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Exhibit 10.17
BOSTON SCIENTIFIC CORPORATION
401(k) SAVINGS PLAN
(Amended and Restated, Effective January 1, 1997)
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TABLE OF CONTENTS
ARTICLE 1. INTRODUCTION ................................................... 1
1.1. Qualification and Purpose ...................................... 1
1.2. Rights under Plans ............................................. 1
1.3. Defined Terms .................................................. 1
ARTICLE 2. PARTICIPATION .................................................. 2
2.1. Date of Participation .......................................... 2
2.2. Duration of Participation ...................................... 3
ARTICLE 3. CONTRIBUTIONS .................................................. 4
3.1. Elective Contributions ......................................... 4
3.2. Form and Manner of Elections ................................... 4
3.3. Matching Contributions ......................................... 4
3.4. Discretionary Contributions .................................... 5
3.5. Qualified Nonelective Contributions ............................ 5
3.6. Rollover Contributions ......................................... 5
3.7. Employee Contributions ......................................... 5
3.8. Crediting of Contributions ..................................... 6
3.9. Time for Making Contributions .................................. 6
3.10. Certain Limits Apply ........................................... 6
3.11. Return of Contributions ........................................ 6
3.12. Establishment of Trust ......................................... 6
ARTICLE 4. PARTICIPANT ACCOUNTS ........................................... 7
4.1. Accounts ....................................................... 7
4.2. Adjustment of Accounts ......................................... 7
4.3. Investment of Accounts ......................................... 7
4.4. Appointment of Investment Manager or Named Fiduciary ........... 8
4.5. Section 404(c) Compliance ...................................... 8
4.6. Transfers From Other Plans ..................................... 8
ARTICLE 5. VESTING OF ACCOUNTS ............................................ 10
5.1. Immediate Vesting of Certain Accounts .......................... 10
5.2. Deferred Vesting of Discretionary Contribution Accounts ........ 10
5.3. Special Vesting Rules .......................................... 10
5.4. Changes in Vesting Schedule .................................... 10
5.5. Forfeitures .................................................... 11
5.6. Vesting of Accounts Transferred From Other Plans ............... 12
ARTICLE 6. WITHDRAWALS PRIOR TO SEPARATION FROM SERVICE ................... 13
6.1. Hardship Withdrawals ........................................... 13
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6.2. Withdrawals After Age 59 1/2 .................................. 14
6.3. Restrictions on Certain Distributions ......................... 14
6.4. Limitation of Withdrawable Amount ............................. 15
6.5. Required Distributions After Required Beginning Date .......... 15
6.6. Distributions Required by a Qualified Domestic Relations Order. 15
6.7. Certain Dispositions .......................................... 15
6.8. Withdrawals by Certain Former Participants in Other Plans ..... 15
ARTICLE 7 LOANS TO PARTICIPANTS ......................................... 17
7.1. In General .................................................... 17
7.2. Rules and Procedures .......................................... 17
7.3. Maximum Amount of Loan ........................................ 17
7.4. Minimum Amount of Loans; Limit on Number of Loans ............. 18
7.5. Note; Security; Interest ...................................... 18
7.6. Repayment ..................................................... 18
7.7. Repayment Upon Distribution ................................... 18
7.8. Default ....................................................... 18
7.9. Note as Trust Asset ........................................... 19
7.10. Nondiscrimination ............................................. 19
7.11. Designation of Accounts ....................................... 19
7.12. Spousal Consent to Loans to Certain Former Participants in
Other Plans ................................................... 19
ARTICLE 8. BENEFITS UPON DEATH OR SEPARATION FROM SERVICE ................ 20
8.1. Separation from Service for Reasons Other Than Death .......... 20
8.2. Time of Distributions ......................................... 20
8.3. Amount of Distribution ........................................ 21
8.4. Distributions After a Participant's Death ..................... 21
8.5. Designation of Beneficiary .................................... 22
8.6. Direct Rollovers of Eligible Distributions .................... 23
8.7. Special Rules for Former Participants in Merged Plans ......... 24
ARTICLE 9. ADMINISTRATION ................................................ 26
9.1. Committee ..................................................... 26
9.2. Powers of Committee ........................................... 26
9.3. Effect of Interpretation or Determination ..................... 26
9.4. Reliance on Tables, etc. ...................................... 27
9.5. Claims and Review Procedures .................................. 27
9.6. Indemnification of Committee and Assistants ................... 27
9.7. Annual Report ................................................. 27
ARTICLE 10. AMENDMENT AND TERMINATION ..................................... 28
10.1. Amendment ..................................................... 28
10.2. Termination ................................................... 28
10.3. Distributions upon Termination of the Plan .................... 28
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10.4. Merger or Consolidation of Plan; Transfer of Plan Assets ...... 29
ARTICLE 11. LIMITS ON CONTRIBUTIONS ....................................... 30
11.1. Code Section 404 Limits ....................................... 30
11.2. Code Section 415 Limits ....................................... 30
11.3. Code Section 402(g) Limits .................................... 32
11.4. Code Section 401(k)(3) Limits ................................. 33
11.5. Code Section 401(m) Limits .................................... 37
ARTICLE 12. SPECIAL TOP-HEAVY PROVISIONS .................................. 42
12.1. Provisions to Apply ........................................... 42
12.2. Minimum Contribution .......................................... 42
12.3. Adjustment to Limitation on Benefits .......................... 43
12.4. Definitions ................................................... 43
ARTICLE 13. MISCELLANEOUS ................................................. 46
13.1. Exclusive Benefit Rule ........................................ 46
13.2. Limitation of Rights .......................................... 46
13.3. Nonalienability of Benefits ................................... 46
13.4. Adequacy of Delivery .......................................... 46
13.5. Reclassification of Employment Status ......................... 46
13.6. Veterans' Reemployment and Benefits Rights .................... 47
13.7. Governing Law ................................................. 47
ARTICLE 14. DEFINITIONS ................................................... 48
14.1. "Accounts" ................................................... 48
14.2. "Affiliated Employer" ......................................... 48
14.3. "Beneficiary" ................................................. 48
14.4. "Board of Directors" .......................................... 48
14.5. "Code" ........................................................ 48
14.6. "Committee" ................................................... 48
14.7. "Company Stock" ............................................... 48
14.8. "Compensation" ................................................ 49
14.9. "Disability" .................................................. 49
14.10. "Discretionary Contribution" .................................. 50
14.11. "Discretionary Contribution Account" .......................... 50
14.12. "Elective Contribution" ....................................... 50
14.13. "Elective Contribution Account" ............................... 50
14.14. "Eligible Employee" ........................................... 50
14.15. "Employee" .................................................... 50
14.16. "Employee Contribution" ....................................... 50
14.17. "Entry Date" .................................................. 51
14.18. "ERISA" ....................................................... 51
14.19. "Highly Compensated Employee" ................................. 51
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14.20. "Hour of Service" .................................. 51
14.21. "Matching Contribution Account" .................... 53
14.22. "Normal Retirement Age" ............................ 53
14.23. "Participant" ...................................... 53
14.24. "Participating Employer" ........................... 53
14.25. "Plan" ............................................. 53
14.26. "Plan Sponsor" ..................................... 53
14.27. "Plan Year" ........................................ 53
14.28. "Predecessor Employer" ............................. 53
14.29. "Qualified Domestic Relations Order" ............... 53
14.30. "Qualified Nonelective Contribution" ............... 53
14.31. "QNEC Account" ..................................... 54
14.32. "Regulation" ....................................... 54
14.33. "Required Beginning Date" .......................... 54
14.34. "Rollover Contribution" ............................ 54
14.35. "Section" ......................................... 54
14.36. "Trust" ............................................ 54
14.37. "Trustee" .......................................... 54
14.38. "Valuation Date" ................................... 54
14.39. "Year of Service for Vesting" ...................... 54
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ARTICLE 1. INTRODUCTION.
1.1. QUALIFICATION AND PURPOSE. This document amends and restates the
provisions of the Boston Scientific Corporation Long-Term Savings and Security
Plan, effective as of January 1, 1997 unless otherwise stated herein. Mergers of
certain other plans into the Plan shall have such effective dates as are
provided in Schedule B. The original effective date of the Plan was January 1,
1987. The Plan and its related Trust are intended to qualify as a profit-sharing
plan and trust under Code sections 401(a) and section 501(a), the cash or
deferred arrangement forming part of the Plan is intended to qualify under Code
section 401(k). The Plan is intended to constitute a plan described in section
404(c) of ERISA. The provisions of the Plan and Trust shall be construed and
applied accordingly. The purpose of the Plan is to provide benefits to
Participants in a manner consistent and in compliance with such Code sections
and Title I of ERISA.
1.2. RIGHTS UNDER PLANS. The rights of Participants in this Plan or any
other plan which has been merged into this Plan, who ceased to be employed by
the applicable employer prior to January 1, 1997 or, if later, the applicable
merger date provided in Schedule B and have not thereafter been reemployed by
the Plan Sponsor or an Affiliated Employer, and the rights of their
beneficiaries, shall be determined in accordance with the terms of the
applicable plan at the time they ceased to be employed.
1.3. DEFINED TERMS. All capitalized terms used in the following
provisions of the Plan have the meanings given them under Article 14.
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ARTICLE 2. PARTICIPATION.
2.1. DATE OF PARTICIPATION.
(a) Any individual who was a Participant on December 31, 1996
and is an Eligible Employee on January 1, 1997 will, subject to Section
2.2, continue to be a Participant.
(b) Any other individual will become a Participant on the
Entry Date coinciding with or next following the latest of
(1) January 1, 1997;
(2) the date on which he or she becomes an Eligible
Employee;
(3) the date on which he or she attains age 21; and
(4) the 30th day after the date he or she completes
an Hour of Service;
provided that (i) he or she is an Eligible Employee on such Entry Date
and (ii) he or she has in effect on such Entry Date a compensation
reduction authorization described in Section 3.2 which was submitted in
the manner prescribed by the Committee. Unless otherwise provided by
the Committee, an Employee who has satisfied the requirements of (1),
(2), (3) and (4) above, but who has failed to satisfy the requirements
of (i) or (ii) above, will become a Participant on the first Entry Date
coinciding with or next following the date on which the requirements of
both (i) and (ii) are satisfied.
(c) Unless otherwise provided in Schedule B, in the event the
Plan Sponsor acquires a business of another employer, through an
acquisition of either assets or stock, an Employee who was employed by
such other employer immediately prior to such acquisition shall have
his or her prior service with such other employer taken into account,
as if it were service with an Affiliated Employer, for purposes of
(b)(4) above and Section 14.14(b).
(d) An Employee who, immediately before becoming an Eligible
Employee, has a contribution agreement in effect with an Affiliated
Employer under a separate plan described in section 401(k) of the Code
shall become a Participant on the payroll date coinciding with or next
following the date he or she becomes an Eligible Employee, provided
that he or she has a compensation reduction authorization in effect on
such payroll date.
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2.2. DURATION OF PARTICIPATION. An individual who has become a
Participant under the Plan will remain a Participant for as long as an Account
is maintained under the Plan for his or her benefit, or until his or her death,
if earlier. Notwithstanding the preceding sentence and unless otherwise
expressly provided for under the Plan, no contributions shall be made with
respect to a Participant who is not an Eligible Employee. In the event a
Participant remains an Employee but ceases to be an Eligible Employee and
becomes ineligible for contributions, such Employee will again become eligible
for contributions immediately upon returning to the class of Eligible Employees.
In the event an Employee who is not an Eligible Employee becomes an Eligible
Employee, such Employee will become a Participant on the first Entry Date on or
after becoming an Eligible Employee, if he or she has satisfied the requirements
of Section 2.1. A Participant or former Participant who is reemployed as an
Eligible Employee shall again become eligible for contributions on the first
Entry Date on or after reemployment.
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ARTICLE 3. CONTRIBUTIONS.
3.1. ELECTIVE CONTRIBUTIONS. On behalf of each Participant for whom
there is in effect, for any pay period, a compensation reduction authorization
described in Section 3.2 and who is receiving Compensation from a Participating
Employer during such pay period, such Participating Employer will contribute to
the Trust, as an Elective Contribution, an amount equal to the amount by which
such Compensation was reduced pursuant to the compensation reduction
authorization. Elective Contributions for any pay period in a Plan Year may not
be less than 1 percent nor exceed 15 percent of the Participant's Compensation
for such pay period.
3.2. FORM AND MANNER OF ELECTIONS. A "compensation reduction
authorization" is an authorization from an Eligible Employee to a Participating
Employer which satisfies the requirements of this Section 3.2. Each compensation
reduction authorization shall be in a form prescribed or approved by the
Committee, and may be entered into as of any Entry Date upon such prior notice
as the Committee may prescribe. A compensation reduction authorization may be
changed by the Participant, with such prior notice as the Committee may
prescribe, as of the first day of any payroll period. A compensation reduction
authorization shall be effective with respect to Compensation payable on and
after the applicable Entry Date. A compensation reduction authorization may be
revoked by the Participant at any time, upon such prior notice as the Committee
may prescribe. A Participant who revokes a compensation reduction authorization
may enter into a new authorization only as of a subsequent Entry Date.
3.3. MATCHING CONTRIBUTIONS.
(a) On a bi-weekly basis, each Participating Employer will
make a Matching Contribution to the Trust for the benefit of each
Participant on whose behalf it made Elective Contributions for the
period. The amount of Matching Contributions made by a Participating
Employer for the period shall be equal to 50% of the Elective
Contributions made on behalf of the Participant for the period which do
not exceed 4% of the Participant's Compensation for such period.
(b) If (i) a Participant is an Eligible Employee on the last
day of the Plan Year, and (ii) the aggregate Matching Contributions
made by his or her Participating Employer under paragraph (a) above to
the Trust for the benefit of such Participant with respect to such Plan
Year are less than the lesser of (1) 50% of the Participant's Elective
Contributions for such Plan Year or (2) 2% of such Participant's
Compensation in such Plan Year, then the Participating Employer shall
make a further contribution to the Trust, for the benefit of such
Participant, to be credited to his or her Matching Contribution
Account, such that the aggregate Matching Contributions made by the
Participating Employer for the benefit of such Participant for the Plan
Year under this Section shall equal the
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lesser of the amounts set forth in clauses (1) and (2) above.
3.4. DISCRETIONARY CONTRIBUTIONS. For each Plan Year, the Participating
Employers shall contribute to the Plan such other amounts, if any, as the Board
of Directors, in its sole discretion, may determine. Any such Discretionary
Contribution for a Plan Year shall be made in cash or, if the Board of Directors
so directs, in Company Stock, and shall be allocated among and credited to the
Accounts of each Participant who:
(a) is an Eligible Employee on the last day of the Plan Year;
or
(b) has ceased to be an Eligible Employee during the Plan Year
by reason of death or separation from service after attaining age 62 or
on account of Disability,
in proportion to their relative amounts of Compensation for such Plan Year.
3.5. QUALIFIED NONELECTIVE CONTRIBUTIONS. To the extent necessary to
satisfy the Code Section 401(k)(3) limits with respect to Elective Contributions
or the Code Section 401(m) limits with respect to Matching Contributions, the
Plan Sponsor, in its discretion, may determine whether a Qualified Nonelective
Contribution shall be made to the Trust for a Plan Year and, if so, the amount
to be contributed by such Participating Employer. If the Plan Sponsor determines
that a Qualified Nonelective Contribution shall be made, each Participating
Employer shall contribute its designated portion. A Qualified Nonelective
Contribution for a Plan Year shall be allocated among and credited to the QNEC
Accounts of all Participants who are eligible to receive Elective Contributions
for the Plan Year, in proportion to their relative amounts of Compensation for
the Plan Year. Qualified Nonelective Contributions shall be fully vested and
subject to the same distribution rules as Elective Contributions as of the time
such Qualified Nonelective Contributions are made to the Plan.
3.6. ROLLOVER CONTRIBUTIONS. An Eligible Employee (whether or not a
Participant) may make a Rollover Contribution to the Plan upon demonstration to
the Committee that the contribution is eligible for transfer to the Plan
pursuant to the rollover provisions of the Code.
3.7. EMPLOYEE CONTRIBUTIONS.
(a) FOR PERIODS PRIOR TO JULY 1, 1997. Prior to July 1, 1997,
Employee Contributions are neither required nor permitted under the
Plan. However, if a Participant who was a participant in a plan that is
merged into this Plan, or from which accounts have been transferred to
this Plan, made after-tax contributions under such plan, such
contributions shall be maintained under the Plan in an after-tax
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contribution account for such Participant.
(b) FOR PERIODS ON OR AFTER JULY 1, 1997. Effective July 1,
1997, a Participant may elect to make Employee Contributions under the
Plan in the form and manner prescribed or approved by the Committee.
Employee Contributions for any pay period in a Plan Year may not be
less than 1 percent nor exceed 10 percent of the Participant's
Compensation for such pay period.
3.8. CREDITING OF CONTRIBUTIONS. Each type of contribution for a Plan
Year shall be allocated among and credited to the respective Accounts of
Participants eligible to share in the contributions as of the Valuation Date
next following the date the contributions are received by the Trustee.
3.9. TIME FOR MAKING CONTRIBUTIONS. Elective Contributions will be paid
in cash to the Trust as soon as such contributions can reasonably be segregated
from the general assets of the Participating Employer, but in any event no later
than the time set forth in Department of Labor Regulations section 2510.3-102.
3.10. CERTAIN LIMITS APPLY. All contributions to the Plan are subject
to the applicable limits set forth under Code sections 401(k), 402(g), 401(m),
404, and 415, as further described elsewhere in the Plan. In addition, certain
minimum allocations may be required under Code section 416, as also further
described elsewhere in the Plan.
3.11. RETURN OF CONTRIBUTIONS. If any contribution by a Participating
Employer to the Trust is (a) made by reason of a mistake of fact, or (b)
believed by the Participating Employer in good faith to be deductible under Code
section 404, but the deduction is disallowed, the Trustee shall, upon request by
the Participating Employer, return to the Participating Employer the excess of
the amount contributed over the amount, if any, that would have been contributed
had there not occurred a mistake of fact or a mistake in determining the
deduction. Such excess shall be reduced by the losses of the Trust attributable
thereto, if and to the extent such losses exceed the gains and income
attributable thereto. In no event shall the return of a contribution hereunder
cause any Participant's Accounts to be reduced to less than they would have been
had the mistaken or nondeductible amount not been contributed. No return of a
contribution hereunder shall be made more than one year after the mistaken
payment of the contribution, or disallowance of the deduction, as the case may
be.
3.12. ESTABLISHMENT OF TRUST. The Plan Sponsor will establish a Trust
to accept and hold contributions made under the Plan. The Trust shall be
governed by an agreement between the Plan Sponsor and the Trustee the terms of
which shall be consistent with the Plan provisions and intended qualification
under Code sections 401(a) and 501(a).
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ARTICLE 4. PARTICIPANT ACCOUNTS.
4.1. ACCOUNTS. The Committee will establish and maintain (or cause the
Trustee to establish and maintain) for each Participant, such Accounts as are
necessary to carry out the purposes of this Plan.
4.2. ADJUSTMENT OF ACCOUNTS. As of each Valuation Date, each Account
will be adjusted to reflect the fair market value of the assets allocated to the
Account. In so doing,
(a) each Account balance will be increased by the amount of
contributions, income and gain allocable to such Account since the
prior Valuation Date; and
(b) each Account balance will be decreased by the amount of
distributions from the Account and expenses and losses allocable to the
Account since the prior Valuation Date.
Income, expense, gain or loss which is generated by a particular investment
within the Trust shall be allocated among the Accounts invested in that
investment in proportion to the balances of such Accounts as of the immediately
preceding Valuation Date. Any expenses relating to a specific Account or
Accounts, including without limitation commissions or sales charges with respect
to an investment in which the Account participates, may be charged solely to the
particular Account or Accounts.
4.3. INVESTMENT OF ACCOUNTS.
(a) A Participant's Accounts shall be invested by the Trustee
as the Participant directs from among such investment options as the
Plan Sponsor may make available from time to time. The Committee shall
prescribe the manner in which such directions may be made or changed,
the dates as of which they shall be effective, and the allocation of
Accounts with respect to which no directions are submitted. Any other
assets of the Trust not specified above in this Section shall be
invested by the Trustee in the sole discretion of the Trustee and in
accordance with its fiduciary duties under ERISA; provided, that if an
investment manager or other named fiduciary has been appointed with
respect to all or a portion of such assets, the Trustee shall invest
such portion as the investment manager or other named fiduciary
directs.
(b) The Committee is specifically authorized to establish a
Company Stock investment option. To the extent such Company Stock has
voting rights, or in the event of any tender or exchange offer by any
person for such Company Stock, Participants invested in such Company
Stock fund may direct the Trustee
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as to the voting and tender of such Company Stock in accordance with
procedures established by the Committee. The Committee may also provide
for the temporary suspension of the right of Participants subject to
Section 16 of the Securities Exchange Act of 1934 to invest further
amounts in the Company Stock fund following any withdrawal from the
portion of such Participants' Accounts theretofore invested in such
Company Stock fund. The Committee may also establish from time to time
a maximum percentage of any Participant's Accounts which may be
invested in the Company Stock fund.
4.4. APPOINTMENT OF INVESTMENT MANAGER OR NAMED FIDUCIARY. The Plan
Sponsor may appoint in writing one or more investment managers or other "named
fiduciaries" (within the meaning of ERISA section 402(a)(2)) to manage the
investment of all or designated portions of the assets held in the Trust. The
appointment shall be effective upon acknowledgment in writing by the investment
manager or other named fiduciary that it is a fiduciary with respect to the
Plan. An investment manager must be (a) registered as an investment adviser
under the Investment Advisers Act of 1940, (b) a bank as defined in that Act, or
(c) an insurance company qualified under the laws of more than one state to
manage, acquire or dispose of any assets of the Plan.
4.5. SECTION 494(c) COMPLIANCE. The Plan is intended to be an "ERISA
section 404(c) plan" as described in section 404(c) of ERISA and title 29 of the
Code of Federal Regulations section 2550.404c-1, and shall be administered and
interpreted in a manner consistent with that intent. The investment direction
requirements of Department of Labor regulation section
2550.404c-1(b)(2)(i)(B)(1)(iv) and (b)(2)(i)(A) and the requirements relating to
the investment alternatives under the Plan are intended to be satisfied by
Section 4.3 above, in each case taking into account related communications to
Participants and beneficiaries under the summary plan description for the Plan
and other communications. For purposes of ERISA section 404(c), the "identified
plan fiduciary" obligated to comply with Participant and Beneficiary investment
instructions (except as provided in such section and regulations thereunder),
the identified plan fiduciary obligated to provide Participants and
Beneficiaries with the materials set forth in Department of Labor regulations
section 2550.404c-1(b)(2)(i)(B) and the identified plan fiduciary obligated to
comply with the confidentiality requirements and procedures under Department of
Labor regulations section 2550.404c-1(d)(2)(ii)(E)(4)(viii) relating to employer
securities shall be the Committee. The Committee may decline to implement
Participant and Beneficiary investment instructions which would result in a
prohibited transaction described in ERISA section 406 or section 4975 of the
Code or which would generate income that would be taxable to the Plan.
4.6. TRANSFERS FROM OTHER PLANS.
(a) Unless otherwise provided herein, in the event that
another plan is merged into the Plan, or accounts are otherwise
transferred to the Plan from
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another plan, the assets transferred to the Plan shall be allocated as
follows:
(1) Assets attributable to an individual's elective
contributions and qualified nonelective contributions (if any)
shall be allocated to an Elective Contribution Account for his
or her benefit under the Plan;
(2) Assets attributable to matching employer
contributions (if any), shall be allocated to a Matching
Contribution Account for his or her benefit under the Plan;
(3) Assets attributable to other employer
contributions (if any), shall be allocated to a Discretionary
Contribution Account for his or her benefit under the Plan;
and
(4) Assets attributable to an individual's after-tax
contributions (if any) shall be allocated to an after-tax
contribution account for his or her benefit under the Plan.
The assets transferred may be separately accounted for in
sub-accounts under the Plan as determined to be necessary by the
Committee in order to administer the provisions of Articles 5, 6, 7 and
8. Unless otherwise provided in Schedule B or in an acquisition
agreement between a Participating Employer and the employer maintaining
such transferor plan, all assets transferred under this Section 4.6
shall be invested in accordance with investment directions by the
Participant under Section 4.3 above or, absent such directions, in a
fund designated by the Committee.
(b) Any individual for whom accounts have been transferred
under this Section 4.6 and who has not become a Participant under
Section 2.1, or pursuant to such other special eligibility rules
provided in Schedule B, shall be treated as a Participant for purposes
of Articles 4, 5, 8, 9, 10 and 13 and, so long as he or she is an
Employee, Articles 6 and 7. Such an individual shall become a
Participant for all purposes of the Plan to the extent such individual
satisfies the requirements of Section 2.1 or any other special
eligibility rules provided in Schedule B which apply to such
individual.
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ARTICLE 5. VESTING OF ACCOUNTS.
5.1. IMMEDIATE VESTING OF CERTAIN ACCOUNTS. A Participant shall at all
times have a vested interest in 100% of his or her Elective Contribution
Account, QNEC Account, Matching Contribution Account, and his or her Rollover
Account, if any.
5.2. DEFERRED VESTING OF DISCRETIONARY CONTRIBUTION ACCOUNTS.
(a) A Participant who on December 31, 1992 had at least
three Years of Service for purposes of calculating vesting, shall have
a vested interest in 100% of his or her Discretionary Contribution
Account, if any.
(b) Effective January 1, 1996, a Participant not described
in (a) above, shall have a vested interest in a percentage of his or
her Discretionary Contribution Account, if any, determined in
accordance with the following schedule and based on his or her Years of
Service for Vesting:
Years of Service Applicable
for Vesting Nonforfeitable Percentage
less than 1 0%
1 but less than 2 20%
2 but less than 3 40%
3 but less than 4 60%
4 but less than 5 80%
5 or more 100%
5.3. SPECIAL VESTING RULES. Notwithstanding any provision of the Plan
to the contrary, a Participant will have a vested interest in 100% of the
Accounts maintained for his or her benefit upon the happening of any one of the
following events:
(a) the Participant's attainment of age 62 while an Employee;
(b) the Participant's separation from service on account of
Disability;
(c) the Participant's death while an Employee;
(d) the termination of the Plan or the complete discontinuance
of Contributions under the Plan; or
(e) the partial termination of the Plan with respect to the
Participant.
5.4. CHANGES IN VESTING SCHEDULE. If the Plan's vesting schedule is
amended,
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or the Plan is amended in any way that directly or indirectly affects
the computation of a Participant's vested percentage (or if the Plan changes to
or from a top-heavy vesting schedule), each Participant who has completed 3
years of Vesting Service may elect, within the period described below, to have
his or her vested percentage determined without regard to such amendment or
change. The period referred to in the preceding sentence will begin on the date
the amendment of the vesting schedule is adopted and will end 60 days after the
latest of the following dates:
(a) the date on which such amendment is adopted;
(b) the date on which such amendment becomes effective; and
(c) the date on which the Participant is issued written notice
of such amendment by the Committee.
5.5. FORFEITURES.
(a) In general. Effective as of January 1, 1996, any portion
of a Participant's Account in which he or she is not vested upon
separation from service for any reason will be forfeited as of the
earlier of
(1) the expiration of 5 consecutive Plan Years
during each of which the Participant does not complete 501
Hours of Service, or
(2) the distribution of the vested portion of the
Account if such distribution is made as a result of the
Participant's separation from service.
Any Participant who separates from the service of the Affiliated
Employers prior to earning a vested interest in any of his or her
Accounts shall be deemed to have received a complete distribution of
his or her vested interest on the day he or she separates from service.
(b) Certain Restorations. Notwithstanding the preceding
paragraph, if a Participant forfeits any portion of an Account as a
result of the complete distribution of the vested portion of the
Account but thereafter returns to the employ of an Affiliated Employer,
the amount forfeited will be recredited to the Participant's Account if
he or she repays to the Plan the entire amount distributed, without
interest, prior to the earlier of (i) the close of the fifth
consecutive Plan Year in each of which the Participant does not
complete at least 501 Hours of Service or (ii) the fifth anniversary of
the date on which the Participant is reemployed. In the case of a
Participant who had earlier separated from service prior to earning a
vested interest in any of his or her Accounts and was deemed to
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17
have received a distribution of such vested interest, the amount
forfeited will be restored upon the Participant's reemployment prior to
the close of the fifth consecutive Plan Year in each of which the
Participant does not complete at least 501 Hours of Service. A
Participant's vested percentage in the amount recredited under this
paragraph will thereafter be determined under the terms of the Plan as
if no forfeiture had occurred. The money required to effect the
restoration of a Participant's Account shall come from other Accounts
forfeited during the Plan Year of restoration, and to the extent such
funds are inadequate, from a special contribution by the Participant's
Participating Employer.
(c) If a Participant forfeits any part of his or her
Accounts under paragraph (a) above, the amount of the forfeiture will
be applied, first, toward any restoration of any amount previously
forfeited as required under paragraph (a) above, and, then, toward the
Matching Contributions required to be made to the Plan under Section
3.3.
5.6. VESTING OF ACCOUNTS TRANSFERRED FROM OTHER PLANS. In the event
that another plan is merged into the Plan, or accounts are otherwise transferred
to the Plan from another plan, the portion of each Account under this Plan that
is attributable to a vested and nonforfeitable account, or portion of an
account, under the transferor plan shall remain vested and nonforfeitable under
this Plan. The remaining portion of each Account under this Plan that is
attributable to a transferor plan account shall vest in accordance with Section
5.2, unless otherwise provided in Schedule B.
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18
ARTICLE 6. WITHDRAWALS PRIOR TO SEPARATION FROM SERVICE.
6.1. HARDSHIP WITHDRAWALS.
(a) Immediate and heavy financial need. A Participant may make
a withdrawal from his or her Elective Contribution Account in the event
of an immediate and heavy financial need arising from
(i) expenses for medical care described in Code
section 213(d) previously incurred by the Participant, his or
her spouse or any of his or her dependents (as defined in Code
section 152) or amounts necessary for these persons to obtain
such medical care;
(ii) costs directly related to the purchase of a
principal residence of the Participant (excluding mortgage
payments);
(iii) the payment of tuition, room and board expenses
and related educational fees for the next 12 months of
post-secondary education for the Participant, his or her
spouse, children or dependents (as defined in Code section
152);
(iv) payments necessary to prevent the eviction of
the Participant from his or her principal residence or
foreclosure on the mortgage on that principal residence; or
(v) any other need identified by the Commissioner of
Revenue as a "financial hardship" for purposes of section
401(k) plans through the publication of revenue rulings,
notices and other guidance of general applicability.
The Committee's determination of whether there is an immediate and
heavy financial need as defined above shall be made solely on the basis
of written evidence furnished by the Participant. Such evidence must
also indicate the amount of such need.
(b) Distribution of amount necessary to meet need. As soon as
practicable after the Committee's determination that an immediate and
heavy financial need exists with respect to the Participant, that the
Participant has obtained all other distributions (other than hardship
distributions) and all nontaxable loans currently available under the
Plan and all other plans maintained by the Affiliated Employers, and
that no other resources are reasonably available to the Participant to
satisfy the need, the Committee will direct the Trustee to pay to the
Participant the amount necessary to meet the need created by the
hardship
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19
(but not in excess of the value of the Participant's Elective
Contribution Account, determined as of the Valuation Date next
following the Committee's determination). The amount necessary to meet
the need may include any amounts necessary to pay any federal, state,
or local income taxes or penalties reasonably anticipated to result
from the distribution. Distribution will be made solely from the
Participant's Elective Contribution Account, and shall not include any
portion of the Account that is attributable to income earned after
December 31, 1988.
(c) Effective Date. The provisions under this Section 6.1
shall be effective as of January 1, 1996.
6.2. WITHDRAWALS AFTER AGE 59-1/2. A Participant who is an Employee and
has attained age 59 1/2 may make a withdrawal from any one or more of his or her
Accounts for any reason, upon such prior notice as the Committee may prescribe.
Any such withdrawal shall be in the amount specified by the Participant, up to
the vested value of the particular Account determined as of the Valuation Date
next following the Committee's receipt of notice of the withdrawal. Payment to
the Participant shall be made as soon as practicable after such Valuation Date.
6.3. RESTRICTIONS ON CERTAIN DISTRIBUTIONS. In the case of a
Participant whose Accounts are valued in excess of $3,500 and who has not yet
attained the Normal Retirement Age, no distribution may be made to the
Participant under this Article unless
(a) between the 30th and 90th day prior to the date
distribution is to be made, the Committee notifies the Participant in
writing that he or she may defer distribution until the Normal
Retirement Age and provides the Participant with a written description
of the material features and (if applicable) the relative values of the
forms of distribution available under the Plan; and
(b) the Participant consents to the distribution in writing
after the information described above has been provided to him or her.
Notwithstanding the foregoing, such distribution may commence less than 30 days
after the required notification described above is given, provided that (i) the
Committee clearly informs the Participant that the Participant has a right to a
period of at least 30 days after receiving the notice to consider whether or not
to elect a distribution; and (ii) the Participant, after receiving the notice,
elects a distribution.
For purposes of this Section, a Participant's Accounts will be considered to be
valued in excess of $3,500 if the value of his or her Accounts exceeds such
amount at the time of the distribution in question or exceeded such amount at
the time of any prior distribution to (or withdrawal by) the Participant under
the Plan.
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20
6.4. LIMITATION OF WITHDRAWABLE AMOUNT. In the event that there is
allocated to a Participant's Account a promissory note with respect to a loan
made from the Plan, the maximum amount of cash that may be withdrawn from the
Account prior to the Participant's separation from service shall be determined
without regard to the value of such note.
6.5. REQUIRED DISTRIBUTIONS AFTER REQUIRED BEGINNING DATE. In the case
of a Participant who remains an Employee on or after his or her Required
Beginning Date, such Participant's Accounts will be distributed, beginning on
his or her Required Beginning Date, in accordance with the applicable
requirements of Code section 401(a)(9) and the Regulations promulgated
thereunder.
6.6. DISTRIBUTIONS REQUIRED BY A QUALIFIED DOMESTIC RELATIONS ORDER. To
the extent required by a Qualified Domestic Relations Order, the Committee shall
make distributions from a Participant's Accounts to alternate payees named in
such order in a manner consistent with the distribution options otherwise
available under the Plan, regardless of whether the Participant is otherwise
entitled to a distribution at such time under the Plan.
6.7. CERTAIN DISPOSITIONS. In connection with the disposition by a
Participating Employer of at least 85 percent of the assets used by the
Participating Employer in a trade or business to an unrelated corporation, or
the disposition of a Participating Employer's interest in a subsidiary to an
unrelated entity, distribution of the entire vested Account balance of an
Employee who continues employment with the acquirer may be made to the Employee
in a single sum, but only if the acquirer does not maintain the Plan after the
disposition, and only if such distribution is otherwise made in accordance with
Code section 401(k)(10).
6.8. WITHDRAWALS BY CERTAIN FORMER PARTICIPANTS IN OTHER PLANS.
(a) In addition to the rights to take withdrawals prior to
separation from service as described in Sections 6.1 and 6.2, in the
case of a Participant for whom amounts have been transferred under
Section 4.6, the Participant shall be entitled to take withdrawals
hereunder in the circumstances in which withdrawals prior to separation
from service would have been permitted under the transferor plan, as
set forth in Schedule B.
(b) In the case of a married Participant for whom amounts
have been transferred under Section 4.6 from another plan and who has
at any time elected an annuity form of payment under Section 8.7, no
withdrawal may be made under Sections 6.1, 6.2 or 6.8(a) unless (i) his
or her spouse consents in writing to such withdrawal, such consent
acknowledges the effect of the withdrawal and is witnessed by a Plan
representative or a notary public, and such consent specifies
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21
the form of the withdrawal (i.e., a lump sum cash payment), or (ii) it
is established to the satisfaction of the Committee that the foregoing
consent may not be obtained because the spouse cannot be located, or
because of such other circumstances as the Secretary of the Treasury
may prescribe.
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22
ARTICLE 7. LOANS TO PARTICIPANTS.
7.1. IN GENERAL. Upon the written request of a Participant on a form
acceptable to the Committee, and subject to the conditions of this Article, the
Committee shall direct the Trustee to make a loan from the Trust to the
Participant. Notwithstanding the foregoing, a Participant who is an
owner-employee or member of the family (as defined in Code section 267(e)(4) of
an owner-employee is not eligible to receive a loan under this Article 7. An
"owner-employee" shall mean an owner employee as defined in Code section
401(c)(3), and shall include an employee or officer of an electing small
business (Subchapter S) corporation which is an Affiliated Employer who owns (or
is considered as owning within the meaning of Code section 318(a)(1)), on any
day during the taxable year of such corporation, more than 5% of the outstanding
stock of such corporation. For purposes of this Article, "Participant" includes
any Participant who is an Employee of a Participating Employer, and any other
Participant (or Beneficiary of a deceased Participant) who is a "party in
interest" within the meaning of ERISA section 3(14).
7.2. RULES AND PROCEDURES. The Committee shall promulgate such rules
and procedures, not inconsistent with the express provisions of this Article, as
it deems necessary to carry out the purposes of this Article including, but not
limited to, rules for charging loan fees directly to a Participant's Accounts.
All such rules and procedures shall be deemed a part of the Plan for purposes of
the Department of Labor regulation section 2550.408b-1(d). Loans shall not be
made available to Participants who are Highly Compensated Employees in an amount
(determined under Department of Labor regulation section 2550.408b-1(b)) greater
than the amount made available to other Participants.
7.3. MAXIMUM AMOUNT OF LOAN. The following limitations shall apply in
determining the amount of any loan to a Participant hereunder:
(a) The amount of the loan, together with any other
outstanding indebtedness of the Participant under the Plan or any other
qualified retirement plans of the Affiliated Employers, shall not
exceed $50,000 reduced by the excess of (i) the highest outstanding
loan balance of the Participant from such plans during the one-year
period ending on the day prior to the date on which the loan is made,
over (ii) the Participant's outstanding loan balance from such plans
immediately prior to the loan.
(b) The amount of the loan shall not exceed 50% of the
Participant's vested interest in his or her Accounts, determined as of
the Valuation Date immediately preceding the date of the loan.
7.4. MINIMUM AMOUNT OF LOANS; LIMIT ON NUMBER OF LOANS. The amount of
any single loan under this Plan shall not be less than $1,000. No more than two
loans
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23
may be outstanding to a Participant at any one time.
7.5. NOTE; SECURITY; INTEREST. Each loan shall be evidenced by a note
signed by the Participant and shall be secured by the Participant's vested
interest in his or her Accounts, including in such security the note evidencing
the loan. The loan shall bear interest at a reasonable annual percentage
interest rate to be determined by the Committee. In determining the interest
rate, the Committee shall take into consideration interest rates currently being
charged by persons in the business of lending money with respect to loans made
in similar circumstances. The Committee shall make such determination through
consultation with one or more lending institutions, as the Committee deems
appropriate.
7.6. REPAYMENT. Each loan made to a Participant who is receiving
regular payments of compensation from a Participating Employer shall be
repayable by payroll deduction. Loans made to other Participants (and, in all
events, where payroll deduction is no longer practicable) shall be repayable in
such manner as the Committee may from time to time determine. The documents
evidencing a loan shall provide that payments shall be made not less frequently
than quarterly and over a specified term as determined by the Committee (but not
to exceed five years; ten years if the loan is being applied toward the purchase
of a principal residence for the Participant); such documents shall also require
that the loan be amortized with level payments of principal and interest. A
Participant may prepay all, but not less than all, of his or her loan at any
time, without penalty, by paying the loan principal then outstanding together
with interest accrued and unpaid to the date of payment.
7.7. REPAYMENT UPON DISTRIBUTION. If, at the time benefits are to be
distributed (or to commence being distributed) to a Participant with respect to
a separation from service, there remains any unpaid balance of a loan hereunder,
such unpaid balance shall, to the extent consistent with Department of Labor
regulations, become immediately due and payable in full. Such unpaid balance,
together with any accrued but unpaid interest on the loan, shall be deducted
from the Participant's Accounts, subject to the default provisions below, before
any distribution of benefits is made. Except as may be required in order to
comply (in a manner consistent with continued qualification of the Plan under
Code section 401(a)) with Department of Labor regulations, no loan shall be made
or remain outstanding with respect to a Participant under this Article after the
time distributions to the Participant with respect to a separation from service
are to be paid or commence.
7.8. DEFAULT. In the event of a default in making any payment of
principal or interest when due under the note evidencing any loan under this
Article, if such default continues for more than 90 days of the due date
thereof, the unpaid principal balance of the note shall immediately become due
and payable in full. Such unpaid principal, together with any accrued but unpaid
interest, shall thereupon be deducted from the
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24
Participant's Accounts, subject to the further provisions of this Section. The
amount so deducted shall be treated as distributed to the Participant and
applied by the Participant as a payment of the unpaid interest and principal (in
that order) under the note evidencing such loan. In no event shall the Committee
apply the Participant's Accounts to satisfy the Participant's repayment
obligation, whether or not he or she is in default, unless the amount so applied
otherwise could be distributed in accordance with the Plan.
7.9. NOTE AS TRUST ASSET. The note evidencing a loan to a Participant
under this Article shall be an asset of the Trust which is allocated to the
Account of such Participant, and shall for purposes of the Plan be deemed to
have a value at any given time equal to the unpaid principal balance of the note
plus the amount of any accrued but unpaid interest.
7.10. NONDISCRIMINATION. Loans shall be made available under this
Article to all Participants on a reasonably equivalent basis, except that the
Committee may make reasonable distinctions based on creditworthiness.
7.11. DESIGNATION OF ACCOUNTS. Unless the Committee designates
otherwise, loans shall be made from the Participant's Accounts in the following
order: (1) from his or her Rollover Account, if any, (2) from his or her
Matching Contribution Account, (3) from his or her Elective Contribution
Account, (4) from the vested portion of his or her Discretionary Contribution
Account, if any and (5) from his or her After-Tax Contribution Account, if any.
The crediting of loan repayments shall be made to the foregoing Accounts in the
same order and shall be allocated among the investment options in accordance
with the Participant's then-effective instructions regarding the investment of
contributions made on his or her behalf.
7.12. SPOUSAL CONSENT TO LOANS TO CERTAIN FORMER PARTICIPANTS IN OTHER
PLANS. In the case of a married Participant for whom amounts have been
transferred under Section 4.6 from a transferor plan and who has at any time
elected an annuity form of payment under Section 8.7 or under the transferor
plan, no loan shall be made unless (a) the Participant's spouse consents in
writing to such loan and to the use of the Participant's Accounts as security
for the loan, and such consent acknowledges the effect of the loan and the use
of the Accounts as security, is witnessed by a Plan representative or a notary
public, and is provided no more than 90 days before the date on which the loan
is to be secured by the Accounts, or (b) it is established to the satisfaction
of the Committee that the foregoing consent may not be obtained because there is
no spouse, because the spouse cannot be located, or because of such other
circumstances as the Secretary of the Treasury may prescribe.
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25
ARTICLE 8. BENEFITS UPON DEATH OR SEPARATION FROM SERVICE.
8.1. SEPARATION FROM SERVICE FOR REASONS OTHER THAN DEATH. Following a
Participant's separation from the service of an Affiliated Employer for any
reason other than death, the Participant will receive the vested portion of his
or her Accounts in cash in a single sum or, if the Participant elects and the
value of such portion exceeds $3,500, in monthly, quarterly, semi-annual, or
annual installments over a period certain not to exceed the Participant's life
expectancy or the joint life and last survivor expectancy of the Participant and
his or her Beneficiary. An election to receive monthly, quarterly, semi-annual,
or annual installment distributions in lieu of a single sum, and the period over
which such installments are to be made, shall be made by the Participant on a
form approved by the Committee. Notwithstanding the foregoing, in the case of
Participant for whom amounts have been transferred under Section 4.6, the
Participant shall be entitled to elect any other form of distribution of his
benefits hereunder that would have been permitted under the transferor plan, as
set forth in Schedule B.
8.2. TIME OF DISTRIBUTIONS. Distribution with respect to a
Participant's separation from service normally will be made as soon as
practicable after such separation. In the case of a Participant whose Accounts
are valued in excess of $3,500 and who has not yet attained the Normal
Retirement Age, however, distribution may not be made under this Section unless
(a) between the 30th and 90th day prior to the date
distribution is to be made, the Committee notifies the Participant in
writing that he or she may defer distribution until the Normal
Retirement Age; and
(b) the Participant consents to the distribution in writing
after the information described above has been provided to him or her,
and files such consent with the Committee.
Notwithstanding the foregoing, such distribution may commence less than 30 days
after the required notification described above is given, provided that (i) the
Committee clearly informs the Participant that the Participant has a right to a
period of at least 30 days after receiving the notice to consider whether or not
to elect a distribution; and (ii) the Participant, after receiving the notice,
elects a distribution.
A Participant's Accounts will be considered to be valued in excess of $3,500 if
the value of such Accounts exceeds such amount at the time of the distribution
in question or exceeded such amount at the time of any prior distribution to the
Participant under the Plan. Distribution under this Section in all events will
be made no later than the 60th day after the close of the Plan Year in which
occurs the later of the Participant's separation from service or the
Participant's attainment of the Normal Retirement Age.
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26
8.3. AMOUNT OF DISTRIBUTION.
(a) Single Sums. In the case of a distribution to be made in a
single sum, the amount of the distribution shall be determined as of
the Valuation Date on which authorized distribution directions are
received by the Trustee.
(b) Installments. In the case of distributions to be made in
monthly, quarterly, semi-annual, or annual installments, the aggregate
installment amount for a particular calendar year (the "installment
year") shall be determined by dividing
(i) the value of the vested portion of the
Participant's Accounts as of the last Valuation Date preceding
the distribution date by
(ii) the lesser of (A) the number of remaining
installment years in the installment period elected by the
Participant as of the beginning of the installment year and
(B) the number of years in the applicable remaining life
expectancy for the installment year determined pursuant to
Regulation section 1.401(a)(9)-1, or (if the Participant's
Beneficiary is not his or her spouse) the applicable divisor
for the installment period determined under Regulation section
1.401(a)(9)-2. For purposes of determining the amount of any
installment distribution, life expectancies will not be
recalculated annually pursuant to Code section 401(a)(9)
unless the Participant elects otherwise. Any such election
shall be in writing on a form prescribed or approved by the
Committee and filed prior to the Participant's attainment of
age 70 1/2.
8.4. DISTRIBUTIONS AFTER A PARTICIPANT'S DEATH.
(a) Death Prior to Separation From Service. If a Participant
dies prior to his or separation from the service of the Company, the
Participant's Beneficiary will receive the Participant's Accounts in
either of the following forms, as elected by the Beneficiary on a form
approved by the Committee:
(i) in cash in a single sum as soon as practicable
following the Participant's death (but in no event later than
December 31 of the calendar year following the year of the
Participant's death); or
(ii) in monthly, quarterly, semi-annual, or annual
installments over a period certain not to exceed the life
expectancy of the Beneficiary, such installments to begin not
later than December 31 of the calendar year following the year
of the Participant's death and to be made in amounts
determined in the same manner as under Section 8.3(b) above.
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27
(b) Death After Separation From Service. If a Participant
dies after separation from service but before the complete distribution
of his or her Accounts has been made, the Participant's Beneficiary
will receive the vested portion of the Participant's Accounts.
Distribution will be made in cash in a single sum as soon as
practicable following the Participant's death (but no later than
December 31 of the calendar year following the year of the
Participant's death) provided, however, that if distribution to the
Participant had begun following his or her separation from service in a
form elected by the Participant, distribution will continue to be made
to the Beneficiary at least as rapidly in such form unless the
Beneficiary elects to receive the distribution in cash in a single sum
as soon as practicable following the Participant's death. Any such
election must be made on a form approved by the Committee and must be
received by the Committee within such period following the
Participant's death as the Committee may prescribe.
Any distribution to a Beneficiary under this Section shall be determined as of
the Valuation Date immediately preceding the date distribution is to be made.
8.5. DESIGNATION OF BENEFICIARY. Subject to the provisions of this
Section, a Participant's Beneficiary shall be the person or persons and entity
or entities, if any, designated by the Participant from time to time on a form
approved by the Committee. In the absence of an effective beneficiary
designation, the full amount payable upon the death of the Participant shall be
paid to his or her surviving spouse or, if none, to his or her issue per stirpes
or, if no issue, to his or her heirs at law determined under the laws of
intestacy of the jurisdiction of his or her last domicile. If any of such issue
is a minor, the Trustee may deposit his or her share in a savings account to his
or her credit. If any Beneficiary survives the Participant but dies prior to
receipt of his or her interest in the Participant's Account, such Beneficiary's
remaining interest shall be paid to the Beneficiary's estate (unless the
Participant had effectively designated a successor or contingent Beneficiary for
the Beneficiary's remaining interest). A nonspouse beneficiary designation by a
Participant who is married at the time of his or her death shall not be
effective unless
(a) prior to the Participant's death, the Participant's
surviving spouse consented to and acknowledged the effect of the
Participant's designation of a specific non-spouse Beneficiary
(including any class of Beneficiaries or any contingent Beneficiaries)
on a written form approved by the Committee and witnessed by a notary
public or a duly authorized Plan representative; or
(b) it is established to the satisfaction of the Committee
that spousal consent may not be obtained because there is no spouse,
because the spouse has died (evidenced by a certificate of death),
because the spouse cannot be located (based on information supplied by
a government agency or independent
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28
investigator), or because of such other circumstances as the Secretary
of the Treasury may prescribe; or
(c) the spouse had earlier executed a general consent form
permitting the Participant (i) to select from among certain specified
beneficiaries without any requirement of further consent by the spouse
(and the Participant designates a Beneficiary from the specified list),
or (ii) to change his or her Beneficiary without any requirement of
further consent by the spouse. Any such general consent shall be on a
form approved by the Committee, and must acknowledge that the spouse
has the right to limit consent to a specific beneficiary and that the
spouse voluntarily elects to relinquish such right.
In the event a spouse is legally incompetent to give consent, the spouse's legal
guardian, even if the guardian is the Participant, may give consent on behalf of
the spouse. Any consent and acknowledgment by (or on behalf of) a spouse, or the
establishment that the consent and acknowledgment cannot be obtained, shall be
effective only with respect to such spouse, but shall be irrevocable once made.
8.6. DIRECT ROLLOVERS OF ELIGIBLE DISTRIBUTIONS. Notwithstanding any
provision of the Plan to the contrary that may otherwise limit a distributee's
election under this Section, for Plan Years beginning after December 31, 1992, a
distributee may elect, at the time and in the manner prescribed by the
Committee, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee in a direct
rollover. For purposes of this Section, the following terms have the following
meanings:
(a) 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 of the distributee
and the distributee's Beneficiary, or for a specified period of ten
years or more; any distribution to the extent such distribution is
required under Code section 401(a)(9); 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).
(b) with respect to a distributee other than the
Participant's surviving spouse, 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). With respect to a distributee who is
a Participant's surviving spouse, an eligible retirement plan is an
individual
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29
retirement account or an individual retirement annuity.
(c) 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 an
alternate payee under a Qualified Domestic Relations Order, are
distributees with regard to the interest of the spouse or former
spouse.
(d) a "direct rollover" is a payment by the Plan to the
eligible retirement plan specified by the distributee.
8.7. SPECIAL RULES FOR FORMER PARTICIPANTS IN MERGED PLANS. If the
vested portion of the Account of a Participant for whom accounts have been
transferred under Section 4.6 from a transferor plan to which the requirements
of Code section 401(a)(11) were applicable at the time of the transfer, as
indicated on Schedule B, becomes payable under Section 8.1, and if the
Participant elects during the 90-day period preceding his or her annuity
starting date (or has elected at any time under the transferor plan) the payment
of benefits in the form of a life annuity, the Participant's vested portion of
his or her Accounts shall be applied to the purchase from an insurance company
of a single premium nontransferable annuity contract providing (a) if the
Participant is married on his or her annuity starting date, an annuity for the
life of the Participant, and upon the death of the Participant providing a
further annuity for the life of the spouse (to whom the Participant was married
on his or her annuity starting date) in an amount equal to 50 percent of the
amount of the annuity payable during the joint lives of the Participant and his
or her spouse, and (b) if the Participant is not married on his or her annuity
starting date, an annuity for the life of the Participant. Any Participant
subject to the provisions of this Section 8.7 may elect, during the 90-day
period preceding his or her annuity starting date, not to have his or her vested
Account balance applied to purchase the annuity described above and either (1)
to have his or her vested Account balance distributed in the form of a single
cash lump sum payment or (2) to have his or her vested Account balance applied
to the purchase from an insurance company of a single premium nontransferable
annuity contract providing any form of optional form of payment provided under
the transferor plan, as described on Schedule B applicable to such transferor
plan.
If the Participant is married on his or her annuity starting date, any
election pursuant to the preceding sentence shall be effective only if:
(i) his or her spouse consents in writing to such election
and, if applicable, to distribution of the Participant's vested Account
balance before age 65, such consent acknowledges the effect of the
election and is witnessed by a Plan representative or a notary public,
and such consent either (1) specifies the form of distribution to the
Participant and, if distribution is to be made in installments, any
nonspouse Beneficiary (including any class of Beneficiaries or any
contingent Beneficiaries), or (2) authorizes the Participant to change
the form
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of distribution or the Beneficiary without further consent, or
(ii) it is established to the satisfaction of the Committee
that the foregoing consent may not be obtained because the spouse
cannot be located, or because of such other circumstances as the
Secretary of the Treasury may prescribe,
(iii) the Participant elects a joint and survivor annuity
naming his or her surviving spouse as beneficiary which provides a
survivor annuity greater than 50 percent of the annuity payable during
the joint lives of the Participant and his or her spouse.
Any consent by a spouse under (i) above, or a determination by the Committee
under (ii) above with respect to such spouse, shall be effective only with
respect to such spouse and shall be obtained within 90 days prior to the annuity
starting date. Any such consent shall be irrevocable. Any such consent that
authorizes the Participant to change the form of distribution of the Beneficiary
without further consent must acknowledge the spouse's right to limit consent to
specific form of distribution and Beneficiary and the spouse's voluntary
election to relinquish such right. For purposes of this Section 8.7, the term
"annuity starting date" means the first day of the first period for which an
annuity is payable under the annuity contract described above.
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ARTICLE 9. ADMINISTRATION.
9.1. COMMITTEE. The Plan will be administered by a committee of
individuals selected by the Board of Directors to serve at its pleasure. The
Committee will be a "named fiduciary" for purposes of Section 402(a)(1) of ERISA
with authority to control and manage the operation and administration of the
Plan, and will be responsible for complying with all of the reporting and
disclosure requirements of Part 1 of Subtitle B of Title I of ERISA. The
Committee will not, however, have any authority over the investment of assets of
the Trust in its capacity as Committee.
9.2. POWERS OF COMMITTEE. The Committee will have full discretionary
power to administer the Plan in all of its details, subject, however, to the
requirements of ERISA. For this purpose the Committee's discretionary power will
include, but will not be limited to, the following authority:
(a) to make and enforce such rules and regulations as it deems
necessary or proper for the efficient administration of the Plan or
required to comply with applicable law;
(b) to interpret the Plan;
(c) to decide all questions concerning the Plan and the
eligibility of any person to participate in the Plan;
(d) to compute the amounts to be distributed under the Plan,
and to determine the person or persons to whom such amounts will be
distributed;
(e) to authorize the payment of distributions;
(f) to keep such records and submit such filings, elections,
applications, returns or other documents or forms as may be required
under the Code and applicable regulations, or under other federal,
state or local law and regulations;
(g) to allocate and delegate its ministerial duties and
responsibilities and to appoint such agents, counsel, accountants and
consultants as may be required or desired to assist in administering
the Plan; and
(h) by written instrument, to allocate and delegate its
fiduciary responsibilities in accordance with ERISA section 405.
9.3. EFFECT OF INTERPRETATION OR DETERMINATION. Any interpretation of
the Plan or other determination with respect to the Plan by the Committee shall
be final and conclusive on all persons in the absence of clear and convincing
evidence that the
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Committee acted arbitrarily and capriciously.
9.4. RELIANCE ON TABLES, ETC. In administering the Plan, the Committee
will be entitled, to the extent permitted by law, to rely conclusively on all
tables, valuations, certificates, opinions and reports which are furnished by
any accountant, trustee, counsel or other expert who is employed or engaged by
the Committee or by the Plan Sponsor on the Committee's behalf.
9.5. CLAIMS AND REVIEW PROCEDURES. The Committee shall adopt procedures
for the filing and review of claims in accordance with ERISA section 503.
9.6. INDEMNIFICATION OF COMMITTEE AND ASSISTANTS. Each Participating
Employer agrees, jointly and severally, to indemnify and defend to the fullest
extent of the law any Employee or former Employee (a) who serves or has served
as Committee, (b) who has been appointed to assist the Committee in
administering the Plan, or (c) to whom the Committee has delegated any of its
duties or responsibilities against any liabilities, damages, costs and expenses
(including attorneys' fees and amounts paid in settlement of any claims approved
by the Plan Sponsor) occasioned by any act or omission to act in connection with
the Plan, if such act or omission to act is in good faith and without gross
negligence.
9.7. ANNUAL REPORT. The Committee shall submit annually to the Plan
Sponsor a report showing in reasonable summary form, the financial position of
the Trust and giving a brief account of the operations of the Plan for the past
year, and such further information as the Plan Sponsor may reasonably require.
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ARTICLE 10. AMENDMENT AND TERMINATION.
10.1. AMENDMENT. The Plan Sponsor reserves the power at any time or
times to amend the provisions of the Plan and Trust to any extent and in any
manner that it may deem advisable. Upon delivery to the Trustee and each
Participating Employer of an amendment adopted by the Board of Directors, the
Plan shall be amended at the time and in the manner set forth therein, and all
Participants and all persons claiming an interest hereunder shall be bound
thereby. Notwithstanding the foregoing, no action by the Board of Directors
shall be required to amend the Plan to revise Schedule A, regarding the addition
or removal of Participating Employers, or Schedule B, regarding a merger of, or
transfer of accounts from, another plan into the Plan. Moreover, the Plan
Sponsor may amend or modify any plan provisions which relate to ERISA section
404(c) compliance, including changes which would eliminate the Plan's status as
an ERISA section 404(c) plan. However, the Plan Sponsor will not have the power:
(a) to amend the Plan or Trust in such manner as would cause
or permit any part of the assets of the Trust to be diverted to
purposes other than for the exclusive benefit of each Participant and
his or her Beneficiary (except as permitted by the Plan with respect to
Qualified Domestic Relations Orders or the return of contributions upon
nondeductibility, mistake of fact, or the failure to qualify
initially), unless such amendment is required or permitted by law,
governmental regulation or ruling; or
(b) to amend the Plan or Trust retroactively in such a
manner as would reduce the accrued benefit of any Participant, except
as otherwise permitted or required by law. For purposes of this
paragraph, an amendment which has the effect of decreasing a
Participant's Account balance or eliminating an optional form of
benefit, with respect to benefits attributable to service before the
amendment, shall be treated as reducing an accrued benefit.
10.2. TERMINATION. The Plan Sponsor has established the Plan and
authorized the establishment of the Trust with the bona fide intention and
expectation that contributions will be continued indefinitely, but may
discontinue contributions under the Plan or terminate the Plan at any time by
written notice delivered to the Trustee without liability whatsoever for any
such discontinuance or termination. In addition, the Participating Employers
will have no obligation or liability whatsoever to maintain the Plan for any
given length of time and may cease to be Participating Employers in a manner
acceptable to the Plan Sponsor.
10.3. DISTRIBUTIONS UPON TERMINATION OF THE PLAN. Upon termination of
the Plan by the Plan Sponsor, the Trustee will distribute to each Participant
(or other person entitled to distribution) the value of the Participant's
Accounts in a single sum as soon as practicable following such termination. The
amount of such distribution shall be
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34
determined as of the Valuation Date immediately preceding the date distribution
is to be made.
10.4. MERGER OR CONSOLIDATION OF PLAN; TRANSFER OF PLAN ASSETS. In case
of any merger or consolidation of the Plan with, or transfer of assets and
liabilities of the Plan to, any other plan, provision must be made so that each
Participant would, if the Plan then terminated, receive a benefit immediately
after the merger, consolidation or transfer which is equal to or greater than
the benefit he or she would have been entitled to receive immediately before the
merger, consolidation or transfer if the Plan had then terminated.
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35
ARTICLE 11. LIMITS ON CONTRIBUTIONS.
11.1. CODE SECTION 404 LIMITS. The sum of the contributions made by
each Participating Employer under the Plan for any Plan Year shall not exceed
the maximum amount deductible under the applicable provisions of the Code. All
contributions under the Plan made by a Participating Employer are expressly
conditioned on their deductibility under Code section 404 for the taxable year
when paid (or treated as paid under Code section 404(a)(6)).
11.2. CODE SECTION 415 LIMITS.
(a) Incorporation by reference. Code section 415 is hereby
incorporated by reference into the Plan.
(b) Annual addition. The Committee shall determine an "annual
addition" for each Participant for each limitation year, which shall
consist of the following amounts:
(i) Elective Contributions allocated to the
Participant's Accounts for the year;
(ii) Qualified Nonelective Contributions allocated to
the Participant's Accounts for the year;
(iii) amounts allocated to an individual medical
amount (as defined in Code section 415(l)(2)) which
is part of a pension or annuity plan maintained by an
Affiliated Employer; and
(iv) amounts derived from contributions paid or
accrued which are attributable to post-retirement
medical benefits allocated to the separate account of
a key employee (as defined in Code section
419A(d)(3)) under a welfare benefit fund (as defined
in Code section 419(e)) maintained by an Affiliated
Employer.
(c) General limitation on annual additions. The annual
addition of a Participant under (b) above for any limitation year, when
added to the annual additions to his or her accounts for such year
under all other defined contribution plans maintained by the Affiliated
Employers, shall not exceed the lesser of (i) $30,000 (increased from
time to time in accordance with Code section 415(d)), or (ii) 25% of
the Participant's Compensation for such limitation year.
(d) Combined limitations. In the case of a Participant who
also participates in a defined benefit plan maintained by an Affiliated
Employer, the
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36
annual addition for a limitation year will, if necessary, be further
limited so that the sum of the Participant's defined contribution
fraction and his or her defined benefit plan fraction for such
limitation year does not exceed 1.0.
(i) A Participant's "defined contribution fraction"
shall be a fraction, the numerator of which is the sum of the
annual additions to the Participant's accounts under all the
defined contribution plans (whether or not terminated)
maintained by an Affiliated Employer for the current and all
prior limitation years (including the annual additions
attributable to the Participant's nondeductible employee
contributions to all defined benefit plans, whether or not
terminated, maintained by an Affiliated Employer, and the
annual additions attributable to all welfare benefit funds, as
defined in section 419(e) of the Code, and individual medical
accounts, as defined in section 415(l)(2) of the Code,
maintained by an Affiliated Employer), and the denominator of
which is the sum of the maximum aggregate amounts for the
current and all prior limitation years of service with the
Affiliated Employers (regardless of whether a defined
contribution plan was maintained by an Affiliated Employer).
The maximum aggregate amount in any limitation year is the
lesser of 125 percent of the dollar limitation determined
under Code sections 415(b) and (d) in effect under Code
section 415(c)(1)(A) or 35 percent of the Participant's
Compensation for such year.
(ii) A Participant's "defined benefit fraction" shall
be a fraction, the numerator of which is the sum of the
Participant's projected annual benefits under all the defined
benefit plans (whether or not terminated) maintained by an
Affiliated Employer, and the denominator of which is the
lesser of 125 percent of the dollar limitation determined for
the limitation year under Code sections 415(b) and (d) or 140
percent of the highest average compensation, including any
adjustments under Code section 415(b).
(e) Limitation Year. For purposes of determining the Code
section 415 limits under the Plan, the "limitation year" shall be the
Plan Year.
(f) Order of reductions. To the extent necessary to satisfy
the limitations of Code section 415 for any Participant, the annual
addition which would otherwise be made on behalf of the Participant
under the Plan shall be reduced before the Participant's benefit is
reduced under any and all defined benefit plans, and before the
Participant's annual addition is reduced under any other defined
contribution plan.
(g) Return of excess contributions. If, as a result of a
reasonable error
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37
in estimating a Participant's Compensation for a Plan Year or
limitation year, a reasonable error in determining the amount of
elective deferrals (within the meaning of Code section 402(g)(3)) that
may be made with respect to any individual under the limits of Code
section 415, or under such other facts and circumstances as may be
permitted under regulation or by the Internal Revenue Service, the
annual addition under the Plan for a Participant would cause the Code
section 415 limitations for a limitation year to be exceeded, the
excess amounts shall be held in an unallocated suspense account and
allocated in subsequent years in accordance with the rules provided in
Internal Revenue Service Reg. Section 1.415-6(b)(6)(i).
11.3. CODE SECTION 402(g) LIMITS.
(a) In general. The maximum amount of Elective Contributions
made on behalf of any Participant for any calendar year, when added to
the amount of elective deferrals under all other plans, contracts and
arrangements of an Affiliated Employer with respect to the Participant
for the calendar year), shall in no event exceed the maximum applicable
limit in effect for the calendar year under Regulation section
1.402(g)-1(d). For purposes of the Plan, an individual's elective
deferrals for a taxable year are the sum of the following:
(i) Any elective contribution under a qualified
cash or deferred arrangement (as defined in Code section
401(k)) to the extent not includible in the individual's
gross income for the taxable year on account of Code section
402(a)(8) (before applying the limits of Code section 402(g)
or this section);
(ii) Any employer contribution to a simplified
employee pension (as defined in code section 408(k) to the
extent not includible in the individual's gross income for
the taxable year on account of Code section 402(h)(1)(B)
(before applying the limits of Code section 402(g)); and
(iii) Any employer contribution to a custodial
account or annuity contract under section 403(b) under a
salary reduction agreement (within the meaning of Code
section 3121(a)(5)(D)), to the extent not includible in the
individual's gross income for the taxable year on account of
Code section 403(b) before applying the limits of Code
section 402(g).
A Participant will be considered to have made "excess deferrals" for a
taxable year to the extent that the Participant's elective deferrals
for the taxable year exceed the applicable limit described above for
the year.
(b) Distribution of excess deferrals. In the event that an
amount is included in a Participant's gross income for a taxable year
as a result of an excess
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38
deferral under Code section 402(g), and the Participant notifies the
Committee on or before the March 1 following the taxable year that all
or a specified part of an Elective Contribution made for his or her
benefit represents an excess deferral, the Committee shall make every
reasonable effort to cause such excess deferral, adjusted for allocable
income, to be distributed to the Participant no later than the April 15
following the calendar year in which such excess deferral was made. The
income allocable to excess deferrals is equal to the allocable gain or
loss for the taxable year of the individual, but not the allocable gain
or loss for the period between the end of the taxable year and the date
of distribution (the "gap period"). Income allocable to excess
deferrals for the taxable year shall be determined by multiplying the
gain or loss attributable to the Participant's Elective Contribution
Account for the taxable year by a fraction, the numerator of which is
the Participant's excess deferrals for the taxable year, and the
denominator of which is the sum of the Participant's Elective
Contribution Account balance as of the beginning of the taxable year
plus the Participant's Elective Contributions for the taxable year. No
distribution of an excess deferral shall be made during the taxable
year of a Participant in which the excess deferral was made unless the
correcting distribution is made after the date on which the Plan
received the excess deferral and both the Participant and the Plan
designate the distribution as a distribution of an excess deferral. The
amount of any excess deferrals that may be distributed to a Participant
for a taxable year shall be reduced by the amount of Elective
Contributions that were excess contributions and were previously
distributed to the Participant for the Plan Year beginning with or
within such taxable year.
(c) Treatment of excess deferrals. For other purposes of the
Code, including Code sections 401(a)(4), 401(k)(3), 404, 409, 411, 412,
and 416, excess deferrals must be treated as employer contributions
even if they are distributed in accordance with paragraph (b) above.
However, excess deferrals of a non-Highly Compensated Employee are not
to be taken into account for purposes of Code section 401(k)(3) (the
actual deferral percentage test) to the extent the excess deferrals are
prohibited under Code section 401(a)(30). Excess deferrals are also to
be treated as employer contributions for purposes of Code section 415
unless distributed under paragraph (b) above.
11.4. CODE SECTION 401(k)(3) LIMITS.
(a) In general. Elective Contributions made under the Plan
are subject to the limits of Code section 401(k)(3), as more fully
described below. The Plan provisions relating to the 401(k)(3) limits
are to be interpreted and applied in accordance with Code sections
401(k)(3) and 401(a)(4), which are hereby incorporated by reference,
and in such manner as to satisfy such other requirements relating to
Code section 401(k) as may be prescribed by the
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39
Secretary of the Treasury from time to time.
(b) Actual deferral ratios. For each Plan Year, the
Committee will determine the "actual deferral ratio" for each
Participant who is eligible for Elective Contributions. The actual
deferral ratio shall be the ratio, calculated to the nearest
one-hundredth of one percent, of the Elective Contributions (plus any
Qualified Nonelective Contributions treated as Elective Contributions)
made on behalf of the Participant for the Plan Year to the
Participant's Compensation for the Plan Year. For purposes of
determining a Participant's actual deferral ratio,
(i) Elective Contributions will be taken into
account only if each of the following requirements are
satisfied:
(A) the Elective Contribution is allocated
to the Participant's Elective Contribution Account
as of a date within the Plan Year is not contingent
upon participation in the Plan or performance of
services on any date subsequent to that date, and
is actually paid to the Trust no later than the end
of the 12-month period immediately following the
Plan Year to which the contribution relates; and
(B) the Elective Contribution relates to
Compensation that either would have been received
by the Participant in the Plan Year but for the
Participant's election to defer under the Plan, or
is attributable to services performed in the Plan
Year and, but for the Participant's election to
defer, would have been received by the Participant
within 2 1/2 months after the close of the Plan
Year.
To the extent Elective Contributions which meet the
requirements of (A) and (B) above constitute excess
deferrals, they will be taken into account for each Highly
Compensated Employee, but will not be taken into account for
any non-Highly Compensated Employee;
(ii) in the case of a Participant who is a Highly
Compensated Employee for the Plan Year and is eligible to
have elective deferrals (and qualified nonelective
contributions, to the extent treated as elective deferrals)
allocated to his or her accounts under two or more cash or
deferred arrangements described in Code section 401(k)
maintained by an Affiliated Employer, the Participant's
actual deferral ratio shall be determined as if such
elective deferrals (as well as qualified nonelective or
qualified ) are made under a single arrangement, and if two
or more of the cash or deferred arrangements have different
Plan Years, all Plan Years ending with or within the same
calendar year shall be treated as a
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40
single Plan Year;
(iii) the applicable period for determining
Compensation for each Participant for a Plan Year shall be
the 12-month period ending on the last day of such Plan
Year; provided, that to the extent permitted under
Regulations, the Committee may choose, on a uniform basis,
to treat as the applicable period only that portion of the
Plan Year during which the individual was eligible to make
Elective Contributions;
(iv) Qualified Nonelective Contributions made on
behalf of Participants who are eligible to receive Elective
Contributions shall be treated as Elective Contributions to
the extent permitted by Regulation section 1.401(k)-1(b)(5);
(v) in the event that the Plan satisfies the
requirements of Code sections 401(k), 410(a)(4), or 410(b)
only if aggregated with one or more other plans with the
same plan year, or if one or more other plans with the same
Plan Year satisfy such Code sections only if aggregated with
this Plan, then this section shall be applied by determining
the actual deferral ratios as if all such plans were a
single plan;
(vi) An employee who would be a Participant but for
the failure to make Elective Contributions shall be treated
as a Participant on whose behalf no Elective Contributions
are made; and
(vii) Elective Contributions which are made on
behalf of non-Highly Compensated Employees which could be
used to satisfy the Code section 401(k)(3) limits but are
not necessary to be taken into account in order to satisfy
such limits, may instead be taken into account for purposes
of the Code section 401(m) limits to the extent permitted by
Regulation sections 1.401(m)-1(b)(5).
(c) Actual deferral percentages. Each Plan Year, the actual
deferral ratios for all Highly Compensated Employees who are eligible
for Elective Contributions for a Plan Year shall be averaged to
determine the actual deferral percentage for the highly compensated
group for the Plan Year, and the actual deferral ratios for all
Employees who are not Highly Compensated Employees but are eligible for
Elective Contributions for the Plan Year shall be averaged to determine
the actual deferral percentage for the nonhighly compensated group for
the Plan Year.
(d) Actual deferral percentage tests. For a Plan Year, at
least one of the following tests must be satisfied:
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41
(i) the highly compensated group's actual deferral
percentage for the Plan Year does not exceed 125% of the
prior year actual deferral percentage for the prior year
nonhighly compensated group; or
(ii) the excess of the actual deferral percentage
for the highly compensated group for the Plan Year over the
prior year actual deferral percentage for the prior year
nonhighly compensated group does not exceed two percentage
points, and the actual deferral percentage for the highly
compensated group for the Plan Year does not exceed twice
the prior year actual deferral percentage for the prior year
nonhighly compensated group.
For purposes of satisfying the above tests for a Plan Year, the "prior
year actual deferral percentage for the prior year nonhighly
compensated group" refers to the actual deferral percentage determined
for the immediately preceding Plan Year for the nonhighly compensated
group existing during such preceding Plan Year. Notwithstanding the
foregoing, in satisfying the above tests, the Committee may elect, in
accordance with Code section 401(k)(3) and applicable regulations, to
use the actual deferral percentage for the nonhighly compensated group
determined for the current Plan Year.
(e) Adjustments by Committee. If, prior to the time all
Elective Contributions for a Plan Year have been contributed to the
Trust, the Committee determines that Elective Contributions are being
made at a rate which will cause the Code section 401(k)(3) limits to be
exceeded for the Plan Year, the Committee may, in its sole discretion,
limit the amount of Elective Contributions to be made with respect to
one or more Highly Compensated Employees for the balance of the Plan
Year by suspending or reducing Elective Contribution elections to the
extent the Committee deems appropriate. Any Elective Contributions
which would otherwise be made to the Trust shall instead be paid to the
affected Participant in cash.
(f) Excess contributions. If the Code section 401(k)(3)
limits have not been met for a Plan Year after all contributions for
the Plan Year have been made, the Committee will determine the amount
of excess contributions with respect to Participants who are Highly
Compensated Employees in the manner prescribed by Code section
401(k)(8) and by applicable regulations.
(g) Distribution of excess contributions. A Participant's
excess contributions, adjusted for income, will be designated by the
Participating Employer as a distribution of excess contributions and
distributed to the Participant. The income allocable to excess
contributions is equal to the allocable
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42
gain or loss for the Plan Year, but not the allocable gain or loss for
the period between the end of the Plan Year and the date of
distribution (the "gap period"). Income allocable to excess
contributions for the Plan Year shall be determined by multiplying the
gain or loss attributable to the Participant's Elective Contribution
Account and QNEC Account balances by a fraction, the numerator of which
is the excess contributions for the Participant for the Plan Year, and
the denominator of which is the sum of the Participant's Elective
Contribution Account and QNEC Account balances as of the beginning of
the Plan Year plus the Participant's Elective Contributions and
Qualified Nonelective Contributions for the Plan Year. Distribution of
excess contributions will be made after the close of the Plan Year to
which the contributions relate, but within 12 months after the close of
such Plan Year. Excess contributions shall be treated as annual
additions under the Plan, even if distributed under this paragraph.
(h) Special rules. For purposes of distributing excess
contributions, the amount distributed with respect to a Highly
Compensated Employee for a Plan Year shall be reduced by the amount of
excess deferrals previously distributed to the Highly Compensated
Employee for his or her taxable year ending with or within such Plan
Year.
(i) Recordkeeping requirement. The Committee, on behalf of
the Participating Employers, shall maintain such records as are
necessary to demonstrate compliance with the Code section 401(k)(3)
limits, including the extent to which Qualified Nonelective
Contributions are taken into account in determining the actual deferral
ratios.
(j) Excise tax where failure to correct. If the excess
contributions are not corrected within 2 1/2 months after the close of
the Plan Year to which they relate, the Participating Employers will be
liable for a 10 percent excise tax on the amount of excess
contributions attributable to them, to the extent provided by Code
section 4979. Qualified Nonelective Contributions properly taken into
account under this Section for the Plan Year may enable the Plan to
avoid having excess contributions, even if the contributions are made
after the close of the 2 1/2 month period.
11.5. CODE SECTION 401(m) LIMITS.
(a) In General. Matching Contributions made under the Plan
are subject to the limits of Code section 401(m), as more fully
described below. The Plan provisions relating to the 401(m) limits are
to be interpreted and applied in accordance with Code sections 401(m)
and 401(a)(4), which are hereby incorporated by reference, and in such
manner as to satisfy such other requirements relating to Code section
401(m) as may be prescribed by the
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43
Secretary of the Treasury from time to time.
(b) Actual contribution ratios. For each Plan Year, the
Administrator will determine the "actual contribution ratio" for each
Participant who is eligible for Matching Contributions. The actual
contribution ratio shall be the ratio, calculated to the nearest
one-hundredth of one percent, of the sum of the Matching Contributions
and Qualified Nonelective Contributions which are not treated as
Elective Contributions made on behalf of the Participant for the Plan
Year, to the Participant's Compensation for the Plan Year. For purposes
of determining a Participant's actual contribution ratio,
(i) A Matching Contribution will be taken into
account only if the Contribution is allocated to a
Participant's Account as of a date within the Plan Year, is
actually paid to the Trust no later than 12 months after the
close of the Plan Year, and is made on behalf of a
Participant on account of the Participant's Elective
Contributions for the Plan Year;
(ii) in the case of a Participant who is a Highly
Compensated Employee for the Plan Year and is eligible to
have Matching Contributions or employee contributions
(including amount treated as Matching Contributions)
allocated to his or her accounts under two or more plans
maintained by an Affiliated Employer which may be aggregated
for purposes of Code sections 410(b) and 401(a)(4), the
Participant's actual contribution ratio shall be determined
as if such contributions are made under a single plan, and
if two or more of the plans have different Plan Years, all
Plan Years ending with or within the same calendar year
shall be treated as a single Plan Year;
(iii) the applicable period for determining
Compensation for each Participant for a Plan Year shall be
the 12-month period ending on the last day of such Plan
Year; provided that to the extent permitted under
Regulations, the Administrator may choose, on a uniform
basis, to treat as the applicable period only that portion
of the Plan Year during which the individual was eligible
for Matching Contributions;
(iv) Elective Contributions not applied to satisfy
the Code section 401(k)(3) limits and Qualified Nonelective
Contributions not treated as Elective Contributions may be
treated as Matching Contributions to the extent permitted by
Regulation section 1.401(m)-1(b)(5);
(v) in the event that the Plan satisfies the
requirements of Code sections 401(k), 410(a)(4), or 410(b)
only if aggregated with one or more
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44
other plans with the same Plan Year, or if one or more other
plans with the same Plan Year satisfy such Code sections only
if aggregated with this Plan, then this section shall be
applied by determining the actual deferral ratios as if all
such plans were a single plan; and
(vi) any forfeitures under the Plan which are applied
against Matching Contributions shall be treated as Matching
Contributions.
(c) Actual contribution percentages. Each Plan Year, the
actual contribution ratios for all Highly Compensated Employees who are
eligible for Matching Contributions for a Plan Year shall be averaged
to determine the actual contribution percentage for the highly
compensated group for the Plan Year, and the actual contribution ratios
for all Employees who are not Highly Compensated Employees but are
eligible for Matching Contributions for the Plan Year shall be averaged
to determine the actual contribution percentage for the nonhighly
compensated group for the Plan Year.
(d) Actual contribution percentage tests. For a Plan Year, at
least one of the following tests must be satisfied:
(i) the highly compensated group's actual
contribution percentage for the Plan Year does not exceed 125%
of the prior year actual contribution percentage for the prior
year nonhighly compensated group; or
(ii) the excess of the actual contribution percentage
for the highly compensated group for the Plan Year over the
prior year actual contribution percentage for the prior year
nonhighly compensated group does not exceed two percentage
points, and the actual contribution percentage for the highly
compensated group for the Plan Year does not exceed twice the
prior year actual contribution percentage for the prior year
nonhighly compensated group.
For purposes of satisfying the above tests for a Plan Year, the "prior
year actual contribution percentage for the prior year nonhighly
compensated group" refers to the actual contribution percentage
determined for the immediately preceding Plan Year for the nonhighly
compensated group existing during such preceding Plan Year.
Notwithstanding the foregoing, in satisfying the above tests, the
Committee may elect, in accordance with Code section 401(m)(2) and
applicable regulations, to use the actual contribution percentage for
the nonhighly compensated group calculated for the current Plan Year.
(e) Multiple use test. In the event that (i) the actual
deferral percentage and actual contribution percentage for the highly
compensated group exceed
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45
125% of the respective actual deferral and actual contribution
percentages for the nonhighly compensated group, and (ii) the sum of
the actual deferral percentage and the actual contribution percentage
for the highly compensated group exceeds the "aggregate limit" within
the meaning of Regulation section 1.401(m)-2(b)(3), the Administrator
shall reduce the actual contribution ratios of Highly Compensated
Employees who had both an actual deferral ratio and an actual
contribution ratio for the Plan Year to the extent required by such
section and in the same manner as described in paragraph (f) below.
(f) Adjustments by Administrator. If, prior to the time all
Matching Contributions for a Plan Year have been contributed to the
Trust, the Administrator determines that such contributions are being
made at a rate which will cause the Code section 401(m) limits to be
exceeded for the Plan Year, the Administrator may, in its sole
discretion, limit the amount of such contributions to be made with
respect to one or more Highly Compensated Employees for the balance of
the Plan Year by limiting the amount of such contributions to the
extent the Administrator deems appropriate.
(g) Excess aggregate contributions. If the Code section
401(m) limits have not been satisfied for a Plan Year after all
contributions for the Plan Year have been made, the excess of the
aggregate amount of the Matching Contributions (and any Qualified
Nonelective Contribution or elective deferral taken into account in
computing the actual contribution percentages) actually made on behalf
of Highly Compensated Employees for the Plan Year over the maximum
amount of such contributions permitted under Code section 401(m)(2)(A)
shall be considered to be "excess aggregate contributions". The
Committee will determine the amount of excess aggregate contributions
with respect to Participants who are Highly Compensated Employees in
the manner prescribed by Code section 401(m)(6)(C) and by applicable
regulations
(h) Distribution of excess aggregate contributions. A
Participant's excess aggregate contributions, adjusted for income, will
be designated by the Participating Employer as a distribution of excess
aggregate contributions, and distributed to the Participant. The income
allocable to excess aggregate contributions is equal to the allocable
gain or loss for the taxable year of the individual, but not the
allocable gain or loss for the period between the end of the taxable
year and the date of distribution (the "gap period"). Income allocable
to excess aggregate contributions for the taxable year shall be
determined by multiplying the gain or loss attributable to the
Participant's Matching Contribution Account balances by a fraction, the
numerator of which is the excess aggregate contributions for the
Participant for the Plan Year, and the denominator of which is the sum
of the Participant's Matching Contribution Account balances as of the
beginning of the Plan Year plus the Participant's Matching
Contributions
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46
for the Plan Year. Distribution of excess aggregate contributions will
be made after the close of the Plan Year to which the contributions
relate, but within 12 months after the close of such Plan Year. Excess
aggregate contributions shall be treated as employer contributions for
purposes of Code sections 401(a)(4), 404, and 415 even if distributed
from the Plan.
(i) Recordkeeping requirement. The Administrator, on behalf
of the Participating Employers, shall maintain such records as are
necessary to demonstrate compliance with the Code section 401(m)
limits, including the extent to which Elective Contributions and
Qualified Nonelective Contributions are taken into account in
determining the actual contribution ratios.
(j) Excise tax where failure to correct. If the excess
aggregate contributions are not corrected within 2 1/2 months after the
close of the Plan Year to which they relate, the Participating
Employers will be liable for a 10 percent excise tax on the amount of
excess aggregate contributions attributable to them, to the extent
provided by Code section 4979. Qualified Nonelective Contributions
properly taken into account under this section for the Plan Year may
enable the Plan to avoid having excess aggregate contributions, even if
the contributions are made after the close of the 2 1/2 month period.
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47
ARTICLE 12. SPECIAL TOP-HEAVY PROVISIONS.
12.1. PROVISIONS TO APPLY. The provisions of this Article shall apply
for any top-heavy Plan Year notwithstanding anything to the contrary in the
Plan.
12.2. MINIMUM CONTRIBUTION. For any Plan Year which is a top-heavy plan
year, the Participating Employers shall contribute to the Trust a minimum
contribution on behalf of each Participant who is not a key employee for such
year and who has not separated from service from the Affiliated Employers by the
end of the Plan Year, regardless of whether or not the Participant has elected
to make Elective Contributions for the Year. The minimum contribution shall, in
general, equal 3% of each such Participant's Compensation, but shall be subject
to the following special rules:
(a) If the largest contribution on behalf of a key employee
for such year, taking into account only Elective Contributions,
Matching Contributions (if any), Discretionary Contributions and
Qualified Nonelective Contributions, is equal to less than 3% of the
key employee's Compensation, such lesser percentage shall be the
minimum contribution percentage for Participants who are not key
employees. This special rule shall not apply, however, if the Plan is
required to be included in an aggregation group and enables a defined
benefit plan to meet the requirements of Code section 401(a)(4) or 410.
(b) No minimum contribution will be required with respect to
a Participant who is also covered by another top-heavy defined
contribution plan of an Affiliated Employer which meets the vesting
requirements of Code section 416(b) and under which the Participant
receives the top-heavy minimum contribution.
(c) If a Participant is also covered by a top-heavy defined
benefit plan of an Affiliated Employer, "5%" shall be substituted for
"3%" above in determining the minimum contribution.
(d) The minimum contribution with respect to any Participant
who is not a key employee for the particular year will be offset by any
Discretionary Contributions and any Qualified Nonelective
Contributions, but not any other type of contribution otherwise made
for the Participant's benefit for such year.
(e) If additional minimum contributions are required under
this Section, such contributions shall be credited to the Participant's
Discretionary Contribution Account.
(f) A minimum contribution required under this Section shall
be made even though, under other Plan provisions, the Participant would
not otherwise be
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48
entitled to receive an allocation for the year because of (i) the
Participant's failure to complete 1,000 hours of service (or any
equivalent provided in the Plan), or (ii) the Participant's failure to
make mandatory contributions or Elective Contributions to the Plan, or
(iii) Compensation less than a stated amount.
12.3. ADJUSTMENT TO LIMITATION ON BENEFITS. For purposes of the Code
section 415 limits, the definitions of "defined contribution plan fraction" and
"defined benefit plan fraction" contained therein shall be modified, for any
Plan Year which is a top-heavy Plan Year, by substituting "1.0" for "1.25" in
Code sections 415(e)(2)(B) and 415(e)(3)(B).
12.4. DEFINITIONS. For purposes of these top-heavy provisions, the
following terms have the following meanings:
(a) "key employee" means a key employee described in Code
section 416(i)(l), and "non-key employee" means any employee who is not
a key employee (including employees who are former key employees);
(b) "top-heavy plan year" means a Plan Year if any of the
following conditions exist:
(i) the top-heavy ratio for the Plan exceeds 60
percent and the Plan is not part of any required aggregation
group or permissive aggregation group of plans;
(ii) this Plan is a part of a required aggregation
group of plans but not part of a permissive aggregation group
and the top-heavy ratio for the group of plans exceeds 60
percent; or
(iii) the Plan is part of a required aggregation
group and part of a permissive aggregation group of plans and
the top-heavy ratio for the permissive aggregation group
exceeds 60 percent.
(c) "top-heavy ratio":
(i) If the employer maintains one or more defined
contribution plans (including any Simplified Employee Pension
Plan) and the employer has not maintained any defined benefit
plan which during the 5-year period ending on the
determination date(s) has or has had accrued benefits, the
top-heavy ratio for the Plan alone or for the required or
permissive aggregation group as appropriate is a fraction, the
numerator of which is the sum of the account balances of all
key employees on the determination date(s) (including any part
of any account balance
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49
distributed in the 5-year period ending on the determination
date(s)), and the denominator of which is the sum of all
account balances (including any part of an account balance
distributed in the 5-year period ending on the determination
date(s)), both computed in accordance with Code section 416.
Both the numerator and the denominator of the top-heavy ratio
are increased to reflect any contribution not actually made as
of the determination date, but which is required to be taken
into account on that date under Code section 416.
(ii) If the employer maintains one or more defined
contribution plans (including any Simplified Employee Pension
Plan) and the employer maintains or has maintained one or more
defined benefit plans which during the 5-year period ending on
the determination date(s) has or has had any accrued benefits,
the top-heavy ratio for any required or permissive aggregation
group as appropriate is a fraction, the numerator of which is
the sum of the account balances under the aggregated defined
contribution plan or plans for all key employees, determined
in accordance with (i) above, and the present value of accrued
benefits under the aggregated defined benefit plan or plans
for all key employees as of the determination date(s), and the
denominator of which is the sum of the account balances under
the aggregated defined contribution plan or plans for all
participants, determined in accordance with (i) above, and the
present value of all accrued benefits under the defined
benefit plan or plans for all participants as of the
determination date(s), all determined in accordance with Code
section 416. The accrued benefits under a defined benefit plan
in both the numerator and denominator of the top-heavy ratio
are increased for any distribution of an accrued benefit made
in the 5-year period ending on the determination date.
(iii) For purposes of (i) and (ii) above, the value
of account balances and the present value of accrued benefits
will be determined as of the most recent valuation date that
falls within or ends with the 12-month period ending on the
determination date, except as provided in Code section 416 for
the first and second plan years of a defined benefit plan. The
account balances and accrued benefits of a participant (A) who
is not a key employee but who was a key employee in a prior
year, or (B) who has not been credited with at least one Hour
of Service with any employer maintaining the plan at any time
during the 5-year period ending on the determination date will
be disregarded. The calculation of the top-heavy ratio, and
the extent to which distributions, rollovers, and transfers
are taken into account will be made in accordance with Code
section 416. Deductible employee contributions will not be
taken into account for purposes of computing the top-heavy
ratio. When
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50
aggregating plans, the value of account balances and accrued
benefits will be calculated with reference to the
determination dates that fall within the same calendar year.
(iv) The accrued benefit of a Participant other than
a key employee shall be determined under (A) the method, if
any, that uniformly applies for accrual purposes under all
defined benefit plans maintained by the employer, or (B) if
there is no such method, as if such benefit accrued not more
rapidly than the slowest accrual rate permitted under the
fractional rule of Code section 411(b)(1)(C).
(d) The "permissive aggregation group" is the required
aggregation group of plans plus any other plan or plan of the employer
which, when considered as a group with the required aggregation group,
would continue to satisfy the requirements of Code sections 401(a)(4)
and 410.
(e) The "required aggregation group" is (i) each qualified
plan of the employer in which at least one key employee participates or
participated at any time during the determination period (regardless of
whether the plan has terminated), and (ii) any other qualified plan of
the employer which enables a plan described in (i) to meet the
requirements of Code sections 401(a)(4) and 410(b).
(f) For purposes of computing the top-heavy ratio, the
"valuation date" shall be the last day of the applicable plan year.
(g) For purposes of establishing present value to compute
the top-heavy ratio, any benefit shall be discounted only for mortality
and interest based on the interest and mortality rates specified in the
defined benefit plan(s), if applicable.
(h) The term "determination date" means, with respect to the
initial plan year of a plan, the last day of such plan year and, with
respect to any other plan year of a plan, the last day of the preceding
plan year of such plan. The term "applicable determination date" means,
with respect to the Plan, the determination date for the Plan Year of
reference and, with respect to any other plan, the determination date
for any plan year of such plan which falls within the same calendar
year as the applicable determination date of the Plan.
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51
ARTICLE 13. MISCELLANEOUS.
13.1. EXCLUSIVE BENEFIT RULE. No part of the corpus or income of the
Trust allocable to the Plan will be used for or diverted to purposes other than
for the exclusive benefit of each Participant and Beneficiary, except as
otherwise provided under the provisions of the Plan relating to Qualified
Domestic Relations Orders, the payment of reasonable expenses of administering
the Plan, the return of contributions upon nondeductibility or mistake of fact,
or the failure of the Plan to qualify initially.
13.2. LIMITATION OF RIGHTS. Neither the establishment of the Plan or
the Trust, nor any amendment thereof, nor the creation of any fund or account,
nor the payment of any benefits, will be construed as giving to any Participant
or other person any legal or equitable right against any Participating Employer
or Committee or Trustee, except as provided herein, and in no event will the
terms of employment or service of any Participant be modified or in any way be
affected hereby. It is a condition of the Plan, and each Participant expressly
agrees by his or her participation herein, that each Participant will look
solely to the assets held in the Trust for the payment of any benefit to which
he or she is entitled under the Plan.
13.3. NONALIENABILITY OF BENEFITS. The benefits provided hereunder will
not be subject to the voluntary or involuntary alienation, assignment,
garnishment, attachment, execution or levy of any kind, and any attempt to cause
such benefits to be so subjected will not be recognized, except to such extent
as may be required by law, except that if the Committee receives any Qualified
Domestic Relations Order that requires the payment of benefits hereunder or the
segregation of any Account, such benefits shall be paid, and such Account
segregated, in accordance with the applicable requirements of such Order. In
addition, the Account balance may be pledged as security for a loan from the
Plan in accordance with the Plan's loan procedures.
13.4. ADEQUACY OF DELIVERY. Any payment to be made under the Plan by
the Trustee may be made by the Trustee's check. Mailing to a person or persons
entitled to distributions hereunder at the addresses designated by the
Participating Employer or Committee shall be adequate delivery by the Trustee of
such distributions for all purposes. In the event the whereabout of a person
entitled to benefits under the Plan cannot be determined after diligent search
by the Committee, the Committee may place the benefits in a federally insured,
interest-bearing bank account opened in the name of such person. Such action
shall constitute a full distribution of such benefits under the terms of the
Plan and Trust.
13.5. RECLASSIFICATION OF EMPLOYMENT STATUS. Notwithstanding anything
herein to the contrary, an individual who is not characterized or treated as a
common law employee of a Participating Employer shall not be eligible to
participate in the Plan. However, in the event that such an individual is
reclassified or deemed to be reclassified
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52
as a common law employee of a Participating Employer, the individual shall be
eligible to participate in the Plan as of the actual date of such
reclassification (to the extent such individual otherwise qualifies as an
Eligible Employee hereunder). If the effective date of any such reclassification
is prior to the actual date of such reclassification, in no event shall the
reclassified individual be eligible to participate in the Plan retroactively to
the effective date of such reclassification.
13.6. VETERANS' REEMPLOYMENT AND BENEFITS RIGHTS. Notwithstanding any
provision of the Plan to the contrary, contributions, benefits and service
credit with respect to qualified military service will be provided in accordance
with Code section 414(u).
13.7. GOVERNING LAW. The Plan and Trust will be construed, administered
and enforced according to the laws of Massachusetts to the extent such laws are
not preempted by ERISA.
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53
ARTICLE 14. DEFINITIONS.
Wherever used in the Plan, the following terms have the following
meanings:
14.1. "ACCOUNTS" mean, for any Participant, the accounts established
under the Plan to which contributions made for the Participant's benefit, and
any allocable income, expense, gain and loss, are allocated.
14.2. "AFFILIATED EMPLOYER" means (a) the Plan Sponsor, (b) any
corporation that is a member of a controlled group of corporations (as defined
in Code section 414(b)) of which the Plan Sponsor is also a member, (c) any
trade or business, whether or not incorporated, that is under common control (as
defined in Code section 414(c)) with the Plan Sponsor, (d) any trade or business
that is a member of an affiliated service group (as defined in Code section
414(m)) of which the Plan Sponsor is also a member, or (e) to the extent
required by Regulations issued under Code section 414(o), any other
organization; provided, that the term "Affiliated Employer" shall not include
any corporation or unincorporated trade or business prior to the date on which
such corporation, trade or business satisfies the affiliation or control tests
of, (b), (c), (d) or (e) above. In identifying any "Affiliated Employers" for
purposes of the Code section 415 limits, the definitions in Code sections 414(b)
and (c) shall be modified as provided in Code section 415(h).
14.3. "BENEFICIARY" means any person entitled to receive benefits under
the Plan upon the death of a Participant.
14.4. "BOARD OF DIRECTORS" means the members of the Board of Directors
of Boston Scientific Corporation.
14.5. "CODE" means the Internal Revenue Code of 1986, as amended from
time to time. Reference to any section or subsection of the Code includes
reference to any comparable or succeeding provisions of any legislation which
amends, supplements or replaces such section or subsection, and also includes
reference to any Regulation issued pursuant to or with respect to such section
or subsection.
14.6. "COMMITTEE" means the entity or persons appointed by the Board of
Directors to administer the Plan pursuant to its provisions.
14.7. "COMPANY STOCK" means any stock of the Plan Sponsor or an
Affiliated Employer constituting a "qualifying employer security" within the
meaning of section 407(d)(5) of ERISA.
14.8. "COMPENSATION" means,
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54
(a) for purposes of determining the Code section 415 limits and the
amount of any minimum contribution under the special top-heavy provisions, the
Participant's wages as defined in Code section 3401(a) for purposes of income
tax withholding at the source but determined without regard to any rules that
limit the remuneration included in wages based on the nature or location of the
employment or the services performed;
(b) for purposes of determining the status of an individual as a Highly
Compensated Employee or a key employee, the same as described in (a) above, but
increased by any such amounts that would have been received by the individual
from the Employer but for an election under Code section 125, 401(k), 402(h), or
403(b);
(c) for purposes of the limits under Sections 11.4 and 11.5,
"compensation" as defined under Code section 414(s) and the Treasury regulations
thereunder; and
(d) for all other purposes under the Plan, the same as in (a) above,
reduced by all of the following items (even if includible in gross income):
reimbursements or other expense allowances, bonuses, deferred compensation, and
moving expenses, provided however that any elective contributions made by the
Participating Employer that are not includible in gross income by reason of Code
section 125 or 402(e)(3) shall in all cases be includible as "Compensation" for
purposes of this paragraph (d). Notwithstanding the foregoing, for purposes of
allocating Discretionary Contributions for a Plan Year, commissions paid to any
field sales commissioned Employee who is a Highly Compensated Employee for such
Plan Year shall be taken into consideration only to the extent of the less of
(i) fifty percent of the amount of the commissions so paid, and (ii) the amount,
not in excess of the commissions so paid, which when added to all other amounts
paid such Employee and qualifying as Compensation results in an aggregate amount
of Compensation of $85,000.
(e) Compensation shall include only that compensation which is actually
paid to the Participant during the applicable Plan Year. For all purposes under
the Plan, Compensation for any individual will be limited for any Plan Year to
$160,000 as adjusted by the Secretary of the Treasury under Code section
401(a)(17). If the period for determining Compensation used in calculating a
Participant's allocation for a determination period is shorter than 12 months,
the annual Compensation limit shall be an amount equal to the otherwise
applicable limit multiplied by a fraction, the numerator of which is the number
of months in the period, and the denominator of which is 12.
14.9. "DISABILITY" means a medically determinable physical or mental
impairment which makes a Participant unable to engage in any substantial gainful
activity and can be expected to result in death or to be of long-continued and
indefinite duration, as determined by the Plan Sponsor or an Affiliated Employer
after taking the advice of a qualified physician.
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55
14.10. "DISCRETIONARY CONTRIBUTION" means a contribution made for the
benefit of a Participant by a Participating Employer in the discretion of the
Board of Directors.
14.11. "DISCRETIONARY CONTRIBUTION ACCOUNT" means an Account to which
Discretionary Contributions are allocated.
14.12. "ELECTIVE CONTRIBUTION" means a contribution made to the Plan
for the benefit of a Participant pursuant to a compensation reduction
authorization.
14.13. "ELECTIVE CONTRIBUTION ACCOUNT" means an Account to which
Elective Contributions are allocated.
14.14. "ELIGIBLE EMPLOYEE" means, subject to Section 13.5, any Employee
who
(a) is employed by a Participating Employer, and who, in the
opinion of his or her Participating Employer, may reasonably be
expected to complete 1,000 or more Hours of Service with a
Participating Employer in a Plan Year; or
(b) any other Employee employed by a Participating Employer
who has completed 1,000 or more Hours of Service in a computation
period or has previously been an Eligible Employee described in (a)
above.
The initial computation period shall be the 12-consecutive month period
beginning on the date the Employee first performs an Hour of Service
(the "employment commencement date"). The succeeding computation
periods commence with the first Plan Year commencing after the
Employee's employment commencement date. In no event shall a "leased
employee" within the meaning of Code section 414(n) become an Eligible
Employee until he or she becomes actually employed by a Participating
Employer.
14.15. "EMPLOYEE" means, effective as of January 1, 1989, any
individual employed by an Affiliated Employer, including any leased employee and
any other individual required to be treated as an employee pursuant to Code
sections 414(n) and 414(o).
14.16. "EMPLOYEE CONTRIBUTION" means the voluntary after-tax
contribution made by a Participant under the Plan.
14.17. "ENTRY DATE" means
(a) the first pay period commencement date on which the
Employee is an Eligible Employee and has satisfied the conditions of
Section 2.1(b)(3) and (4); and
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56
(b) the first pay period commencement date in each
subsequent calendar quarter.
For this purpose, a "pay period commencement date" means the first day of a full
pay period of the Employee.
14.18. "ERISA" means the Employee Retirement Income Security Act of
1974, as from time to time amended, and any successor statute or statutes of
similar import.
14.19. "HIGHLY COMPENSATED EMPLOYEE" means each individual employed by
an Affiliated Employer who (i) during such Plan Year or preceding Plan Year, is
a "5% owner" within the meaning of Code section 414(q), or (ii) during the
preceding Plan Year received Compensation in excess of $80,000 (as adjusted
under such Code section) and was in the "top paid group" as defined therein for
such Plan Year.
14.20. "HOUR OF SERVICE" means, with respect to any Employee,
(a) Each hour for which the Employee is paid or entitled to
payment for the performance of duties for an Affiliated Employer, each
such hour to be credited to the Employee for the computation period in
which the duties were performed;
(b) Each hour for which the Employee is directly or
indirectly paid or entitled to payment by any Affiliated Employer
(including payments made or due from a trust fund or insurer to which
the Affiliated Employer contributes or pays premiums) on account of a
period of time during which no duties are performed (irrespective of
whether the employment relationship has terminated) due to vacation,
holiday, illness, incapacity, disability, layoff, jury duty, military
duty, or leave of absence, each such hour to be credited to the
Employee for the computation period in which such period of time
occurs, subject to the following rules;
(i) No more than 501 Hours of Service shall be
credited under this paragraph (b) to the Employee on account
of any single continuous period during which the Employee
performs no duties;
(ii) Hours of Service shall not be credited under
this paragraph (b) to an Employee for a payment which solely
reimburses the Employee for medically related expenses
incurred by the Employee, or which is made or due under a
plan maintained solely for the purpose of complying with
applicable worker's compensation, unemployment compensation
or disability insurance laws; and
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57
(iii) If the period during which the Employee
performs no duties falls within two or more computation
periods, and if the payment made on account of such period
is not calculated on the basis of units of time, the number
of Hours of Service credited with respect to such period
shall be allocated between not more than the first two such
periods based on the amount of the payment divided by the
Employee's most recent hourly rate of Compensation before
the period during which no duties were performed;
(c) Each hour not counted under paragraph (a) or (b) for
which back pay, irrespective of mitigation of damages, has been either
awarded or agreed to be paid by any Affiliated Employer, each such hour
to be credited to the Employee for the computation period to which the
award or agreement for back pay pertains, provided that crediting of
Hours of Service under this paragraph (c) with respect to periods
described in paragraph (b) above shall be subject to the limitations
and special rules set forth in clauses (i), (ii) and (iii) of paragraph
(b);
(d) Each noncompensated hour while an Employee during a
period of absence from any Affiliated Employer in the armed forces of
the United States if the Employee returns to work for any Affiliated
Employer at a time when he or she has reemployment rights under federal
law, and each noncompensated hour while an Employee on an unpaid leave
of absence granted by the Employer; and
(e) Solely for purposes of Section 5.5, each hour not
counted under paragraph (a) or (b) for which the Employee is absent
form work for maternity or paternity reasons, provided that no more
than 501 Hours of Service shall be credited under this paragraph (e) to
the Employee. For purposes of this paragraph, an absence from work for
maternity or paternity reasons means an absence (1) by reason of the
pregnancy of the individual, (2) by reason of the birth of a child of
the individual, (3) by reason of the placement of a child with the
individual in connection with the adoption of such child by such
individual, or (4) for purposes of caring for such child for a period
beginning immediately following such birth or placement.
Hours of Service to be credited to an Employee under (a), (b) and (c) above will
be calculated and credited pursuant to paragraphs (b) and (c) of Section
2530.200b-2 of the Department of Labor Regulations, which are incorporated
herein by reference. Hours of Service to be credited to an Employee during a
period described in (d) and (e) above will be determined by the Committee with
reference to the individual's most recent normal work schedule, or at the rate
of eight hours per day in the event the Committee is unable to establish such
schedule.
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14.21. "MATCHING CONTRIBUTION ACCOUNT" means an Account to which
Matching Contributions are allocated.
14.22. "NORMAL RETIREMENT AGE" means age 62.
14.23. "PARTICIPANT" means each Eligible Employee who participates in
the Plan pursuant to its provisions.
14.24. "PARTICIPATING EMPLOYER" means the Plan Sponsor and each other
Affiliated Employer listed on Schedule A.
14.25. "PLAN" means the Boston Scientific Corporation 401(k) Savings
Plan set forth herein, and all subsequent amendments thereto.
14.26. "PLAN SPONSOR" means Boston Scientific Corporation, a Delaware
Corporation.
14.27. "PLAN YEAR" means the calendar year.
14.28. "PREDECESSOR EMPLOYER" means any trade or business acquired by a
Participating Employer, or any entity from which a Participating Employer has
acquired substantially all of its assets.
14.29. "QUALIFIED DOMESTIC RELATIONS ORDER" means any judgment, decree
or order (including approval of a property settlement agreement) which
constitutes a "qualified domestic relations order" within the meaning of Code
section 414(p). A judgment, decree or order may still be considered to be a
Qualified Domestic Relations Order if it requires a distribution to an alternate
payee (or the segregation of accounts pending distribution to an alternate
payee) before the Participant is otherwise entitled to a distribution under the
Plan.
14.30. "QUALIFIED NONELECTIVE CONTRIBUTION" means a contribution made
in the discretion of the Plan Sponsor which is designated by the Plan Sponsor as
a Qualified Nonelective Contribution and which falls within the definition of a
"qualified nonelective contribution" under Regulation section 1.401(k)-1(g)(13).
14.31. "QNEC ACCOUNT" means an Account to which Qualified Nonelective
Contributions are allocated.
14.32. "REGULATION" means a regulation issued by the Department of
Treasury, including any final regulation, proposed regulation, temporary
regulation, as well as any modification of any such regulation contained in any
notice, revenue procedure, or similar pronouncement issued by the Internal
Revenue Service.
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14.33. "REQUIRED BEGINNING DATE" for a Participant shall be determined
as follows:
(i) For a Participant who is a five percent owner (as defined
in Code section 416), the Required Beginning Date is April 1 following
the calendar year in which the Participant attains age 70 1/2.
(ii) For a Participant who is not a five percent owner, the
Required Beginning Date is April 1 following the later of (A) the
calendar year in which the Participant attains age 70 1/2, and (B) the
calendar year in which the Participant retires.
14.34. "ROLLOVER CONTRIBUTION" means a contribution made by a
Participant which satisfies the requirements for rollover contributions as set
forth in the Plan.
14.35. "SECTION" means a section of the Plan.
14.36. "TRUST" means the trust established under Section 3.12.
14.37. "TRUSTEE" means the person or persons who are at any time acting
as trustee under the Trust.
14.38. "VALUATION DATE" means each day on which the New York Stock
Exchange is open for trading.
14.39. "YEAR OF SERVICE FOR VESTING" means a Plan Year during which the
Employee completes at least 1,000 Hours of Service. The following special rules
shall apply:
(a) Unless otherwise provided in Schedule B, in the event the
Plan Sponsor acquires a business of another employer, through an
acquisition either of assets or stock of such other employer, an
Employee who was employed by such other employer immediately prior to
such acquisition shall have his or her prior service with such other
employer taken into account, as if it were service with an Affiliated
Employer.
(b) A "leased employee", within the meaning of Code section
414(n) shall accrue Years of Service for vesting purposes and shall be
credited with such Years of Service for Vesting upon hire by a
Participating Employer as a common law employee.
IN WITNESS WHEREOF, the Plan Sponsor has caused this instrument to be
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signed in its name and on its behalf by its duly authorized officer,
this day of , 1998.
------- --------------
BOSTON SCIENTIFIC CORPORATION
By:
---------------------------
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Schedule A
----------
(As of January 1, 1996, except as otherwise noted)
Participating Employer State of Incorporation
---------------------- ----------------------
Boston Scientific Corporation Delaware
Boston Scientific Corporation
Northwest Technology Center, Inc.(1) Washington
Boston Scientific Sales, Inc. Delaware
Boston Scientific Technology, Inc. Minnesota
BSC Finance Corporation Indiana
BSC International Corporation Delaware
BSC Technology, Inc. Minnesota
Cardiovascular Imaging Systems, Inc. California
Celltechnix Corporation New Jersey
EP Technologies, Inc.(1) Delaware
EP Technologies Sales, Inc.(1) California
Heart Technology Manufacturing, Inc.(1) Washington
Meadox Distribution Company(1) New Jersey
Meadox Instruments, Inc.(1) New Jersey
Meadox Medicals, Inc.(1) New Jersey
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62
Participating Employer State of Incorporation
---------------------- ----------------------
Meadox Medicals Sales, Inc.(1) New Jersey
Meadox Technology, Inc.(1) Minnesota
Scimed Life Systems, Inc. Minnesota
Scimed, Inc. Minnesota
Scimed Technology Inc. Minnesota
Symbiosis Corporation(2) Florida
Vesica Medical, Inc. California
(1) Effective as of the close of December 31, 1996.
(2) Effective as of June 1, 1996.
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Schedule B
----------
Special Provisions Regarding Former Participants in Other Plans
The following plans have been merged into this Plan as of the dates
indicated below. Any elections made by participants in such plans with respect
to contributions, beneficiaries, investments, loans or benefit distributions
shall carry over and be treated as if made under this Plan, except as otherwise
provided by the Committee.
1. Cardiovascular Imaging Systems, Inc. 401(k) Salary Reduction Plan
and Trust
On October 3, 1995, the Cardiovascular Imaging Systems, Inc. 401(k)
salary reduction plan was merged into this Plan.
Special participation rules (Section 2.1(c)): No
---
Special rules re allocation of transferred accounts
(Section 4.6(a)): No
---
Special Vesting rules (Sections 5.6 and 14.41): No
--
Special in-service withdrawal rules (Section 6.8(a)): No
---
QJSA rules applicable (Section 8.7): Yes
---
Optional forms of payment to preserve
(Sections 8.1 and 8.7):
Immediate life annuity.
Immediate life annuity with a period certain of 10, 15, or 20
years.
Immediate annuity for the life of the Participant, with a
survivor annuity for the Participant's beneficiary which is
100%, 66 2/3% or 50% of the amount payable during the life of
the Participant.
Any combination of the above options and the benefit forms
described in Section 8.1.
2. Scimed Life Systems, Inc. Retirement Savings and Profit Sharing Plan
Effective January 1, 1996, the Scimed Life Systems, Inc. Retirement
Savings and Profit
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Sharing Plan was merged into this Plan.
Special participation rules (Section 2.1(c)): No
---
Special rules re allocation of transferred accounts
(Section 4.6(a)): No
---
Special Vesting rules (Sections 5.6 and 14.41): No
---
Special in-service withdrawal rules (Section 6.8(a)): No
---
QJSA rules applicable (Section 8.7): No
---
Optional forms of payment to preserve
(Sections 8.1 and 8.7): No
---
3. Symbiosis Corporation 401(k) Plan and Trust
Effective June 1, 1996, the Symbiosis Corporation 401(k) Plan and Trust
was merged into this Plan.
Special Participation rules (Section 2.1(c)): No
---
Special Rules re allocation of transferred accounts
(Section 4.6(a)): No
---
Special Vesting rules (Sections 5.6 and 14.41): No
---
Special in-service withdrawal rules (Section 6.8(a)): No
---
QJSA rules applicable (Section 8.7): No
---
Optional forms of payment to preserve
(Sections 8.1 and 8.7): None
----
4. American Home Products Corporation Savings Plan
Effective June 1, 1996, the accounts under the American Home Products
Corporation Savings Plan attributable to Participants employed by Symbiosis
Corporation were merged into this Plan.
Special Participation rules (Section 2.1(c)): No
---
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65
Special Rules re allocation of transferred accounts
(Section 4.6(a)): No
---
Special Vesting Rules (Sections 5.6 and 14.41): No
---
Special in-service withdrawal rules (Section 6.8(a)):
Withdrawal from after-tax contribution account
(Once per Plan Year; $500 minimum)
QJSA rules applicable (Section 8.7): No
---
Optional forms of payment to preserve
(Sections 8.1 and 8.7): None
----
5. EPT 401(k) Plan
Effective as of the close of business on December 31, 1996, the EPT
401(k) Plan is hereby merged into this Plan.
- Special participation rules (Section 2.1(c)): Yes
---
(i) Any individual who is a participant in the EPT
401(k) Plan (the "Former Plan") on December 31, 1996 shall
become a Participant in the Plan as of January 1, 1997.
(ii) Each other Employee of EP Technologies, Inc.
shall be subject to the participation rules under Section 2.1.
- Special rules re allocation of transferred accounts
(Section 4.6(a)): No
---
- Special Vesting rules (Sections 5.6 and 14.38): Yes
---
(i) Any individual who is a participant in the EPT
401(k) Plan (the "Former Plan") on December 31, 1996 and who
is actively employed by the Plan Sponsor or an Affiliated
Employer on or after December 31, 1996 shall have a 100%
nonforfeitable interest in the portion of his or her Accounts
under this Plan that are attributable to the transfer of his
or her employer matching contribution account balance, if any,
from the Former Plan.
(ii) Any individual who is actively employed by EP
Technologies, Inc. on
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66
December 31, 1996 and who has 3 or more years of service for
purposes of calculating vesting (as determined under the
Former Plan) shall have a vested interest in a percentage of
his or her Discretionary Contribution Account under the Plan,
if any, determined in accordance with the following schedule
and based on his or her Years of Service for Vesting:
Years of Service Applicable
for Vesting Nonforfeitable Percentage
---------------- -------------------------
3 but less than 4 75%
4 or more 100%
- Special in-service withdrawal rules (Section 6.8(a)):
- Hardship withdrawals allowed from any account which
is 100% vested.
- QJSA rules applicable (Section 8.7): No
----
- Optional forms of payment to preserve
(Sections 8.1 and 8.7): None
----
6. Heart Technology, Inc. 401(k) Profit Sharing Plan
Effective as of the close of business on December 31, 1996, the Heart
Technology, Inc. 401(k) Profit Sharing Plan is hereby merged into this Plan.
- Special Participation rules (Section 2.1(c)): Yes
---
(i) Any individual who is a participant in the Heart
Technology, Inc. 401(k) Profit Sharing Plan (the "Former
Plan") on December 31, 1996 shall become a Participant in the
Plan as of January 1, 1997.
(ii) Any individual who is an active employee of
Boston Scientific Corporation Northwest Technology Center,
Inc. on December 31, 1996 and who has satisfied the
eligibility requirements under the Former Plan as of December
31, 1996 (age 18 and the earlier of 6 months continuous
employment or 1 year of service), but who has not yet enrolled
in the Former Plan shall become a Participant in the Plan on
the first Entry Date on or after January 1, 1997 on which such
individual (a) is an Eligible Employee and (b) has in effect a
compensation reduction authorization described in Section 3.2.
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67
(iii) Any individual who is an active employee of
Boston Scientific Corporation Northwest Technology Center,
Inc. on December 31, 1996 and who has not yet satisfied the
eligibility requirements under the Former Plan as of December
31, 1996 shall become a Participant in the Plan as of the
Entry Date coinciding with or next following the date on which
the individual (a) satisfies the eligibility requirements
under Section 2.1, substituting age 18 for age 21 in Section
2.1(b)(3), (b) is an Eligible Employee and (c) has in effect a
compensation reduction authorization described in Section 3.2.
(iv) Each other Employee of Boston Scientific
Corporation Northwest Technology Center, Inc. shall be subject
to the participation rules under Section 2.1.
- Special Rules re allocation of transferred accounts
(Section 4.6(a)): No
----
- Special Vesting Rules (Sections 5.6 and 14.38): Yes
----
Any individual who is a participant in the Heart
Technology, Inc. 401(k) Profit Sharing Plan (the "Former
Plan") on December 31, 1996 and who is an active employee of
the Plan Sponsor or an Affiliated Employer on or after
December 31, 1996 shall have a 100% nonforfeitable interest in
the portion of his or her Accounts under this Plan that are
attributable to the transfer of his or her employer matching
contribution account balance, if any, from the Former Plan.
- Special in-service withdrawal rules (Section 6.8(a)): Yes
----
In-service withdrawals of rollover account; limited
to once per year.
- QJSA rules applicable (Section 8.7): No
----
- Optional forms of payment to preserve
(Sections 8.1 and 8.7): None
----
7. Meadox Medicals, Inc. Employees' Savings Plan
Effective as of the close of business on December 31, 1996, the Meadox
Medicals, Inc. Employees' Savings Plan is hereby merged into this Plan.
- Special Participation rules (Section 2.1(c)): Yes
----
(i) Any individual who is a participant in the Meadox
Medicals, Inc. Employees' Savings Plan (the "Former Plan") on
December 31, 1996 shall become
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68
a Participant in the Plan as of January 1, 1997.
(ii) Any individual who is an active employee of
Meadox Medicals, Inc. on December 31, 1996, but who has not
yet enrolled in the Former Plan shall become a Participant in
the Plan on any Entry Date on or after January 1, 1997,
provided on such Entry Date such individual (a) is an Eligible
Employee and (b) has in effect a compensation reduction
authorization described in Section 3.2.
(iii) Each other Employee of Meadox Medicals, Inc.
shall be subject to the participation rules under Section 2.1.
- Special Rules re allocation of transferred accounts
(Section 4.6(a)): No
----
- Special Vesting Rules (Sections 5.6 and 14.38): Yes
----
Any individual who is a participant in the Meadox
Medicals, Inc. Employees' Retirement Plan (the "Former Plan")
on December 31, 1996 and is an active employee of the Plan
Sponsor or an Affiliated Employer on or after December 31,
1996 shall have a 100% nonforfeitable interest in the portion
of his or her Accounts under this Plan that are attributable
to the transfer of his or her employer matching contribution
account balance, if any, from the Former Plan.
- Special in-service withdrawal rules (Section 6.8(a)): Yes
----
- After-tax contribution account. No
----
- QJSA rules applicable (Section 8.7): No
----
- Optional forms of payment to preserve
(Sections 8.1 and 8.7): None
----
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