group (as defined in Code Section 414(m)) or other organization
described in Code Section 414(o). Each such Affiliate shall be treated as
an Affiliate only during such period as it is or was an Affiliate as
defined above.
1.3 "Board" means the Board of Directors of the Company.
1.4 "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
1.5 "Company" means Erie Indemnity Company, a corporation organized and
existing under the laws of Pennsylvania.
1.6 "Compensation" for any period means the aggregate amount of base salary or
wages paid by an Employer to an Employee during the period. For this
purpose, "base salary or wages" shall exclude overtime compensation,
bonuses and commissions but shall be deemed to include any amounts
contributed by the Employer pursuant to a salary reduction agreement and
which is not includible in the gross income of the Participant under Code
Sections 125 and 402(e)(3) for the Plan Year in question. Effective for
each Plan Year, in no event shall the amount of Compensation taken into
account under the Plan exceed the adjusted annual limitation permitted
under Section 401(a)(17) of the Code for such Plan Year. Such adjusted
annual limitation shall be, for each Plan Year beginning on and after
January 1, 1989 and prior to January 1, 1994, $200,000 as adjusted for
such year in the same manner as under Section 415(d) of the Code and, for
each Plan Year beginning on and after January 1, 1994, $150,000 as
adjusted for such year as provided under Section 401(a)(17)(B) of the
Code.
For years beginning before January 1, 1997, in determining the
Compensation of a Covered Employee for purposes of the foregoing annual
limitation, the rules aggregating certain family members (as set forth in
Section 1.15) shall apply, except that in applying such rules, the term
"family" shall include only the spouse of the Covered Employee and any
lineal descendent of the Covered Employee who has not attained age 19
before the end of the calendar year. If, as a result of the family
aggregation rules, the adjusted annual limitation is exceeded, then the
limitation
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shall be prorated among the family members in proportion to each
individual's Compensation as determined under this paragraph without
regard to the adjusted annual limitation.
1.7 "Covered Employee" shall mean any Employee of an Employer, excluding:
(a) any such Employee whose employment is governed by the terms of a
collective bargaining agreement under which retirement benefits were
the subject of good faith bargaining; and
(b) for periods prior to January 1, 2001, any such Employee who is
compensated on an hourly basis.
Notwithstanding any provision of the Plan to the contrary, any individual
who an Employer determines to be a contract employee, independent
contractor, leased employee (including a Leased Employee as defined
hereunder), leased owner, leased manager, shared employee or person
working under a similar classification shall not become a Covered Employee
hereunder, regardless of whether any such individual is ultimately
determined to be a common law employee, unless and until the Employer
shall otherwise determine. An Employee shall be considered a Covered
Employee only during such period in which the individual satisfies the
requirements defined above.
1.8 "Effective Date" means January 1, 1989.
1.9 "Employee" shall mean any common-law employee of an Employer or an
Affiliate; provided, however, that for purposes of Section 1.15 "Employee"
shall include any self-employed individual performing services for an
Employer or Affiliate who is treated as an employee under Section
401(c)(1) of the Code.
1.10 "Employer(s)" shall mean the Company, Erie Family Life Insurance Company,
Erie Insurance Exchange, Erie Insurance Company, EI Holding Corp., EI
Service Corp., Erie Insurance Company of New York, Erie Insurance Property
& Casualty Company, Flagship City Insurance Company and any other
Affiliate which may adopt this Plan.
1.11 "Employer Matching Contribution" means the Employer contribution made
pursuant to Section 3.6.
1.12 "Erie Indemnity Stock" means the Class A common stock of the Company which
is a qualifying employer security within the meaning of Section 407(d)(5)
of ERISA.
1.13 "Erie Indemnity Stock Fund" means the investment fund described in Section
5.4.
1.14 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
1.15 "Highly Compensated" means, for periods beginning before January 1, 1997,
any Employee who meets any of the following requirements in either the
prior Plan Year (the "lookback year") or the current Plan Year (the
"determination year"):
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(a) is a more than five percent (5%) owner of an Employer;
(b) earns $75,000 or more in Test Compensation;
(c) earns $50,000 or more in Test Compensation and is a member of the
Top Paid Group;
(d) is an officer of an Employer (as described in Section 416(i) of the
Code) who earns Test Compensation of more than fifty percent (50%)
of the amount in effect under Section 415(b)(1)(A) of the Code for
such year; or
(e) is a former Employee who was Highly Compensated upon separation from
service prior to the determination year, performs no service for an
Employer during the determination year, or was Highly Compensated at
any time after attaining age 55.
In addition, the Test Compensation paid to any family member (spouse,
lineal ascendant or descendant and their spouses) of an Employee or former
Employee who is a more than five percent owner or is one of the top 10
Highly Compensated Employees on the basis of Test Compensation, shall be
aggregated with the Test Compensation of such Employee for the purposes of
this definition. Notwithstanding the foregoing, an Employee will not be
Highly Compensated for the determination year merely by compensation or
officer status unless he was in the top 100 Employees on the basis of Test
Compensation. The amounts indicated in (b) and (c) above shall be adjusted
for cost of living at the same time and in the same manner as determined
under Code Section 415(d). For years beginning on and after January 1,
1997, "Highly Compensated" shall mean any Employee who is a more than five
percent (5%) owner of an Employer or both earned $80,000 or more in Test
Compensation from the Employer in the lookback year and was member of the
Top Paid Group for such year; provided, however, that such $80,000 figure
shall be adjusted for cost of living at the same time and in the same
manner as determined under Code Section 415(d). To the extent permitted
under regulations and other guidance promulgated by the Internal Revenue
Service, the Company may elect to determine the status of Highly
Compensated Employees on a basis other than that provided above.
1.16 "Hour of Service" shall include the following:
(a) Each hour for which an Employee is directly or indirectly paid or
entitled to payment from an Employer or an Affiliate as an Employee
for the performance of duties during an applicable computation
period (these hours must be credited to the Employee in the
computation period during which the duties were performed and not
when paid, if different); and
(b) Each hour for which back pay, irrespective of mitigation of damages,
has been awarded or agreed to by an Employer or an Affiliate (these
hours must be credited in the computation period or periods to which
the award or agreement pertains rather than that in which the
payment, award or agreement was made); and
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(c) Each hour for which an Employee is directly or indirectly paid or
entitled to payment from an Employer or an Affiliate for reasons,
such as vacation, sickness or disability, other than for the
performance of duties (these hours shall be calculated and credited
pursuant to Section 2530.200b-2 of the Department of Labor
regulations which are incorporated herein by reference).
1.17 "Interactive Electronic Communication" means a communication between a
Participant or beneficiary and the person or entity designated by the
Administrator to perform recordkeeping and other administrative services
on behalf of the Plan pursuant to a system maintained by such person or
entity and communicated to each Participant and beneficiary whereby each
such individual may make elections and exercise options as described
herein with respect to all or a portion of his Total Account through the
use of such system and a personal identification number. If a Participant
or beneficiary (i) consents to participate in Interactive Electronic
Communication procedures adopted by the Administrator and (ii)
acknowledges that actions taken by him through the use of his personal
identification number pursuant to the Interactive Electronic Communication
procedure constitute his signature for purposes of initiating transactions
such as investment option changes, and increases, decreases, and
suspensions of Tax Deferred Contributions, the Participant or beneficiary,
as the case may be, will be deemed to have given his written consent and
authorization to any such action resulting from the use of the Interactive
Electronic Communication system by the Participant or beneficiary.
1.18 "Leased Employee" means any person (other than an Employee of an Employer)
who pursuant to an agreement between the Employer and any other person
("leasing organization") has performed services for the Employer (or for
the Employer and related persons determined in accordance with Section
414(n)(6) of the Code) on a substantially full-time basis for a period of
at least one year and, for periods before January 1, 1997, such services
are of a type historically performed by employees in the business field of
the Employer or, for periods on and after January 1, 1997, such services
are performed under primary direction or control by the recipient. Except
as provided below, any person satisfying the foregoing criteria shall be
treated as an Employee. Contributions or benefits provided a Leased
Employee by the leasing organization which are attributable to services
performed for the Employer shall be treated as provided by the Employer.
Notwithstanding the foregoing, a Leased Employee shall not be considered
an Employee of an Employer if: (i) such Leased Employee is covered by a
money purchase pension plan providing: (1) a nonintegrated employer
contribution rate of at least 10 percent of compensation, (2) immediate
participation, and (3) full and immediate vesting; and (ii) Leased
Employees do not constitute more than 20 percent of the Employer's
non-Highly Compensated workforce.
1.19 "Normal Retirement Date" means the first day of the month next following
the month in which the Participant attains age 65 (his "Normal Retirement
Age").
1.20 "Notice" means, unless otherwise specifically provided herein, (i) written
Notice on an appropriate form provided by the Administrator that is, in
the discretion of the Administrator, properly completed and executed by
the party giving such Notice and which is delivered by hand or by mail to
the Administrator or to such party designated by the terms of the Plan or
by the Administrator to receive the Notice, or (ii) Notice by Interactive
Electronic Communication to
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the person or entity designated by the Administrator to perform
recordkeeping and other administrative services on behalf of the Plan. The
form of Notice satisfactory in any given circumstance under the Plan shall
be determined by the Administrator, in its discretion, and shall be
applied uniformly to all Participants and beneficiaries. Notice to any
party as provided herein shall be deemed to be given when it is actually
received (either physically or by Interactive Electronic Communication, as
the case may be) by the party to whom such Notice is given.
1.21 "Participant" means any Covered Employee who participates in the Plan as
provided in Section 3.1 (an "active" Participant) or Section 4.1, and
further, shall include any current or former Covered Employee who has
suspended his Tax Deferred Contributions or has terminated or retired if
such individual has a vested Total Account balance maintained on his
behalf under the Plan.
1.22 "Plan" means this Erie Insurance Group Employee Savings Plan as herein set
forth with all amendments, modifications and supplements hereafter made.
1.23 "Plan Year" means the calendar year.
1.24 "Qualified Domestic Relations Order" or "QDRO" means any judgment, decree
or order (including approval of a property settlement agreement) which is
made pursuant to a State Domestic Relations Law (including a community
property law) and which:
(a) relates to provision of child support, alimony payments, or marital
property rights of a spouse, former spouse, child or other dependent
of a Participant;
(b) recognizes or creates an alternate payee's right to, or assigns to
an alternate payee the right to receive all or a portion of the
benefits payable with respect to a Participant under this Plan; and
(c) clearly specifies:
(i) name and last known address of the Participant and of each
alternate payee;
(ii) the amount, percentage, or manner in which such could be
determined, of the Participant's benefits to be paid to such
alternate payee by the Plan;
(iii) the number of payments or time periods the QDRO covers; and
(iv) each plan to which the QDRO applies.
A QDRO cannot require the Plan to provide a type or form of benefit, or
any option not otherwise provided by the Plan, nor can it require the Plan
to provide increased benefits. A QDRO cannot require payment to an
alternate payee by virtue of a previous QDRO.
A written procedure will be established to determine the qualified status
of domestic relations orders and to administer distributions thereunder.
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1.25 "Safe Harbor Matching Contribution" means the Employer contribution made
pursuant to Section 3.10.
1.26 "Spousal Consent" means a written consent given by a Participant's
legally-recognized spouse to a Participant's designation of a specified
beneficiary or beneficiaries (including the designation of any class of
beneficiaries or any contingent beneficiaries) under Section 11.6(a), the
Participant's election of an immediate distribution under Section 6.2, or
the Participant's request for a withdrawal (in excess of $3,500) or loan
under Sections 7.2 and 14.2, respectively. Any Spousal Consent shall be
effective only with respect to such spouse. Such consent shall be duly
witnessed by a Plan representative or a notary public and shall
acknowledge the effect on the spouse of the Participant's election. The
Participant may revoke, without limitation, any such designation, election
or request without the need for Spousal Consent at any time before the
date as of which the Participant is to receive a distribution from the
Plan or, if applicable, before the effective date of a withdrawal or loan.
Any new designation, election or request by a Participant as provided
above will require a new Spousal Consent. The requirement for Spousal
Consent may be waived by the Administrator if it is established that there
is no spouse, the spouse cannot be located, the Participant has a court
order evidencing a legal separation from or abandonment by the spouse, or
for such other circumstances as shall be prescribed by applicable law.
1.27 "Tax Deferred Contribution" means the Employer contribution made pursuant
to Section 3.1.
1.28 "Test Compensation" means, for any Plan Year, an Employee's compensation,
reported under Sections 6041 and 6051 of the Code on Form W-2, as paid by
an Employer or an Affiliate for the calendar year ending with or within
such Plan Year, including any amounts contributed pursuant to a salary
reduction election on behalf of a Covered Employee to a plan described in
Sections 125, 402(e)(3), 402(h)(1)(B) or 403(b) of the Code for the period
in question. Test Compensation in any given year shall not exceed the
adjusted annual limitation in effect for such year (as set forth in
Section 1.6), provided that such limitation shall not be applied in
determining the top 10 Highly Compensated Employees subject to family
aggregation under the Plan (applicable to Plan Years beginning before
January 1, 1997) and for purposes of determining the status of an Employee
as a Highly Compensated Employee or Key Employee. To the extent permitted
under regulations and other guidance promulgated by the Internal Revenue
Service, the Company may elect to determine Test Compensation on a basis
other than that provided above.
Applicable to years beginning before January 1, 1998, Test Compensation
for purposes of Section 11.11 shall exclude all amounts contributed
pursuant to a salary reduction election on behalf of a Covered Employee.
1.29 "Top Paid Group" means all active Employees who, as of a given year, are
in the top twenty percent (20%) of the Company's work force on the basis
of Test Compensation for such year, excluding the following:
(a) Employees who have not completed six months of service by the end of
such year;
(b) Employees who work less than 17-1/2 hours per week for such year;
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(c) Employees who normally do not work more than six months in a year;
(d) Employees under age 21 at the end of such year; and
(e) non-resident aliens who received no U.S.-source income for such
year.
For purposes of this Section, the Company's work force shall include
individuals employed by an Affiliate.
1.30 "Total Account" means the total amounts held under the Plan for a
Participant, consisting of the following sub-accounts:
(a) "Tax Deferred Account" the portion of the Participant's Total
Account consisting of Tax Deferred Contributions made in accordance
with Section 3.1, plus (minus) any investment earnings (losses) on
such contributions and less any distributions or withdrawals made
from this account in accordance with Articles Six and Seven,
respectively.
(b) "Employer Account" the portion of the Participant's Total Account
consisting of Employer Matching Contributions made in accordance
with Section 3.6, plus (minus) any investment earnings (losses) on
such contributions and less any distributions or withdrawals made
from this account in accordance with Articles Six and Seven,
respectively.
(c) "Rollover Account" the portion of the Participant's Total Account
consisting of Rollover Contributions made in accordance with Section
4.1, plus (minus) any investment earnings (losses) on such
contributions and less any distributions or withdrawals made from
this account in accordance with Articles Six and Seven,
respectively.
(d) "Safe Harbor Matching Account" the portion of the Participant's
Total Account consisting of Safe Harbor Matching Contributions made
in accordance with Section 3.10, plus (minus) any investment
earnings (losses) on such contributions and less any distributions
made from this account in accordance with Article Six.
1.31 "Trust Agreement" means the Trust Agreement between the Company and a
Trustee as provided in Section 8.1, together with all amendments,
modifications and supplements hereafter made.
1.32 "Trust Fund" means the fund established under the terms of the Trust
Agreement with the Trustee for the purpose of holding and investing the
assets of the Plan. The Trust Fund shall consist of such investment funds
or vehicles as the Administrator may, in its discretion, designate from
time to time and may include such investments as may be selected by a
Participant or beneficiary under a self-directed "open option" arrangement
authorized by the Administrator.
Nothing herein shall prohibit the Trust Fund from holding reasonable
amounts in cash or cash equivalents in any fund or vehicle offered under
the Plan. The portion of the Trust Fund to be
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invested in the various funds or vehicles shall be determined by
Participant investment elections made pursuant to Article Five. The
Administrator may, in its discretion, offer additional investment funds or
vehicles to all Participants and may cease to offer any investment fund or
vehicle at such time as it deems appropriate.
Except as otherwise indicated, the Trust Fund shall be deemed to include
that portion of a Total Account which a Participant or beneficiary elects
to invest in a group annuity contract provided by the Erie Family Life
Insurance Company.
1.33 "Trustee" means the Trustee or Trustees acting as such under a Trust
Agreement, including any successor or successors.
1.34 "Valuation Date" means, for periods prior to the Conversion Date, the last
day of each calendar month and, for periods on and after the Conversion
Date, the close of business as of each business day.
1.35 "Year of Eligibility Service" means an "Eligibility Computation Period" in
which an Employee completes at least 1,000 Hours of Service.
The "Eligibility Computation Period" with respect to an Employee shall
mean the 12 consecutive month period that begins on the first day on which
the Employee is credited with an Hour of Service in the employment of an
Employer or Affiliate ("Employment Commencement Date") and ends on the
first anniversary thereof, and each Plan Year thereafter beginning with
the Plan Year that includes the first anniversary of the Employee's
Employment Commencement Date. In the event an Employee completes 1,000
Hours of Service during the Eligibility Computation Period that begins on
his Employment Commencement Date and completes 1,000 Hours of Service
during the Eligibility Computation Period that begins on the January 1
that next follows his Employment Commencement Date, such Employee shall be
credited with two Years of Eligibility Service.
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ARTICLE TWO
PARTICIPATION
2.1 Participation
(a) Any Employee shall be eligible to participate in the Plan on the
first day of a pay period, provided he is a Covered Employee and is
actively employed by an Employer on such date and, provided further,
that he makes proper application for participation within a
reasonable time prior to the start of such pay period by completing
and filing with the Administrator such forms as may be prescribed by
the Administrator.
(b) Notwithstanding the foregoing, effective January 1, 2001, any
Covered Employee who is compensated on an hourly basis and who is
classified by an Employer as other than a regular hourly employee
shall be eligible to participate in the Plan on the January 1 or
July 1 coincident with or next following such Employee's completion
of each of the following requirements, provided he remains a Covered
Employee as of such January 1 or July 1:
(i) His attainment of age 21 years; and
(ii) His completion of one Year of Eligibility Service.
If the Employee is not a Covered Employee on the date he otherwise
would have become eligible to participate in the Plan, such Employee
shall automatically become eligible to participate in the Plan upon
his return to employment as a Covered Employee.
2.2 Rehired Employees
An Employee who had been an "active" Participant in the Plan, who
terminates his employment and is subsequently re-employed may become
eligible to participate in the Plan under Section 3.1 on the first day of
any pay period following re-employment, provided he is a Covered Employee
and is actively employed by an Employer on such date and, provided
further, that he makes proper application for participation within a
reasonable time prior to the start of such pay period by completing and
filing with the Administrator such forms as may be prescribed by the
Administrator.
2.3 Employment Transfers
(a) Upon the transfer of a Covered Employee to other employment with an
Employer or Affiliate whereby he ceases to be a Covered Employee
hereunder, such individual's ability to have Tax Deferred
Contributions made to the Plan on his behalf (and to receive
Employer Matching Contributions) with respect to Compensation earned
on and after this date of transfer shall cease and such Participant
shall be considered an "inactive" Participant under the Plan.
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(b) Upon the transfer of an individual from other employment with an
Employer or Affiliate such that the individual becomes a Covered
Employee hereunder, such individual shall be eligible to participate
in the Plan as provided in Section 2.1 hereof.
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ARTICLE THREE
EMPLOYER CONTRIBUTIONS
3.1 Tax Deferred Contributions
(a) Each Covered Employee who is eligible to participate in the Plan and
who has elected to become a Participant (in accordance with Article
Two) may, at the time of making application to become a Participant,
elect to reduce his future Compensation on a fixed, whole
percentage, from one percent (1%) to eight percent (8%) of that
Compensation otherwise payable in future pay periods. Effective with
respect to pay periods commencing on and after December 14, 2000, a
Participant may elect to reduce his future Compensation by a stated
percentage, from one percent (1%) to fifteen percent (15%) of that
Compensation otherwise payable in future pay periods. Such election
shall be made in accordance with procedures adopted by the
Administrator and communicated to Participants.
Subject to the limitations set forth in Sections 3.2, 3.3, 3.4, 3.9
and 11.11, the Participant's Compensation shall be reduced in
accordance with the foregoing election and shall be designated as a
Tax Deferred Contribution to the Plan. Tax Deferred Contributions
shall be withheld by the Participant's Employer each pay period by
regular payroll deduction in accordance with the Employer's payroll
withholding procedures and shall be credited to the Participant's
Tax Deferred Account as of the date the contributions are received
by the Trustee or otherwise deposited in the Trust Fund. Such
contributions shall be deposited in the Trust Fund as soon as such
amounts can reasonably be segregated from the Employer's general
assets.
(b) Participant Tax Deferred Contributions constitute Employer
contributions under the Plan and are intended to qualify as elective
contributions under Section 401(k) of the Code. Tax Deferred
Contributions may be made only with respect to an amount which the
Participant could otherwise elect to receive in cash and which is
not currently available to the Participant as of the date an
election specified in this Section 3.1 is made. In the event a
Participant has no Compensation for any payroll period, no Tax
Deferred Contribution may be made for such period. Any Tax Deferred
Contribution made on behalf of a Covered Employee in any given Plan
Year that is taken into account for purposes of the actual deferral
percentage limitation described in Section 3.3(b) shall be
attributable to services performed by the Covered Employee in such
Plan Year and shall relate to Compensation which would have been
paid in such Plan Year or within two and one-half (2-1/2) months
following such Plan Year but for the deferral election.
3.2 Dollar Limitation on Tax Deferred Contributions
(a) Any provision of this Plan to the contrary notwithstanding, no
Employer shall be permitted, during any calendar year, to make with
respect to such calendar year, Tax Deferred Contributions on behalf
of a Participant under the Plan (when combined with
- 11 -
the Participant's elective deferrals under any other plans,
contracts, or arrangements) that will exceed the limitation in
affect for such year under Section 402(g)(1) of the Code, as
adjusted in accordance with Section 402(g)(5) of the Code.
(b) In the event any amount of Tax Deferred Contributions for a calendar
year exceeds the limitation applicable under this Section 3.2 for
such calendar year, such excess amount (hereafter described for
purposes of this Section, as "Excess Deferrals"), as adjusted for
any income or loss allocable thereto in accordance with regulations,
shall to the extent possible be distributed to such Participant, as
provided in subparagraphs (i), (ii), (iii) and (iv) below:
(i) At a date not later than the March 1st of the calendar year
immediately following the calendar year to which such Excess
Deferrals are attributable, any Participant to whom this
Section 3.2 applies may notify, in writing, the Administrator
by submitting a form as may be provided by the Administrator
which shall specify the amount of the Participant's Excess
Deferrals for the given calendar year and shall contain a
certified statement by the Participant indicating that if such
amount is not distributed, such Excess Deferrals will exceed
the limit imposed on the Participant by Section 402(g) of the
Code for the year in which the Tax Deferred Contribution
occurred.
Notwithstanding the foregoing and solely for the purpose of
facilitating a distribution of Excess Deferrals as required by
regulation, in the event a Participant has Excess Deferrals in
a given year calculated by taking into account his Tax
Deferred Contributions hereunder and his elective deferrals
under any other plan, contract, or arrangement maintained by
an Employer or Affiliate, the Participant will be deemed to
have notified the Administrator in the manner provided in this
subparagraph.
(ii) At a date not later than the April 15 of the calendar year
immediately following the calendar year to which such Excess
Deferrals are attributable, the Plan may distribute to the
Participant the amount of the Excess Deferrals allocated to
the Plan as adjusted for any income or loss allocable to such
excess. Any Excess Deferrals distributed pursuant to this
subparagraph are to be included in the gross income of the
Participant for the year to which such Excess Deferrals
relate. Any income that is allocable to such Excess Deferrals
(as determined in accordance with rules promulgated by the
Secretary of the Treasury or his delegate) that is distributed
pursuant to this subparagraph is to be included in the gross
income of the Participant for the year in which such amount is
distributed. In making a distribution as permitted under this
Section, the Employer shall specifically designate the
distribution as that consisting of Excess Deferrals within the
meaning of Section 402(g)(1) of the Code. Any distribution of
less than the entire amount of Excess Deferrals plus income or
loss attributable to such deferral contributions shall be
treated as a pro rata distribution of such excess deferral
contributions and income/loss.
- 12 -
(iii) To the extent provided by the Secretary of the Treasury or his
delegate, such Excess Deferrals distributed pursuant to this
subparagraph are to be taken into account for purposes of
applying the actual deferral percentage test specified in
Section 3.3(b) (except if such excess is both prohibited under
Section 401(a)(30) of the Code and is attributable to a
non-Highly Compensated Employee), and for any other purpose of
the Code which may be prescribed by the Secretary of the
Treasury or his delegate. No corrective distribution under
this Section shall be recognized for purposes of determining
whether the minimum distribution requirements of Section
401(a)(9) of the Code are satisfied with respect to any
Participant.
(iv) Any distribution in accordance with this Section 3.2 shall be
made without regard to any notice or consent otherwise
required under Sections 411(a)(11) or 417 of the Code.
3.3 Actual Deferral Percentage Limitation on Tax Deferred Contributions (Plan
Years beginning before January 1, 2001)
(a) Any provision of Section 3.1(a) to the contrary notwithstanding and
effective for Plan Years beginning before January 1, 2001, the Tax
Deferred Contribution percentages under Section 3.1(a) shall be
modified as provided in paragraph (d) if the requirements of
paragraph (b) are not satisfied.
(b) An actual deferral percentage shall be determined for each Covered
Employee who is eligible to make Tax Deferred Contributions. Such
percentage shall be equal to the total Tax Deferred Contribution
(and, if elected by the Company, Employer Matching Contribution)
made on the Covered Employee's behalf for the Plan Year divided by
his Test Compensation in the Plan Year. With respect to Covered
Employees who are eligible to make Tax Deferred Contributions but
make no such contributions under this Plan, such actual deferral
percentage shall be zero.
Notwithstanding the foregoing, if for any Plan Year beginning before
January 1, 1997, any eligible Highly Compensated Covered Employee is
subject to the family aggregation rules of Section 414(q)(6) of the
Code because he is either a five percent (5%) owner or one of the
top 10 Highly Compensated Employees on the basis of Test
Compensation, the actual deferral percentage of such Employee, as so
aggregated for such year, shall be determined by combining the Tax
Deferred Contributions and Test Compensation of all family members
(as described in Section 1.15) eligible to participate in the Plan.
The average of the actual deferral percentages for eligible Highly
Compensated Covered Employees (High Average), when compared to the
average of the actual deferral percentages for eligible non-Highly
Compensated Covered Employees (Low Average), must meet one of the
following requirements:
- 13 -
(i) The High Average is no greater than the Low Average times one
and one-quarter (1-1/4); or
(ii) The excess of the High Average over the Low Average is not
greater than two (2) percentage points and the High Average is
no greater than the Low Average times two (2).
The provisions of this paragraph (b) shall be deemed to include the
provisions of Section 401(k)(3) of the Code and Section
1.401(k)-1(b) of the Income Tax Regulations which are hereby
incorporated by reference.
(c) If two or more plans which include cash or deferred arrangements are
considered as one plan for purposes of Section 410(b) of the Code,
such arrangements included in such plans shall be treated as one
arrangement for purposes of this Section 3.3 If any Highly
Compensated Covered Employee is a participant under two or more cash
or deferred arrangements maintained by an Employer or Affiliate, all
such arrangements shall be treated as one cash or deferred
arrangements for purposes of determining the actual deferral
percentage of such Covered Employee. For purposes of this section,
actual deferral percentages shall be calculated to the nearest
one-hundredth of one percent.
(d) To the extent Tax Deferred Contributions (and Employer Matching
Contributions, if applicable) made with respect to Highly
Compensated Covered Employees cause the High Average to fail to meet
paragraph (b) above, such Tax Deferred Contributions (individually
determined pursuant to Section 3.4(a) and as adjusted for earnings
or loss thereon in accordance with regulations promulgated by the
Secretary of the Treasury or his delegate) shall return to the
Employer solely for the purpose of enabling the Employer to withhold
any federal, state, or local taxes due on such amounts. Thereafter,
the Employer shall treat all remaining amounts in accordance with
the provisions of Sections 3.4(b) below. The Administrator may also,
at any time, authorize a suspension or reduction of Tax Deferred
Contributions made pursuant to Section 3.1 hereof in accordance with
rules promulgated by the Administrator. These rules may include
administrative provisions authorizing the suspension or reduction of
Tax Deferred Contributions above a specified dollar amount or
percentage of Compensation.
(e) The extent to which Tax Deferred Contributions cause the High
Average to fail to meet paragraph (b) above shall be determined by
the Administrator in a reasonable and consistent manner. The
Administrator shall not be liable to any Participant (or his
beneficiary, if applicable) for any losses caused by inaccurately
estimating the amount of any Participant's Tax Deferred
Contributions in excess of the limitations established in Sections
3.2(a) and 3.3(b) and the earnings or losses attributable to such
Tax Deferred Contributions.
(f) In the event the Administrator determines that an amount to be
deferred pursuant to the election provided in Section 3.1 would
cause an Employer's contributions under this and/or any other
tax-qualified retirement plan maintained by an Employer or Affiliate
to exceed the applicable deduction limitations contained in Section
404 of the Code, or to
- 14 -
exceed the maximum annual addition determined in accordance with
Section 11.11, the Administrator may treat such amount in accordance
with the rules in paragraph (d) above.
3.4 Treatment of Tax Deferred Contributions in Excess of Actual Deferral
Percentage Limitation (Plan Years beginning before January 1, 2001)
(a) If the actual deferral percentage limitation of Section 3.3(b) is
not satisfied with respect to any given Plan Year beginning before
January 1, 1997, the amount of Tax Deferred Contributions that are
in excess of such limitation and are attributable to a Highly
Compensated Covered Employee shall be determined as follows:
(i) the actual deferral percentage of the Highly Compensated
Covered Employee with the highest actual deferral percentage
is reduced to the extent necessary to:
(A) cause such Employee's actual deferral percentage to
equal that of the Highly Compensated Covered Employee
with the next highest actual deferral percentage; or
(B) enable the Plan to satisfy the actual deferral
percentage limitation, if such reduction is less than
that required by (A) above.
(ii) The process described in (i) above shall be repeated until the
Plan satisfies the actual deferral percentage limitation.
(iii) Notwithstanding the foregoing, the determination of excess Tax
Deferred Contributions with respect to a given Highly
Compensated Covered Employee whose actual deferral percentage
is determined under the family aggregation rules described in
Section 3.3(b) hereof shall be accomplished by reducing the
actual deferral percentage as required by the foregoing
provisions of this paragraph (a) and by allocating the excess
Tax Deferred Contributions derived thereby for the family
group among the family members in proportion to the Tax
Deferred Contributions of each family member that is combined
to determine the actual deferral percentage for the family
group.
(b) If the actual deferral percentage limitation of Section 3.3(b) is
not satisfied with respect to any given Plan Year beginning on or
after January 1, 1997 and before January 1, 2001, the amount of Tax
Deferred Contributions that are in excess of such limitation and are
attributable to a Highly Compensated Covered Employee shall be
determined by first computing the total dollar amount of Tax
Deferred Contributions which must be reduced to satisfy the
limitation and by allocating these amounts, in accordance with
guidance promulgated by the Secretary of the Treasury or his
delegate, to the Highly Compensated Covered Employees on behalf of
whom the largest amounts of Tax Deferred Contributions have been
made to the Plan for the given Plan Year.
(c) Those Tax Deferred Contributions attributable to a Highly
Compensated Covered Employee that are deemed in excess of the actual
deferral percentage limitation for any
- 15 -
given Plan Year shall be distributed (along with any earnings or
losses attributable thereto in accordance with regulations) no later
than the last day of the Plan Year following the Plan Year to which
such excess Tax Deferred Contributions relate. Any excess Tax
Deferred Contribution that is in an amount greater than the de
minimis amount prescribed by the Secretary of the Treasury or his
delegate (and any income or loss attributable to such excess Tax
Deferred Contribution) that is distributed pursuant to this
paragraph by two and one-half (2-1/2) months following the Plan Year
to which such excess amount relates shall be includible in the
affected Covered Employee's gross income on the earliest date on
which any Tax Deferred Contribution made on behalf of such Covered
Employee during such Plan Year would have been received had the
Employee declined to make the deferral election specified in Section
3.1(a) hereof. Any excess Tax Deferred Contributions (and any income
or loss attributable thereto) so distributed more than two and
one-half (2-1/2) months following the Plan Year to which such excess
amounts relate and any de minimis excess Tax Deferred Contributions
(and any income or loss attributable thereto) distributed prior to
such date shall be includible in the affected Covered Employee's
gross income in the year in which such amounts are distributed.
(d) In making a distribution under this section, the Administrator shall
specifically designate such distribution as a distribution
consisting of Tax Deferred Contributions (and income or loss) in
excess of that permitted by the actual deferral percentage
limitation. Any distribution of less than the entire amount of
excess Tax Deferred Contributions and income or loss attributable
thereto (as such entire amount is determined after application of
paragraph (a) or paragraph (b) of this Section 3.4, whichever
applicable, and after application of Section 3.5, if applicable)
shall be treated as a pro rata distribution of such excess
contribution and income/loss.
(e) Except as otherwise provided by the Secretary of the Treasury or his
delegate, any Tax Deferred Contribution in excess of the actual
deferral percentage limitation shall be taken into account for
purposes of determining the Participant's annual additions
limitation as provided in Section 11.11 herein, and shall be taken
into account for purposes of Section 404 of the Code,
notwithstanding the correction of such excess amounts by
distribution. No corrective distribution under this section shall be
recognized for purposes of determining whether the minimum
distribution requirements of Section 401(a)(9) of the Code are
satisfied with respect to any Participant.
(f) Any distribution in accordance with this section shall be made
without regard to any notice or consent otherwise required under
Sections 411(a)(11) or 417 of the Code.
- 16 -
3.5 Coordination of Distributions of Excess Tax Deferred Contributions (Plan
Years beginning before January 1, 2001)
In the event that a portion of the Tax Deferred Contributions made with
respect to a Highly Compensated Covered Employee for any given Plan Year
beginning before January 1, 2001 exceed the applicable limitations of both
Section 3.2(a) and Section 3.3(b), such excess amounts subject to both
limitations shall be coordinated as follows:
(a) to the extent permitted, such excess amounts shall be distributed
pursuant to Section 3.2(b) hereof; and
(b) to the extent that any such excess amounts remain after application
of paragraph (a) such excess amounts shall be distributed pursuant
to Section 3.4(c) hereof.
3.6 Employer Matching Contributions
Effective with respect to each given pay period beginning on and after
January 1, 1997 and prior to December 14, 2000, the Employer shall
contribute an amount to the Trust Fund equal to fifty percent (50%) of the
Tax Deferred Contributions made with respect to each Participant during
such payroll period which are not in excess of six percent (6%) of the
Participant's Compensation during such payroll period. Such contributions
shall be designated as Employer Matching Contributions. Employer Matching
Contributions shall be credited to Participants' Employer Accounts as of
the date they are received by the Trustee or otherwise deposited in the
Trust Fund.
3.7 Actual Contribution Percentage Limitation on Employer Matching
Contributions (Plan Years beginning before January 1, 2001)
(a) Effective with respect to each Plan Year beginning before January 1,
2001, an actual contribution percentage shall be determined for each
Covered Employee who is eligible to become a Participant. Such
percentage shall be equal to his Employer Matching Contributions for
the Plan Year, divided by his Test Compensation in the Plan Year.
With respect to Covered Employees who are eligible to participate in
the Plan but have no Tax Deferred Contributions made to the Plan on
their behalf and therefore do not have any Employer Matching
Contributions made to the Plan on their behalf under Section 3.6,
such actual contribution percentage shall be zero.
Notwithstanding the foregoing, if for any Plan Year beginning before
January 1, 1997, an eligible Highly Compensated Covered Employee is
subject to the family aggregation rules of Section 414(q)(6) of the
Code because he is either a five percent (5%) owner or one of the
top 10 Highly Compensated Employees on the basis of Test
Compensation, the actual contribution percentage of such Employee,
as so aggregated for such year, shall be determined by combining the
Employer Matching Contributions and Test Compensation of all family
members (as described in Section 1.15) eligible to participate in
the Plan.
(b) The average of the actual contribution percentages for eligible
Highly Compensated Covered Employees (High Average), when compared
to the average of the actual
- 17 -
contribution percentages for eligible non-Highly Compensated Covered
Employees (Low Average) must meet one of the following requirements:
(i) the High Average is no greater than the Low Average times one
and one-quarter (1-1/4); or
(ii) the excess of the High Average over the Low Average is not
greater than two (2) percentage points and the High Average is
no greater than the Low Average times two (2).
The provisions of this paragraph (b) shall be deemed to include the
provisions of Section 401(m)(2) of the Code and Section
1.401(m)-1(b) of the Income Tax Regulations which are hereby
incorporated by reference.
(c) If two or more plans to which Employer Matching Contributions are
made are treated as one plan for purposes of Section 410(b) of the
Code, such plans shall be treated as one plan for purposes of this
Section 3.7. If any Highly Compensated Covered Employee is a
participant in two or more plans of an Employer or Affiliate to
which such contributions are made, all such contributions shall be
aggregated for purposes of this section. For purposes of this
section, actual contribution percentages shall be calculated to the
nearest one-hundredth of one percent.
(d) To the extent Employer Matching Contributions cause the High Average
to fail to meet paragraph (b) above, the Administrator may include
such amount of Tax Deferred Contributions (if not used to satisfy
the requirements of Section 3.3(b)) as may be necessary to satisfy
the requirements of paragraph (b).
(e) The extent to which Employer Matching Contributions cause the High
Average to fail to meet paragraph (b) above shall be determined by
the Administrator in a reasonable and consistent manner. The
Administrator shall not be liable to any Participant (or his
beneficiary, if applicable) for any losses caused by inaccurately
estimating the amount of any Employer Matching Contributions made on
behalf of any Participant in excess of the limitation established in
paragraph (b) above and the earnings or losses attributable to such
Employer Matching Contributions.
3.8 Treatment of Employer Matching Contributions in Excess of Actual
Contribution Percentage Limitation (Plan Years beginning before January 1,
2001)
(a) If the actual contribution percentage limitation of Section 3.7(b)
is not satisfied with respect to any given Plan Year beginning
before January 1, 1997, the amount of Employer Matching
Contributions (as such term includes any Tax Deferred Contribution
that may be treated as an Employer Matching Contribution for
purposes of Section 3.7(b) hereof) that are in excess of such
limitation and are attributable to a Highly Compensated Covered
Employee shall be determined as follows:
- 18 -
(i) the actual contribution percentage of the Highly Compensated
Covered Employee with the highest actual contribution
percentage is reduced to the extent necessary to:
(A) cause such Employee's actual contribution percentage to
equal that of the Highly Compensated Covered Employee
with the next highest actual contribution percentage; or
(B) enable the Plan to satisfy the actual contribution
percentage limitation, if such reduction is less than
that required by (A) above.
(ii) The process described in (i) above shall be repeated until the
Plan satisfies the actual contribution percentage limitation.
(iii) Notwithstanding the foregoing, the determination of excess
Employer Matching Contributions with respect to a given Highly
Compensated Covered Employee whose actual contribution
percentage is determined under the family aggregation rules
described in Section 3.7(a) hereof shall be accomplished by
reducing the actual contribution percentage as required by the
foregoing provisions of this paragraph (a) and by allocating
the excess Employer Matching Contributions derived thereby for
the family group among the family members in proportion to the
Employer Matching Contributions made on behalf of each family
member that is combined to determine the actual contribution
percentage of the family group.
(b) If the actual contribution percentage limitation of Section 3.7(b)
is not satisfied with respect to any given Plan Year beginning on or
after January 1, 1997 and before January 1, 2001, the amount of
Employer Matching Contributions (as such term includes any Tax
Deferred Contribution that may be treated as an Employer Matching
Contribution for purposes of Section 3.7(b) hereof) that are in
excess of such limitation and are attributable to a Highly
Compensated Covered Employee shall be determined by first computing
the total dollar amount of Employer Matching Contributions which
must be reduced to satisfy the limitation and by allocating these
amounts, in accordance with guidance promulgated by the Secretary of
the Treasury or his delegate, to the Highly Compensated Covered
Employees on behalf of whom the largest amounts of Employer Matching
Contributions have been made to the Plan for the given Plan Year.
(c) Any Employer Matching Contributions attributable to a Highly
Compensated Covered Employee that are deemed in excess of the actual
contribution percentage limitation for a given Plan Year (through
application of paragraph (a) or paragraph (b) above, whichever
applicable) shall be distributed (along with any earnings or losses
attributable thereto in accordance with regulations) no later than
the last day of the Plan Year following the Plan Year to which such
excess Employer Matching Contributions relate. Any such excess
Employer Matching Contribution that is in an amount greater than the
de minimis amount prescribed by the Secretary of the Treasury or his
delegate (and any income or loss attributable to such excess
Employer Matching Contribution) that is distributed pursuant to this
paragraph by two and one-half (2-1/2) months following the Plan Year
to which
- 19 -
such excess amounts relate shall be includible in the affected
Covered Employee's gross income for his taxable year ending with or
within the Plan Year for which the excess Employer Matching
Contributions were made. Any excess Employer Matching Contributions
(and any income or loss attributable thereto) so distributed more
than two-and one-half (2-1/2) months following the Plan Year to
which such excess amounts relate and any de minimis excess Employer
Matching Contributions (and any income or loss attributable thereto)
distributed prior to such date shall be includible in the affected
Covered Employee's gross income in the taxable year in which such
amounts are distributed.
(d) In making a distribution under paragraph (c), the Administrator
shall specifically designate such distribution as a distribution
consisting of Employer Matching Contributions in excess of that
permitted by the actual contribution percentage limitation, along
with any income or loss attributable thereto. Any distribution of
less than the entire amount of excess Employer Matching
Contributions shall be treated as a pro rata distribution of such
excess contribution and income/loss.
(e) Except as otherwise provided by the Secretary of the Treasury or his
delegate, any Employer Matching Contribution in excess of the actual
contribution percentage limitation shall be taken into account for
purposes of determining the Participant's annual additions
limitation, as provided in Section 11.11 herein, and shall be taken
into account for purposes of Section 404 of the Code,
notwithstanding the correction of such excess amount by a
distribution under this section. No corrective distribution under
this section shall be recognized for purposes of determining whether
the minimum distribution requirements of Section 401(a)(9) of the
Code are satisfied with respect to any Participant.
(f) Any distribution in accordance with this section shall be made
without regard to any notice or consent otherwise required under
Sections 411(a)(11) or 417 of the Code.
3.9 Combined Alternative Limitation on Tax Deferred Contributions and Employer
Matching Contributions (Plan Years beginning before January 1, 2001)
Any provisions of this Article Three to the contrary notwithstanding, if,
for any Plan Year beginning before January 1, 2001, both the High Average
specified in Section 3.3(b) (relating to actual deferral percentages) and
the High Average specified in Section 3.7(b) (relating to actual
contribution percentages) exceed the Low Average specified in such
sections by more than twenty-five percent (25%), the Administrator shall
apply the aggregate alternative limitation in accordance with Section
1.401(m)-2 of the Income Tax Regulations, the provisions of which are
incorporated herein by reference. In the event such combined alternative
limitation is not satisfied for any given Plan Year, the Company shall
direct the Administrator to reduce the High Average of Section 3.3(b)
and/or the High Average of Section 3.7(b) as permitted by Sections 3.4,
3.5 and 3.8 hereof to the extent necessary to satisfy the combined
alternative limitation.
For purposes of this Section 3.9, the High Average specified in Sections
3.3(b) and 3.7(b) shall
- 20 -
be determined after taking into account all corrective measures permitted
under Sections 3.2, 3.4 and 3.8.
3.10 Safe Harbor Matching Contributions
(a) Effective with respect to each given pay period beginning on and
after December 14, 2000, the Employer shall contribute an amount to
the Trust Fund equal to the sum of those amounts individually
determined with respect to each Participant, as follows:
(i) One hundred percent (100%) of the Tax Deferred Contributions
made with respect to the Participant during such pay period
which do not exceed three percent (3%) of the Participant's
Compensation during such pay period; and
(ii) Fifty percent (50%) of the Tax Deferred Contributions made
with respect to the Participant during such pay period which
exceed three percent (3%), but do not exceed five percent
(5%), of the Participant's Compensation during such pay
period.
Such contributions shall be designated as Safe Harbor Matching
Contributions and shall be 100% vested and nonforfeitable when made.
The Employer shall make Safe Harbor Matching Contributions as soon
as practicable following the end of the pay period to which they
relate and such contributions shall be credited to Participants'
Safe Harbor Matching Accounts as of the date they are received by
the Trustee or otherwise deposited in the Trust Fund.
(b) Effective with respect to each Plan Year in which the provisions of
Section 3.10(a) are applicable, the Administrator shall provide
Notice during the "Safe Harbor Notice Period" (as hereinafter
defined) to each Covered Employee who is eligible to participate in
the Plan during such Plan Year. Such Notice shall describe the
following:
(i) The formula used to determine the Safe Harbor Matching
Contribution to be made on behalf of such Employee for such
Plan Year;
(ii) Any requirements that such Employee must satisfy to become
entitled to receive such contributions;
(iii) The type and amount of Compensation that may be deferred under
the Plan as Tax Deferred Contributions;
(iv) The procedures for making or changing an election to make Tax
Deferred Contributions; and
(v) The withdrawal and vesting provisions applicable to
contributions under the Plan.
For purposes hereof, the "Safe Harbor Notice Period" shall mean a
period beginning 90 days before the first day of the applicable Plan
Year and ending 30 days before the first
- 21 -
day of the applicable Plan Year; provided, however, with respect to
a Covered Employee who becomes eligible to participate in the Plan
during a given Plan Year in which the provisions of Section 3.10(a)
are applicable, the "Safe Harbor Notice Period" shall begin 90 days
before the day such Employee may first participate in the Plan and
shall end on the day such Employee may first participate in the
Plan.
(c) For Plan Years beginning on and after January 1, 2001 in which the
Safe Harbor Matching Contribution of Section 3.10(a) is made and the
Notice requirement of Section 3.10(b) is satisfied, the Employer
elects to treat the Plan as automatically satisfying the
nondiscrimination in amount of employer contribution requirements of
Section 401(a)(4) of the Code. Notwithstanding any provision of this
Section 3.10 to the contrary, the Employer may suspend future Safe
Harbor Matching Contributions at any time provided that the
procedures for implementing such suspension are consistent with
guidance promulgated by the Internal Revenue Service and, provided
further, that for any Plan Year in which such suspension occurs, the
provisions of Section 3.3, 3.4, 3.5, 3.7, 3.8 and 3.9 shall again
become applicable to the extent then required by law.
3.11 Source of Employer Contributions
(a) The Employer shall make all contributions to the Plan without regard
to current or accumulated net profits. Notwithstanding the
foregoing, for purposes of Sections 401(a)(27) and 401(k) of the
Code, the Plan shall continue to be considered a profit sharing
plan. All Employer contributions shall be made in cash.
(b) Any provision of the Plan to the contrary notwithstanding, the total
Employer contribution made with respect to any Plan Year, when added
to any other contributions made by the Employer to a plan qualified
under Section 401(a) of the Code, shall not exceed such amount which
is deductible for such Plan Year pursuant to Sections 404(a)(3) or
404(a)(7) of the Code. In any event, all contributions for a Plan
Year shall be paid within the regular or extended time for filing
the Employer's federal income tax return for the fiscal year which
includes the Plan Year end.
3.12 Investment of Employer Contributions
The Employer contributions made on behalf of a Participant shall be
invested by the Trustee in accordance with the Participant's election
under Sections 5.3(a) and 5.4(a).
- 22 -
3.13 Recovery of Contributions
Except as provided in this Section 3.13, the assets of the Plan shall
never inure to the benefit of an Employer or Affiliate and shall be held
for the exclusive purpose of providing benefits under the Plan and
defraying reasonable expenses of the Plan. However, no provision of this
Plan shall:
(a) Prohibit the return of a contribution to an Employer or a
Participant within one year after payment if such contribution was
made by a mistake of fact;
(b) Prohibit the return of a contribution which was conditioned upon its
deductibility under Section 404 of the Code (to the extent
disallowed as a deduction);
provided, however, in the case of the return of a contribution which was
made as a result of a mistake of fact, the amount which shall be returned
is the excess of the amount contributed over the amount which would have
been contributed had the mistake of fact not occurred. Further, in the
case of the return of a contribution which was conditioned upon
deductibility, and in the case of a contribution made as the result of a
mistake of fact, earnings attributable to the excess contribution may not
be returned, but losses attributable thereto must reduce the amount to be
returned. Further, in both such cases, if the withdrawal of the amount
attributable to the mistaken or non-deductible contribution would cause
the balance of the account of any Participant to be reduced to less than
the balance which would have been in the account had the mistaken or
non-deductible amount not been contributed, then the amount to be returned
to the Employer will be limited so as to avoid such reduction.
3.14 Other Provisions Relating to Employer Contributions
(a) A Participant may as of any time:
(i) suspend the Tax Deferred Contributions made on his behalf; or
(ii) increase or decrease the rate of Tax Deferred Contributions
made on his behalf or have such contributions resumed after a
period of suspension.
Such suspension or change in rate shall be effective as of the first
day of the pay period next following the date the Participant
delivers Notice of the same to the Administrator, provided such
Notice is delivered to the Administrator in such time as to allow
the Administrator a reasonable period within which to act on the
election contained therein.
During any period of suspension, regardless of the length of its
duration, the Participant's Account shall be maintained in
accordance with the procedure set forth in Article Five.
(b) In the event Employer Matching Contributions or Safe Harbor Matching
Contributions have been made with respect to Tax Deferred
Contributions that are subsequently determined to fail to meet the
annual dollar limitation specified in Section 3.2(a) (and if such
Excess Deferrals are distributed pursuant to Section 3.2(b)) or the
actual deferral
- 23 -
percentage limitation of Section 3.3(b) (and if such excess Tax
Deferred Contributions are distributed pursuant to Section 3.4),
such Employer Matching Contributions or Safe Harbor Matching
Contributions (and any income or loss attributable thereto
determined in accordance with regulations) shall be forfeited and
applied to reduce future Employer Matching Contributions or Safe
Harbor Matching Contributions.
- 24 -
ARTICLE FOUR
ROLLOVER CONTRIBUTIONS
4.1 Rollover Contributions
(a) Under such rules and procedures as the Administrator may establish,
any Covered Employee may make a cash contribution to this Plan of
all or a portion of the amount received by the Covered Employee in
the form of a lump sum distribution from a qualified trust within
the meaning of Section 402(c)(8) of the Code or from a rollover
account described in Section 408(d)(3) of the Code, or may make a
direct rollover of all or a portion of an eligible rollover
distribution within the meaning of Section 402(c)(4) of the Code.
Such rollover contribution shall be allocated to a Rollover Account
established on behalf of the Covered Employee. For purposes of this
Section 4.1, the entire amount of cash to be accepted by this Plan
as a rollover contribution must constitute all or a portion of an
eligible rollover distribution (as defined in Section 6.4). Such
contribution must not include after-tax amounts contributed by the
Employee or regular IRA contributions and, with respect to rollovers
of distributions from a qualified trust or rollover account, must be
received by the Trustee on or before the 60th day after the day on
which the Employee received the distribution. A rollover
contribution may include funds which were contributed on the
Participant's behalf under an arrangement described in Code Section
401(k). Before accepting any rollover contributions from a Covered
Employee, the Administrator shall determine to its satisfaction that
such contribution does not contain amounts from sources other than
those provided in this Section 4.1.
(b) In the event the Administrator has reasonably concluded that an
amount may be accepted by the Plan as a rollover contribution under
Section 4.1(a) but later determines that all or a portion of such
amount is not an eligible rollover distribution (as defined in
Section 6.4) from a qualified trust within the meaning of Section
402(c)(8) of the Code or from a rollover account described in
Section 408(d)(3) of the Code, the Administrator shall cause such
ineligible amount and related investment earnings to be distributed
to the Covered Employee (or, if applicable, beneficiary) as soon as
administratively feasible.
4.2 Vesting of Rollover Contributions
Amounts contributed under Section 4.1 hereof shall at all times be 100%
vested.
- 25 -
ARTICLE FIVE
PARTICIPANT ACCOUNTS AND VALUATION OF FUNDS
5.1 Establishment of Participant Accounts
(a) There shall be established and maintained for each Participant a
Total Account consisting of the following accounts:
(i) a Tax Deferred Account;
(ii) an Employer Account; and
(iii) for periods on and after January 1, 2001, a Safe Harbor
Matching Account.
Under the circumstances described in Article Four, a Participant may
also have a Rollover Account maintained on his behalf.
(b) Within each of the accounts listed in Section 5.1(a), separate
records shall be kept of the portion, if any, of each account
invested in each investment fund or vehicle then offered under the
Plan.
5.2 Procedure as of Each Valuation Date
As of each Valuation Date, each Participant's balance in his various
accounts shall be adjusted in accordance with the valuation procedure
adopted by the Administrator.
5.3 Investment Elections
(a) When a Covered Employee submits his application to become a
Participant, he shall give Notice regarding the investment of Tax
Deferred Contributions and any Employer Matching Contributions or
Safe Harbor Matching Contributions made on his behalf under the
Plan. The Notice shall specify, in 1% increments from 0% to 100%:
(i) the percentage of all future Tax Deferred Contributions to be
invested in each investment option which is then made
available for the investment of Tax Deferred Contributions;
and
(ii) the percentage of all future Employer Matching Contributions
or, with respect to pay periods beginning on and after
December 14, 2000, Safe Harbor Matching Contributions, to be
invested in each investment option which is then made
available for the investment of Employer Matching
Contributions or, with respect to pay periods beginning on and
after December 14, 2000, Safe Harbor Matching Contributions.
- 26 -
A Participant may change the investment elections made under this
Section 5.3(a) at any time by giving Notice to the Administrator or
its designee within such time and in accordance with such means as
are designated by the Administrator and communicated to Participants
and Covered Employees. Such Notice of change shall be subject to the
procedural specifications set forth above (and, if applicable,
subject to the limitations set forth in Section 5.4) and, except as
may otherwise be provided in the Trust Agreement, shall be effective
with respect to contributions received by the Trustee (or otherwise
deposited into the Trust Fund) as of the Valuation Date on which the
Notice is received or as of the next following Valuation Date, in
accordance with procedures established by the Administrator, and
communicated to Participants and Covered Employees.
A Covered Employee making a rollover contribution shall give Notice
regarding the investment of such contribution. Such Notice shall be
delivered on or prior to the date the rollover contribution is
effective and shall specify, in 1% increments from 0% to 100%, the
percentage of the rollover contribution to be invested in each
investment option which is then made available for the investment of
rollover contributions.
(b) Each Participant and beneficiary shall have the opportunity to
change the manner in which the Total Account maintained on his
behalf under the Plan is invested. Such opportunity shall be
exercised by giving Notice to the Administrator or its designee
within such time and in accordance with such means as are designated
by the Administrator and communicated to Participants, Covered
Employees and affected beneficiaries. Subject to any minimum dollar
limitation which may be established by the Administrator from
time-to-time, such Notice shall specify, in a whole dollar amount or
in 1% increments from 0% to 100%, the dollar amount, or percentage,
of the Total Account maintained on behalf of the Participant or
beneficiary which is to be invested in each investment option then
made available. Except as may otherwise be set forth in the Trust
Agreement, such Notice shall be effective as of the Valuation Date
on which the Notice is received by the Trustee or as of the next
following Valuation Date, in accordance with procedures established
by the Administrator and communicated to Participants, Covered
Employees and affected beneficiaries. Notwithstanding any provision
of this paragraph (b) to the contrary, (i) the election under this
Section 5.3(b) shall be subject to any contractual limitations
imposed on the direct transfer of assets between given investment
funds, (ii) in no event shall any portion of the Total Account
maintained on behalf of a Participant or beneficiary in the Erie
Family Life Group Annuity Fund be transferred to any other
investment fund and (iii) in no event shall any portion of the Total
Account maintained on behalf of a Participant be transferred to the
Erie Indemnity Stock Fund.
(c) Any investment elections or changes in elections under this Section
5.3 may be limited or delayed by the Administrator or Trustee, if,
in the judgment of such party, giving immediate effect to such
elections would adversely affect the Total Account balances of a
significant number of Participants.
- 27 -
(d) In the event a Participant's or beneficiary's investment election is
incomplete, the Participant or beneficiary will be assumed to have
chosen to invest in such default fund as is set forth in the Trust
Agreement.
(e) Any investment election under the foregoing provisions of this
Section 5.3 shall remain in effect until changed by another election
under this Section.
(f) Each Participant, Covered Employee and beneficiary is solely
responsible for the selection of his investment option. The Trustee,
the Administrator, the Employer, and the directors, officers,
supervisors and other employees of the Employer are not empowered to
advise a Participant, Covered Employee or beneficiary as to the
manner in which any portion of his Total Account shall be invested.
The fact that an investment option is available under the Plan shall
not be construed as a recommendation for investment in that
investment option.
5.4 Erie Indemnity Stock Fund
The provisions of this Section shall become applicable to the extent to
which Participants' and beneficiaries' Employer Accounts and/or Safe
Harbor Matching Accounts under the Plan are invested in the Erie Indemnity
Stock Fund.
(a) Effective for pay periods beginning on and after May 8, 1997, the
Administrator shall make available under the Plan an investment fund
which shall consist exclusively of Erie Indemnity Stock; provided,
however, that in the discretion of the Trustee, within guidelines
set by the Administrator, a portion of such fund may be held in
short-term interest-bearing investments or cash pending purchase of
Erie Indemnity Stock and to provide sufficient liquidity for
exchanges out of the fund, withdrawals and loans. Such investment
fund shall be referred to as the "Erie Indemnity Stock Fund". Except
as otherwise provided in this Section 5.5, a Participant shall be
permitted to invest all or a portion of the Employer Matching
Contributions or, with respect to pay periods beginning on and after
December 14, 2000, the Safe Harbor Matching Contributions, made on
his behalf in the Erie Indemnity Stock Fund in accordance with the
provisions of Section 5.3. A Participant shall not be permitted to
invest any portion of the Tax Deferred Contributions made on his
behalf in the Erie Indemnity Stock Fund nor shall any Participant or
Covered Employee be permitted to invest any portion of a rollover
contribution in the Erie Indemnity Stock Fund. No Participant,
Covered Employee or beneficiary may transfer any portion of the
Total Account maintained on his behalf to the Erie Indemnity Stock
Fund. For purposes of implementing Participant investment elections
under Section 5.3, or a Participant's or beneficiary's distribution
election under Section 6.3, the Trustee may, in its discretion,
purchase or sell Erie Indemnity Stock on the open market or by
privately-negotiated transaction; provided however, that any such
purchase or sale shall be made only in exchange for fair market
value as determined by the Trustee and, provided further that, no
commission shall be charged to or paid by the Plan with respect to
any purchase or sale of Erie Indemnity Stock between the Plan and a
party in interest (as defined in Section 3(14) of ERISA). Any
distributions, dividends or
- 28 -
other income received by the Trustee with respect to the Erie
Indemnity Stock Fund shall be reinvested by the Trustee in the Erie
Indemnity Stock Fund.
(b) The restrictions contained in this paragraph (b) shall apply to that
portion of the Employer Accounts and/or Safe Harbor Matching
Accounts maintained on behalf of Participants or beneficiaries which
are invested in the Erie Indemnity Stock Fund and, if and to the
extent necessary, any election made by a Participant or beneficiary
under the Plan shall be deemed modified to be consistent with this
paragraph (b).
(i) Notwithstanding the provisions of Section 5.3, and Articles
Seven and Fourteen:
(A) No Participant or beneficiary shall, on the basis of
material nonpublic information with respect to the
Company or its affiliates, make an election permitted by
that Section or those Articles if (1) such election
would result in an exchange into or out of, loans from,
withdrawals from, or an increase or decrease in the
amount of contributions to the Erie Indemnity Stock
Fund, and (2) the transaction resulting from such
election is prohibited by Rule 10b-5.
(B) No officer shall make an election permitted by that
Section or those Articles if such election would result
in a transaction involving the Erie Indemnity Stock Fund
which is not an exempt transaction pursuant to Rule
16b-3.
For purposes of this paragraph (b), the terms "Rule 10b-5" and Rule
16b-3" shall mean the rules, as amended, having those designations
promulgated by the United States Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended, and the
terms "affiliate" and "officer" shall have the meanings set forth in
Rule 12b-2 and Rule 16a-1(f), respectively, both as so promulgated
and amended.
- 29 -
ARTICLE SIX
VESTING & DISTRIBUTIONS
6.1 Vesting
A Participant shall be fully vested in all contributions made and
investment earnings credited under the provisions of the Plan.
6.2 Distributions Upon Retirement or Other Termination of Employment
(a) Subject to the provisions of (b) below, in the event of the
termination of a Participant's employment with the Company and
Affiliates for any reason, the Participant (or, if deceased, his
designated beneficiary) shall receive the vested Total Account
maintained on behalf of the Participant in accordance with Section
6.3 if, as of the date of determination, the balance of such vested
Total Account is not in excess of $3,500.00. The Administrator or
its designee shall make such determination on a periodic basis, not
less frequent than annually. If, as of such date of determination,
the vested Total Account maintained on behalf of a Participant
exceeds $3,500.00, the Participant may elect, in such manner as
provided by the Administrator, to either take or commence an
immediate distribution of such vested Total Account (with Spousal
Consent) in a form permitted under Section 6.3, or to defer receipt
of the same until a later date, but not beyond the end of the
calendar year in which he attains age 70-1/2. Such election by a
Participant must be made in writing to the Administrator on a form
or forms designated for such purpose. The failure of any terminating
Participant to make an election with respect to a vested Total
Account in excess of the $3,500 threshold shall be deemed an
election by the Participant to defer receipt of such vested Total
Account. A Participant who elects (or is deemed to have elected) to
defer receipt of his vested Total Account may request a distribution
of his vested Total Account in a form permitted under Section 6.3 at
a subsequent date, subject to Spousal Consent. Pending distribution
of his Total Account, such Participant shall be permitted to change
the manner in which such Total Account is invested in accordance
with Section 5.3(b).
(b) The Administrator or its designee shall notify a Participant or
beneficiary of his election right under Section 6.2(a) and, in the
case of a Participant who may defer payment of the vested portion of
his Total Account in accordance with Section 6.2(a), of his right to
defer payment. Such notification shall be provided to the
Participant or beneficiary not less than 30 days and not more than
90 days before payment is made; provided however, that a Participant
or beneficiary may affirmatively elect to be paid the vested Total
Account being maintained on his behalf (such election to include
Spousal Consent, in the case of a Participant) within 30 days after
the Participant or beneficiary received the notice described in this
Section 6.2(b).
(c) A Participant who returns to employment with the Employer on a full
or part-time basis prior to distribution of his vested Total Account
under paragraph (a) shall be deemed to have cancelled his
distribution election as of his date of reemployment.
- 30 -
(d) All payments made pursuant to this Section 6.2 shall be based on the
Participant's vested Total Account balance on the Valuation Date as
of which payment is made.
6.3 Payment of Amounts Distributed
(a) For periods before January 1, 2001 and except as otherwise provided
in Section 6.3(c), all Plan distributions shall be paid in the form
of a lump sum. Effective on and after January 1, 2001, distributions
to a Participant or beneficiary may be paid in the form of:
(i) a lump sum;
(ii) monthly, quarterly or annual installments that will provide a
fixed amount per pay period; or
(iii) monthly, quarterly or annual installments that will provide
substantially equal payments over a fixed period that is not
in excess of the lesser of fifteen (15) years or the
recipient's life expectancy, as determined by the
Administrator as of the date the payments begin.
A Participant or beneficiary who has elected payment in an
installment form under Section 6.3(a)(ii) or (iii) may elect, at
some future date, to have the balance of the vested Total Account
maintained on his behalf paid in the form of a lump sum. Except as
provided in the preceding sentence, a Participant or beneficiary may
not change his elected form of distribution following the date Plan
payments begin. A Participant who returns to employment with the
Employer on a full or part-time basis following commencement of an
installment form of distribution shall be deemed to have cancelled
his distribution election as of his date of reemployment. In no
event may distributions from the Plan be made in the form of an
annuity.
(b) The distributee shall elect to have that portion of his Employer
Account and Safe Harbor Matching Account which is invested in the
Erie Indemnity Stock Fund paid either (i) in whole units of Erie
Indemnity Stock (with fractional units being distributed in cash) or
(ii) in cash. The election of a Participant or beneficiary under
this Section 6.3(b) shall be made in connection with the
Participant's or beneficiary's distribution election(s) under
Section 6.2. In the event distribution is made in the absence of a
Participant's or beneficiary's distribution election, that portion
of an Employer Account and Safe Harbor Matching Account which is
invested in the Erie Indemnity Stock Fund at the time of
distribution shall be paid in cash.
(c) Distribution to a Participant must commence no later than the April
1st of the calendar year following the calendar year in which the
Participant attains age 70-1/2. Notwithstanding the foregoing,
effective January 1, 1999 with respect to any employed Participant
who attains age 70-1/2 during or after the 1999 calendar year,
distribution must commence no later than the April 1st of the
calendar year following the calendar year in which the Participant
retires; provided, however, that if the Participant is a five
percent owner (for
- 31 -
purposes of Section 416 of the Code) during the calendar year in
which he attains age 70-1/2 or in a later calendar year,
distribution must commence to the Participant no later than the
April 1st of the calendar year following the calendar year in which
the Participant attains age 70-1/2 or the calendar year in which the
Participant becomes a five percent owner, whichever date is later.
For periods before January 1, 2001, a Participant who is required to
commence payments under this Section 6.3(c), and who continues to
work on either a full or part-time basis, may elect to receive his
Total Account in the form of 10 annual installments instead of a
lump sum distribution. In all cases, for purposes of calculating the
amount of a required minimum distribution, life expectancy will be
determined without regard to the permissive recalculation rule of
Section 401(a)(9)(D) of the Code.
Notwithstanding the foregoing, unless the Participant elects
otherwise, distribution of benefits under Section 6.2 will begin no
later than the 60th day after the latest of the close of the Plan
Year in which:
(i) the Participant attains age 65,
(ii) occurs the fifth anniversary of the Plan Year in which the
Participant commenced participation in the Plan, or
(iii) the Participant terminated employment with the Company and
Affiliates.
(d) In the event the Participant dies after distribution of his interest
has begun, but prior to distribution of his entire interest, the
remaining portion of such interest shall be distributed in a method
which is at least as rapid as the method being used at the date of
the Participant's death. In the event the Participant dies prior to
commencement of the distribution of his interest, the entire
interest attributable to such Participant shall be distributed
within five years after the date of his death, unless such interest
is payable to a designated beneficiary (as defined in Code Section
401(a)(9)), commences no later than the December 31 of the calendar
year following the calendar year of the Participant's death and is
payable over a period which does not exceed the life expectancy of
such designated beneficiary, as determined by the Administrator as
of the date payments begin.
Notwithstanding the foregoing, if the designated beneficiary of the
Participant is the Participant's surviving spouse, the date
distributions are required to begin shall be no earlier than the
date that the Participant would have attained age 70-1/2 and, if the
spouse dies before payments begin, subsequent distribution shall be
made as if the spouse had been the Participant.
(e) Any provision of the Plan to the contrary notwithstanding, all
distributions shall be determined and made in accordance with the
provisions of Section 401(a)(9) of the Code and the regulations
promulgated thereunder including 1.401(a)(9)-2. Such provisions
shall override any distribution provision of the Plan that is
inconsistent with Code Section 401(a)(9).
- 32 -
6.4 Direct Rollovers
(a) Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a distributee's election under this Section, a
distributee may elect, subject to provisions adopted by the
Administrator which shall be consistent with income tax regulations,
to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee
in a direct rollover. The Administrator shall notify a distributee
of his right to elect a direct rollover; such notice shall be
furnished to the distributee between 30 days and 90 days prior to
the date as of which the distributee is to receive a distribution
from the Plan, provided that the distributee may affirmatively elect
a distribution or direct rollover to occur within 30 days after the
furnishing of such notice. Subject to Section 6.2(a), a distributee
who has been given a timely notice and explanation of the election
to have his eligible rollover distribution paid to an eligible
retirement plan, and who has failed to file an election with the
Administrator within 30 days of the delivery of such notice and
explanation shall be presumed to have elected to have his benefit
paid directly to him as of the Valuation Date which is, or which
next follows, the end of such 30-day period.
(b) Definitions.
(i) 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 10 years or more; any distribution to the extent
such distribution is required under Code Section 401(a)(9);
for periods on and after January 1, 1999, that portion of a
hardship withdrawal that is attributable to Tax Deferred
Contributions; and the portion of any distribution that is not
includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to
employer securities).
(ii) Eligible Retirement Plan: An eligible retirement plan is an
individual retirement account described in Code Section
408(a), an individual retirement annuity described in Code
Section 408(b), an annuity plan described in Code Section
403(a), or a qualified trust described in Code Section 401(a),
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.
(iii) Distributee: A distributee includes an Employee or former
Employee. In addition, the Employee's or former Employee's
surviving spouse and the Employee's or former Employee's
spouse or former spouse who is the alternate payee under a
qualified domestic relations order, as defined in Code
- 33 -
Section 414(p), are distributees with regard to the interest
of the spouse or former spouse.
(iv) Direct Rollover: A direct rollover is a payment by the Plan to
the eligible retirement plan specified by the distributee.
- 34 -
ARTICLE SEVEN
WITHDRAWALS
7.1 Withdrawals Generally
A Participant actively employed with the Company or an Affiliate (herein
referred to in this Article as an "Eligible Applicant") may make written
application to the Administrator for withdrawal of a portion of his
account balance without terminating his employment, but only in such
amounts and under such conditions as specified in this Article Seven. All
such applications for a withdrawal made by an Eligible Applicant shall be
approved or denied by the Administrator in accordance with a uniform,
non-discriminatory policy and such action by the Administrator shall be
final.
7.2 Hardship Withdrawal
Upon proper written application of an Eligible Applicant in such form as
the Administrator may specify, the Administrator may permit the Eligible
Applicant withdraw in cash the portion of the balance of his Total Account
representing his Rollover Account (if applicable), his Employer Account
and his Tax Deferred Contributions without earnings thereon, provided that
the reason for such withdrawal is to enable the Eligible Applicant to meet
unusual or special situations in his financial affairs resulting in
immediate and heavy financial needs of the Eligible Applicant and,
provided further, that the Administrator must be satisfied that any
withdrawal hereunder is not in excess of the amount necessary to meet the
immediate and heavy financial need and is not available from other
resources of the Eligible Applicant. The amount available for withdrawal
shall be based on the balances of the applicable accounts (and the Tax
Deferred Contributions made) on the Valuation Date as of which payment is
made. In the event an Eligible Applicant is married at the time of
application and the withdrawal request exceeds $3,500, the Administrator
shall require Spousal Consent prior to approving the withdrawal
application. Amounts required to meet the following items are deemed to be
for immediate and heavy financial needs:
(a) payments necessary to prevent the eviction of the Eligible Applicant
from, or foreclosure of the mortgage on, his principal residence;
(b) expenses for medical care described in Code Section 213(d) incurred
by the Eligible Applicant, his spouse, or his dependents as defined
in Code Section 152, or necessary for these persons to obtain
medical care described in Section 213(d) of the Code;
(c) costs directly related to the purchase of an Eligible Applicant's
principal residence; or
(d) payment of tuition, related educational fees and room and board
expenses, for the next 12 months of post-secondary education for the
Eligible Applicant, his spouse or his dependents.
7.3 Safe Harbor Distribution
- 35 -
A distribution shall be deemed necessary to satisfy an immediate and heavy
financial need of a Eligible Applicant if all of the following
requirements are satisfied:
(a) the distribution is not in excess of the amount of the immediate and
heavy financial need of the Eligible Applicant including any amounts
necessary to pay any federal, state or local income taxes or
penalties reasonably anticipated to result from such distribution;
(b) the Eligible Applicant has obtained all other forms of distribution
and nontaxable loans currently available from all plans maintained
by an Employer;
(c) the Eligible Applicant shall be suspended from making Tax Deferred
Contributions to the Plan until the first day of the pay period
occurring 12 full months from the effective date of the withdrawal;
and
(d) the limitation specified in Section 3.2(a) shall be applied to the
aggregated Tax Deferred Contributions made during the taxable years
which include the first and last days of the suspension period and
not separately to each such taxable year.
7.4 Hardship Withdrawal Priority
(a) A withdrawal pursuant to this Article Seven shall be made from the
Total Account maintained on behalf of an Eligible Applicant in the
order of priority set forth in this Section 7.4. That portion of a
Eligible Applicant's Total Account which is of a lower priority
shall be withdrawn only after those portions of the Total Account
which are of higher priority have been completely withdrawn:
(i) Rollover Account;
(ii) Employer Account; and
(iii) Tax-Deferred Account (excluding earnings on Tax Deferred
Contributions).
In no event shall a hardship withdrawal be taken from the Safe
Harbor Matching Account maintained on behalf of an Eligible
Applicant.
(b) Subsequent to the determination under paragraph (a), withdrawals
shall be made out of those investment options in which the
applicable account is invested according to the withdrawal hierarchy
designated by the Administrator and communicated to Participants.
7.5 Modifications to Hardship Withdrawal Standards
The Company shall have full discretionary authority to modify the
provisions of Sections 7.2, 7.3 and 7.4 provided that any modifications
shall be evidenced by a writing approved by the Plan Administrator, shall
be consistently applied to all pending and future applications as of the
date
- 36 -
of the modification and shall not operate so as to reduce or eliminate any
benefit protected under Section 411(d)(6) of the Code that has accrued as
of the date of modifications.
- 37 -
ARTICLE EIGHT
THE TRUST FUND
8.1 Trust Agreement
The Company has entered into a Trust Agreement for the purpose of holding
assets of the Trust Fund other than assets attributable to amounts
invested in a group annuity contract provided by the Erie Family Life
Insurance Company. The Trust Agreement provides, among other things, that
all funds received by the Trustee thereunder shall be held, administered,
invested and distributed by the Trustee, and that no part of the corpus or
income of the Trust Fund held by the Trustee shall be used for, or
diverted to, purposes other than for the exclusive benefit of participants
or their beneficiaries. The Company shall have the authority to remove
such Trustee or any successor Trustee, and any Trustee or any successor
Trustee may resign. Upon removal or resignation of a Trustee, the Company
shall appoint a successor Trustee.
The Company shall have authority to direct that there shall be more than
one Trustee under the Trust Agreement and to determine the portion of the
assets under the Trust Agreement to be held by each such Trustee. If such
a direction is given, the Company shall designate the additional Trustee
or Trustees, and each Trustee shall hold and invest and keep records with
respect to the portion of such assets held by it.
8.2 Appointment of Independent Accountants
The Company may select a firm of independent public accountants to examine
and report on the financial position and the results of the operations of
the Trust Fund created under the Plan, at such times as it deems proper
and/or necessary.
8.3 Appointment of Investment Manager
The Company may select an independent investment manager to invest the
portion of the Trust Fund in each of the various funds. Such investment
manager shall be either registered as an investment manager under the
Investment Adviser's Act of 1940, a bank, a mutual fund or an insurance
company, and as required by the Company, shall acknowledge in writing that
he is a fiduciary with respect to the Plan.
8.4 Investment Committee
The Company shall appoint three or more persons to serve as the Employee
Savings Plan Investment Committee, to be referred to herein as the
"Investment Committee". The Investment Committee shall perform such duties
relating to the investment of the Trust Fund as the Company delegates to
it and the duties specified in this Section 8.4. Any one or more of the
members of the Investment Committee may be officers or directors of an
Employer and need not be Participants entitled to benefits under the Plan.
The Company in its sole discretion may remove or replace any member at any
time with or without cause. A member may resign by delivering his written
resignation to the Company, and such resignation shall become effective
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upon its delivery or at any other date specified therein. If, at any time,
there shall be a vacancy in the membership of the Investment Committee,
the remaining member or members shall continue to act until such vacancy
is filled by the Company. The Investment Committee shall hold meetings
upon such notice, at such place or places and at such times as its members
may from time to time determine. A simple majority of the members at the
time in office shall constitute a quorum for the transaction of business.
All action taken by the Investment Committee at any meeting shall be by
vote of the simple majority of those present at such meeting, but the
Investment Committee may act without a meeting by unanimous action of its
members evidenced by a resolution or other written instrument signed by
all members of the Investment Committee.
The Investment Committee shall have the following responsibilities:
(a) to recommend to the Company a Trustee and to recommend any changes
in said Trustee;
(b) to recommend to the Company the appointment of fund managers;
(c) to allocate the duties and procedures for the Trustee and investment
managers;
(d) to establish a separate investment philosophy and goals for each of
the fund managers;
(e) to monitor the Trustee with respect to servicing the trust in a
fiduciary capacity; and
(f) to monitor the fund managers with respect to the investment
philosophy, goals and rates of return.
8.5 Voting of Erie Indemnity Stock
(a) Each Participant or beneficiary who has an Employer Account
maintained under the Plan on his behalf with an investment in the
Erie Indemnity Stock Fund shall have the powers and responsibilities
set forth in this Section 8.5.
(b) Prior to each meeting of the Class A shareholders of the Company
during which a vote of Class A shares is to be taken, the Company
shall cause to be sent to each person described in Section 8.5(a), a
copy of the proxy solicitation material for such meeting, together
with a form requesting confidential voting instructions for the
voting of Erie Indemnity Stock held in the Erie Indemnity Stock Fund
in proportion to the number of shares or units of the Erie Indemnity
Stock Fund held by such a person's Employer Account. Upon receipt of
such a person's instructions, the Trustee shall then vote in person,
or by proxy, such Erie Indemnity Stock as so instructed.
(c) Instructions received from the persons described in Section 8.5(a)
by the Trustee regarding the voting of Erie Indemnity Stock held in
the Erie Indemnity Stock Fund shall be held in strictest confidence
and shall not be divulged to any other person, including directors,
officers or employees of the Company, or any Affiliate, except as
otherwise required by law.
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(d) Except as otherwise set forth in the Trust Agreement, the Trustee
shall vote Erie Indemnity Stock which represents those shares or
units of the Erie Indemnity Stock Fund for which the Trustee does
not receive affirmative direction from Participants and
beneficiaries in the same proportion as the Trustee votes those
shares of Erie Indemnity Stock held in the Erie Indemnity Stock Fund
for which it has received voting instructions.
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ARTICLE NINE
ADMINISTRATION OF THE PLAN
9.1 The Administrator
The Plan shall be administered by a Plan Administrator who shall serve at
the pleasure of the Board. The Board has appointed the Company's Senior
Vice President, Treasurer and Chief Investment Officer to serve as
Administrator. The Administrator may resign by delivering his written
resignation to the Board. In the event of the death, resignation or
removal of the Administrator, the Board shall fill the vacancy. In making
the appointment, the Board shall not be limited to any particular person
or group, and nothing herein contained shall be construed to prevent any
Participant, director, officer, employee or shareholder of the Employers
from serving as the Administrator. The Administrator will not be
compensated from the Trust Fund for services performed in such capacity,
but the Company will reimburse such individual for expenses reasonably
incurred by him in such capacity. The Administrator shall be the "named
fiduciary" for purposes of ERISA; provided, however, that Participants and
beneficiaries with Employer Accounts under the Plan shall be considered
"named fiduciaries" solely to the extent of those fiduciary duties and
responsibilities which are directly related to the exercise of voting
rights with respect to Plan interests invested in the Erie Indemnity Stock
Fund (and not to other aspects of Plan operation and/or administration).
Appointment by the Board shall be evidenced by a certified copy of the
resolution of the Board making such appointment, and copies of such
certified resolution shall be delivered to the Trustee and to such other
persons as may require such notice.
9.2 Powers of Administrator
The Administrator will have full power to administer the Plan in all of
its details, subject, however, to the requirements of ERISA. This power
shall include having the sole and absolute discretion to interpret and
apply the provisions of the Plan, to determine the rights and status
hereunder of any individual, to decide disputes arising under the Plan,
and to make any determinations and findings of fact with respect to
benefits payable hereunder and the persons entitled thereto as may be
required for any purpose under the Plan. Without limiting the generality
of the above, the Administrator is hereby granted the following authority
which it shall discharge in its sole and absolute discretion in accordance
with Plan provisions as interpreted by the Administrator:
(a) To make and enforce such rules and regulations as it deems necessary
or proper for the efficient administration of the Plan, including
the modification of the claims procedure under Article Ten in
accordance with any regulations issued under Section 503 of ERISA.
(b) To interpret the Plan.
(c) To decide all questions concerning the Plan and the eligibility of
any person to participate in the Plan, his period of participation
and/or service under the Plan, his date of birth, the value of the
Total Account, or any part thereof, maintained on behalf of the
person and the
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rights of any person to receive a distribution from the Plan and the
amount of such distribution.
(d) To compute the amount of Tax Deferred Contributions, Employer
Matching Contributions and Safe Harbor Matching Contributions to be
made on behalf of any Participant in accordance with the provisions
of the Plan.
(e) To authorize the payment of Plan benefits and to direct cessation of
benefit payments.
(f) To appoint, employ or engage such other agents, counsel,
accountants, consultants and actuaries as may be required to assist
in administering the Plan.
(g) To establish procedures to determine whether a domestic relations
order is a qualified domestic relations order within the meaning of
Section 414(p) of the Code, to inform the parties to the order as to
the effect of the order, and to direct the Trustee to hold in escrow
or pay any amounts so directed to be held or paid by the order.
(h) To obtain from the Employers, Employees, Participants, spouses and
beneficiaries such information as shall be necessary for the proper
administration of the Plan.
(i) To perform all reporting and disclosure requirements imposed upon
the Plan by ERISA, the Code or any other lawful authority.
(j) To ensure that procedures are established which are sufficient to
safeguard the confidentiality of information relating to the
purchase, holding, and sale of Erie Indemnity Stock held in the Erie
Indemnity Stock Fund and the exercise of shareholder rights with
respect to Erie Indemnity Stock held in the Erie Indemnity Stock
Fund and to ensure such procedures are being followed.
(k) To appoint and remove an independent fiduciary for the purpose of
carrying-out activities relating to any situations which the
Administrator determines involves an unreasonable potential for
undue Employer influence with regard to the direct or indirect
exercise of shareholder rights with respect to Erie Indemnity Stock
holdings in the Erie Indemnity Stock Fund.
(l) To take such steps as it, in its discretion, considers necessary
and/or appropriate to remedy an inequity under the Plan that results
from incorrect information received or communicated or as the
consequence of administrative error.
(m) To correct any defect, reconcile any inconsistency or supply any
omission under the Plan.
(n) To delegate its powers and duties to others in accordance with
Section 9.3.
(o) To exercise such other authority and responsibility as is
specifically assigned to it under the terms of the Plan and to
perform any other acts necessary to the performance of its powers
and duties.
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The Administrator at its discretion may either request the Company or
direct the Fund to pay for any or all services rendered by the Trustee,
any investment manager, and by persons appointed, employed or engaged
under Section 9.2(f) or under the terms of the Trust Agreement.
The Administrator's interpretations, decisions, computations and
determinations under this Section 9.2 which are made in good faith will be
final and conclusive upon the Employers, all Participants and all other
persons concerned. Any action taken by the Administrator with respect to
the rights or benefits of any person under the Plan shall be revocable by
the Administrator as to payments or distributions not theretofore made,
pursuant to such action, from the Trust Fund; and appropriate adjustments
may be made in future payments or distributions to a Participant or
beneficiary to offset any excess payment or underpayment previously made
to such Participant or beneficiary from the Trust Fund. No ruling or
decision of the Administrator in any one case shall create a basis for a
retroactive adjustment in any other case prior to the date of a written
filing of each specific claim.
9.3 Delegation of Duties
The Administrator may, from time to time, designate any person to carry
out any of the responsibilities of the Administrator. The person so
designated will have full authority, or such limited authority as the
Administrator may specify, to take such actions as are necessary or
appropriate to carry out the duties delegated by the Administrator.
9.4 Conclusiveness of Various Documents
The Administrator and the Company and its directors and officers will be
entitled to rely upon all tables, valuations, certificates and reports
furnished by any actuary, accountant, counsel or other expert appointed,
employed or engaged by the Administrator or the Company.
9.5 Actions to be Uniform
Any discretionary actions to be taken under the Plan by the Administrator
will be nondiscriminatory and uniform with respect to all persons
similarly situated.
9.6 Liability and Indemnification
To the full extent allowed by law, the Administrator shall not incur any
liability to any Participant or beneficiary, or to any other person, by
reason of any act or failure to act on the part of the Administrator if
such act or omission is not the result of the Administrator's gross
negligence, willful misconduct or exercise of bad faith. To the full
extent allowed by law, the Company agrees to indemnify the Administrator
against all liability and expenses (including reasonable attorney's fees
and other reasonable expenses) occasioned by any act or omission to act if
such act or omission is not the result of the Administrator's gross
negligence, willful misconduct or exercise of bad faith. Neither this
Section 9.6 nor any other provision of this Plan shall be applied to
invalidate, modify, or limit in any respect any contract, agreement, or
arrangement for indemnifying or insuring the Administrator against, or
otherwise limiting, such
- 43 -
liability or expense, or for settlement of such liability, to the extent
such contract, agreement, or arrangement is not precluded by the terms of
Section 410 of ERISA.
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ARTICLE TEN
CLAIMS PROCEDURE
10.1 Claim for Benefit
If a Participant or a beneficiary asserts a right to any benefit under the
Plan which he has not received, he must file a claim for such benefit with
the Administrator in such manner as provided hereunder. If the
Administrator wholly or partially denies such claim, it shall provide
written notice to the Participant or the beneficiary submitting the
application within 90 days of the receipt by the Administrator of the
application. The Administrator shall set forth in the notice:
(a) the specific reasons for denial of the claim;
(b) the specific reference to pertinent provisions of the Plan on which
the denial is based;
(c) a description of any additional material or information necessary to
perfect the claim and an explanation of why such material or
information is necessary; and
(d) further steps which the Participant or beneficiary may take in order
to have his claim reviewed (including a statement that the claimant
or his duly authorized representative may review Plan documents and
submit issues and comments regarding the claim to the
Administrator).
10.2 Review of Denial of Claim
A Participant or beneficiary whose application for benefits is denied may
request a full and fair review of the decision denying the claim within 90
days after receipt of the notice of the denial provided by the
Administrator. The Participant or beneficiary may:
(a) request a hearing by the Administrator upon written application to
the Administrator;
(b) review pertinent Plan documents in the possession of the
Administrator; and
(c) submit issues and comments in writing to the Administrator for
review.
If a hearing is requested by a Participant or beneficiary, such hearing
shall be held within 30 days after the Administrator's receipt of the
request for review.
10.3 Decision by Administrator
A decision on review by the Administrator shall be made promptly and not
later than 60 days after the receipt by the Administrator of a request for
review, unless special circumstances (such as the need to hold a hearing)
require an extension of time for processing, in which case the Participant
or beneficiary will be notified of the extension and a decision shall be
rendered as soon as possible, but not later than 120 days after the
receipt of the request for review. The
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decision shall be in writing and shall include specific reasons for the
decision written in a manner calculated to be understood by the
Participant or beneficiary, and specific references to the pertinent
provisions of the Plan on which the decision is based.
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ARTICLE ELEVEN
MISCELLANEOUS
11.1 Non-Alienation of Benefits
(a) Except as provided in Section 11.1(b) or 11.1(c), no benefit payable
under the Plan shall be subject in any manner to anticipation, sale,
transfer, assignment, pledge, encumbrance, security interest or
charge, and any action by way of anticipating, alienating, selling,
transferring, assigning, pledging, encumbering, charging or granting
a security interest in the same shall be void and of no effect; nor
shall any such benefit be in any manner liable for or subject to the
debts, contracts, liabilities, engagements or torts of the person
entitled to such benefit.
(b) Section 11.1(a) shall not apply to the creation, assignment, or
recognition of a right to any benefit payable pursuant to a
Qualified Domestic Relations Order. The Company shall establish
reasonable procedures to determine the status of domestic relations
orders and to administer distributions under such orders which are
deemed to be Qualified Domestic Relations Orders. Such procedures
shall be in writing and shall comply with the provisions of Section
414(p) of the Code. To the extent that, because of a Qualified
Domestic Relations Order, more than one individual is to be treated
as a surviving spouse, the total amount payable from the Plan as a
result of the death of a Participant shall not exceed the amount
that would be payable from the Plan if there were only one surviving
spouse.
(c) Notwithstanding the provisions of Section 11.1(a), the Plan may
offset any portion of the Total Account maintained on behalf of a
Participant or beneficiary against a claim of the Plan arising:
(i) as a result of the Participant's or beneficiary's conviction
of a crime involving the Plan; or
(ii) with regard to the Participant's or beneficiary's violation of
ERISA's fiduciary provisions upon:
(A) the entry of any civil judgment, consent order, or
decree against the Participant or beneficiary; or
(B) the execution of any settlement agreement between the
Participant and the Department of Labor or Pension
Benefit Guaranty Corporation.
The provisions of this Section 11.1(c) shall apply only to orders,
judgments, decrees and settlements issued or entered into after
August 5, 1997, and which expressly provide for such offset.
- 47 -
11.2 Risk to Participants and Source of Payments
Each Participant assumes all risk in connection with any decrease in the
value of any investment fund in the Trust Fund, and the Trust Fund shall
be the sole source of any payments to be made to Participants or their
beneficiaries under the Plan.
11.3 Expenses
Subject to any restriction applicable under Section 5.4(a), brokerage
fees, transfer taxes and other expenses incurred by the Trustee in
connection with the purchase or sale of securities may be added to the
cost of such securities or deducted from the proceeds thereof, as the case
may be. Earnings credited to accounts invested in mutual funds shall be
net of direct fund management expenses. Fees and other expenses associated
with a self-directed "open option" arrangement shall be assessed directly
against the Total Account maintained on behalf of the Participant or
beneficiary participating in such arrangement.
All other costs and expenses incurred in administering the Plan shall be
paid by the Company or an Employer, unless the Company authorizes the
payment of such expenses from the Trust Fund.
11.4 Rights of Participants
No Participant or beneficiary shall have any right or interest under the
Plan unless and until he becomes entitled thereto as provided in the Plan.
The adoption and maintenance of the Plan shall not be deemed to constitute
a contract between an Employer and any Employee or Participant. Inclusion
in the Plan will not affect an Employer's right to discharge or otherwise
discipline Employees and membership in the Plan will not give any Employee
the right to be retained in the service of an Employer nor any right or
claim to a benefit unless such right is specifically granted under the
terms of the Plan.
The Plan shall be binding on all Participants and their spouses and
beneficiaries and upon heirs, executors, administrators, successors, and
assigns of all persons having an interest herein. The provisions of the
Plan in no event shall be considered as giving any such person any legal
or equitable right against the Company, an Employer or an Affiliate, any
of its officers, employees, directors, or shareholders, or against the
Trustee, except such rights as are specifically provided for in the Plan
or hereafter created in accordance with the terms of the Plan.
11.5 Statement of Accounts
As soon as practicable after the last day of March, June, September and
December, or such other time or times as the Administrator shall
designate, the Company shall cause to be sent to each current or former
Participant a written statement of his account.
- 48 -
11.6 Designation of Beneficiary
(a) Each Participant shall file with the Administrator, on such form as
may be provided by the Administrator, a written designation of a
beneficiary or beneficiaries who shall receive payment of the
Participant's interest under the Plan in the event of his death. If
the Participant is married, the Participant's beneficiary must be
his spouse (in accordance with Code Section 401(a)(11)(B)(iii))
unless Spousal Consent requirements are satisfied. In the event the
Participant shall die and there is no properly designated
beneficiary then living, the interest of the Participant under the
Plan shall be paid in a lump sum to his surviving spouse, or, if
there is no surviving spouse, to his estate or other successor, all
as the Administrator may determine.
(b) A beneficiary entitled to a payment of all or a portion of a
Participant's Total Account due to the death of the Participant may
disclaim his interest therein subject to the following requirements.
To be eligible to disclaim, a beneficiary must be a natural person,
must not have received a distribution of all or any portion of said
Total Account at the time such disclaimer is executed and delivered,
and must have attained at least age twenty-one (21) years as of the
date of the Participant's death. Any disclaimer must be in writing
and must be executed personally by the beneficiary before a notary
public. A disclaimer shall state that the beneficiary's entire
interest is disclaimed or shall specify what portion thereof is
disclaimed. To be effective, an original executed copy of the
disclaimer must be both executed and actually delivered to the
Administrator after the date of the Participant's death but not
later than one hundred eighty (180) days after the date of the
Participant's death. A disclaimer shall be irrevocable when
delivered to the Administrator. A disclaimer shall be considered to
be delivered to the Administrator only when actually received by the
Administrator. The Administrator shall be the sole judge of the
content, interpretation and validity of a purported disclaimer. Upon
the filing of a valid disclaimer, the beneficiary shall be
considered not to have survived the Participant as to the interest
disclaimed. A disclaimer by a beneficiary shall not be considered to
be a transfer of an interest or an assignment or alienation of
benefits in violation of Section 11.1 hereof. No other form of
attempted disclaimer shall be recognized by the Administrator.
11.7 Payment to Incompetents
If any person entitled to receive any benefits hereunder is a minor, or is
in the judgment of the Administrator, legally, physically, or mentally
incapable of personally receiving and receipting for any distribution, the
Administrator may instruct the Trustee to make distribution to such other
person, persons or institutions who, in the judgment of the Administrator,
are then maintaining or have custody of such distributee. As a condition
to the issuance of such instruction for the distribution to such other
person or institution, the Administrator may require such person or
institution to exhibit or to secure an order, decree or judgment of a
court of competent jurisdiction with respect to the incapacity of the
person who would otherwise be entitled to receive the benefits.
11.8 Authority to Determine Payee
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The determination of the Administrator as to the identity of the proper
payee of any benefit under the Plan and the amount of such benefit
properly payable shall be conclusive, and payment in accordance with such
determination shall constitute a complete discharge of all obligations on
account of such benefit.
11.9 Severability
If any provision of this Plan is held to be invalid or unenforceable, such
determination shall not affect the other provisions of this Plan. In such
event, this Plan shall be construed and enforced as if such provision had
not been included herein.
11.10 Employer Records
The records of a Participant's Employer shall be presumed to be conclusive
of the facts concerning his employment or non-employment, periods of
service and Compensation unless shown beyond a reasonable doubt to be
incorrect.
11.11 Limitation on Contributions
(a) In no event shall the total annual additions on behalf of a
Participant under this Plan and under any other defined contribution
plan or plans maintained by the Employer with respect to any
Limitation Year exceed the lesser of $30,000 (or such dollar figure,
as increased in accordance with Section 415(d) of the Code for years
up to and including the given Limitation Year) or 25% of the Test
Compensation, paid to the Participant by an Employer within such
Limitation Year. All amounts contributed to any defined contribution
plan maintained by an Employer or an Affiliate (taking into account
Section 415(h) of the Code) other than any rollover contribution and
any salary reduction contribution to a simplified employee pension
shall be aggregated with contributions made by an Employer under
this Plan in computing any Employee's total annual additions
limitation. For purposes hereof, the Limitation Year shall be the
calendar year.
For purposes of this section, "total annual additions" for any
Limitation Year shall mean the sum of the following:
(i) Employer contributions under this Plan and under any other
defined contribution plan maintained by an Employer or
Affiliate;
(ii) Reallocated forfeitures under any defined contribution plan
maintained by an Employer or Affiliate;
(iii) After-tax contributions under any other defined contribution
plan maintained by an Employer or Affiliate; and
(iv) Amounts allocated to an individual medical account, as defined
in Section 415(1)(2) of the Code, as part of a pension or
annuity plan and amounts
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derived from contributions paid or accrued which are attributable to
post-retirement medical benefits described in Section 419A(d) of the
Code, under a welfare benefit fund (as defined in Section 419(e) of
the Code) maintained by an Employer or Affiliate.
Loan repayments under Section 14.2 shall not be recognized as annual
additions for purposes of this section.
(b) In the event that a Participant's total annual additions for any
Limitation Year exceed the limitations of Section 11.11(a) because
of a reasonable error in estimating the Participant's Compensation,
a reasonable error in determining the amount of Tax Deferred
Contributions that a Participant may make within the limitations of
paragraph (a) above or due to such other facts and circumstances as
the Commissioner of Internal Revenue finds justifiable, his total
annual additions shall be reduced in the following order until such
limitations are met:
(i) any after-tax employee contributions made in the Limitation
Year by the Participant under any other plan maintained by an
Employer or Affiliate shall be returned to the Participant in
accordance with the provisions of such plan to the extent
necessary to meet the above limitations;
(ii) If further corrective adjustment is necessary, Tax Deferred
Contributions made on the Participant's behalf in the
Limitation Year that are in excess of five percent (5%) of the
Participant's Compensation (six percent (6%) for Limitation
Years beginning before January 1, 2001) shall be distributed
to the Participant;
(iii) If further corrective adjustment is necessary with respect to
a Limitation Year beginning on or after January 1, 2001, the
Tax Deferred Contributions made on the Participant's behalf in
the Limitation Year that are not in excess of five percent
(5%) of the Participant's Compensation and the Safe Harbor
Matching Contributions made on the Participant's behalf in the
Limitation Year shall be reduced proportionately to the extent
necessary to meet the above limitations.
(iv) If further corrective adjustment is necessary with respect to
a Limitation Year beginning before January 1, 2001, the Tax
Deferred Contributions made on the Participant's behalf in the
Limitation Year that are not in excess of six percent (6%) of
the Participant's Compensation and the Employer Matching
Contributions made on the Participant's behalf in the
Limitation Year shall be reduced proportionately to the extent
necessary to meet the above limitations.
Tax Deferred Contributions so reduced shall be distributed to the
Participant. Employer Matching Contributions and Safe Harbor
Matching Contributions so reduced shall be held unallocated in a
suspense account and shall be applied to reduce the Employer
Matching Contribution or Safe Harbor Matching Contribution with
respect to all Participants for the subsequent Limitation Year. Any
distribution under this paragraph
- 51 -
which includes Tax Deferred Contributions shall also include gains
on such Tax Deferred Contributions.
The Administrator may change the order of the reductions listed
above in any manner which, in the judgment of the Administrator, is
in the Participant's best interest.
(c) If a Participant is also a participant in a defined benefit plan
maintained by an Employer, the sum of the defined benefit plan
fraction and the defined contribution plan fraction for any
Limitation Year beginning after December 31, 1982 and before January
1, 2000 shall not exceed 1.0. The defined benefit plan fraction for
any Limitation Year is a fraction, the numerator of which is the
projected annual benefit of the Participant under such Plan
(determined as of the close of the year), and the denominator of
which is the lesser of 1.25 times the dollar limit in Section
415(b)(1)(A) of the Code or 1.4 times 100% of the Participant's
average Test Compensation over that period of consecutive calendar
years (not more than three) during which his Test Compensation was
the highest. The defined contribution plan fraction for any
Limitation Year is a fraction the numerator of which is the sum of
the annual additions on behalf of the Participant under this Plan
and any other defined contribution plan or plans maintained by an
Employer as of the close of the year and the denominator of which is
the sum of 1.25 times the maximum dollar limit or 1.4 times the
maximum percentage limit, whichever is smaller on a year-by-year
basis, which could have been made under Section 415(c) of the Code
for such year and for each prior year of service with the Employer,
subject to any transition adjustments allowed by law and adopted by
the Administrator. Any adjustment necessary to comply with the
limitations of this Section 11.11(c) shall be made in the
Participant's benefit payable under the defined benefit plan. The
provisions of this paragraph (c) shall not apply with respect to
Limitation Years beginning on and after January 1, 2000.
(d) The sole purpose of this Section is to comply with Sections 415(c)
and 415(e) of the Code and the terms of this Section shall be
interpreted, applied, and if and to the extent necessary, shall be
deemed modified so as to satisfy solely the minimum requirements of
Sections 415(c) and 415(e) of the Code and the regulations
promulgated with respect thereto.
11.12 IRC 414(u) Compliance Provision
Notwithstanding any provision of the Plan to the contrary, contributions,
benefits and service credit with respect to qualified military service
shall be provided in accordance with Section 414(u) of the Code.
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ARTICLE TWELVE
AMENDMENT, TERMINATION OR MERGER OF THE PLAN
12.1 Right to Amend
The Company reserves the right at any time or times to modify or amend the
Plan by resolution of the Board setting forth such modification or
amendment; provided, however, that no such modification or amendment shall
be made which would:
(a) increase the duties or liabilities of the Trustee without its
written consent; or
(b) divest a Participant of any portion of his Total Account hereunder
that has accrued to him prior to the effective date of such
amendment; or
(c) cause or permit any portion of the Trust Fund to be converted to or
become the property of the Company; or
(d) cause any portion of the Trust Fund to be used for purposes other
than the exclusive benefit of the Participants or their
beneficiaries;
unless such modification or amendment is necessary or appropriate to
enable the Plan or Trust Fund to qualify under Section 401 of the Code, as
amended from time to time, or to retain for the Plan or Trust Fund such
qualified status.
12.2 Right to Terminate
(a) Although it is the expectation of the Company that it will continue
the Plan as a permanent retirement program for the benefit of the
Employees eligible hereunder, the Company reserves the right at any
time, by action of its Board, at its sole discretion, to terminate
the Plan in whole or in part. There shall be no liability or
obligation on the part of an Employer to make any further
contributions to the Trust Fund in the event of the termination of
the Plan.
(b) Notwithstanding anything to the contrary contained herein, Trustee's
fees and other expenses incident to the operation and management of
the Plan incurred after the termination of the Plan may, at the
discretion of the Company, be paid from assets of the Trust Fund
that are not part of any Participant's Total Account.
(c) In the event of the termination of the Plan in whole or in part or
in the event of the complete discontinuance of Employer
contributions under the Plan, each affected Participant's interest
in the Trust Fund shall become 100% vested and shall be
nonforfeitable.
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12.3 Merger, Transfer of Assets or Liabilities
The Company may merge or consolidate the Plan with, transfer assets and
liabilities of the Plan to, or receive a transfer of assets and
liabilities from, any other plan without the consent of any other Employer
or other person, if such transfer is effected in accordance with
applicable law and if such other plan meets the requirements of Code
Sections 401(a) and 501(a), permits such transfer or the receipt of such
transfer and, with respect to liabilities to be transferred from this Plan
to such other plan, satisfies the requirements of Code Sections 411(d)(6).
This Plan may not be merged or consolidated with any other plan, nor may
any assets or liabilities of this Plan be transferred to any other plan,
unless the terms of the merger, consolidation or transfer are such that
each Participant in the Plan would, if the Plan were terminated
immediately after such merger, consolidation or transfer, receive a
benefit equal to or greater than the benefit he would have been entitled
to receive if this Plan had terminated immediately prior to the merger,
consolidation or transfer.
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ARTICLE THIRTEEN
TOP HEAVY PROVISIONS
13.1 Top Heavy Provisions
(a) The Plan shall be deemed to be a top heavy plan for a Plan Year if,
as of a Determination Date, the aggregate value of the Total
Accounts of Key Employee Participants exceeds 60% of the aggregate
value of the Total Accounts of all Participants (excluding, for such
determination, "unrelated" rollovers), or if the Plan is part of a
required Aggregation Group which is top heavy. Such value shall be
determined by using the single accrual method which is used for all
plans of the Employers (including entities required to be aggregated
with the Employer pursuant to Sections 414(b), (c), (m) and (o) of
the Code) and by taking into account any distributions made during
the five Plan Years ending on the Determination Date. If a
Participant was not a Key Employee during the five Plan Years ending
on the Determination Date, but such individual was a Key Employee
during any previous Plan Year, the value of his Total Account shall
not be taken into account. Further, if any Employee has not
performed services for an Employer at any time during the five-year
period ending on the Determination Date, the value of such
Employee's Total Account shall be disregarded. In no event shall the
Plan be considered top heavy if it is part of a required or
permissive Aggregation Group which is not top heavy.
(b) For purposes of this Section 13.1, the following terms shall have
the meaning indicated:
(i) Key Employee means any Employee who at any time during the
Plan Year or any of the four preceding Plan Years is:
(A) an officer of an Employer or an Affiliate. No more than
50 Employees (or, if lesser, the greater of three
Employees or 10 percent of the Employees) shall be
treated as officers. No Employee whose annual Test
Compensation is less than 50% of the amount specified in
Section 415(b)(1)(A) of the Code, adjusted for any
automatic increases permitted by law or regulation,
shall be treated as an officer;
(B) one of the 10 Employees owning or considered as owning
(within the meaning of Section 318 of the Code) the
largest interest in an Employer, if such Employee's
annual Test Compensation is greater than the amount
specified in Section 415(c)(1)(A) of the Code, adjusted
for any automatic increases permitted by law or
regulation;
(C) a more than five percent owner of an Employer; or
(D) a more than one percent owner of an Employer having
annual Test Compensation from an Employer of more than
$150,000.
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For the purpose of determining top 10 owners, five percent
owners and one percent owners, neither the aggregation rules
nor the rules of Sections 414(b), (c) and (m) shall apply.
(ii) Non-Key Employee means an Employee who is not a Key Employee.
(iii) Determination Date means the last day of the preceding Plan
Year.
(iv) Plan Year means any calendar year commencing on or after
December 31, 1988.
(v) A required Aggregation Group is each plan of an Employer which
provides benefits to a Key Employee and each other plan of an
Employer, if any, which is included with this Plan for
purposes of meeting the requirements of Sections 401(a)(4) or
410 of the Code. A permissive Aggregation Group is this Plan
and each other plan of an Employer which in total would
continue to meet the requirements of Section 401(a)(4) and 410
of the Code with such other plan being taken into account. For
purposes hereof, an Aggregation Group shall include a
terminated plan if such Plan was maintained within the
five-year period ending on the Determination Date for the Plan
Year in question and it would, but for the fact if terminated,
be part of a required Aggregation Group for such Plan Year. An
Aggregation Group will be deemed to be a "top-heavy group" if
the sum of (a) the present value of the cumulative accrued
benefits for Key Employees under all defined benefit plans
included in such group, and (b) the aggregate of the accounts
of Key employees under all defined contribution plans included
in such group, exceeds 60% of a similar sum determined for all
Employees.
(vi) "Employee" and "Key Employee" shall also include beneficiaries
of such an Employee. Inherited benefits shall retain the
character of the benefits of the Participant.
13.2 Minimum Contribution
Notwithstanding the provisions of Article Three, for any Plan Year during
which the Plan is deemed to be top heavy, the Employers shall make a
minimum contribution on behalf of each Non-Key Employee Participant which
shall be no less than three percent (3%) of the Test Compensation of the
Non-Key Employee Participant; provided, however, that if the Employer
contribution allocated on behalf of the Key Employee Participant for whom
such allocation represents the highest percentage of Test Compensation for
the given Plan Year of all Key Employee Participants is a lesser
percentage, the minimum contribution shall be reduced to such lesser
percentage. For purposes of this Section 13.2 all defined contribution
plans that are included in an Aggregation Group shall be considered as one
plan. In the case of Employees covered under both this Plan and any
defined benefit plan maintained by an Employer or Affiliate, the defined
benefit plan will provide the top heavy minimum benefit and will be offset
by the benefit provided under this Plan. Non-Key Covered Employees who are
eligible to participate in the Plan or who have become participants in the
Plan but who subsequently fail to complete 1,000 Hours of Service by the
end of the applicable Plan Year (and who have not
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separated from service by the end of such Plan Year) shall receive an
allocation of a minimum contribution.
Except to the extent used for the purpose of determining the largest
percentage of Test Compensation contributed by an Employer for a given
year on behalf of a Key Employee Participant, Tax Deferred Contributions
described in Section 3.1 and Employer Matching Contributions described in
Section 3.6 shall not be considered Employer contributions under this
Section 13.2.
13.3 Plan Year in Which Plan is Top Heavy
In any Plan Year in which the Plan is top heavy, but not super top heavy,
the factor of 1.25 in Section 11.11(c) shall be changed to 1.00 wherever
it appears therein; provided, however, that such change shall not have the
effect of reducing any benefit accrued under a defined benefit plan prior
to the first day of the Plan Year in which this provision becomes
applicable and, provided further, that this Section 13.3 shall not apply
with respect to Limitation Years beginning on and after January 1, 2000.
13.4 Plan Year in Which Plan Ceases to be Top Heavy
In any Plan Year that the Plan ceases to be top heavy, the above
provisions shall no longer apply.
13.5 Limited Application of this Article
The sole purpose of this Article is to comply with Section 416 of the Code
and the terms of this Article shall be interpreted, applied and, if and to
the extent necessary, shall be deemed modified so as to satisfy solely the
minimum requirements of Section 416 of the Code and the regulations
promulgated with respect thereto.
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ARTICLE FOURTEEN
LOANS
14.1 Availability of Loans
Subject to the provisions of this Article Fourteen, Participants actively
employed with the Company or an Affiliate (herein referred to in this
Article as "Eligible Applicants") may apply for a loan from the Plan. All
such applications for a loan made by an Eligible Applicant shall be
approved or denied by the Administrator in accordance with a uniform,
non-discriminatory policy and such action by the Administrator shall be
final. All loans approved shall be effective as of the "loan effective
date" (as hereinafter defined) provided the loan application was submitted
to the Administrator within a reasonable time (as determined by the
Administrator) prior to the loan effective date. All loans shall be made
only in consideration of adequate security. For purposes hereof the term
"loan effective date" shall mean the date, mutually agreed upon by the
Participant and the Administrator, on which the loan shall be considered
effective.
The Administrator may establish rules governing the granting of loans,
provided (i) that such rules are not inconsistent with the provisions of
this Article Fourteen, (ii) that any such rules adopted by the
Administrator shall be described in the documents supporting the loan
transaction and (iii) that loans are made available to all Eligible
Applicants on a reasonably equivalent basis and are not made available to
Eligible Applicants who are Highly Compensated in an amount greater than
the amount made available to other Eligible Applicants.
14.2 Terms and Conditions of Participant Loans
(a) Amount of Loan. At the time the loan is made, the principal amount
of the loan, when added to all other outstanding loans of the
Participant from the Plan and any other qualified plan of an
Employer and Affiliates, shall not exceed the lesser of:
(i) $50,000, as reduced by the excess, if any, of the Eligible
Applicant's highest outstanding loan balance from the Plan
during the one-year period ending on the day before the date
such new loan is secured over the outstanding balance of loans
from the Plan on the date such loan is made; or
(ii) one-half of the current value of the Total Account maintained
on behalf of the Eligible Applicant under the Plan.
The current value of a Total Account shall be determined as of the
Valuation Date on which the Eligible Applicant initiates the loan
process by providing Notice to the Administrator or its designee. No
loan shall be made in an amount less than $1,000. Any loan amount
shall be made in accordance with Section 14.3.
(b) Application for Loan. The Eligible Applicant must give the
Administrator adequate written notice, as determined by the
Administrator, of the requested amount and desired
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time for receiving a loan. In addition, if an Eligible Applicant is
married at the time of application, the Administrator shall require
Spousal Consent prior to approving the loan application.
(c) Length of Loan. The Eligible Applicant and the Administrator shall
arrange for the repayment of a Plan loan. The period of repayment
shall not exceed five years from the date the loan is made. All
repayment schedules (whether by payroll withholding or otherwise)
shall commence as of the next administratively feasible pay period
following the disbursement of the loan and shall provide for
substantially level amortization of principal and interest. An
Eligible Applicant on a leave of absence and an Eligible Applicant
who terminates employment with the Company and Affiliates must make
principal and interest payments in the amount and on such dates as
otherwise due. In the event such payments are not made the maturity
of the loan shall be accelerated and the outstanding principal
amount of the loan, together with all accrued interest, shall be
deemed immediately due and distributable at such date or dates as
the Administrator deems reasonable and as may be specified by
applicable law and regulation. Except as otherwise permitted in
Income Tax Regulations, in no event shall the date of deemed
distribution extend beyond the end of the calendar quarter next
following the calendar quarter in which the payment was not made.
(d) Prepayment. The Eligible Applicant shall be permitted to repay the
loan in total as of any date prior to maturity without penalty.
(e) Note. The loan shall be evidenced by a promissory note executed by
the Eligible Applicant and delivered to the Administrator. The
Eligible Applicant will agree to execute any other documents (e.g.,
payroll withholding forms) that may be necessary or appropriate to
effect the loan.
(f) Interest. All loans shall be considered investments of the Trust and
interest shall be charged on the loan at the rate set by the
Administrator as of the loan effective date. Such rate shall be
based on the prime lending rate charged by a financial institution
selected by the Administrator, plus 100 basis points.
(g) Security. Subject to the extent required under regulations
promulgated by the Secretary of Labor or his delegate, a Plan loan
shall be secured by an assignment of the Eligible Applicant's right,
title and interest in that portion of his Total Account under the
Plan as shall adequately secure the loan, provided such security
shall not exceed one-half of the current value of the Eligible
Applicant's vested Total Account. The Administrator may also require
such additional collateral as may be deemed necessary to adequately
secure repayment of the loan.
(h) Default. The Administrator shall take reasonable steps to secure
repayment of any loan granted hereunder in accordance with its
terms; however, when the Administrator declares a loan to an
Eligible Applicant to be in default, the outstanding balance of the
loan, together with unpaid, accrued interest, shall be deemed a lien
against the Total Account maintained on behalf of the Eligible
Applicant and no contributions or distributions of any
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kind (other than distributions due to loan default) may thereafter
be made by or on behalf of the Eligible Applicant to or from this
Plan during the continuance of the default. The Administrator shall
take such reasonable steps as it shall deem necessary or appropriate
to eliminate the default before causing an offset distribution to be
made with respect to the Eligible Applicant for the purpose of fully
amortizing the loan outstanding; however, should the loan remain in
default after these administrative procedures are taken, the
Administrator will consider the entire amount of the loan
outstanding (including all accrued interest to date) as a
distribution as of the first date, on or following the
administrative procedures, on which the Eligible Applicant has a
distributable event and will process the Total Account of the
Eligible Applicant accordingly.
(j) Other Terms and Conditions. The Administrator shall fix such other
terms and conditions of the loan as it deems necessary to comply
with legal requirements, to maintain the qualification of the Plan
and Trust Fund under Code Section 401(a), to exempt the loan
transaction from the prohibited transaction rules of under Code
Section 4975, or to prevent the treatment of the loan for tax
purposes as a distribution to the Eligible Participant. The
Administrator may fix other terms and conditions of the loan, not
inconsistent with the provisions of this Article Fourteen.
(k) No Prohibited Transactions. No loan shall be made unless such loan
is exempt from the tax imposed on prohibited transactions by Code
Section 4975 or would be exempt from such tax (if the Eligible
Participant were a disqualified person as defined in Section
4975(e)(2) of the Code) by reason of Code Section 4975(d)(1).
10.3 Loan Accounts
A loan made by the Plan to a Eligible Applicant in accordance with
Sections 14.1 and 14.2 shall be from the Total Account maintained on
behalf of such Eligible Applicant and from the investment funds in which
such Total Account is invested in such order of priority as the
Administrator, pursuant to a uniform and nondiscriminatory policy, shall
direct. Payments of principal and interest on loans shall be paid over to
the Trustee as soon as possible after each payroll deduction or other
repayment and shall be credited to the Total Account of the Eligible
Applicant as of the date the repayments are received by the Trustee. Loan
repayments will be credited in such manner as determined by the
Administrator to those accounts and those investment options which were
accessed in connection with the granting of the loan to the Eligible
Applicant. The Administrator shall have the authority to establish other
reasonable rules, not inconsistent with the provisions of the Plan,
governing the establishment and maintenance of loan accounts.
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Executed at Erie, Pennsylvania, this 10th day of December, 2000.
ERIE INDEMNITY COMPANY
By: /s/ Stephen A. Milne
-------------------------------
Title: President and CEO
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