EXHIBIT 10.3
THE PER-SE TECHNOLOGIES, INC.
EMPLOYEES' RETIREMENT SAVINGS PLAN
THE PER-SE TECHNOLOGIES, INC.
EMPLOYEES' RETIREMENT SAVINGS PLAN
THIS INDENTURE is made effective as of the 31st day of January 2005, by
PER-SE TECHNOLOGIES, INC., a corporation duly organized and existing under the
laws of the State of Delaware (hereinafter called the "Primary Sponsor").
INTRODUCTION
WHEREAS, the Primary Sponsor established the Per-Se Technologies, Inc.
Employees' Retirement Savings Plan (f/k/a the Medaphis Corporation Employees'
Retirement Savings Plan) (the "Plan") by indenture dated June 30, 1991, which
was last amended and restated by indenture dated January 20, 2000; and
WHEREAS, the Plan has been amended several times since its previous
restatement to make certain administrative and technical changes and to comply
with various changes in the law; and
WHEREAS, the Primary Sponsor now wishes to amend and restate the Plan
primarily to incorporate the various amendments into one document and make
several changes to the Plan; and
WHEREAS, the Plan is intended to be a profit sharing plan within the
meaning of Treasury Regulations Section 1.401-1(b)(1)(ii) and also contains a
cash or deferred arrangement as described in Section 401(k) of the Internal
Revenue Code of 1986.
NOW, THEREFORE, the Primary Sponsor does hereby amend and restate the Plan
in its entirety, generally effective as of January 31, 2005, except as otherwise
provided herein, to read as follows:
TABLE OF CONTENTS
PAGE
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ARTICLE 1 DEFINITIONS................................................... 1
ARTICLE 2 ELIGIBILITY................................................... 13
ARTICLE 3 CONTRIBUTIONS................................................. 14
ARTICLE 4 INDIVIDUAL FUNDS AND INVESTMENTS OF TRUST ASSETS.............. 16
ARTICLE 5 PLAN LOANS.................................................... 17
ARTICLE 6 WITHDRAWALS DURING EMPLOYMENT................................. 20
ARTICLE 7 PAYMENT OF BENEFITS ON TERMINATION OF EMPLOYMENT.............. 22
ARTICLE 8 PAYMENT OF BENEFITS ON RETIREMENT OR DISABILITY............... 24
ARTICLE 9 DEATH BENEFITS................................................ 24
ARTICLE 10 GENERAL RULES ON DISTRIBUTIONS................................ 24
ARTICLE 11 ADMINISTRATION OF THE PLAN.................................... 26
ARTICLE 12 CLAIMS REVIEW PROCEDURE....................................... 28
ARTICLE 13 INCOMPETENT DISTRIBUTEE AND UNCLAIMED PAYMENTS................ 32
ARTICLE 14 PROHIBITION AGAINST DIVERSION................................. 33
ARTICLE 15 LIMITATION OF RIGHTS.......................................... 33
ARTICLE 16 AMENDMENT TO OR TERMINATION OF THE PLAN AND THE TRUST......... 34
ARTICLE 17 ADOPTION OF PLAN BY AFFILIATES................................ 35
ARTICLE 18 QUALIFICATION AND RETURN OF CONTRIBUTIONS..................... 36
ARTICLE 19 INCORPORATION OF SPECIAL LIMITATIONS.......................... 36
APPENDIX A LIMITATION ON ALLOCATIONS..................................... A-1
APPENDIX B TOP-HEAVY PROVISIONS.......................................... B-1
APPENDIX C SPECIAL NONDISCRIMINATION RULES............................... C-1
APPENDIX D MINIMUM DISTRIBUTION REQUIREMENTS............................. D-1
ARTICLE 1
DEFINITIONS
Wherever used herein, the masculine pronoun shall be deemed to include the
feminine, and the singular to include the plural, unless the context clearly
indicates otherwise and the following words and phrases shall, when used herein,
have the meanings set forth below:
1.1 "Account" means a Participant's aggregate balance in the following
accounts, as adjusted pursuant to the Plan as of any given date:
(a) "Company Match Account" which shall reflect a Participant's
interest in matching contributions made by a Plan Sponsor under Section
3.2.
(b) "Employee Pre-Tax Account" which shall reflect a Participant's
interest in contributions made by a Plan Sponsor under Section 3.1,
pre-tax amounts transferred to the Plan from the GFS 401(k) Savings Plan
and the Health Data Services, Inc. 401(k) Plan.
(c) "MMNE Company Account" which shall reflect the interest of each
Participant who was a participant in the Medical Management of New
England, Inc. 401(k) Plan immediately prior to January 1, 1994 in amounts
transferred to the Plan from the Medical Management of New England, Inc.
401(k) Plan.
(d) "Profit Sharing Account" which shall reflect a Participant's
interest in contributions made by a Plan Sponsor under Section 3.3.
(e) "Rollover Account" which shall reflect a Participant's interest
in Rollover Amounts; amounts transferred to the Plan from the plan of a
Participant's prior employer; amounts transferred to the Plan from the PST
Services, Inc. Service Employees' Profit Sharing Plan, the Impact
Innovations Holdings, Inc. 401(k) Retirement Savings Plan and the Rapid
Systems Solutions, Inc. 401(k) Savings and Profit Sharing Plan.
Notwithstanding the foregoing, the Plan shall separately account for any
Rollover Amounts that are not includable in gross income of the
Participant (determined without regard to the rollover) and are
transferred to the Plan in a direct trustee-to-trustee transfer, and
earnings and losses thereon.
(f) "qmac/qnec Account" which shall reflect a Participant's interest
in Qualified Matching Contributions and/or Qualified Nonelective
Contributions made by a Plan Sponsor pursuant to Appendix C.
In addition, the Plan Administrator shall allocate the interest of a Participant
in any funds transferred to the Plan in a trust-to-trust transfer (other than
Rollover Amounts) or pursuant to the merger of another tax-qualified retirement
plan with the Plan among the above accounts as the Plan Administrator determines
best reflects the interest of the Participant.
1.2 "Affiliate" means
(a) any corporation which is a member of the same controlled group
of corporations (within the meaning of Code Section 414(b)) as is a Plan
Sponsor,
(b) any other trade or business (whether or not incorporated) under
common control (within the meaning of Code Section 414(c)) with a Plan
Sponsor,
(c) any other corporation, partnership or other organization which
is a member of an affiliated service group (within the meaning of Code
Section 414(m)) with a Plan Sponsor, and
(d) any other entity required to be aggregated with a Plan Sponsor
pursuant to regulations under Code Section 414(o).
Notwithstanding the foregoing, for purposes of applying the limitations set
forth in Appendix A and for purposes of determining Annual Compensation under
Appendix A, the references to Code Sections 414(b) and (c) above shall be as
modified by Code Section 415(h).
1.3 "Annual Compensation" means wages within the meaning of Code Section
3401(a) (for purposes of income tax withholding at the source) paid to an
Employee by a Plan Sponsor and Affiliates during a Plan Year (but 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, such as the exception
for agricultural labor in Code Section 3401(a)(2)), to the extent not in excess
of the Annual Compensation Limit for all purposes under the Plan except for
purposes of determining who are Highly Compensated Employees. Notwithstanding
the above, Annual Compensation shall be determined as follows:
(a) in determining the amount of contributions made by or on behalf
of an Employee under Article 3, allocations under Article 4, and
application of the provisions of Section 2 of Appendix C for such Plan
Years as the Secretary of the Treasury may allow, Annual Compensation
shall only include amounts received for the portion of the Plan Year
during which the Employee was a Participant. For purposes of applying the
provisions of Section 5 of Appendix C for such Plan Years as the Secretary
of the Treasury may allow, Annual Compensation shall only include amounts
received for the portion of the Plan Year during which the Employee was
eligible to receive a Matching Contribution (as defined by Section 1 of
Appendix C) from the Plan. For all purposes of this subsection (a), Annual
Compensation shall exclude income from sources outside the United States,
whether or not such income is excludable under Code Section 911;
(b) in determining the amount of contributions under Article 3 and
allocations under Article 4 made by or on behalf of an Employee, Annual
Compensation shall not include reimbursements or other expense allowances,
taxable fringe benefits, short-term disability pay, amounts realized from
the exercise of non-qualified stock options or when restricted stock (or
property) held by an employee either becomes freely transferable or is no
longer subject to a substantial risk of forfeiture, moving expense
allowances, deferred
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compensation and welfare benefits. Notwithstanding anything contained
herein to the contrary, if using the definition of Annual Compensation as
described in this Subsection (b) for purposes of Section 3.3 results in a
"compensation percentage" for Employees who are Highly Compensated
Employees which is greater than the "compensation percentage" for
Employees who are not Highly Compensated Employees by more than a de
minimis amount, then short-term disability pay and amounts realized from
the exercise of non-qualified stock options or when restricted stock (or
property) held by an employee either becomes freely transferable or is no
longer subject to a substantial risk of forfeiture shall be included in
Annual Compensation for purposes of Section 3.3. The "compensation
percentage" for a group of Employees is the average of the "compensation
ratio" for each Employee in the group. An Employee's "compensation ratio"
is the Employee's Annual Compensation determined pursuant to the first
sentence of this Subsection (b) divided by the Employee's Annual
Compensation determined pursuant to the second sentence of this Subsection
(b); and
(c) for all purposes under the Plan, Annual Compensation shall
include any amount which would have been paid during a Plan Year, but was
contributed by a Plan Sponsor on behalf of an Employee pursuant to a
salary reduction agreement which is not includable in the gross income of
the Employee under Code Section 125, 132(f)(4), 402(g)(3), 402(h) or 457.
1.4 "Annual Compensation Limit" means $210,000, which amount may be
adjusted in subsequent Plan Years based on changes in the cost of living as
announced by the Secretary of the Treasury.
1.5 "Appeals Fiduciary" means an individual or group of individuals
appointed to review appeals of claims for benefits payable due to a
Participant's Disability made pursuant to Section 12.4.
1.6 "Beneficiary" means the person, trust, estate or organization that a
Participant designated most recently in writing to the Plan Administrator;
provided, however, that if the Participant has failed to make a designation, no
person designated is alive at the date of the Participant's death, no trust has
been established, or no successor Beneficiary has been designated who is alive,
the term "Beneficiary" means the Participant's spouse or (b) if no spouse is
alive, the Participant's surviving children, or (c) if no children are alive,
the Participant's parent or parents, or (d) if no parent is alive, the legal
representative of the deceased Participant's estate. Notwithstanding the
preceding sentence, the spouse of a married Participant shall be his Beneficiary
unless that spouse has consented in writing to the designation by the
Participant of some other person or trust and the spouse's consent acknowledges
the effect of the designation and is witnessed by a notary public. A Participant
may change his designation at any time. However, a Participant may not change
his designation without further consent of his spouse under the terms of the
preceding sentence unless the spouse's consent permits designation of another
person or trust without further spousal consent and acknowledges that the spouse
has the right to limit consent to a specific beneficiary and that the spouse
voluntarily relinquishes this right. Notwithstanding the above, the spouse's
consent shall not be required if the Participant establishes to the satisfaction
of the Plan Administrator that the spouse cannot be located, if the
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Participant has a court order indicating that he is legally separated or has
been abandoned (within the meaning of local law) unless a "qualified domestic
relations order" (as defined in Code Section 414(p)) provides otherwise, or if
there are other circumstances as the Secretary of the Treasury prescribes. If
the spouse is legally incompetent to give consent, consent by the spouse's legal
guardian shall be deemed to be consent by the spouse. If, subsequent to the
death of a Participant, the Participant's Beneficiary dies while entitled to
receive benefits under the Plan, benefits under the Plan will be paid to the
successor Beneficiary, if any, or the Beneficiary listed under Subsection (a),
or if no spouse is alive, Subsection (b), or if no children are alive,
Subsection (c), or if no parents are alive, to the Beneficiary's estate.
1.7 "Board of Directors" means the Board of Directors of the Primary
Sponsor.
1.8 "Break in Service" means the failure of an Employee to complete more
than one Hour of Service in a twelve-consecutive-month period beginning with the
Participant's Severance Date or any anniversary thereof.
1.9 "Code" means the Internal Revenue Code of 1986, as amended.
1.10 "Company Stock" means a share or shares of any class of stock issued
by the Primary Sponsor (or any of its Affiliates) which constitutes employer
securities within the meaning of Code Section 4978(e)(5).
1.11 "Company Stock Fund" means an Individual Fund that is primarily
invested in Company Stock.
1.12 "Deferral Amount" means a contribution of a Plan Sponsor on behalf of
a Participant pursuant to Section 3.1.
1.13 "Direct Rollover" means a payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.
1.14 "Disability" means a disability of a Participant within the meaning
of Code Section 72(m)(7), to the extent that the Participant is, or would be,
entitled to disability retirement benefits under the federal Social Security
Act. The determination of whether or not a Disability exists shall be determined
by the Plan Administrator and shall be substantiated by competent medical
evidence.
1.15 "Distributee" means an Employee or former Employee. In addition, the
Employee's or former Employee's surviving spouse and the Employee's or former
Employee's spouse or former spouse who is the alternate payee under a qualified
domestic relations order (as defined in Code Section 414(p)), are Distributees
with regard to the interest of the spouse or former spouse.
1.16 "Elective Deferrals" means, with respect to any taxable year of the
Participant, the sum of:
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(a) any Deferral Amounts;
(b) any contributions made by or on behalf of a Participant under
any other qualified cash or deferred arrangement as defined in Code
Section 401(k), whether or not maintained by a Plan Sponsor, to the extent
such contributions are not or would not, but for Code Section 402(g)(1) be
included in the Participant's gross income for the taxable year; and
(c) any other contributions made by or on behalf of a Participant
pursuant to Code Section 402(g)(3).
1.17 "Eligibility Service" means the completion by an Employee of a
sixty-consecutive-day period beginning on the date on which the Employee first
performs or performed an Hour of Service upon his employment or reemployment or
any anniversary thereof, without reaching a Severance Date; provided, however:
(a) if an Employee quits, retires or is discharged and then performs
an Hour of Service within twelve (12) months of his Severance Date, then
such period of severance shall be taken into account in calculating
Eligibility Service;
(b) if an Employee quits, retires or is discharged during an absence
from service of twelve (12) months or less for any reason other than quit,
discharge or attainment of a Retirement Date and the Employee then
performs an Hour of Service within twelve (12) months of the date the
Employee was first absent from service, then such period of absence shall
be taken into account in calculating Eligibility Service; and
(c) in the case of an Employee who remains absent from service
beyond the first anniversary of the commencement of a period of absence
(1) by reason of the pregnancy of the Employee, (2) by reason of the birth
of a child of the Employee, (3) by reason of the placement of a child with
the Employee in connection with the adoption of the child by the Employee,
or (4) for purposes of caring for such child for a period immediately
following its birth or placement, the period between the first and second
anniversaries of such period of absence shall not be counted as
Eligibility Service.
Eligibility Service shall not include, in the case of a rehired Employee
who did not have any vested right at his Severance Date and then incurs five (5)
consecutive Breaks in Service, all periods which would otherwise constitute
Eligibility Service before the first of the five (5) consecutive Breaks in
Service commenced.
1.18 "Eligible Employee" means any Employee of a Plan Sponsor other than
an Employee who is:
(a) covered by a collective bargaining agreement between a union and
a Plan Sponsor, provided that retirement benefits were the subject of good
faith bargaining, unless the collective bargaining agreement provides for
participation in the Plan;
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(b) a Leased Employee with respect to a Plan Sponsor;
(c) a Leased Employee with respect to a client of a Plan Sponsor who
is an active participant in the tax-qualified retirement plan of the
client during any part of the Plan Year; or
(d) deemed to be an Employee of a Plan Sponsor pursuant to
regulations under Code Section 414(o).
In addition, no person who is initially classified by a Plan Sponsor as an
independent contractor for federal income tax purposes shall be regarded as an
Eligible Employee for that period, regardless of any subsequent determination
that any such person should have been characterized as a common law employee of
the Plan Sponsor for the period in question.
1.19 "Eligible Retirement Plan" means any of the following that will
accept a Distributee's Eligible Rollover Distribution:
(a) an individual retirement account described in Code Section
408(a);
(b) an individual retirement annuity described in Code Section
408(b);
(c) an annuity plan described in Code Section 403(a) or an annuity
contract described in Code Section 403(b);
(d) a qualified trust described in Code Section 401(a); or
(e) an eligible plan under Code Section 457(b) which is maintained
by a state or political subdivision of a state, or any agency or
instrumentality of a state or political subdivision and which agrees to
separately account for amounts transferred into such plan from this Plan.
Effective for distributions after December 31, 2005, if any portion
of an Eligible Rollover Distribution is attributable to payments or
distributions from a designated Roth account (as defined in Code Section
402A), an Eligible Retirement Plan with respect to such portion shall
include only another designated Roth account and a Roth IRA.
1.20 "Eligible Rollover Distribution" means any distribution of all or any
portion of the Distributee's Account, except that an Eligible Rollover
Distribution does not include:
(a) any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life
(or life expectancy) of the Distributee or the joint lives (or joint life
expectancies) of the Distributee and the Distributee's designated
Beneficiary, or for a specified period of ten (10) years of more;
6
(b) any distribution to the extent such distribution is required under
Code Section 401(a)(9);
(c) any distribution which is made upon hardship of the Employee; and
(d) except as otherwise provided in this Section, the portion of any
distribution that is not includable in gross income (determined without
regard to the exclusions for net unrealized appreciation with respect to
employer securities).
"Eligible Rollover Distribution" shall include any portion of the
distribution that is not includable in gross income provided such amount is
distributed directly to one of the following:
(i) an individual retirement account described in Code Section
408(a) or an individual retirement annuity described in Code Section
408(b) (other than an endowment contract); or
(ii) a qualified trust as described in Code Section 401(a) but only
to the extent that
(A) the distribution is made in a direct trustee-to-trustee
transfer;
(B) the transferee plan is a defined contribution plan; and
(C) the transferee plan agrees to separately account for amounts
transferred (including a separate accounting for the portion of the
distribution which is includable in income and the portion which is
not includable in income).
1.21 "Employee" means any person who is:
(a) employed by a Plan Sponsor or an Affiliate for purposes of the
Federal Insurance Contributions Act;
(b) a "Leased Employee" (as defined in Section 1.32); or
(c) deemed to be an employee of a Plan Sponsor pursuant to regulations
under Code Section 414(o).
1.22 "Employment Date" means that date on which an Employee first performs
an Hour of Service with a Plan Sponsor or, in the alternative, on which an
Employee again performs an Hour of Service following any period of severance
which is not required to be taken in account in determining the Employee's
period of Service.
1.23 "Entry Date" means the first day of each payroll period.
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1.24 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
1.25 "Fiduciary" means each Named Fiduciary and any other person who
exercises or has any discretionary authority or control regarding management or
administration of the Plan, any other person who renders investment advice for a
fee or has any authority or responsibility to do so with respect to any assets
of the Plan, or any other person who exercises or has any authority or control
respecting management or disposition of assets of the Plan.
1.26 "Fund" means the amount at any given time of cash and other property
held by the Trustee pursuant to the Plan.
1.27 "Highly Compensated Employee" means with respect to a Plan Year, each
Employee who:
(a) was at any time during the Plan Year or the immediately preceding
Plan Year an owner of more than five percent (5%) of the outstanding stock
of a Plan Sponsor or Affiliate or more than five percent (5%) of the total
combined voting power of all stock of a Plan Sponsor or Affiliate; or
(b) received Annual Compensation in excess of $95,000 during the
immediately preceding Plan Year, which amount shall be adjusted for changes
in the cost of living as provided in regulations issued by the Secretary of
the Treasury; or
(c) is a former Employee who met the requirements of Subsection (a) or
(b) at the time the former Employee separated from service with the Plan
Sponsor or an Affiliate or at any time after the former Employee reached age
55.
1.28 "Hour of Service" means:
(a) Each hour for which an Employee is paid, or entitled to payment, for
the performance of duties for a Plan Sponsor or any Affiliate during the
applicable computation period, and such hours shall be credited to the
computation period in which the duties are performed;
(b) Each hour for which an Employee is paid, or entitled to payment, by
a Plan Sponsor or any Affiliate on account of a period of time during which
no duties are performed (irrespective of whether the employment relationship
has terminated) due to vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or leave of absence;
(c) Each hour for which back pay, irrespective of mitigation of damages,
is either awarded or agreed to by a Plan Sponsor or any Affiliate, and such
hours shall be credited to the computation period or periods to which the
award or agreement for back pay pertains rather than to the computation
period in which the award, agreement or
8
payment is made; provided, that the crediting of Hours of Service for back
pay awarded or agreed to with respect to periods described in Subsection (b)
of this Section shall be subject to the limitations set forth in Subsection
(e);
(d) Solely for purposes of determining whether a Break in Service has
occurred, each hour during any period that the Employee is absent from work
(1) by reason of the pregnancy of the Employee, (2) by reason of the birth
of a child of the Employee, (3) by reason of the placement of a child with
the Employee in connection with the adoption of the child by the Employee,
or (4) for purposes of caring for such child for a period immediately
following its birth or placement shall be credited (A) only in the
computation period in which the absence from work begins, if the Employee
would be prevented from incurring a Break in Service in that year solely
because of that credit, or (B), in any other case, in the next following
computation period;
(e) Without duplication of the Hours of Service counted pursuant to
Subsection (d) hereof and solely for such purposes as required pursuant to
the Family and Medical Leave Act of 1993 and the regulations thereunder (the
"FMLA"), each hour (as determined pursuant to the FMLA) for which an
Employee is granted leave under the FMLA (1) for the birth of a child, (2)
for placement with the Employee of a child for adoption or foster care, (3)
to care for the Employee's spouse, child or parent with a serious health
condition, or (4) for a serious health condition that makes the Employee
unable to perform the functions of the Employee's job;
(f) The Plan Administrator shall credit Hours of Service in accordance
with the provisions of Section 2530.200b-2(b) and (c) of the U.S. Department
of Labor Regulations or such other federal regulations as may from time to
time be applicable and determine Hours of Service from the employment
records of a Plan Sponsor or in any other manner consistent with regulations
promulgated by the Secretary of Labor, and shall construe any ambiguities in
favor of crediting Employees with Hours of Service. Notwithstanding any
other provision of this Section, in no event shall an Employee be credited
with more than 501 Hours of Service during any single continuous period
during which he performs no duties for the Plan Sponsor or Affiliate; and
(g) In the event that a Plan Sponsor or an Affiliate acquires
substantially all of the assets of another corporation or entity or a
controlling interest of the stock of another corporation or merges with
another corporation or entity and is the surviving entity, or if an Employee
of a Plan Sponsor was previously employed by an entity that is under common
control or ownership with the Plan Sponsor, as determined by the Board of
Directors of the Plan Sponsor, then service of an Employee who was employed
by the prior corporation or entity shall be counted in the manner provided,
with the consent of the Primary Sponsor, in resolutions adopted by the Plan
Sponsor which authorizes the counting of such service.
1.29 "Individual Fund" means individual subfunds of the Fund as may be
established by the Plan Administrator from time to time for the investment of
the Fund.
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1.30 "Investment Committee" means a committee, which may be established to
direct the Trustee with respect to investments of the Fund.
1.31 "Investment Manager" means a Fiduciary, other than the Trustee, the
Plan Administrator, or a Plan Sponsor, who may be appointed by the Primary
Sponsor:
(a) who has the power to manage, acquire, or dispose of any assets of
the Fund or a portion thereof; and
(b) who
(1) is registered as an investment adviser under the Investment
Advisers Act of 1940;
(2) is a bank as defined in the Investment Advisers Act of 1940; or
(3) is an insurance company qualified to perform services described
in Subsection (a) above under the laws of more than one state; and
(c) who has acknowledged in writing that he is a Fiduciary with respect
to the Plan.
1.32 "Leased Employee" means an Employee (other than a common law employee
of the Plan Sponsor or an Affiliate) who, pursuant to an agreement between the
Plan Sponsor or an Affiliate and any other person, has performed services for
the Plan Sponsor or an Affiliate (or for the Plan Sponsor and related persons
determined in accordance with Code Section 414(n)(6)), on a substantially
full-time basis for a period of at least one year, and such services are
performed under the primary direction or control of the Plan Sponsor or an
Affiliate.
1.33 "Loan Fund" means the separate subfund of the fund for the investment
of a Participant's Account in a note made by the Participant evidencing a loan
to the Participant from the Fund.
1.34 "Named Fiduciary" means only the following:
(a) the Plan Administrator;
(b) the Trustee;
(c) the Investment Committee;
(d) the Investment Manager; and
(e) the Appeals Fiduciary.
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1.35 "Normal Retirement Age" means age 65.
1.36 "Participant" means any Employee or former Employee who has become a
participant in the Plan for so long as his vested Account has not been fully
distributed pursuant to this Plan.
1.37 "Plan Administrator" means the organization or person designated to
administer the Plan by the Primary Sponsor and, in lieu of any such designation,
means the Primary Sponsor.
1.38 "Plan Sponsor" means individually the Primary Sponsor and any Affiliate
or other entity which has adopted the Plan and Trust.
1.39 "Plan Year" means the calendar year.
1.40 "Retirement Date" means the date on which the Participant terminates
employment on or after reaching Normal Retirement Age.
1.41 "Rollover Amount" means any amount transferred to the Fund by a
Participant, which amount qualifies as an eligible rollover distribution under
Code Sections 402(c)(4), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), or 457(e)(16),
and any regulations issued thereunder.
1.42 "Service" means a period commencing on an Employee's Employment Date
and ending on his Severance Date thereafter. The following rules shall apply:
(a) Notwithstanding the foregoing, if an Employee performs one Hour of
Service within twelve (12) months of (a) a Severance Date described in
Subsection (a) of Section 1.43, or (b) the date the Employee was first
absent from service for any other reason, any period of severance which
would otherwise occur shall be ignored and be required to be taken into
account in computing the Employee's period of Service.
(b) The period between the first anniversary and second anniversary of
an absence from service for the reasons specified in Section 1.43(b)(2)
shall be neither a period of severance or a period of Service.
(c) In the event that a Plan Sponsor or an Affiliate acquires a
substantial part of the assets of another corporation, or merges with
another corporation and is the surviving entity, then the Service performed
for such prior corporation or entity by an Employee who becomes employed by
the Plan Sponsor or an Affiliate as a result of the acquisition or merger
shall be credited as service in the manner provided, with the consent of the
Primary Sponsor, in resolutions adopted by the Plan Sponsor.
1.43 "Severance Date" means the earlier of:
(a) the date on which an Employee quits, is discharged, retires or dies;
or
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(b) (1) the first anniversary of the first date of a period in which an
Employee remains absent from service (with or without pay) with the Plan
Sponsor for any other reason, such as vacation, layoff, or leave of absence;
or (2) in the case of an Employee who remains absent from service beyond the
first anniversary of the first day of absence by reason of the Employee's
pregnancy, the birth of the Employee's child, the placement of a child in
the Employee's home or adoption by the Employee, or the caring for the child
for the period immediately following its birth or adoption, the second
anniversary of the first day of absence from service.
1.44 "Termination Completion Date" means the last day of the fifth
consecutive Break in Service computation period, determined under the Section
which defines Break in Service, in which a Participant completes a Break in
Service.
1.45 "Termination of Employment" means a severance from employment (within
the meaning of Code Section 401(k)(2)(B)(i)(I)) of an Employee from all Plan
Sponsors and Affiliates for any reason other than death, Disability, or
attainment of a Retirement Date. Any absence from active employment of the Plan
Sponsor and Affiliates by reason of an approved leave of absence shall not be
deemed for any purpose under the Plan to be a Termination of Employment.
Transfer of an Employee from one Plan Sponsor to another Plan Sponsor or to an
Affiliate shall not be deemed for any purpose under the Plan to be a Termination
of Employment. In addition, transfer of an Employee to another employer (other
than a Plan Sponsor or an Affiliate) in connection with a corporate transaction
involving a sale of assets, merger, or sale of stock, shall not be deemed to be
a Termination of Employment, for purposes of the timing of distributions under
Section 7.1, if the employer to which such Employee is transferred agrees with
the Plan Sponsor to accept a transfer of assets from the Plan to its
tax-qualified plan in a trust-to-trust transfer meeting the requirements of Code
Section 414(l).
1.46 "Trust" means the trust established under an agreement between the
Primary Sponsor and the Trustee to hold the Fund or any successor agreement.
1.47 "Trustee" means the trustee under the Trust.
1.48 "Valuation Date" means each regular business day or any other day which
the Plan Administrator declares to be a Valuation Date, provided, however, that
the last business day of each Plan Year will always be a Valuation Date and the
selection of other Valuation Dates may not result in discrimination prohibited
by Code Section 401(a)(4).
1.49 "Vesting Service" means, with respect to each Employee, the period of
Service credited to an Employee. Notwithstanding anything contained herein to
the contrary, Vesting Service shall not include:
(a) In the case of an Employee who completes five consecutive Breaks in
Service for purposes of determining the vested portion of his Account
derived from Plan Sponsor contributions which accrued before his Termination
Completion Date, all service in Plan Years after his Termination Completion
Date.
12
(b) In the case of an Employee who completes five consecutive Breaks in
Service and at that time does not have any vested right in Plan Sponsor
contributions, all service before those Breaks in Service commenced.
ARTICLE 2
ELIGIBILITY
2.1 New Hires. Each Eligible Employee shall become a Participant as of the
Entry Date coinciding with or next following the date he completes his
Eligibility Service.
2.2 Existing Participants. Each individual who was a Participant on January
30, 2005 shall continue to be a Participant as of January 31, 2005.
2.3 Former Participants Rehired. Each former Participant who is reemployed
by a Plan Sponsor shall become a Participant as of the date of his reemployment
as an Eligible Employee.
2.4 Former Employees Rehired. Each former Employee who completes his
Eligibility Service but terminates employment with a Plan Sponsor before
becoming a Participant shall become a Participant as of the latest of the date
he
(a) is reemployed,
(b) would have become a Participant if he had not incurred a Termination
of Employment, or
(c) becomes an Eligible Employee.
2.5 Rollovers. Solely for the purpose of contributing a Rollover Amount to
the Plan, an Eligible Employee who has not yet become a Participant pursuant to
any other provision of this Section 2 shall become a Participant as of the date
on which the Rollover Amount is contributed to the Plan.
2.6 Acquisition of Controlling Interest. Notwithstanding anything contained
in this Section 2 to the contrary, in the event that an individual becomes an
Eligible Employee of a Plan Sponsor by reason of an acquisition by the Plan
Sponsor of a controlling interest in or a substantial part of all the assets of
the individual's prior employer with a Plan Sponsor, if the Eligible Employee
was covered under a plan of the prior employer meeting the requirements of Code
Section 401(a), such Eligible Employee shall become a Participant as of the date
of his employment with the Plan Sponsor as an Eligible Employee.
13
ARTICLE 3
CONTRIBUTIONS
3.1 (a) Deferral Amounts. The Plan Sponsor shall make a contribution to the
Fund on behalf of each Participant who is an Eligible Employee and has
elected to defer a portion of his Annual Compensation otherwise payable to
him for the Plan Year and to have such portion contributed to the Fund.
Except to the extent permitted under Section 3.1(c) and Code Section 414(v),
the contribution made by a Plan Sponsor on behalf of a Participant under
this Section 3.1(a) shall be in an amount equal to the amount specified in
the Participant's deferral election, but not greater than twenty-five
percent (25%) of the Participant's Annual Compensation. Pursuant to Section
4 of Appendix C, the Plan Administrator may restrict the amount which Highly
Compensated Employees may defer under this Section 3.1(a).
(b) Limit on Deferral Amounts. Except to the extent permitted under
Section 3.1(c) and Code Section 414(v), Elective Deferrals shall in no event
exceed the limit set forth in Code Section 402(g) in any one taxable year of
the Participant. In the event the amount of Elective Deferrals exceeds Code
Section 402(g) limit, in any one taxable year then,
(1) not later than the immediately following March 1, the
Participant may designate to the Plan the portion of the Participant's
Deferral Amounts which consist of excess Elective Deferrals, and
(2) not later than the immediately following April 15, the Plan may
distribute the amount designated to it under Paragraph (1) above, as
adjusted to reflect income, gain, or loss attributable to it through the
end of the Plan Year, and reduced by any `Excess Deferral Amounts,' as
defined in Appendix C hereto, previously distributed or recharacterized
with respect to the Participant for the Plan Year beginning with or
within that taxable year.
The payment of the excess Elective Deferrals, as adjusted and reduced,
from the Plan shall be made to the Participant without regard to any other
provision in the Plan. In the event that a Participant's Elective Deferrals
exceed the Code Section 402(g) limit, as adjusted, in any one taxable year
under the Plan and other plans of the Plan Sponsor and its Affiliates, the
Participant shall be deemed to have designated for distribution under the
Plan the amount of excess Elective Deferrals, as adjusted and reduced, by
taking into account only Elective Deferral amounts under the Plan and other
plans of the Plan Sponsor and its Affiliates.
(c) Catch-Up Contributions. A Participant who is eligible to contribute
Deferral Amounts to the Plan and who has attained age 50 on or before the
last day of the Plan Year shall be eligible to elect to have a portion of
his Annual Compensation otherwise payable to him for the Plan Year
contributed by the Plan Sponsor to the Fund on his behalf as catch-up
contributions in accordance with and subject to the limitations of Code
Section 414(v). Contributions made pursuant to this Section 3.1(c) shall not
be
14
taken into account for purposes of implementing the limitations set forth in
Section 3.1(a), 3.1(b) and Appendix A hereto. The Plan shall not be treated
as failing to satisfy the provisions of Appendix B, Appendix C or Code
Section 410(b), as applicable, by reason of the making of the catch-up
contributions as described in this Section 3.1(c).
(d) Allocation of Contributions. Contributions made pursuant to this
Section 3.1 shall be allocated to the Employee Pre-Tax Account of the
Participant on whose behalf they were made as soon as reasonably practicable
following the date of withholding by the Plan Sponsor and receipt by the
Trustee.
(e) Deferral Elections. The elections under this Section 3.1 must be
made before the Annual Compensation is payable and may only be made in such
manner and subject to such rules and limitations as the Plan Administrator
may prescribe and shall specify the percentage or dollar amount, as
applicable, of Annual Compensation that the Participant desires to defer
pursuant to Section 3.1(a) and/or 3.1(c) and to have contributed to the
Fund. Once a Participant has made an election for a Plan Year, the
Participant may revoke or modify his election to increase or reduce the rate
of future deferrals, as provided in the administrative procedures
established by the Plan Administrator.
3.2 Matching Contributions. Following the completion of a year of Service by
a Participant, the Plan Sponsor proposes to make contributions for each Plan
Year to the Company Match Account of each Participant in an amount equal to
fifty percent (50%) of the contribution made on behalf of a Participant pursuant
to Section 3.1(a) for each payroll period, to the extent the contribution under
Section 3.1(a) does not exceed six percent (6%) of the Participant's Annual
Compensation for that payroll period. The Board of Directors may, at its
discretion, increase the percentage contribution under this Section 3.2 for all
Participants, or for any specified unit, division, subdivision, or location, or
for any Participants who participated in a specified prior plan that was merged
into this Plan.
3.3 Profit Sharing Contributions. Effective upon resolution by the Board of
Directors, a Plan Sponsor proposes to make contributions each Plan Year to the
Profit Sharing Account of each Participant who is (a) an Eligible Employee and
is employed by a Plan Sponsor on the last day of the Plan Year; or (b) reached a
Retirement Date or, while an Employee, died or became subject to a Disability
during the Plan Year in an amount determined by the Plan Sponsor as a uniform
percentage of Annual Compensation for all eligible Participants.
3.4 Rollover Contributions. Any Eligible Employee may, with the consent of
the Plan Administrator and subject to such rules and conditions as the Plan
Administrator may prescribe, transfer a Rollover Amount to the Rollover Account
(which may include, without limitation, prohibitions against transferring
certain categories of Rollover Amounts to the Plan); provided, however, that the
Plan Administrator shall not administer this provision in a manner which is
discriminatory in favor of Highly Compensated Employees.
3.5 Forfeitures. Forfeitures shall be used to reduce Plan Sponsor
contributions and not to increase benefits.
15
3.6 Tax-Deductible Limit. Contributions may be made only in cash or other
property which is acceptable to the Trustee. In no event will the sum of
contributions under Sections 3.1, 3.2, 3.3, and Appendix C exceed the deductible
limits under Code Section 404.
3.7 Military Service. 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 Section 414(u) of the Code.
3.8 Corrective Actions. Notwithstanding any provision of the Plan to the
contrary, the Plan Sponsor may make corrective distributions, contributions,
allocations, or other remedial action as required or permitted to comply with
any remedial or fiduciary correction program promulgated by the Internal Revenue
Service, U.S. Treasury Department, or U.S. Department of Labor.
ARTICLE 4
INDIVIDUAL FUNDS AND INVESTMENTS OF TRUST ASSETS
4.1 Participant Direction of Contributions. The Company may designate two
(2) or more Individual Funds available for investment of Participants' Accounts
under the Plan. Until such time as the Plan Administrator may direct otherwise,
each Participant and each Beneficiary of a deceased Participant may direct the
Plan Administrator to invest amounts attributable to the Participant's Account
among the Individual Funds as the Participant or Beneficiary, as applicable,
shall designate by providing notice to the Plan Administrator according to the
procedures established by the Plan Administrator for that purpose.
Notwithstanding the foregoing, Participants shall not be able to direct the
investment of any portion of their Account other than their Company Match
Accounts into the Company Stock Fund subject to such rules as the Plan
Administrator shall develop, including the Primary Sponsor's "stock trading
policy."
(a) All investment directions shall be in multiples of one percent (1%)
of contributions being made at any time. All investment directions, or
changes in investment directions, of contributions shall be made in
accordance with the procedures established by the Plan Administrator. New
investment directions shall be effective as of the date that such directions
are processed by the Plan Administrator in accordance with the procedures
established for such purpose.
(b) An investment direction, once given, shall be deemed to be a
continuing direction until changed as otherwise provided herein. If no
direction is effective for the date a contribution is to be made, all
contributions which are to be made for such date shall be invested in such
Individual Fund as the Plan Administrator, the Investment Manager, the
Investment Committee, or the Trustee, as applicable, may determine. To the
extent permissible by law, no Fiduciary shall be liable for any loss, which
results from a Participant's exercise or failure to exercise his investment
election.
16
4.2 Participant Directions to Transfer Between Individual Funds. A
Participant may elect, according to the procedures established by the Plan
Administrator, to transfer in multiples of one percent (1%), the investment of
his Account among Individual Funds. An election under this Section 4.2 shall be
effective as of the date that such directions are processed by the Plan
Administrator in accordance with the procedures established for such purpose.
4.3 Allocation of Income and Losses. As of each Valuation Date, the Trustee
shall allocate net income or net loss to each Account at the same rate as the
rate of net income or net loss of the Individual Funds in which the Account is
invested.
4.4 Loan Fund. A Loan Fund shall be established by the Trustee on behalf of
each Participant for whom a loan is made pursuant to Article 5. The Loan Fund
shall be credited with the amount of any loan made by the Plan to the
Participant and shall be debited with all principal and interest repayments of
any such loans. Under rules established by the Plan Administrator, a
Participant's interest in the Individual Funds shall be debited by the amount
credited to the Participant's Loan Fund. All principal and interest repayments
debited to the Loan Fund shall be invested as contributions to the Participant's
Account pursuant to Section 4.1. Each Loan Fund shall be invested in a note or
notes made by the Participant evidencing the promised repayment of monies loaned
to the Participant from the Fund.
ARTICLE 5
PLAN LOANS
5.1 Loan Procedures. All loans under the Plan will be subject to the
requirements of this Section and such other rules as the Plan Administrator may
from time to time prescribe, including, without limitation, any rules
restricting the purpose for which loans will be approved (the "Loan
Procedures"). The Loan Procedures shall be set forth in a separate written
document, which shall form a part of the Plan and is incorporated herein by
reference.
5.2 Eligible Individuals. Subject to the provisions of the Plan and the
Trust, each Participant who is an Employee shall have the right, subject to
prior approval by the Plan Administrator, to borrow from the Fund. In addition,
each "party in interest," as defined in ERISA Section 3(14), who is (a) a
Participant but no longer an Employee, (b) the Beneficiary of a deceased
Participant, or (c) an alternate payee of a Participant pursuant to the
provisions of a "qualified domestic relations order," as defined in Code Section
414(p), shall also have the right, subject to prior approval by the Plan
Administrator, to borrow from the Fund; provided, however, that loans to such
parties in interest may not discriminate in favor of Highly Compensated
Employees.
5.3 Application. In order to apply for a loan, a borrower must complete and
submit to the Plan Administrator documents or information required by the Plan
Administrator for this purpose.
5.4 Equivalent Basis. Loans shall be available to all eligible borrowers on
a reasonably equivalent basis which may take into account the borrower's
creditworthiness, ability
17
to repay, and ability to provide adequate security. Loans shall not be made
available to Highly Compensated Employees, officers or shareholders of a Plan
Sponsor in an amount greater than the amount made available to other borrowers.
This provision shall be deemed to be satisfied if all borrowers have the right
to borrow the same percentage of their interest in the Participant's vested
Account, notwithstanding that the dollar amount of such loans may differ as a
result of differing values of Participants' vested Accounts.
5.5 Interest Rate. Each loan shall bear a "reasonable rate of interest" and
provide that the loan be amortized in substantially level payments, made no less
frequently than quarterly, over a specified period of time. A "reasonable rate
of interest" shall be that rate that provides the Plan with a return
commensurate with the interest rates charged by persons in the business of
lending money for loans which would be made under similar circumstances.
Notwithstanding the foregoing, to the extent that any loan interest rate is
subject to the provisions of the Soldiers and Sailors Relief Act of 1940, it
shall not exceed six percent (6%) per annum.
5.6 Security. Each loan shall be adequately secured, with the security for
the outstanding balance of all loans to the borrower to consist of one-half
(1/2) of the borrower's interest in the Participant's vested Account, or such
other security as the Plan Administrator deems acceptable.
5.7 Loan Limit. Each loan, when added to the outstanding balance of all
other loans to the borrower from all retirement plans of the Plan Sponsor and
its Affiliates which are qualified under Section 401 of the Code, shall not
exceed the lesser of:
(a) $50,000, reduced by the excess, if any, of
(1) the highest outstanding balance of loans made to the borrower
from all retirement plans qualified under Code Section 401 of the Plan
Sponsor and its Affiliates during the one (1) year period immediately
preceding the day prior to the date on which such loan was made, over
(2) the outstanding balance of loans made to the borrower from all
retirement plans qualified under Code Section 401 of the Plan Sponsor
and its Affiliates on the date on which such loan was made, or
(b) one-half (1/2) of the value of the borrower's interest in the
vested Account attributable to the Participant's Account.
For purposes of this Section, the value of the vested Account attributable to a
Participant's Account shall be established as of the latest preceding Valuation
Date, or any later date on which an available valuation was made, and shall be
adjusted for any distributions or contributions made through the date of the
origination of the loan.
5.8 Loan Term. Each loan, by its terms, shall be repaid within five (5)
years, except that, if allowed pursuant to the Loan Procedures, any loan which
is used to acquire any dwelling unit which, within a reasonable time, is to be
used (determined at the time the loan is made) as
18
the principal residence of the borrower may, by its terms, be repaid within a
longer period of time.
5.9 Minimum Amount. Except as may otherwise be established pursuant to the
Loan Procedures, each loan shall be made in an amount of no less than $ 1,000.
5.10 Further Loan Limits. Except as may otherwise be established pursuant to
the Loan Procedures, a borrower is permitted to have only one loan existing
under the Plan at any one time.
5.11 Default. The loan shall be in default if:
(a) a borrower fails to make any loan payment when due;
(b) a Participant ceases to be an Employee and is not otherwise a "party
in interest" as defined in ERISA Section 3(14);
(c) the vested Account held as security under the Plan for the borrower
will, as a result of an impending distribution or withdrawal, be reduced to
an amount less than the amount of all unpaid principal and accrued interest
then outstanding under the loan; or
(d) a borrower makes any untrue representations or warranties in
connection with the obtaining of the loan.
In that event, the Plan Administrator may take such steps as it deems necessary
to preserve the assets of the Plan (in the case of Subsection (a), after any
cure period allowed by the Plan Administrator, if applicable, not to continue
beyond the last day of the calendar quarter following the calendar quarter in
which the required installment payment was due), including, but not limited to,
directing the Trustee to make a distribution to the borrower of an offset amount
(i.e., a deduction of the unpaid principal sum, accrued interest, and any other
applicable charge under the note evidencing the loan from the Participant's
Account). To the extent that such distribution of an offset amount in the case
of Subsection (a) would violate the requirements of Section 401(a) or 401(k)
(because for example, the deduction would have to be made from the Participant's
Employee Pre-Tax Account while the Participant is an Employee), the entire
outstanding balance of the loan (including accrued interest) shall be a deemed
distribution as provided in Treasury Regulations under Code Section 72(p), and
thereafter a distribution of an offset amount may be made at the earliest date
legally permissible or deferred, at the Plan Administrator's discretion applied
on a basis not discriminatory in favor of Highly Compensated Employees, until
the borrower receives another distribution from the Plan. If any part of the
indebtedness under the note evidencing the loan is collected by law or through
an attorney, the borrower shall be liable for attorneys' fees in an amount equal
to ten percent (10%) of the amount then due and all costs of collection.
Notwithstanding the foregoing, a loan may be satisfied upon a Participant's
Termination of Employment arising from the Participant's transfer to another
employer (other than a Plan Sponsor or an Affiliate) in connection with a
corporate transaction involving a sale of assets, merger, or sale of stock, by
distributing the note evidencing
19
the debt as part of an Eligible Rollover Distribution if the trustee, custodian
or administrator for an Eligible Retirement Plan described in Code Section
401(a) or 403(a) indicates its willingness to accept such property.
5.12 Certain Leaves of Absence. Except as may otherwise be established
pursuant to the Loan Procedures, if an Employee is on an approved bona fide
leave of absence (not longer than one year), either without pay from the Plan
Sponsor or an Affiliate or at a rate of pay (after income and employment tax
withholding) that is less than the amount of the installment payments required
under the terms of the loan, the requirement of loan repayment shall be
suspended during the leave of absence and if a Participant is absent from
employment due to his performing service in the uniformed service, the
requirement of loan repayment will be suspended for the period of such service
in the uniformed services. When the Participant resumes employment, loan
payments will resume and must be completed by the end of the period equal to the
original term of the loan plus the period of such military service.
5.13 Regulations. Each loan shall be made only in accordance with
regulations and rulings of the Internal Revenue Service and the Department of
Labor and any supplemental loan procedures established by the Plan
Administrator. The Plan Administrator shall be authorized to administer the loan
program of this Section and shall act in his sole discretion to ascertain
whether the requirements of such regulations and rulings and this Section have
been met.
ARTICLE 6
WITHDRAWALS DURING EMPLOYMENT
6.1 Hardship Withdrawals. The Trustee shall, upon the direction of the Plan
Administrator, withdraw all or portion of a Participant's Employee Pre-Tax
Account consisting of Deferral Amounts (but not earnings thereon), including
catch-up contributions made pursuant to Section 3.1(c), MMNE Company Account and
Rollover Account prior to the time such subaccounts are otherwise distributable
in accordance with the other provisions of the Plan; provided, however, that any
such withdrawal shall be made only if the Participant is an Employee and
demonstrates that he is suffering from `hardship' as determined herein. For
purposes of this Section, a withdrawal will be deemed to be an account of
hardship if the withdrawal is on account of:
(a) expenses for medical care described in Code Section 213(d) incurred
by the Participant, his spouse, or any dependents of the Participant (as
defined in Section 152 of the Code) or necessary for these persons to obtain
medical care described in Code Section 213(d);
(b) purchase (excluding mortgage payments) of a principal residence for
the Participant;
(c) payment of tuition and related educational fees for the next twelve
(12) months of post-secondary education for the Participant, his spouse,
children, or dependents;
20
(d) the need to prevent the eviction of the Participant from his
principal residence or foreclosure on the mortgage of the Participant's
principal residence; or
(e) any other contingency determined by the Internal Revenue Service to
constitute an "immediate and heavy financial need" within the meaning of
Treasury Regulations Section 1.401(k)-l(d).
6.2 Additional Hardship Withdrawal Requirements. In addition to the
requirements set forth in Section 6.1, any withdrawal pursuant to Section 6.1
shall not be in excess of the amount necessary to satisfy the need determined
under Section 6.1 and shall also be subject to the requirements of either
Section 6.2(a) or 6.2(b).
(a) (1) The Participant shall first obtain all withdrawals, other
than hardship withdrawals, and all nontaxable loans currently available
under all plans maintained by the Plan Sponsor; and
(2) The Plan Sponsor shall not permit Elective Deferrals,
including catch-up contributions as described in Code Section 414(v),
for a period of six (6) months after the Participant receives the
withdrawal pursuant to this Section; and
(b) A hardship withdrawal shall be permitted only pursuant to the
suspension method in Section 6.2(a) and not pursuant to the certification
method in this Section 6.2(b), unless the Plan Administrator determines to
permit hardship withdrawal pursuant to either Section 6.2(a) or 6.2(b).
Under the certification method, a hardship withdrawal is permitted if the
Plan Administrator relies on the Participant's certification by execution of
a form provided by the Plan Administrator, unless the Plan Administrator has
actual knowledge to the contrary, that the need determined under Section 6.1
cannot be relieved:
(1) through reimbursement or compensation by insurance or otherwise;
(2) by reasonable liquidation of the assets of the Participant, his
spouse and minor children, to the extent that the liquidation would not
itself cause an immediate and heavy financial need and to the extent
that the assets of the spouse and minor children are reasonably
available to the Participant;
(3) by cessation of Elective Deferrals; or
(4) by other distributions or nontaxable (at the time of the
distribution) loans from plans maintained by the Plan Sponsor or any
other employer, or by borrowing from commercial sources on reasonable
commercial terms.
Such withdrawals shall be made only in accordance with such other rules,
policies, procedures, restrictions, and conditions as the Plan Administrator may
from time to time adopt. Any determination of the existence of hardship and the
amount to be withdrawn on account thereof
21
shall be made by the Plan Administrator (or such other person as may be required
to make such decisions) in accordance with the foregoing rules as applied in a
uniform and nondiscriminatory manner; provided that, unless the Participant
requests otherwise, any such withdrawal shall include the amount necessary to
pay any federal, state and local income taxes and penalties reasonably
anticipated to result from the withdrawal. A withdrawal under Section 6.1 shall
be made in a lump sum to the Participant.
6.3 Age 59-1/2 Withdrawals. A Participant who has attained at least age
59-1/2 may elect to receive, in a lump sum in cash, all or any portion of the
balance of his Employee Pre-Tax Account, his Rollover Account, the vested
portion of his Company Match Account and the vested portion of his Profit
Sharing Account. A Participant who makes a withdrawal under this Section 6.3
will not be eligible to receive any contributions pursuant to Section 3.1 or 3.2
with respect to the three-month period following the date of the withdrawal.
6.4 MMNE Company Account Withdrawals. A Participant who was a participant in
the Medical Management of New England, Inc. 401(k) Plan and who has at least two
(2) years of Service may elect to receive a distribution of all or any portion
of the balance of his MMNE Company Account and Company Match Account at any
time. Distributions under this Section 6.4 shall be made in a reasonable manner
within a reasonable time following the Plan Administrator's receipt of a request
for such a distribution.
ARTICLE 7
PAYMENT OF BENEFITS ON TERMINATION OF EMPLOYMENT
7.1 Eligibility for Payment. A Participant who has a Termination of
Employment shall be eligible to receive payment of his vested Account as soon as
administratively practicable following the Participant's Termination of
Employment. Payment of Participant's vested Account shall be made in accordance
with Section 10.1.
7.2 Vesting. That portion of a Participant's Account in which he is vested
at any given time shall be:
(a) his Employee Pre-Tax Account, MMNE Company Account, Rollover Account
and QMAC/QNEC Account, which shall be fully vested and nonforfeitable at all
times; and
(b) his Company Match Account and Profit Sharing Account computed
according to the following vesting schedule:
Full Years of Percentage
Vesting Service Vested
- --------------- ----------
1 33 1/3%
2 66 2/3%
3 100%
22
7.3 Cash-out/Buyback.
(a) The nonvested portion of the Account of a Participant who has had a
Termination of Employment shall be forfeited as of the earlier of the date
the Participant receives a distribution of the vested portion of his Account
or the Participant's Termination Completion Date. For such purposes, a
Participant who has had a Termination of Employment and who is not vested in
any portion of his Account, the Participant shall be deemed to have received
a distribution of his Account.
(b) If a Participant who has received (or has been deemed to have
received) a distribution of the vested portion of his Account is reemployed
by a Plan Sponsor or an Affiliate prior to his Termination Completion Date
and (1) if the Participant's Account was partially vested, and the
Participant repays to the Fund no later than the fifth anniversary of the
Participant's reemployment by the Plan Sponsor or an Affiliate all of that
portion of his vested Account which was paid to him or (2) if the
Participant's Account was not vested upon his Termination of Employment,
then any portion of his Account which was forfeited shall be restored
effective on the Valuation Date coinciding with or next following the
repayment or the Participant's reemployment, respectively. The restoration
on any Valuation Date of the forfeited portion of the Account of a
Participant pursuant to the preceding sentence shall be made first from
forfeitures available for allocation on that Valuation Date, to the extent
available, and secondly from contributions by the Plan Sponsor. Only after
restorations have been made shall the remaining net income be available for
allocation under Section 4.
7.4 Changes to Vesting Schedule. If a Plan amendment directly or indirectly
changes the vesting schedule, the vesting percentage for each Participant in his
Account accumulated to the date when the amendment is adopted shall not be
reduced as a result of the amendment. In addition, any Participant with at least
three (3) years of Vesting Service may irrevocably elect to remain under the
pre-amendment vesting schedule with respect to all of his benefits accrued both
before and after the amendment, unless after the amendment, any such
Participant's nonforfeitable percentage at any time cannot be less than the
Participant's nonforfeitable percentage determined without regard to such
amendment.
7.5 Suspension for Rehires. If a Participant has a Termination of Employment
and is subsequently reemployed by a Plan Sponsor or an Affiliate prior to
receiving a distribution of his Account under the Plan, such Participant shall
not be entitled to a distribution under this Article while he is an Employee.
7.6 Distribution of Affiliate Plans Merger Accounts. Payment of amounts
attributable to a Participant's Rollover Account which were transferred to the
Plan from the PST Services, Inc. Service Employees' Profit Sharing Retirement
Plan, the Impact Innovations Holdings, Inc. Retirement Savings Plan and the
Rapid Systems Solutions, Inc. 401(k) Savings and Profit Sharing Plan shall be
payable as soon as administratively feasible following such Participant's
notification of the Plan Administrator of his election to receive payment of
that portion of his Account. Payment pursuant to this Section 7.6 shall be made
in accordance with Section 10.1 hereof.
23
7.7 Transfer of Participant. Transfer of a Participant from one Plan Sponsor
to another Plan Sponsor or to an Affiliate shall not be deemed for any purpose
under the Plan to be a termination of employment of the Participant.
ARTICLE 8
PAYMENT OF BENEFITS ON RETIREMENT OR DISABILITY
8.1 Eligibility for Payment. A Participant who has reached a Retirement Date
or terminates employment after becoming subject to a Disability while an
Employee shall be eligible to receive payment of his Account as soon as
administratively practicable thereafter. Payment of a Participant's vested
Account shall be made in accordance with Section 10.1.
8.2 Vesting. The Account of a Participant who has reached a Retirement Date,
has attained Normal Retirement Age while an Employee, or has incurred a
Disability while an Employee shall be fully vested and nonforfeitable.
ARTICLE 9
DEATH BENEFITS
9.1 Eligibility for Payment. If a Participant dies before receiving a
distribution of his vested Account, his Beneficiary shall be eligible to receive
payment of the Participant's vested Account as soon as administratively
practicable following the death of the Participant. Payment of a Participant's
vested Account shall be made in accordance with Section 10.1.
9.2 Vesting. The Account of a deceased Participant shall be vested to the
extent provided pursuant to Article 7 or 8, as applicable. In addition, the
Account of a Participant who dies while an Employee shall be fully vested.
ARTICLE 10
GENERAL RULES ON DISTRIBUTIONS
10.1 Timing and Form.
(a) Payment of a Participant's benefits under the Plan shall be made in
the form of a lump sum cash payment. Notwithstanding any provisions of the
Plan to the contrary, if a Participant's vested Account balance exceeds
$5,000 (without consideration of amounts attributable to a Participant's
Rollover Account), it shall not be distributed before the Participant's
Normal Retirement Age or death without the consent of the Participant. If a
Participant's Account balance does not exceed $5,000 (without consideration
of amounts attributable to a Participant's Rollover Account), it will be
distributed as soon as administratively practicable following the
Participant's Termination of Employment (subject to Section 10.3(b)).
24
(b) Payment of a Participant's vested Account to the Participant will
commence not later than sixty (60) days after the last day of the Plan Year
in which falls the later of (1) the Participant reaching Normal Retirement
Age; or (2) the Participant reaching a Retirement Date or termination after
becoming subject to a Disability while an Employee; provided, however, that
the distribution will be made at a later date specified by the Participant
(subject to Section 10.4) if the Participant requests to delay the
distribution. If the amount of the payment required to commence on the date
determined under this Subsection cannot be ascertained by such date, or if
it is not possible to make such payment on such date because the Plan
Administrator has been unable to locate the Participant after making
reasonable efforts to do so, a payment retroactive to such date may be made
no later than sixty (60) days after the earliest date in which the amount of
such payment can be ascertained for the date on which the Participant is
located.
10.2 Adjustments for Income. Accounts shall not be adjusted for earnings or
losses incurred after the Valuation Date with respect to which the Account is
valued for imminent payout purposes. Prior to distribution of an Account, the
Account shall be reduced by the amount necessary to satisfy the unpaid
principal, accrued interest, and penalties on any loan made to the Participant.
10.3 Direct Rollovers.
(a) Notwithstanding any provisions of the Plan to the contrary that
would otherwise limit a Distributee's election under this Article 10, a
Distributee may elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of a distribution pursuant to this
Section which is an Eligible Rollover Distribution paid directly to an
Eligible Retirement Plan specified by the Distributee in a Direct Rollover
or to directly receive a portion of an Eligible Rollover Distribution and
directly roll the balance over to an Eligible Retirement Plan. If the
Eligible Rollover Distribution is one to which Code Sections 401(a)(11) and
417 do not apply, such Eligible Rollover Distribution may commence less than
thirty (30) days after the notice required under Treasury Regulations
Section 1.411(a)-11(c) is given, provided that:
(i) the Plan Administrator clearly informs the Distributee that the
Distributee has a right to a period of at least thirty (30) days after
receiving the notice to consider the decision of whether or not to elect
a distribution (and, if applicable, a particular distribution option);
and
(ii) the Distributee, after receiving the notice, affirmatively
elects a distribution.
(b) Effective for distributions made on or after March 28, 2005, if a
Participant's vested Account does not exceed $5,000 (without consideration
of amounts attributable to a Participant's Rollover Account) and is
immediately distributable pursuant to Section 10.1(a), the amount to be
distributed pursuant to Section 10.1(a) exceeds $1,000, and the Participant
does not make an election pursuant to Section
25
10.3(a), the Plan Administrator shall pay all of the Participant's vested
Account to an individual retirement account of a designated trustee or
issuer and shall notify the Participant in writing that the distribution may
be transferred by the Participant to another individual retirement plan.
10.4 Required Minimum Distributions. Notwithstanding any other provisions of
the Plan, distributions will be made in accordance with Code Section 401(a)(9)
and the regulations issued thereunder, including the incidental benefit
requirements, and shall be administered in accordance with the requirements of
Appendix D hereto.
ARTICLE 11
ADMINISTRATION OF THE PLAN
11.1 Trust Agreement. The Primary Sponsor shall enter into a Trust Agreement
to establish a Trust with the Trustee designated by the Board of Directors for
the management of the Fund, which Trust Agreement shall form a part of the Plan
and is incorporated herein by reference.
11.2 Operation of the Plan Administrator. The Primary Sponsor shall appoint
a Plan Administrator. If an organization is appointed to serve as the Plan
Administrator, then the Plan Administrator may designate in writing one or more
persons who may act on behalf of the Plan Administrator. If more than one person
is so designated with respect to the same administrative function, a majority of
such persons shall constitute a quorum for the transaction of business and shall
have the full power to act on behalf of the Plan Administrator. The Primary
Sponsor shall have the right to remove the Plan Administrator at any time by
notice in writing. The Plan Administrator may resign at any time by written
notice of resignation to the Trustee and the Primary Sponsor. Upon removal or
resignation of the Plan Administrator, or in the event of the dissolution of the
Plan Administrator, the Primary Sponsor shall appoint a successor.
11.3 Fiduciary Responsibility.
(a) The Plan Administrator, as a Named Fiduciary, may allocate its
fiduciary responsibilities among Fiduciaries other than the Trustee,
designated in writing by the Plan Administrator and may designate in writing
persons other than the Trustee to carry out its fiduciary responsibilities
under the Plan. The Plan Administrator may remove any person designated to
carry out its fiduciary responsibilities under the Plan by notice in writing
to such person.
(b) The Plan Administrator and each other Fiduciary may employ persons
to perform services and to render advice with regard to any of the
Fiduciary's responsibilities under the Plan. Charges for all such services
performed and advice rendered may be paid from the Fund to the extent
permitted by ERISA.
(c) Each Plan Sponsor shall indemnify and hold harmless each person
constituting the Plan Administrator or the Investment Committee, if any,
from and
26
against any and all claims, losses, costs, expenses (including, without
limitation, attorney's fees and court costs), damages, actions or causes of
action arising from, on account of or in connection with the performance by
such person of his duties in such capacity, other than such of the foregoing
arising from, on account of or in connection with the willful neglect or
willful misconduct of such person.
11.4 Duties of the Plan Administrator.
(a) The Plan Administrator shall advise the Trustee with respect to
all payments under the terms of the Plan and shall direct the Trustee in
writing to make such payments from the Fund; provided, however, in no
event shall the Trustee make such payments if the Trustee has actual
knowledge that such payments are contrary to the terms of the Plan and
the Trust.
(b) The Plan Administrator shall from time to time establish rules,
not contrary to the provisions of the Plan and the Trust, for the
administration of the Plan and the transaction of its business. All
elections and designations under the Plan by a Participant or
Beneficiary shall be made on forms prescribed by the Plan Administrator.
The Plan Administrator shall have discretionary authority to construe
the terms of the Plan and shall determine all questions arising in the
administration, interpretation and application of the Plan, including,
but not limited to, those concerning eligibility for benefits and it
shall not act so as to discriminate in favor of any person. All
determinations of the Plan Administrator shall be conclusive and binding
on all Employees, Participants, Beneficiaries and Fiduciaries, subject
to the provisions of the Plan and the Trust and subject to applicable
law.
(c) The Plan Administrator shall furnish Participants and
Beneficiaries with all disclosures now or hereafter required by ERISA or
the Code. The Plan Administrator shall file, as required, the various
reports and disclosures concerning the Plan and its operations as
required by ERISA and by the Code, and shall be solely responsible for
establishing and maintaining all records of the Plan and the Trust.
(d) The statement of specific duties for a Plan Administrator in
this Section is not in derogation of any other duties which a Plan
Administrator has under the provisions of the Plan or the Trust or under
applicable law.
11.5 Investment Manager. The Primary Sponsor may, by action in writing
provided to the Trustee, appoint an Investment Manager. Any Investment Manager
may be removed in the same manner in which appointed, and in the event of any
removal, the Investment Manager shall, as soon as possible, but in no event more
than thirty (30) days after notice of removal, turn over all assets managed by
it to the Trustee or to any successor Investment Manager appointed, and shall
make a full accounting to the Primary Sponsor with respect to all assets managed
by it since its appointment as an Investment Manager.
11.6 Investment Committee. The Primary Sponsor may, by action in writing
certified by notice to the Trustee, appoint an Investment Committee. The Primary
Sponsor shall have the
27
right to remove any person on the Investment Committee at any time by notice in
writing to such person. A person on the Investment Committee may resign at any
time by written notice of resignation to the Primary Sponsor. Upon such removal
or resignation, or in the event of the death of a person on the Investment
Committee, the Primary Sponsor may appoint a successor. Until a successor has
been appointed, the remaining persons on the Investment Committee may continue
to act as the Investment Committee.
11.7 Action by a Plan Sponsor. Any action to be taken by a Plan Sponsor
shall be taken by persons duly authorized by the Plan Sponsor, except, subject
to Section 16.1, amendments to, termination of, or termination of a Plan Sponsor
participation in, the Plan or the Trust, or the determination of the basis of
any Plan Sponsor contributions, may be made only to the extent authorized by
written resolution or written direction of the board of directors or appropriate
governing body. Nothing herein shall be construed to prohibit the board of
directors or appropriate governing body from delegating to any officer or other
appropriate person of a Plan Sponsor the authority to take any such actions as
may be specified in such resolution or written direction.
11.8 Appeals Fiduciary. The Primary Sponsor shall appoint an Appeals
Fiduciary. The Appeals Fiduciary shall be required to review claims for benefits
payable due to a Participant's Disability that are initially denied by the Plan
Administrator and for which the claimant requests a full and fair review
pursuant to Section 12.4. The Appeals Fiduciary may not be the individual who
made the initial adverse determination with respect to any claim he reviews and
may not be a subordinate of any individual who made the initial adverse
determination. The Appeals Fiduciary may be removed in the same manner in which
appointed or may resign at any time by written notice of resignation to the
Primary Sponsor. Upon such removal or resignation, the Primary Sponsor shall
appoint a successor.
ARTICLE 12
CLAIMS REVIEW PROCEDURE
12.1 Notice of Denial. If a Participant or a Beneficiary is denied a claim
for benefits under the Plan, the Plan Administrator shall provide to the
claimant written notice of the denial within ninety (90) days (forty-five (45)
days with respect to a denial of any claim for benefits due to the Participant's
Disability) after the Plan Administrator receives the claim, unless special
circumstances require an extension of time for processing the claim. If such an
extension of time is required, written notice of the extension shall be
furnished to the claimant prior to the termination of the initial 90-day or
45-day period, as applicable. In no event shall the extension exceed a period of
ninety (90) days (thirty (30) days with respect to a claim for benefits due to
the Participant's Disability) from the end of such initial period. With respect
to a claim for benefits due to the Participant's Disability, an additional
extension of up to thirty (30) days beyond the initial 30-day extension period
may be required for processing the claim. In such event, written notice of the
extension shall be furnished to the claimant within the initial 30-day extension
period. Any extension notice shall indicate the special circumstances requiring
the extension of time, the date by which the Plan Administrator expects to
render the final decision,
28
the standards on which entitlement to benefits are based, the unresolved issues
that prevent a decision on the claim and the additional information needed to
resolve those issues.
12.2 Contents of Notice of Denial. If a Participant or Beneficiary is
denied a claim for benefits under a Plan, the Plan Administrator shall provide
to such claimant written notice of the denial which shall set forth:
(a) the specific reasons for the denial;
(b) specific references to the pertinent provisions of the Plan on
which the denial is based;
(c) a description of any additional material or information
necessary for the claimant to perfect the claim and an explanation of why
such material or information is necessary;
(d) an explanation of the Plan's claim review procedures, and the
time limits applicable to such procedures, including a statement of the
claimant's right to bring a civil action under Sections 502(a) of ERISA
following an adverse benefit determination on review;
(e) in the case of a claim for benefits due to a Participant's
Disability, if an internal rule, guideline, protocol or other similar
criterion is relied upon in making the adverse determination, either the
specific rule, guideline, protocol or other similar criterion; or a
statement that such rule, guideline, protocol or other similar criterion
was relied upon in making the decision and that a copy of such rule,
guideline, protocol or other similar criterion will be provided free of
charge upon request; and
(f) in the case of a claim for benefits due to a Participant's
Disability, if a denial of the claim is based on a medical necessity or
experimental treatment or similar exclusion or limit, an explanation of
the scientific or clinical judgment for the denial, an explanation
applying the terms of the Plan to the claimant's medical circumstances or
a statement that such explanation will be provided free of charge upon
request.
12.3 Right to Review. After receiving written notice of the denial of a
claim or that a domestic relations order is a qualified domestic relations
order, a claimant or his representative shall be entitled to:
(a) request a full and fair review of the denial of the claim or
determination that a domestic relations order is a qualified domestic
relations order by written application to the Plan Administrator (or
Appeals Fiduciary in the case of a claim for benefits payable due to a
Participant's Disability);
(b) request, free of charge, reasonable access to, and copies of,
all documents, records, and other information relevant to the claim;
29
(c) submit written comments, documents, records, and other
information relating to the denied claim to the Plan Administrator or
Appeals Fiduciary, as applicable; and
(d) a review that takes into account all comments, documents,
records, and other information submitted by the claimant relating to the
claim, without regard to whether such information was submitted or
considered in the initial benefit determination.
12.4 Application for Review.
(a) If a claimant wishes a review of the decision denying his claim
to benefits under the Plan, other than a claim described in Subsection (b)
of this Section 12.4, or if a claimant wishes to appeal a decision that a
domestic relations order is a qualified domestic relations order, he must
submit the written application to the Plan Administrator within sixty (60)
days after receiving written notice of the denial or notice that the
domestic relations order is a qualified domestic relations order.
(b) If the claimant wishes a review of the decision denying his
claim to benefits under the Plan due to a Participant's Disability, he
must submit the written application to the Appeals Fiduciary within one
hundred eighty (180) days after receiving written notice of the denial.
With respect to any such claim, in deciding an appeal of any denial based
in whole or in part on a medical judgment (including determinations with
regard to whether a particular treatment, drug, or other item is
experimental, investigational, or not medically necessary or appropriate),
the Appeals Fiduciary shall
(i) consult with a health care professional who has
appropriate training and experience in the field of medicine
involved in the medical judgment; and
(ii) identify the medical and vocational experts whose advice
was obtained on behalf of the Plan in connection with the denial
without regard to whether the advice was relied upon in making the
determination to deny the claim.
Notwithstanding the foregoing, the health care professional consulted
pursuant to this Subsection (b) shall be an individual who was not
consulted with respect to the initial denial of the claim that is the
subject of the appeal or a subordinate of such individual.
12.5 Hearing. Upon receiving a written application for review pursuant to
Subsection (a) or (b) of this Section, the Plan Administrator or Appeals
Fiduciary, as applicable, may schedule a hearing for purposes of reviewing the
claimant's claim, which hearing shall take place not more than thirty (30) days
from the date on which the Plan Administrator or Appeals Fiduciary received such
written application for review.
30
12.6 Notice of Hearing. At least ten (10) days prior to the scheduled
hearing, the claimant and his representative designated in writing by him, if
any, shall receive written notice of the date, time, and place of such scheduled
hearing. The claimant or his representative, if any, may request that the
hearing be rescheduled, for his convenience, on another reasonable date or at
another reasonable time or place.
12.7 Counsel. All claimants requesting a review of the decision denying
their claim for benefits may employ counsel for purposes of the hearing.
12.8 Decision on Review. No later than sixty (60) days (forty-five (45)
days with respect to a claim for benefits due to the Participant's Disability)
following the receipt of the written application for review, the Plan
Administrator or the Appeals Fiduciary, as applicable, shall submit its decision
on the review in writing to the claimant involved and to his representative, if
any, unless the Plan Administrator or Appeals Fiduciary determines that special
circumstances (such as the need to hold a hearing) require an extension of time,
to a day no later than one hundred twenty (120) days (ninety (90) days with
respect to a claim for benefits due to the Participant's Disability) after the
date of receipt of the written application for review. If the Plan Administrator
or Appeals Fiduciary determines that the extension of time is required, the Plan
Administrator or Appeals Fiduciary shall furnish to the claimant written notice
of the extension before the expiration of the initial sixty (60) day (forty-five
(45) days with respect to a claim for benefits due to the Participant's
Disability) period. The extension notice shall indicate the special
circumstances requiring an extension of time and the date by which the Plan
Administrator or Appeals Fiduciary expects to render its decision on review. In
the case of a decision adverse to the claimant, the Plan Administrator or
Appeals Fiduciary shall provide to the claimant written notice of the denial
which shall include:
(a) the specific reasons for the decision;
(b) specific references to the pertinent provisions of the Plan on
which the decision is based;
(c) a statement that the claimant is entitled to receive, upon
request and free of charge, reasonable access to, and copies of, all
documents, records, and other information relevant to the claimant's claim
for benefits;
(d) an explanation of the Plan's claim review procedures, and the
time limits applicable to such procedures, including a statement of the
claimant's right to bring an action under Section 502(a) of ERISA
following the denial of the claim upon review;
(e) in the case of a claim for benefits due to the Participant's
Disability, if an internal rule, guideline, protocol or other similar
criterion is relied upon in making the adverse determination, either the
specific rule, guideline, protocol or other similar criterion; or a
statement that such rule, guideline, protocol or other similar criterion
was relied upon in making the decision and that a copy of such rule,
guideline, protocol or other similar criterion will be provided free of
charge upon request;
31
(f) in the case of a claim for benefits due to a Participant's
Disability, if a denial of the claim is based on a medical necessity or
experimental treatment or similar exclusion or limit, an explanation of
the scientific or clinical judgment for the denial, an explanation
applying the terms of the Plan to the claimant's medical circumstances or
a statement that such explanation will be provided free of charge upon
request; and
(g) in the case of a claim for benefits due to a Participant's
Disability, a statement regarding the availability of other voluntary
alternative dispute resolution options.
ARTICLE 13
INCOMPETENT DISTRIBUTEE AND UNCLAIMED PAYMENTS
13.1 Anti-Alienation. No benefit which shall be payable under the Plan to
any person shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge, and any attempt to
anticipate, alienate, sell, transfer, assign, pledge, encumber or charge the
same shall be void; and no such benefit shall in any manner be liable for, or
subject to, the debts, contracts, liabilities, engagements or torts of any
person, nor shall it be subject to attachment or legal process for, or against,
such person, and the same shall not be recognized under the Plan, except to such
extent as may be required by law. Notwithstanding the above, this Section shall
not apply to a "qualified domestic relations order" (as defined in Code Section
414(p)), and benefits may be paid pursuant to the provisions of such an order.
The Plan Administrator shall develop procedures (in accordance with applicable
federal regulations) to determine whether a domestic relations order is
qualified, and, if so, the method and the procedures for complying therewith. In
addition, a distribution to an "alternate payee" (as defined in Code Section
414(p)) shall be permitted if such distribution is authorized by a qualified
domestic relations order, even if the affected Participant has not yet separated
from service and has not yet reached the "earliest retirement age" (as defined
in Code Section 414(p)). If the benefit to be paid pursuant to a qualified
domestic relations order is $5,000 or less, it will be paid out as soon as
administratively feasible after the Plan Administrator has approved the order.
13.2 Exceptions to Anti-Alienation. Notwithstanding any other provision of
the Plan, the benefit of a Participant shall be subject to legal process and may
be assigned, alienated or attached pursuant to a court judgment or settlement
provided:
(a) such Participant is ordered or required to pay the Plan in
accordance with the following:
(1) a judgment or conviction for a crime involving the Plan;
(2) a civil judgment entered by a court in an action brought
in connection with a violation of part 4 of subtitle B of Title I of
ERISA; or
32
(3) a settlement agreement between such Participant and the
Secretary of Labor, in connection with a violation (or alleged
violation) of part 4 of subtitle B of Title I of ERISA by a
fiduciary or any other person; and
(b) the judgment, order, decree, or settlement agreement shall
expressly provide for the offset of all or part of the amount ordered or
required to be paid to the Plan against such Participant's benefits under
the Plan.
13.3 Minors and Incompetents. Whenever any benefit which shall be payable
under the Plan is to be paid to or for the benefit of any person who is then a
minor or determined to be incompetent by qualified medical advice, the Plan
Administrator need not require the appointment of a guardian or custodian, but
shall be authorized to cause the same to be paid over to the person having
custody of such minor or incompetent, or to cause the same to be paid to such
minor or incompetent without the intervention of a guardian or custodian, or to
cause the same to be paid to a legal guardian or custodian of such minor or
incompetent if one has been appointed or to cause the same to be used for the
benefit of such minor or incompetent.
13.4 Missing Participants. If the Plan Administrator cannot ascertain the
whereabouts of any Participant to whom a payment is due under the Plan, the Plan
Administrator may direct that the payment and all remaining payments otherwise
due to the Participant be cancelled on the records of the Plan and the amount
thereof applied as a forfeiture in accordance with Plan provisions except that,
in the event the Participant later notifies the Plan Administrator of his
whereabouts and requests the payments due to him under the Plan, the forfeited
amount shall be restored either from Trust income or by a special contribution
by the Plan Sponsor to the Plan, as determined by the Plan Administrator, in an
amount equal to the payment to be paid to the Participants.
ARTICLE 14
PROHIBITION AGAINST DIVERSION
At no time shall any part of the Fund be used for or diverted to purposes
other than the exclusive benefit of the Participants or their Beneficiaries,
subject, however, to the payment of all taxes and administrative expenses and
subject to the provisions of the Plan with respect to returns of contributions.
Expenses incurred in the administration of the Plan shall be paid from the
Trust, to the extent permitted by ERISA, unless such expenses are paid by the
Plan Sponsor; provided, further, that the Plan Sponsor may be reimbursed by the
Fund, to the extent permitted by ERISA, for Plan expenses originally paid by the
Plan Sponsor.
ARTICLE 15
LIMITATION OF RIGHTS
Participation in the Plan shall not give any Employee any right or claim
except to the extent that such right is specifically fixed under the terms of
the Plan. The adoption of the Plan and the Trust by any Plan Sponsor shall not
be construed to give any Employee a right to be
33
continued in the employ of a Plan Sponsor or as interfering with the right of a
Plan Sponsor to terminate the employment of any Employee at any time.
ARTICLE 16
AMENDMENT TO OR TERMINATION OF THE
PLAN AND THE TRUST
16.1 Right of Primary Sponsor to Amend or Terminate. The Primary Sponsor
reserves the right at any time to modify or amend or terminate the Plan or the
Trust in whole or in part; provided, however, that the Primary Sponsor shall
have no power to modify or amend the Plan in such manner as would cause or
permit any portion of the funds held under a Plan to be used for, or diverted
to, purposes other than for the exclusive benefit of Participants or their
Beneficiaries, or as would cause or permit any portion of a fund held under the
Plan to become the property of a Plan Sponsor; and provided further, that the
duties or liabilities of the Trustee shall not be increased without its written
consent. No such modifications or amendments shall have the effect of
retroactively changing or depriving Participants or Beneficiaries of rights
already accrued under the Plan. No Plan Sponsor other than the Primary Sponsor
shall have the right to so modify, amend or terminate the Plan or the Trust.
Notwithstanding the foregoing, each Plan Sponsor may terminate its own
participation in the Plan and Trust pursuant to the Plan.
16.2 Right of Plan Sponsor to Terminate Participation. Each Plan Sponsor
other than the Primary Sponsor shall have the right to terminate its
participation in the Plan and Trust by resolution of its board of directors or
other appropriate governing body and notice in writing to the Primary Sponsor
and the Trustee unless such termination would result in the disqualification of
the Plan or the Trust or would adversely affect the exempt status of the Plan or
the Trust as to any other Plan Sponsor. If contributions by or on behalf of a
Plan Sponsor are completely terminated, the Plan and Trust shall be deemed
terminated as to such Plan Sponsor. Any termination by a Plan Sponsor, shall not
be a termination as to any other Plan Sponsor.
16.3 Plan Termination.
(a) If the Plan is terminated by the Primary Sponsor or if
contributions to the Trust should be permanently discontinued, it shall
terminate as to all Plan Sponsors and the Fund shall be used, subject to
the payment of expenses and taxes, for the benefit of Participants and
Beneficiaries, and for no other purposes, and the Account of each affected
Participant shall be fully vested and nonforfeitable, notwithstanding the
provisions of the Section of the Plan which sets forth the vesting
schedule.
(b) In the event of the partial termination of the Plan, each
affected Participant's Account shall be fully vested and nonforfeitable,
notwithstanding the provisions of the Section of the Plan which sets forth
the vesting schedule.
16.4 Payments Upon Plan Termination. In the event of the termination of
the Plan or the Trust with respect to a Plan Sponsor, the Accounts of the
Participants with respect to the Plan as adopted by such Plan Sponsor shall be
distributed in lump sum payments pursuant to the
34
instructions of the Plan Administrator; provided that the Trustee shall not be
required to make any distribution until it receives a copy of an Internal
Revenue Service determination letter to the effect that the termination does not
affect the qualified status of the Plan or the exempt status of the Trust or, in
the event that such letter is applied for and is not issued, until the Trustee
is reasonably satisfied that adequate provision has been made for the payment of
all taxes which may be due and owing by the Trust.
16.5 Plan Merger. In the case of any merger or consolidation of the Plan
with, or any transfer of the assets or liabilities of the Plan to, any other
plan qualified under Code Section 401, the terms of the merger, consolidation or
transfer shall be such that each Participant would receive (in the event of
termination of the Plan or its successor immediately thereafter) a benefit which
is no less than the benefit which the Participant would have received in the
event of termination of the Plan immediately before the merger, consolidation or
transfer.
16.6 Optional Benefits. Notwithstanding any other provision of the Plan,
an amendment to the Plan -
(a) which eliminates or reduces an early retirement benefit, if any,
or which eliminates or reduces a retirement-type subsidy (as defined in
regulations issued by the Department of the Treasury), if any, or
(b) which eliminates an optional form of benefit (except to the
extent otherwise provided in Treasury Regulations)
shall not be effective with respect to benefits attributable to service before
the amendment is adopted. In the case of a retirement-type subsidy described in
Subsection (a) above, this Section shall be applicable only to a Participant who
satisfies, either before or after the amendment, the preamendment conditions for
the subsidy.
ARTICLE 17
ADOPTION OF PLAN BY AFFILIATES
Any corporation or other business entity related to the Primary Sponsor by
function or operation and any Affiliate, if the corporation, business entity or
Affiliate is authorized to do so by written direction adopted by the Board of
Directors, may adopt the Plan and the related Trust by action of the board of
directors or other appropriate governing body of such corporation, business
entity or Affiliate. Any adoption shall be evidenced by certified copies of the
resolutions of the foregoing board of directors or governing body indicating the
adoption and by the execution of the Trust by the adopting corporation, or
business entity or Affiliate. The resolution shall state and define the
effective date of the adoption of the Plan by the Plan Sponsor and, for the
purpose of Code Section 415, the "limitation year" as to such Plan Sponsor.
Notwithstanding the foregoing, however, if the Plan and Trust as adopted by an
Affiliate or other corporation or business entity under the foregoing provisions
shall fail to receive the initial approval of the Internal Revenue Service as a
qualified Plan and Trust under Code Sections 401(a) and 501(a), any
contributions by the Affiliate or other corporation or business entity after
35
payment of all expenses will be returned to such Plan Sponsor free of any trust,
and the Plan and Trust shall terminate, as to the adopting Affiliate or other
corporation or business entity.
ARTICLE 18
QUALIFICATION AND RETURN OF CONTRIBUTIONS
18.1 Initial Qualification Failure. If the Plan and the related Trust fail
to receive the initial approval of the Internal Revenue Service as a qualified
plan and trust, within one (1) year after the date of denial of qualification
(a) the contribution of a Plan Sponsor after payment of all expenses
will be returned to a Plan Sponsor free of the Plan and Trust,
(b) contributions made by a Participant shall be returned to the
Participant who made the contributions, and
(c) the Plan and Trust shall thereupon terminate.
18.2 Deductibility. All Plan Sponsor contributions to the Plan are
contingent upon deductibility. To the extent permitted by the Code and other
applicable laws and regulations thereunder, upon a Plan Sponsor's request, a
contribution which was made by reason of a mistake of fact or which was
nondeductible under Code Section 404, shall be returned to a Plan Sponsor within
one (1) year after the payment of the contribution, or the disallowance of the
deduction (to the extent disallowed), whichever is applicable. In the event of a
contribution which was made by reason of a mistake of fact or which was
nondeductible, the amount to be returned to the Plan Sponsor shall be the excess
of the contribution above the amount that would have been contributed had the
mistake of fact or the mistake in determining the deduction not occurred, less
any net loss attributable to the excess. Any net income attributable to the
excess shall not be returned to the Plan Sponsor. No return of any portion of
the excess shall be made to the Plan Sponsor if the return would cause the
balance in a Participant's Account to be less than the balance would have been
had the mistaken contribution not been made.
ARTICLE 19
INCORPORATION OF SPECIAL LIMITATIONS
Appendices A, B, C and D to the Plan, attached hereto, are incorporated by
reference and the provisions of the same shall apply notwithstanding anything to
the contrary contained herein.
[Remainder of Page Intentionally Left Blank]
36
IN WITNESS WHEREOF, the Primary Sponsor has caused this indenture to be
executed as of the date first above written.
PER-SE TECHNOLOGIES, INC.
By: PHILIP M. PEAD
-----------------------------
Philip M. Pead
Chairman, President and
Chief Executive Officer
37
APPENDIX A
LIMITATION ON ALLOCATIONS
SECTION 1
Except to the extent permitted under Section 3.1(c) and Code Section
414(v), if applicable, the `annual addition' for any Participant for any one
limitation year may not exceed the lesser of:
(a) $42,000, as adjusted under Code Section 415(d); or
(b) 100% of the Participant's Annual Compensation.
The limit described in Subsection (b) shall not apply to any contribution
for medical benefits after separation from service (within the meaning of Code
Section 401(h) or 419A(f)(2)) which is otherwise treated as an annual addition.
SECTION 2
For the purposes of this Appendix A, the term "annual addition" for any
Participant means for any limitation year, the sum of certain Plan Sponsor,
Affiliate, and Participant contributions, forfeitures, and other amounts as
determined in Code Section 415(c)(2) in effect for that limitation year.
Participant contributions shall be determined without regard to Rollover
Amounts, employee contributions to a simplified employee pension which are
excludable from gross income under Code Section 401(k)(6), and catch-up
contributions as described in Code Section 414(v).
SECTION 3
For purposes of this Appendix A, the term "limitation year" shall mean a
Plan Year unless a Plan Sponsor elects, by adoption of a written resolution, to
use any other twelve month period adopted in accordance with regulations issued
by the Secretary of the Treasury. For purposes of applying the limitations set
forth in this Appendix A, the term "Plan Sponsor" shall mean a Plan Sponsor and
any other corporations which are members of the same controlled group of
corporations (as described in Section 414(b) of the Code, as modified by Code
Section 415(h)) as is a Plan Sponsor, any other trades or businesses (whether or
not incorporated) under common control (as described in Code Section 414(c), as
modified by Code Section 415(h)) with a Plan Sponsor, any other corporations,
partnerships, or other organizations which are members of an affiliated service
group (as described in Section 414(m) of the Code) with a Plan Sponsor, and any
other entity required to be aggregated with a Plan Sponsor pursuant to
regulations under Code Section 414(o).
A-1
SECTION 4
For purposes of applying the limitations of this Appendix A, all defined
contribution plans maintained or deemed to be maintained by a Plan Sponsor shall
be treated as one defined contribution plan, and all defined benefit plans now
or previously maintained or deemed to be maintained by a Plan Sponsor shall be
treated as one defined benefit plan. In the event any of the actions to be taken
pursuant to Section 6 of this Appendix A or pursuant to any language of similar
import in another defined contribution plan are required to be taken as a result
of the annual additions of a Participant exceeding the limitations set forth in
Section 1 of this Appendix A, because of the Participant's participation in more
than one defined contribution plan, the actions shall be taken first with regard
to this Plan.
SECTION 5
In the event that as a result of the allocation of forfeitures to the
Account of a Participant, a reasonable error in estimating the Participant's
Annual Compensation, a reasonable error in determining the amount of Elective
Deferrals, or other similar circumstances, the annual addition allocated to the
Account of a Participant exceeds the limitations set forth in Section 1 of this
Appendix A, the Plan Administrator shall, in writing, direct the Trustee to take
such of the following actions as the Plan Administrator shall deem appropriate,
specifying in each case the amount or amounts of contributions involved:
(a) A Participant's annual addition shall be reduced by distributing
to the Participant's contributions made by the Plan Sponsor on behalf of
the Participant pursuant to Section 3.1 with respect to which no
contribution is made under Section 3.2 which cause the annual addition to
exceed such limitations;
(b) If further reduction is necessary, contributions made by the
Plan Sponsor on behalf of the Participant pursuant to Section 3.1 and
contributions of the Plan Sponsor thereon pursuant to Section 3.2 shall be
reduced in the amount of the remaining excess and distributed to the
Participant. The amount of the reduction under Section 3.2 shall be
reallocated to the Company Match Accounts of Participants who are not
affected by the limitation in the same proportion as the contribution of
the Plan Sponsor for the year is allocated under Section 3.1(d) to the
Accounts of such Participants;
(c) If further reduction is necessary, contributions made by the
Plan Sponsor on behalf of the Participant pursuant to Section 3.3 shall be
reduced in the amount of the remaining excess. The amount of the reduction
shall be reallocated to the Accounts of Participants who are not affected
by the limitations in the same proportion as the contribution of the Plan
Sponsor for the year is allocated under Section 3.1(c) to the Accounts of
such Participants;
(d) If further reduction is necessary, forfeitures allocated to the
Participant's Account shall be reduced by the amount of the remaining
excess. The amount of the
A-2
reduction shall be reallocated to the Profit Sharing Accounts of
Participants who are not affected by the limitations in the same
proportions as the contributions of the Plan Sponsor for the year are
allocated to the Profit Sharing Accounts of such Participants;
(e) If the contribution of the Plan Sponsor and forfeitures would
cause the annual addition to exceed the limitations set forth herein with
respect to all Participants under the Plan, the portion of such
contribution in excess of the limitations shall be segregated in a
suspense account. While the suspense account is maintained, (1) no Plan
Sponsor contributions under the Plan shall be made which would be
precluded by this Appendix A, (2) income, gains and loses of the Fund
shall not be allocated to such suspense account and (3) amounts in the
suspense account shall be allocated in subsequent limitation years as Plan
Sponsor contributions and forfeitures under the Plan as of each Valuation
Date on which Plan Sponsor contributions may be allocated for each such
limitation year until the suspense account is exhausted. In the event of
the termination of the Plan, the amounts in the suspense account shall be
returned to the Plan Sponsor to the extent that such amounts may not then
be allocated to Participants' Accounts.
Notwithstanding anything contained in the Plan to the contrary, the Plan
Administrator may modify the provisions of this Section 5 with respect to
reduction of Participant's accounts in accordance with such procedures as the
Plan Administrator may establish with respect to catch-up contributions
described in Code Section 414(v).
A-3
APPENDIX B
TOP-HEAVY PROVISIONS
SECTION 1
As used in this Appendix B, the following words shall have the following
meanings:
(a) "Determination Date" means, with respect to any Plan Year, the
last day of the preceding Plan Year, or, in the case of the first Plan
Year, means the last day of the first Plan Year.
(b) `Key Employee' means an Employee or former Employee (including a
Beneficiary of a Key Employee or former Key Employee) who at any time
during the Plan Year containing the Determination Date was:
(1) an officer of the Plan Sponsor or any Affiliate whose
Annual Compensation was greater than $130,000 (as adjusted for
changes in the cost of living as provided in regulations issued by
the Secretary of the Treasury) for the calendar year in which the
Plan Year ends, where the term `officer' means an administrative
executive in regular and continual service to the Plan Sponsor or an
Affiliate; provided, however, that in no event shall the number of
officers exceed the lesser of (A) fifty (50) employees; or (B) the
greater of (I) three (3) employees or (II) ten percent (10%) of the
number of Employees during the Plan Year, with any non-integer being
increased to the next integer. If for any year, no officer of the
Plan Sponsor meets the requirements of this Subparagraph (1), the
highest paid officer of the Plan Sponsor for the Plan Year shall be
considered an officer for purposes of this Subparagraph (1);
(2) an owner of more than five percent (5%) of the outstanding
stock of the Plan Sponsor or an Affiliate or more than five percent
(5%) of the total combined voting power of all stock of the Plan
Sponsor or an Affiliate; or
(3) an owner of more than one percent (1%) of the outstanding
stock of the Plan Sponsor or an Affiliate or more than one percent
(1%) of the total combined voting power of all stock of the Plan
Sponsor or an Affiliate, and who in such Plan Year had Annual
Compensation from the Plan Sponsor and all of its Affiliates of more
than $150,000.
For purposes of determining ownership under Subsections (2) and (3) above,
the rules set forth in Code Section 318(a)(2) shall be applied as follows (i) in
the case of any Plan Sponsor or Affiliate which is a corporation, by
substituting five percent (5%) for fifty percent (50%) and, (ii) in the case of
any Plan Sponsor or Affiliate which is not a corporation, ownership shall be
determined in accordance with Treasury Regulations which shall be based on
principles similar to the principles of Code Section 318 (modified as described
in Clause (i) above).
B-1
Employees other than Key Employees are sometimes referred to in this
Appendix B as `non-key employees.'
(c) "Required Aggregation Group" means:
(1) each plan of the Plan Sponsor and its Affiliates which
qualifies under Code Section 401 (a) in which a Key Employee is a
participant, and
(2) each other plan of the Plan Sponsor and its Affiliates
which qualifies under Code Section 401 (a) and which enables any
plan described in Subsection (a) of this Section to meet the
requirements of Section 401(a)(4) or 410 of the Code.
(d) (1) "Top-Heavy" means:
(A) if the Plan is not included in a Required
Aggregation Group, the Plan's condition in a Plan Year for
which, as of the Determination Date:
(i) the present value of the cumulative Accounts
(excluding catch-up contributions as described in Code
Section 414(v) made in the Plan Year in which the
determination is being made) under the Plan for all Key
Employees exceeds sixty percent (60%) of the present
value of the cumulative Accounts (excluding catch-up
contributions as described in Code Section 414(v) for
the current Plan Year) under the Plan for all
Participants; and
(ii) the Plan, when included in every potential
combination, if any, with any or all of:
(I) any Required Aggregation Group, and
(II) any plan of the Plan Sponsor which is
not part of any Required Aggregation Group and
which qualifies under Code Section 401 (a)
is part of a Top-Heavy Group (as defined in Paragraph
(2) of this Subsection); and
(B) if the Plan is included in a Required Aggregation
Group, the Plan's condition in a Plan Year for which, as of
the Determination Date:
(i) the Required Aggregation Group is a Top-Heavy
Group (as defined in Paragraph (2) of this Subsection);
and
B-2
(ii) the Required Aggregation Group, when included
in every potential combination, if any, with any or all
of the plans of the Plan Sponsor and its Affiliates
which are not part of the Required Aggregation Group and
which qualify under Code Section 401(a), is part of a
Top-Heavy Group (as defined in Paragraph (2) of this
Subsection).
(C) For purposes of Subparagraphs (A)(ii) and (B)(ii) of
this Paragraph (1), any combination of plans must satisfy the
requirements of Sections 401(a)(4) and 410 of the Code.
(2) A group shall be deemed to be a Top-Heavy Group if:
(A) the sum, as of the Determination Date, of the
present value of the cumulative accrued benefits for all Key
Employees under all plans included in such group exceeds
(B) sixty percent (60%) of a similar sum determined for
all participants in such plans.
(3) (A) For purposes of this Section, the present value of
the accrued benefit for any participant in a defined
contribution plan as of any Determination Date or last day of
a plan year shall be the sum of:
(i) as to any defined contribution plan other than
a simplified employee pension, the account balance as of
the most recent valuation date occurring within the plan
year ending on the Determination Date or last day of a
plan year, and
(ii) as to any simplified employee pension, the
aggregate employer contributions, and
(iii) an adjustment for contributions due as of
the Determination Date or last day of a plan year.
In the case of a plan that is not subject to the minimum
funding requirements of Code Section 412, the adjustment in
Clause (iii) of this Subparagraph (A) shall be the amount of
any contributions actually made after the valuation date but
on or before the Determination Date or last day of the plan
year to the extent not included under Clause (i) or (ii) of
this Subparagraph (A); provided, however, that in the first
plan year of the plan, the adjustment in Clause (iii) of this
Subparagraph (A) shall also reflect the amount of any
contributions made thereafter that are allocated as of a date
in such first plan year. In the case of a plan that is subject
to the minimum funding requirements, the account balance in
Clause (i) and the aggregate contributions in Clause (ii) of
this Subparagraph (A) shall
B-3
include contributions that would be allocated as of a date not
later than the Determination Date or last day of a plan year,
even though those amounts are not yet required to be
contributed, and the adjustment in Clause (iii) of this
Subparagraph (A) shall be the amount of any contribution
actually made (or due to be made) after the valuation date but
before the expiration of the extended payment period in Code
Section 412(c)(10) to the extent not included under Clause (i)
or (ii) of this Subparagraph (A).
(B) For purposes of this Subsection, the present value
of the accrued benefit for any participant in a defined
benefit plan as of any Determination Date or last day of a
plan year must be determined as of the most recent valuation
date which is within a 12-month period ending on the
Determination Date or last day of a plan year as if such
participant terminated as of such valuation date; provided,
however, that in the first plan year of a plan, the present
value of the accrued benefit for a current participant must be
determined either (i) as if the participant terminated service
as of the Determination Date or last day of a plan year or
(ii) as if the participant terminated service as of such
valuation date, but taking into account the estimated accrued
benefit as of the Determination Date or last day of a plan
year. For purposes of this Subparagraph (B), the valuation
date must be the same valuation date used for computing plan
costs for minimum funding, regardless of whether a valuation
is performed that year. The actuarial assumptions utilized in
calculating the present value of the accrued benefit for any
participant in a defined benefit plan for purposes of this
Subparagraph (B) shall be established by the Plan
Administrator after consultation with the actuary for the
plan, and shall be reasonable in the aggregate and shall
comport with the requirements set forth by the Internal
Revenue Service in Q&A T-26 and T-27 of Regulation Section
1.416-1.
(C) For purposes of determining the present value of the
cumulative accrued benefit under a plan for any Participant in
accordance with this Subsection, the present value shall be
increased by the aggregate distributions made with respect to
the Participant (including distributions paid on account of
death to the extent they do not exceed the present value of
the cumulative accrued benefit existing immediately prior to
death) under each plan being considered, and under any
terminated plan which if it had not been terminated would have
been in a Required Aggregation Group with the Plan, during the
one-year period ending on the Determination Date or the last
day of the Plan Year that falls within the calendar year in
which the Determination Date falls. In the case of a
distribution made with respect to a Participant made for a
reason other than separation from service, death, or
disability, this provision shall applied by substituting a
five-year period for the one-year period.
B-4
(D) For purposes of this Paragraph (3), participant
contributions which are deductible as "qualified retirement
contributions" within the meaning of Code Section 219 or any
successor, as adjusted to reflect income, gains, losses, and
other credits or charges attributable thereto, shall not be
considered to be part of the accrued benefits under any plan.
(E) For purposes of this Paragraph (3), if any employee
is not a Key Employee with respect to any plan for any plan
year, but such employee was a Key Employee with respect to
such plan for any prior plan year, any accrued benefit for
such employee shall not be taken into account.
(F) For purposes of this Paragraph (3), if any Employee
has not performed any service for a Plan Sponsor or an
Affiliate maintaining the Plan during the one-year period
ending on the Determination Date, any accrued benefit for than
Employee shall not be taken into account.
(G) (i) In the case of an "unrelated rollover" (as
defined below) between plans which qualify under Code
Section 401(a), (a) the plan providing the distribution
shall count the distribution as a distribution under
Subparagraph (C) of this Paragraph (3), and (b) the plan
accepting the distribution shall not consider the
distribution part of the accrued benefit under this
Section; and
(ii) in the case of a "related rollover" (as
defined below) between plans which qualify under Code
Section 401(a), (a) the plan providing the distribution
shall not count the distribution as a distribution under
Subparagraph (C) of this Paragraph (3), and (b) the plan
accepting the distribution shall consider the
distribution part of the accrued benefit under this
Section.
For purposes of this Subparagraph (G), an "unrelated
rollover" is a rollover as defined in Code Section
402(c)(4) or 408(d)(3) or a plan-to-plan transfer which
is both initiated by the participant and made from a
plan maintained by one employer to a plan maintained by
another employer where the employers are not Affiliates.
For purposes of this Subparagraph (G), a "related
rollover" is a rollover as defined in Code Section
402(c)(4) or 408(d)(3) or a plan-to-plan transfer which
is either not initiated by the participant or made to a
plan maintained by the employer or an Affiliate.
B-5
SECTION 2
(a) Notwithstanding anything contained in the Plan to the contrary, except
as otherwise provided in Subsection (b) of this Section, in any Plan Year during
which the Plan is Top-Heavy, allocations of Plan Sponsor contributions and
forfeitures for the Plan Year for the Account of each Participant who is not a
Key Employee and who has not separated from service with the Plan Sponsor prior
to the end of the Plan Year shall not be less than three percent (3%) of the
Participant's Annual Compensation. For purposes of this Subsection, an
allocation to a Participant's Account resulting from any Plan Sponsor
contribution attributable to a salary reduction or similar arrangement shall not
be taken into account.
(b) (1) The percentage referred to in Subsection (a) of this Section for
any Plan Year shall not exceed the percentage at which allocations are
made or are required to be made under the Plan for the Plan Year for the
Key Employee for whom the percentage is highest for a Plan Year. For
purposes of this Paragraph, an allocation to the Account of a Key Employee
resulting from any Plan Sponsor contribution attributable to a salary
reduction or similar agreement shall be taken into account but allocations
of catch-up contributions as described in Code Section 414(v) shall not be
taken into account.
(2) For purposes of this Subsection (b), all defined contribution
plans which are members of a Required Aggregation Group shall be treated
as part of the Plan.
(3) This Subsection (b) shall not apply to any plan which is a
member of a Required Aggregation Group if the plan enables a defined
benefit plan which is a member of the Required Aggregation Group to meet
the requirements of Code Section 401(a)(4) or 410.
(4) If the Plan Sponsor maintains a defined benefit plan which is
qualified under Code Section 401(a) and which would be Top-Heavy within
the meaning of the Plan for its plan year ending within or coincident with
the Plan Year, no allocation shall be made pursuant to Subsection (a) of
this Section on behalf of any Participant who participates in the defined
benefit plan and acquires a year of service within the meaning of
paragraphs (4), (5) and (6) of Code Section 411(a) under the defined
benefit plan for the plan year, if the defined benefit plan provides
generally that the accrued benefit of the Participant when expressed as an
annual retirement benefit shall not, when expressed as a percentage of the
Participant's Annual Compensation, be less than the lesser of (A) two
percent (2%) multiplied by the number of such years of service in plan
years during which such plan was Top-Heavy, or (B) twenty percent (20%).
B-6
SECTION 3
Notwithstanding anything contained in the Plan to the contrary, in any
Plan Year during which the Plan is Top-Heavy, a Participant's interest in his
Account shall not vest at any rate which is slower than the following schedule,
effective as of the first day of that Plan Year:
Full Years of Percentage
Vesting Service Vested
- --------------- ----------
Less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
The Schedule set forth above in this Section 3 shall be inapplicable to a
Participant who has failed to perform an Hour of Service after the Determination
Date on which the Plan has become Top-Heavy. When the Plan ceases to be
Top-Heavy, the Schedule set forth above in this Section 3 shall cease to apply;
provided however, that the provisions of the Section dealing with changes in the
vesting schedule shall apply.
B-7
APPENDIX C
SPECIAL NONDISCRIMINATION RULES
SECTION 1
As used in this Appendix, the following words shall have the following
meanings:
(a) "Eligible Participant" means a Participant who is an Employee
during any particular Plan Year.
(b) "Highly Compensated Eligible Participant" means any Eligible
Participant who is a Highly Compensated Employee.
(c) "Matching Contribution" means any contribution made by a Plan
Sponsor to a Company Match Account and any other contribution made to a
plan by a Plan Sponsor or an Affiliate on behalf of an Employee on account
of a contribution made by an Employee or on account of an Elective
Deferral.
(d) "Qualified Matching Contributions" means Matching Contributions
of the Plan Sponsor or an Affiliate to the Employee Pre-Tax Account of a
Participant who is not a Highly Compensated Employee which are immediately
nonforfeitable when made, and which would be nonforfeitable, regardless of
the age or service of the Employee or whether the Employee is employed on
a certain date, and which may not be distributed, except upon one of the
events described under Section 401(k)(2)(B) of the Code and the
regulations thereunder.
(e) "Qualified Nonelective Contributions" means contributions of the
Plan Sponsor or an Affiliate to the Employee Pre-Tax Account of a
Participant who is not a Highly Compensated Employee, other than Matching
Contributions or Elective Deferrals, which are nonforfeitable when made,
and which would be nonforfeitable regardless of the age or service of the
Employee or whether the Employee is employed on a certain date, and which
may not be distributed, except upon one of the events described under Code
Section 401(k)(2)(B) and the regulations thereunder.
SECTION 2
In addition to any other limitations set forth in the Plan, for each Plan
Year one of the following tests must be satisfied:
(a) the actual deferral percentage for the Highly Compensated
Eligible Participants for the Plan Year must not be more than the actual
deferral percentage of all other Eligible Participants for the Plan Year
multiplied by 1.25; or
C-1
(b) the excess of the actual deferral percentage for the Highly
Compensated Eligible Participants for the Plan Year over that of all other
Eligible Participants for the Plan Year must not be more than two (2)
percentage points, and the actual deferral percentage for the Highly
Compensated Eligible Participants for the Plan Year must not be more than
the actual deferral percentage of all other Eligible Participants for the
Plan Year multiplied by two (2).
The "actual deferral percentage" for the Highly Compensated Eligible
Participants and all other Eligible Participants for a Plan Year is the average
in each group of the ratios, calculated separately for each Employee, of the
Deferral Amounts contributed by the Plan Sponsor on behalf of an Employee for
the Plan Year to the Annual Compensation of the Employee in the Plan Year. In
addition, for purposes of calculating the "actual deferral percentage" as
described above, Deferral Amounts of Employees who are not Highly Compensated
Employees which are prohibited by Code Section 401(a)(30) shall not be taken
into consideration. Except to the extent limited by Treasury Regulation section
1.401(k)-l(b)(5) and any other applicable regulations promulgated by the
Secretary of the Treasury, all or part of the Qualified Matching Contributions
and Qualified Nonelective Contributions (other than Qualified Nonelective
Contributions that are treated as matching Contributions pursuant to Section 5
of Appendix C) made pursuant to the Plan may be treated as Deferral Amounts for
purposes of determining the "actual deferral percentage." The Plan Sponsor may
in its sole discretion contribute Qualified Nonelective Contributions or
Qualified Matching Contributions with respect to a Plan Year, provided the
contributions are made no later than the last day of the Plan Year following the
Plan for which the Qualified Nonelective Contributions or Qualified Matching
Contributions are made. Qualified Nonelective Contributions for a Plan Year will
be allocated to the QMAC/QNEC Account of the Participant who has the least
amount of Annual Compensation for such Plan Year in an amount which, when
combined with contributions made on behalf of the Participant pursuant to
Sections 3.2 and 3.3, equals no more than the maximum contribution permitted
under Code Section 415. This Qualified Nonelective Contribution formula
allocation shall be repeated for the Participants, determined in ascending order
of relative Annual Compensation for such year, until the actual deferral
percentage test described in this Section is passed.
SECTION 3
If the Deferral Amounts contributed on behalf of any Highly Compensated
Eligible Participant exceeds the amount permitted under the "actual deferral
percentage" test described in Section 2 of this Appendix C for any given Plan
Year, then before the end of the Plan Year following the Plan Year for which the
Excess Deferral Amount was contributed, (a) the portion of the Excess Deferral
Amount for the Plan Year attributable to a Highly Compensated Participant, as
adjusted to reflect income, gain, or loss attributable to it through the date
the end of the Plan Year for which the test is being performed and reduced by
any excess Elective Deferrals as determined pursuant to Section 3.1 previously
distributed to a Participant for the Participant's taxable year ending with or
within the Plan Year, may be distributed to the Highly Compensated Eligible
Participant. The income allocable to such Excess Deferral Amount shall be
determined in a similar manner as described in Section 4.3 of the Plan. The
Excess Deferral Amount to be distributed shall be reduced by Deferral Amounts
previously distributed for the
C-2
taxable year ending in the same Plan Year, and shall also be reduced by Deferral
Amounts previously distributed for the Plan Year beginning in such taxable year.
The portion of the Matching Contribution on which such Excess Deferral Amount
was based shall be forfeited upon the distribution of such Excess Deferral
Amount.
(a) For purposes of this Section 3, "Excess Deferral Amount" means,
with respect to a Plan Year, the excess of:
(1) the aggregate amount of Deferral Amounts contributed
by a Plan Sponsor on behalf of Highly Compensated Eligible
Participants for the Plan Year, over
(2) the maximum amount of Deferral Amounts permitted
under Section 2 of this Appendix C for the Plan Year, which
shall be determined by reducing the Deferral Amounts
contributed on behalf of Highly Compensated Eligible
Participants in order of the actual deferral percentages
beginning with the highest of such percentages.
(b) Distribution of the Excess Deferral Amount for any Plan Year
shall be made to Highly Compensated Eligible Participants on the basis of
the dollar amount of Deferral Amounts attributable to each Highly
Compensated Eligible Participant. The Plan Sponsor shall determine the
amount of Excess Deferral Amounts which shall be distributed to each
Highly Compensated Eligible Participant as follows.
(1) The Deferral Amounts allocated to the Highly
Compensated Eligible Participant with the highest dollar
amount of Deferral Amounts for the Plan Year shall be reduced
by the amount required to cause that Highly Compensated
Eligible Participant's remaining Deferral Amounts for the Plan
Year to be equal to the dollar amount of the Deferral Amounts
allocated to the Highly Compensated Eligible Participant with
the next highest dollar amount of Deferral Amounts for the
Plan Year. This amount is then distributed to the Highly
Compensated Eligible Participant with the highest dollar
amount of Deferral Amounts, unless a smaller reduction, when
added to the total dollar amount already distributed pursuant
to this Paragraph (1), equals the total Excess Deferral
Amounts.
(2) If the total amount distributed under Paragraph (1)
of this Section 3(b) is less than the total Excess Deferral
Amounts, the procedure in Paragraph (1) shall be successively
repeated until the total dollar amount distributed is equal to
the total Excess Deferral Amounts attributable to Highly
Compensated Eligible Participants.
If a distribution of the Excess Deferral Amounts attributable to the
Highly Compensated Eligible Participants is made in accordance with
Paragraphs (1) and (2) of this Section, the limitations in Section 2 of
this Appendix C shall be treated as being met
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regardless of whether the actual deferral percentage, if recalculated
after such distributions, would have satisfied the requirements of Section
2.
SECTION 4
The Plan Administrator shall have the responsibility of monitoring the
Plan's compliance with the limitations of this Appendix C and shall have the
power to take all steps it deems necessary or appropriate to ensure compliance,
including, without limitation, restricting the amount which Highly Compensated
Eligible Participants can elect to have contributed pursuant to Section 3.1(a).
Any actions taken by the Plan Administrator pursuant to this Section 4 shall be
pursuant to non-discriminatory procedures consistently applied.
SECTION 5
In addition to any other limitations set forth in the Plan, Matching
Contributions under the Plan and the amount of nondeductible employee
contributions under the Plan, for each Plan Year must satisfy one of the
following tests:
(a) The contribution percentage for Highly Compensated Eligible
Participants for the Plan Year must not exceed 125% of the contribution
percentage for all other Eligible Participants for the Plan Year; or
(b) The contribution percentage for Highly Compensated Eligible
Participants for the Plan Year must not exceed the lesser of (1) 200 % of
the contribution percentage for all other Eligible Participants for the
Plan Year, and (2) the contribution percentage for all other Eligible
Participants for the Plan Year plus two (2) percentage points.
Notwithstanding the foregoing, for purposes of this Section 5, the terms Highly
Compensated Eligible Participant and Eligible Participant shall not include any
Participant who is not eligible to receive a Matching Contribution under the
provisions of the Plan, other than as a result of the Participant failing to
contribute to the Plan or failing to have an Elective Deferral contributed to
the Plan on the Participant's behalf. The "contribution percentage" for Highly
Compensated Eligible Participants and for all other Eligible Participants for a
Plan Year shall be the average of the ratios, calculated separately for each
Participant, of (A) to (B), where (A) is the amount of Matching Contributions
under the Plan (excluding Qualified Matching Contributions which are used to
apply the test set forth in Section 2 of this Appendix C) and nondeductible
employee contributions made under the Plan for the Eligible Participant for the
Plan Year, and where (B) is the Annual Compensation of the Eligible Participant
for the Plan Year. Except to the extent limited by Treasury Regulation Section
1.401(m)-l(b)(5) and any other applicable regulations promulgated by the
Secretary of the Treasury, a Plan Sponsor may elect to treat Deferral Amounts
and Qualified Nonelective Contributions as Matching Contributions for purpose of
determining the "contribution percentage," provided the Deferral Amounts,
excluding those treated as Matching Contributions, satisfy the test set forth in
Section 2 of Appendix C. The Plan Sponsor may in its sole discretion contribute
Qualified Nonelective Contributions or Qualified
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Matching Contributions with respect to a Plan Year, provided the contributions
are made no later than the last day of the Plan Year following the Plan for
which the Qualified Nonelective Contributions or Qualified Matching
Contributions are made. Notwithstanding the foregoing, Qualified Nonelective
Contributions and Qualified Matching Contributions that are taken into account
for purposes of applying the test contained in Section 2 of this Appendix C
shall not be taken into account under this Section 5.]
SECTION 6
If either (a) the Matching Contributions and, if taken into account under
Section 5 of this Appendix C, the Deferral Amounts, Qualified Nonelective
Contributions and/or Qualified Matching Contributions made on behalf of Highly
Compensated Eligible Participants, or (b) the nondeductible employee
contributions made by Highly Compensated Eligible Participants exceed the amount
permitted under the "contribution percentage test" for any given Plan Year,
then, before the close of the Plan Year following the Plan Year for which the
Excess Aggregate Contributions were made, the amount of the Excess Aggregate
Contributions attributable to the Plan for the Plan Year under either Section
(6)(a)(1) or (2), or both, as adjusted to reflect any income, gain or loss
attributable to such contributions through the date the Excess Aggregate
Contributions are distributed shall be distributed or, if the Excess Aggregate
Contributions are forfeitable, forfeited. The income allocable to such
contributions shall be determined in a similar manner as described in Section
4.2 of the Plan. As to any Highly Compensated Employee, any distribution or
forfeiture of his allocable portion of the Excess Aggregate Contributions for a
Plan Year shall first be attributed to any nondeductible employee contributions
made by the Participant during the Plan Year for which no corresponding Plan
Sponsor contribution is made and then to any remaining nondeductible employee
contributions made by the Participant during the Plan Year and any Matching
Contributions thereon. As between the Plan and any other plan or plans
maintained by the Plan Sponsor in which Excess Aggregate Contributions for a
Plan Year are held, each such plan shall distribute or forfeit a pro-rata share
of each class of contribution based on the respective amounts of a class of
contribution made to each plan during the Plan Year. The payment of the Excess
Aggregate Contributions shall be made without regard to any other provision in
the Plan.
For purposes of this Section 6, with respect to any Plan Year, "Excess
Aggregate Contributions" means the excess of:
(a) the aggregate amount of the Matching Contributions and
nondeductible employee contributions (and any Qualified Nonelective
Contributions or Qualified Matching Contributions) and, it taken into
account under Section 5 of this Appendix C, the Deferral Amounts actually
made on behalf of Highly Compensated Eligible Participants for the Plan
Year, over
(b) the maximum amount of contributions permitted under the
limitations of Section 5 of this Appendix C, determined by reducing
contributions made on behalf of Highly Compensated Eligible Participants
in order of their contribution percentages beginning with the highest of
such percentages.
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The determination of the amount of Excess Aggregate Contributions
under this Section 6 shall be made after (1) first determining the excess
Elective Deferrals under Section 3.1(b) of the Plan and (2) then
determining the Excess Deferral Amounts under Section 3 of this Appendix
C.
(c) Distribution or forfeiture of nondeductible employee
contributions or Matching Contributions in the amount of the Excess
Aggregate Contributions for any Plan Year shall be made with respect to
Highly Compensated Eligible Participants on the basis of the dollar amount
of the Excess Aggregate Contributions attributable to each Highly
Compensated Eligible Participant. Forfeitures of Excess Aggregate
Contributions may not be allocated to Participants whose contributions are
reduced under this Section 6. The Plan Sponsor shall determine the amount
of Excess Aggregate Contributions which shall be distributed to each
Highly Compensated Eligible Participant as follows.
(1) The Matching Contributions and nondeductible contributions
allocated to the Highly Compensated Eligible Participant with the
highest dollar amount of such contributions for the Plan Year shall
be reduced by the amount required to cause that Highly Compensated
Eligible Participant's remaining Matching Contributions and
nondeductible contributions for the Plan Year to be equal to the
dollar amount of such contributions allocated to the Highly
Compensated Eligible Participant with the next highest dollar amount
of Matching contributions and nondeductible contributions for the
Plan Year. This amount is then distributed to the Highly Compensated
Eligible Participant with the highest dollar amount of Matching
Contributions and nondeductible contributions, unless a smaller
reduction, when added to the total dollar amount already distributed
pursuant to this Subsection (1), equals the total Excess Aggregate
Contributions.
(2) If the total amount distributed under Paragraph (1) is
less than the total Excess Aggregate Contributions, the procedure in
Paragraph (1) shall be repeated until the total dollar amount of
Matching Contributions and nondeductible contributions distributed
is equal to the total Excess Aggregate Contributions attributable to
Highly Compensated Eligible Participants.
If a distribution of the total Excess Aggregate Contributions is
made in accordance with Paragraphs (1) and (2) of this Section 6(c), the
limitations in Section 5 of this Appendix C shall be treated as being met
regardless of whether the actual contribution percentage, if recalculated after
such distributions, would have satisfied the requirements of Section 5.
SECTION 7
Except to the extent limited by rules promulgated by the Secretary of the
Treasury, if a Highly Compensated Eligible Participant is a participant in any
other plan of the Plan Sponsor or any Affiliate which includes Matching
Contributions, deferrals under a cash or deferred
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arrangement pursuant to Code Section 401(k), or nondeductible employee
contributions, any contributions made by or on behalf of the Participant to the
other plan shall be allocated with the same class of contributions under the
Plan for purposes of determining the "actual deferral percentage" and
"contribution percentage" under the Plan; provided, however, contributions that
are made under an "employee stock ownership plan" (within the meaning of Code
Section 4975(e)(7)) shall not be combined with contributions under any plan
which is not an employee stock ownership plan (within the meaning of Code
Section 4975(e)(7)).
Except to the extent limited by rules promulgated by the Secretary of the
Treasury, if the Plan and any other plans which include Matching Contributions,
deferrals under a cash or deferred arrangement pursuant to Code Section 401(k),
or nondeductible employee contributions are considered as one plan for purposes
of Code Section 401(a)(4) and 410(b)(1), any contributions under the other plans
shall be allocated with the same class of contributions under the Plan for
purposes of determining the "contribution percentage" and "actual deferral
percentage" under the Plan; provided, however, contributions that are made under
an "employee stock ownership plan" (within the meaning of Code Section
4975(e)(7)) shall not be combined with contributions under any plan which is not
an employee stock ownership plan (within the meaning of Code Section
4975(e)(7)).
SECTION 8
Notwithstanding any other provision in this Appendix C to the contrary, to the
extent otherwise applicable, the limitations expressed in this Appendix C shall
not apply with respect to those Plan Years in which the Plan satisfies the
requirements of Code Sections 401(k)(11) and/or 401(k)(12).
C-7
APPENDIX D
MINIMUM DISTRIBUTION REQUIREMENTS
SECTION 1
GENERAL RULES
(a) Effective Date and Precedence. The provisions of this Appendix D will
apply for purposes of determining required minimum distributions. The
requirements of the Appendix D will take precedence over any inconsistent
provisions of the Plan.
(b) Requirements of Treasury Regulations Incorporated. All distributions
required under this Section will be determined and made in accordance with the
Treasury Regulations under Code Section 401(a)(9).
(c) TEFRA Section 242(b)(2) Elections. Notwithstanding the other
provisions of this Appendix D, distributions may be made under a designation
made before January 1, 1984, in accordance with Section 242(b)(2) of the Tax
Equity and Fiscal Responsibility Act (TEFRA) and the provisions of the Plan that
relate to Section 242(b)(2) of TEFRA.
SECTION 2
TIME AND MANNER OF DISTRIBUTION
(a) Required Beginning Date. The Participant's entire interest will be
distributed, or begin to be distributed, to the Participant no later than the
Participant's Required Beginning Date.
(b) Death of Participant Before Distributions Begin. If the Participant
dies before distributions begin, the Participant's entire interest will be
distributed, or begin to be distributed, no later than as follows:
(1) If the Participant's surviving spouse is the Participant's sole
Designated Beneficiary, then, distributions to the surviving spouse will
begin by December 31 of the calendar year immediately following the
calendar year in which the Participant died, or by December 31 of the
calendar year in which the Participant would have attained age 70-1/2, if
later.
(2) If the Participant's surviving spouse is not the Participant's
sole Designated Beneficiary, then, distributions to the Designated
Beneficiary will begin by December 31 of the calendar year immediately
following the calendar year in which the Participant died.
(3) If there is no Designated Beneficiary as of September 30 of the
year following the year of the Participant's death, the Participant's
entire interest will be distributed by December 31 of the calendar year
containing the fifth anniversary of the Participant's death.
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(4) If the Participant's surviving spouse is the Participant's sole
Designated Beneficiary and the surviving spouse dies after the Participant
but before distributions to the surviving spouse begin, this Section 2(b),
other than Section 2(b)(1) of this Appendix D, will apply as if the
surviving spouse were the Participant.
For purposes of this Section 2(b) and Section 4 of this Appendix D, unless
Section 2(b)(4) of this Appendix D applies, distributions are considered to
begin on the Participant's Required Beginning Date. If Section 2(b) of this
Appendix D applies, distributions are considered to begin on the date
distributions are required to begin to the surviving spouse under Section
2(b)(1) of this Appendix D. If distributions under an annuity purchased from an
insurance company irrevocably commence to the Participant before the
Participant's Required Beginning Date (or to the Participant's surviving spouse
before the date distributions are required to begin to the surviving spouse
under Section 2(b)(1)), the date distributions are considered to begin is the
date distributions actually commence.
(c) Forms of Distribution. Unless the Participant's interest is
distributed in the form of an annuity purchased from an insurance company or in
a single sum on or before the Required Beginning Date, as of the first
Distribution Calendar Year, distributions will be made in accordance with
Sections 3 and 4 of this Appendix D. If the Participant's interest is
distributed in the form of an annuity purchased from an insurance company,
distributions thereunder will be made in accordance with the requirements of
Code Section 401(a)(9) and the regulations issued thereunder.
SECTION 3
REQUIRED MINIMUM DISTRIBUTIONS DURING PARTICIPANT'S LIFETIME
(a) Amount of Required Minimum Distribution For Each Distribution Calendar
Year. During the Participant's lifetime, the minimum amount that will be
distributed for each Distribution Calendar Year is the lesser of:
(1) the quotient obtained by dividing the Participant's Account
Balance by the distribution period in the Uniform Lifetime Table set forth
in Section 1.401(a)(9)-9 of the Treasury Regulations, using the
Participant's age as of the Participant's birthday in the Distribution
Calendar Year; or
(2) if the Participant's sole Designated Beneficiary for the
Distribution Calendar Year is the Participant's spouse, the quotient
obtained by dividing the Participant's Account Balance by the number in
the Joint and Last Survivor Table set forth in Section 1.401(a)(9)-9 of
the Treasury Regulations, using the Participant's and spouse's attained
ages as of the Participant's and spouse's birthdays in the Distribution
Calendar Year.
(b) Lifetime Required Minimum Distributions Continue Through Year of
Participant's Death. Required minimum distributions will be determined under
this Section 3 beginning with the first Distribution Calendar Year and up to and
including the Distribution Calendar Year that includes the Participant's date of
death.
D-2
SECTION 4
REQUIRED MINIMUM DISTRIBUTIONS AFTER PARTICIPANT'S DEATH
(a) Death On or After Date Distributions Begin.
(1) Participant Survived by Designated Beneficiary. If the
Participant dies on or after the date distributions begin and there is a
Designated Beneficiary, the minimum amount that will be distributed for
each Distribution Calendar Year after the year of the Participant's death
is the quotient obtained by dividing the Participant's Account Balance by
the longer of the remaining Life Expectancy of the Participant or the
remaining Life Expectancy of the Participant's Designated Beneficiary,
determined as follows:
(i) The Participant's remaining Life Expectancy is calculated
using the age of the Participant in the year of death, reduced by
one for each subsequent year.
(ii) If the Participant's surviving spouse is the
Participant's sole Designated Beneficiary, the remaining Life
Expectancy of the surviving spouse is calculated for each
Distribution Calendar Year after the year of the Participant's death
using the surviving spouse's age as of the spouse's birthday in that
year. For Distribution Calendar Years after the year of the
surviving spouse's death, the remaining Life Expectancy of the
surviving spouse is calculated using the age of the surviving spouse
as of the spouse's birthday in the calendar year of the spouse's
death, reduced by one for each subsequent calendar year.
(iii) If the Participant's surviving spouse is not the
Participant's sole Designated Beneficiary, the Designated
Beneficiary's remaining Life Expectancy is calculated using the age
of the Designated Beneficiary in the year following the year of the
Participant's death, reduced by one for each subsequent year.
(2) No Designated Beneficiary. If the Participant dies on or after
the date distributions begin and there is no Designated Beneficiary as of
September 30 of the year after the year of the Participant's death, the
minimum amount that will be distributed for each Distribution Calendar
Year after the year of the Participant's death is the quotient obtained by
dividing the Participant's Account Balance by the Participant's remaining
Life Expectancy calculated using the age of the Participant in the year of
death, reduced by one for each subsequent year.
(b) Death Before Date Distributions Begin.
(1) Participant Survived by Designated Beneficiary. If the
Participant dies before the date distributions begin and there is a
Designated Beneficiary, the minimum amount that will be distributed for
each Distribution Calendar Year after the year of the Participant's death
is the quotient obtained by dividing the Participant's Account Balance
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by the remaining Life Expectancy of the Participant's Designated
Beneficiary, determined as provided in Section 4(a).
(2) No Designated Beneficiary. If the Participant dies before the
date distributions begin and there is no Designated Beneficiary as of
September 30 of the year following the year of the Participant's death,
distribution of the Participant's entire interest will be completed by
December 31 of the calendar year containing the fifth anniversary of the
Participant's death.
(3) Death of Surviving Spouse Before Distributions to Surviving
Spouse Are Required to Begin. If the Participant dies before the date
distributions begin, the Participant's surviving spouse is the
Participant's sole Designated Beneficiary, and the surviving spouse dies
before distributions are required to begin to the surviving spouse under
Section 2(b)(1) of this Appendix D, this Section (b) will apply as if the
surviving spouse were the Participant.
SECTION 5
DEFINITIONS
As used in this Appendix D, the following words and phrases shall have the
meaning set forth below:
(a) Designated Beneficiary. The individual who is designated as the
Beneficiary under Section 1.6 of the Plan and is the designated
Beneficiary under Section 401(a)(9) of the Internal Revenue Code and
Section 1.401(a)(9)-1, Q&A-4, of the Treasury Regulations.
(b) Distribution Calendar Year. A calendar year for which a minimum
distribution is required. For distributions beginning before the
Participant's death, the first distribution calendar year is the calendar
year immediately preceding the calendar year which contains the
Participant's Required Beginning Date. For distributions beginning after
the Participant's death, the first distribution calendar year is the
calendar year in which distributions are required to begin under Section
2(b). The required minimum distribution for the Participant's first
distribution calendar year will be made on or before the Participant's
Required Beginning Date. The required minimum distribution for other
distribution calendar years, including the required minimum distribution
for the distribution calendar year in which the Participant's Required
Beginning Date occurs, will be made on or before December 31 of that
distribution calendar year.
(c) Life Expectancy. Life expectancy as computed by use of the
Single Life Table in Section 1.401(a)(9)-9 of the Treasury Regulations.
(d) Participant's Account Balance. The Account balance as of the
last Valuation Date in the calendar year immediately preceding the
Distribution Calendar Year ("Valuation Calendar Year") increased by the
amount of any contributions made and allocated or forfeitures allocated to
the Account balance as of dates in the Valuation
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Calendar Year after the Valuation Date and decreased by distributions made
in the Valuation Calendar Year after the Valuation Date. The Account
balance for the Valuation Calendar Year includes any amounts rolled over
or transferred to the Plan either in the Valuation Calendar Year or in the
Distribution Calendar Year if distributed or transferred in the Valuation
Calendar Year.
(e) Required Beginning Date. April 1 of the calendar year following
the later of the calendar year in which the Participant attains age 70-1/2
or the calendar year in which the Participant retires, except that in the
case of a person described in Section l(b)(2) of Appendix B the Required
Beginning Date shall be April 1 of the calendar year following the
calendar year in which the Participant attains age 70-1/2.
D-5